Is this really possible, creating companies that last forever? I am always grilled (often challenged) by stubborn clients and fellow researchers in the Association of Southeast Asian Nations (Asean) and my usual response is this: If Japanese enterprises are able to last for centuries, can its counterparts in Asia notably South Korea, Indonesia, Philippines, Malaysia, Singapore, Thailand and Hong Kong replicate the same longevity model? Doubtful. Longevity, Japanese style is more than just a business model nor having a eureka product, it is something deep that transcends blood relations. For Japanese family-owned businesses, the quest to perpetuate the enterprise is embedded in their culture.
Let me digress for a moment. This coming Aug. 31, 2019, Saturday, I will be sharing the stage at Manila Marriott with prominent business leaders / family business owners in the biggest Family Business gathering in the Philippines. The public event entitled, “Can Family-Run Businesses Last Forever? will tackle the secrets to building 100-year-old enterprises.
The Japanese Longevity Model is all about business continuity. Here are the facts:
· 21,000 business entities more than 100 years
· 1,200 plus firms in existence for at least 200 years
· 400 plus companies for at least 300 years
· 30 Japanese firms for 500 years or more
· seven have been in existence for more than 1,000 years
Successful family-owned and-controlled businesses that have lasted for more than a century have mastered the art of embracing attributes that have carried them through many challenges and tested their resolve in managing conflicts. In my research using the Japanese longevity yardstick, I realized two powerful traits that are common in all companies. First, it is their clear sense of purpose (a strong sense of mission, if you will) and a long-term vision for the business.
Business leaders that have successfully navigated turbulent phases in their enterprise journey, as well as their successors put into practice explicit principles that define their business goals and underlying strengths. In most cases, these guiding precepts are written down and preserved in the form of a family code of conduct or a formal set of rules such as the family covenant where regulating behavior is institutionalized. These pre-agreed rules are eventually passed on from one generation to the next.
Most of the time, the family code of conduct is expressed through actions reflecting the firm’s founding philosophy or inspired by the words and deeds of the founder. Among Japanese firms I have researched, the one constant among these enduring businesses is their devotion and acquiescence to a particular set of values and principles passed on to them for centuries. These are values that are inherently related to a certain precept and norm where the primary objective of the parties in the relationship is to survive and prosper. It is a form of commitment that must last forever. In short, where the business prospers so does the family. And this bond is so deep that any mention about strategy must always look beyond short-term profits.
This leads me to the second Japanese attribute. Their management approach is based on a long-term perspective such that enduring businesses strive to double their existence. Writer Funabashi Haruo explains that a 200-year-old firm looks ahead to the next 200 years and a 500-year-old firm tries to see 500 years into the future. The most fundamental management policy is more focused on the firm’s long-term welfare than with short-term profit or the pursuit of wealth.
To be continued...