Business Lessons From Ancient Japan
Did you know that the five oldest companies still operating today in the world were all founded in Japan more than one thousand years ago? There's even a Japanese term for businesses that have survived more than a century, kept ownership within the same family, and continued to operate in the same industry. They're known as shinise firms.
In fact, Japan is home to over 33,000 businesses that have been in operation for at least a century, accounting for 40 percent of the world's total. Every year, over 1,000 businesses celebrate their 100th anniversary. So, what's the secret behind building everlasting brands and companies, and what are the most important lessons that we can learn from them?
Well, if you're like us and are looking to build a business that will stand the test of time, join us in exploring the most important business lessons from ancient Japan. Welcome to a Lux.
Number one: focus on long-term success. If we were to use one word to describe shinise companies, it's this: sustainable. The widely accepted definition of sustainable development is that we must meet the needs of the present without jeopardizing future generations' ability to meet their own needs. The implication here is that sustainability does not occur magically overnight; rather, it's the result of intergenerational cooperation over a long period of time.
One of the reasons that shinise firms last so long is they put a strong emphasis on two important things: longevity and tradition. Usually, in a Japanese business, the CEO holds the position for two to four years, and they have the mission to satisfy the expectation of shareholders in that short period. But shinise firms do not publicly list their stocks. Their way of doing business is the opposite of this.
Short-term profits are not their end goal. They're also cautious about swerving from their original focus and constantly balance opportunities to innovate with maintaining tradition. We'll discuss more on this later in the video. Even though Japanese business owners agree that profit generation is critical for survival, they do not prioritize short-term profit maximization. The key goal for them is to ensure the longevity of the business by cultivating and maintaining long-term relationships with customers and employees.
The Japanese phrase "hosoku nagaku," which literally translates to "thin and long," perfectly captures this mindset. The idea here is that long-term stability is more important than short-term dynamism. Needless to say, maximizing short-term profits is not a good strategy when the goal is to be around for a long time.
Instead, it is critical to cultivate and maintain relationships with customers. This translates into providing high-quality, long-lasting products and actively seeking customer feedback so they can continuously improve their services and ensure their customers are satisfied and well cared for. Such businesses want to survive not only for the sake of their family and employees but also for the sake of their customers, who expect them to be around for generations to come.
The extraordinary longevity of Japanese businesses appears to indicate that owners have a much longer time horizon and patience that is less common amongst U.S. entrepreneurs. Furthermore, shareholders might not be regarded as the primary constituent of Japanese businesses; rather, it's the customers that are frequently regarded and treated as the priority. This is beautifully reflected in a common Japanese saying about business owners: "okyakusama wakami same desu," meaning "the customers are Gods."
But it's not just that. Long-term sustainability and success are also tied to the fact that number two: tradition matters more than profits. A key part of why some Japanese businesses manage to stand the test of time is because they understand one vital thing: the importance of maintaining high social standing in the city they're operating in.
Amid a changing business environment characterized by the loss of traditional values and practices, the changing customer tastes due to Japan's westernization and increasing competition from larger, internationally operating firms have made these companies truly special. Their high social standing partly comes from the fact that they put tradition above profits.
As well as producing traditional Japanese crafts, they embody and reproduce local community values. In doing so, the shinise firms are like custodians that protect local traditions. Culturally, there's a love of tradition in Japan that gives these firms a sense of local customers and community. Shinise firms are also very much embedded in the communities where they are based, as well as maintaining family ownership and the quality of products. Many shinise companies are committed to the welfare of the community, and that is a thing that we also value in really high regard.
Number three: quality over quantity. Consumers in the United States and around the world are increasingly putting pressure on businesses to be better and more transparent in their operations. Consumers, particularly those in the consumer technology industry, are becoming increasingly dissatisfied with having to replace their products every few years, if not sooner.
As a result, consumers are demanding the right to repair products rather than having to replace them because the products are essentially designed to be unfixable or have a planned obsolescence. Given this context, it's not surprising that the Japanese art of Kentucky, in which broken ceramics are repaired and given new life, is gaining traction in the west. As more people become aware of the negative consequences of fast, cheap, and mindless consumption, it's expected that businesses and consumers will begin to question the status quo and move in the right direction.
The truth is, we value the things we pay for more than we value the things that are free. This logic can easily be extended to argue that fast fashion, fast furniture, or fast anything makes us less likely to respect and value products. At the heart of the quality over quantity philosophy is a focus on excellence and attention to detail.
Japanese companies believe that by putting in the time and effort to create high-quality products and services, they can build a loyal customer base that will choose their offerings over their competitors. This approach is based on the belief that delivering exceptional quality will make customers willing to pay a premium price and will continue to do business with the company for years to come.
Japanese companies have a reputation for being meticulous in their attention to detail, whether that's in the design of their products, the quality of their materials, or the level of customer service they provide. This attention to detail is driven by a commitment to perfection and a desire to create products that are not only functional but also beautiful and enjoyable to use.
Another reason why quality over quantity matters for Japanese companies is that it also helps to build trust and credibility with their customers. By consistently delivering high-quality products and services, Japanese companies have earned a reputation for reliability and trustworthiness, allowing them to build long-term relationships with customers and establish themselves as leaders in their respective industries.
Number four: elegant simplicity is everything. Shibui is a traditional Japanese aesthetic that emphasizes simplicity, understated elegance, and refined beauty. It's a concept that embodies a sense of tranquility, harmony, and balance. In business, shibui is applied to the design, branding, and overall customer experience of a company.
When it comes to design, shibui means using minimalistic elements and natural materials to create a simple yet elegant product or service. Companies in Japan strive to create a harmonious balance between form and function, ensuring their products are both beautiful and practical. In branding, shibui is reflected in a company's logo, packaging, and marketing materials.
The branding should be understated and elegant, with a focus on simplicity and quality, creating a sense of trust and reliability in the customer's mind. A shibui-designed packaging would use natural materials such as recycled paper and minimalistic colors and graphics. In terms of customer experience, shibui applies to the way a business interacts with its customers.
In this regard, Japanese companies prioritize providing a peaceful and welcoming environment. The customer service is polite, efficient, and non-intrusive, creating a sense of tranquility and comfort. By balancing beauty and elegance with efficiency, Japanese businesses strive to create products and services that are both beautiful and functional.
This leads us perfectly to the final lesson of the video: number five, the design must be an experience in itself. In Japan, there's a beautiful idiom called "monono aware," which encapsulates the deep appreciation of the fleeting moments of beauty in life. This philosophy is reflected in many aspects of Japanese culture, including their products, which are not just functional but also a feast for the eyes.
A prime example of this philosophy in action is the traditional Japanese wrapping cloth known as the furoshiki. These gorgeous cloths are crafted from exquisite fabrics and used to wrap gifts or carry objects. The act of folding the furoshiki into a specific shape is a meditative experience that creates a stunning work of art, which can then be reused again and again.
But this appreciation for beauty is not just limited to traditional items; even modern products can be designed with a "monono aware" philosophy in mind. Take, for instance, a suitcase. With careful crafting and design, a simple suitcase can be transformed into a luxurious experience.
Japanese companies understand that even the smallest details can make a big difference in the quality of their products and services, and they go to great lengths to ensure that every aspect of their work is done with precision and care. This requires a commitment to excellence, a willingness to go the extra mile, and a deep appreciation for beauty and elegance.
So, a Lux, with all of this considered, this is what you need to take home from this video. The longevity and success of the shinise firms demonstrate the importance of focusing on long-term sustainability, prioritizing tradition over profits, and valuing quality over quantity. By cultivating and maintaining long-term relationships with customers, emphasizing tradition and social standing, and prioritizing quality, these firms have managed to stand the test of time for over a thousand years.
As we move toward a more sustainable future, these lessons from ancient Japan can serve as valuable inspiration for modern entrepreneurs and businesses. And with all of this being said, here's our question to you: If you were to build a business, what are the core values that you would value the most? Make sure to drop your answer in the comments below; we're always so curious to know what you value most: short-term profits versus sustainability.
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