The Philosophy Behind Longevity of Japanese Companies
One of the virtues of Japanese culture is the longevity of its companies. Japan is home to some of the oldest companies in the world. There are only 16 companies world-wide that have survived for more than 1000 years. Eight of them are in Japan.1 The oldest company in the world is Kongo Gumi, a temple architecture business founded in 578, when Prince Shotoku was a child. The second oldest is Keiunkan in Yamanashi Prefecture, which has been in the hotel business since 705 during the Nara Era. The third oldest is Koman in Hyogo Prefecture, which is also a hotel. In other words, the three oldest companies in the world are Japanese. Moreover, there are 5,500 companies that have been in business for over 200 years. Of these almost half (3,146) are in Japan.2 For a company to survive 200 years is extraordinary, especially if you consider that only 15% of Japanese start-ups last more than 5 years, 6.3% last more than 10 years, and only 0.3% make it to 20 years.3 It is hard to imagine how a company can survive 200 years, let alone 1000.
The secret of their longevity lies in their corporate philosophy. One of them is incorporating the perspectives of diverse stakeholders. For example, the views of clients, employees, local community, and countries are taken into account in a balanced manner to run their business. Moreover, those companies not only aim to gain only profit, but to contribute to the society and restore their benefit back to community, which established social trust with the stakeholders in a sustainable way.4
Chikuro Hiroike introduced the idea “Sanpo yoshi (Beneficial act from the three stakeholders’ point of view)” or three-way good" and described “Good (service or product) for yourself,” “Good (service or product) for others,” and “Good (service or product) for the society.”
He suggested that the suppliers must consider whether their products and services are beneficial for the all stakeholders or else someone will have to take the burden and eventually the supplier will also have to pay the price for the negative consequences in the long run. 5
Because sustainable companies had this philosophy in mind, took the option to have a win-win deal with all stakeholders, earned trust, and lasted in the market for a long time.
Of course, there is an important takeaway from this episode. If you want to run a long lasting company, you have to release another critical goal- profit-oriented mindset.