The year 2020 opened with widespread concern about COVID-19. Japan's economy and industry faces daunting challenges. Konosuke Matsushita also dealt with numerous crises during his lifetime. Management struggles in the wake of the Great Depression, tremendous hardships in wartime and the early postwar era, an industry crisis as the home appliance boom led to market saturation. Each time Konosuke and Matsushita Electric faced a crisis, they took measures to overcome it and achieve further growth. That this was possible was not due simply to skilled management on Konosuke's part. There was something more fundamental: the bonds between people. Matsushita Electric's employees and their families, its sales companies and distributors, came together to face challenges.
Let's look back at some stories of unity in adversity and see how the bonds between people were forged. Today, as the way we communicate continues to evolve, perhaps these stories can point the way as we face our own challenges.
Note: This content has been edited for online presentation. It was originally presented in a special exhibition held at the Konosuke Matsushita Museum from September 5 to November 21, 2020, titled "Bonds: Unity in Adversity."
Table of Contents
A historic challenge prepares the ground for historic growth
History provides us with ample evidence of how people can grow through challenges. Individuals, organizations and even nations often achieve remarkable growth as a result of becoming fully aware of reality in the face of a very difficult situation, and by making maximum efforts with a firm determination to remove obstacles in the path of natural development toward a particular goal. In fact, nobody achieves remarkable growth or builds a strong foundation under ordinary circumstances. When things are going smoothly, even a resourceful person may fail to grow. In the absence of challenges, people tend to become lazy and unenthusiastic. In the face of a very difficult situation, even an ordinary man comes alive and begins to strive with firm determination. Today we face a difficult situation. Take this as an opportunity. We should maintain our aspirations toward growth, be strong in spirit, remember our true mission, and continue to take the appropriate actions in a confident manner. As we continue such efforts, intelligence will awaken in us as never before. This intelligence will then give rise to creativity, bringing about surprising development in manufacturing, technology and sales. Because I trust in this process, my heart becomes even more courageous in the face of difficulties. This assures me. This makes me believe that we are going to be alright.
Throughout the history of Matsushita Electric, we have always given birth to something new whenever we were faced with a difficult situation. Since I have faith in this process, I predict now that today's historic challenge will serve as the seedbed for tomorrow's historic growth. The efforts we are going to make this year will be very valuable, and could serve us well for the next hundred years. In other words, this year, we are going to build a really good foundation for the future growth of Matsushita Electric.
Konosuke Matsushita, from a speech during the Annual Management Policy Meeting for FY1958
The effects of the deepening global depression finally began to affect Matsushita Electric.
The power generated by unity and strong bonds between employees, which Konosuke had cultivated since the company's founding, became the driving force that allowed them to overcome this slump.
Konosuke and his employees come together in the Hoichi-kai Society
The spirit of unity
In March 1920, soon after the company was founded, Konosuke formed the Hoichi-kai (One-step Society), an employee association in which all 28 employees, including himself, participated. At the time, the labor movement was burgeoning due to the economic slump after the end of World War I, and strikes were taking place all over Japan. Konosuke was convinced that if everyone in the company shared the same goals and worked together in harmony, progress, development, and enhanced well-being for Matsushita Electric and its employees would be the result. It was here that the Hoichi-kai played a crucial role, promoting psychological guidance for employees, enhanced well-being, sports events, and cultural and other activities. The unity of the company, with Konosuke at the center, was reinforced further.
EPISODE
Growth as a business entity
In 1929, as the business expanded and Konosuke set down the Basic Management Objective, reflecting his budding sense of mission, he undertook to promote the unity of his rapidly expanding workforce. At the same time, he established the Company Creed, a set of guidelines for employees. Masaharu Niwa, who joined the company in 1932 and later became president of Matsushita Electric Works (today's Life Solutions Company) described it this way.
"When I joined Matsushita Electric, people took two days off a month. Everyone worked from morning until night, including the senior managers. As a newcomer, I could hardly go home when others were still working. Nevertheless, we all worked without complaint, and I think everyone respected our boss (Konosuke) for having the kinds of ideals laid out in the Basic Management Objective and the Company Creed."
From Masaharu Niwa, Managing for Profits and Social Justice (Japanese only)
The power of unity and bonds between employees
Overcoming an unprecedented downturn
In March 1929, Matsushita Electric Housewares Manufacturing Works changed its name to Matsushita Electric Works, and the Basic Management Objective and Company Creed were established. In May, a new head office was completed, and just as the company was about to embark on aggressive business operation under a new management policy, the effects of the Great Depression struck Japan. At the time, Konosuke was recovering from illness; when his senior managers told him there was no alternative but to cut the workforce in half if the company was to overcome its difficulties, his doubts were suddenly dispelled, and his mind made up: "We'll reduce production by half, immediately. But we must not dismiss even a single factory worker. The factories will work half days with half output, but we will pay workers their full salary. Administrative staff and managers will give up their days off and focus all their energy on selling our inventory." When hearing this, everyone felt a strong desire to strive together and overcome the crisis, and they worked tirelessly, without time off, to sell the inventory that had been piling up. In two months, the inventory was sold and the factories returned to full production.
Konosuke speaks
Factory workers worked half days and took the rest of the day off. But we paid full salaries. All administrative staff and managers went out every day without time off, and sold products. We would wait for conditions to improve and wouldn't dismiss a single employee. That was my decision. […] Two months passed. It was amazing: our warehouses were empty. I gave the order, but I myself was astonished. It's amazing what effort can achieve. This experience gave me newfound confidence. I realized that refusing to dismiss anyone had been the right thing. Determination to succeed is everything. When your back's to the wall, you can accomplish anything. I trace my confidence in business management to this experience.
From Reminiscences of Konosuke Matsushita's Management (Japanese only)
EPISODE
A company that puts people first
Dismissal. It's an ugly word. In every era, the fear of being fired for no reason is in the back of every worker's mind. And we were facing a severe depression. The rumor spread quickly that Matsushita was a company that puts people first. In 1929, Matsushita gave its answer as a company to its employees. "People come first." These three words formed the foundation of the company's prosperity. Amid an economic slump, Matsushita's employees all wore smiles. This is burned in my memory.
From Seiichi Goto, Memoir of Scolding and Being Scolded
(Japanese only)
Note: Goto later became vice president of SANYO Electric
Seeking progress despite economic contraction
The energy of a Hatsuni ceremony
As Konosuke pondered how he could somehow revitalize the market, he thought back to his days as an apprentice, when he would visit nearby shops and assist them with their Hatsuni, the ceremonial first deliveries of the year to customers. "Perhaps business conditions will improve if we revive this tradition," he thought. In January 1930, the company held its first Hatsuni ceremony at the Nagoya Office, and it was received very positively by customers. The following year, in 1931, the activity was extended to all of the company's offices.
Konosuke speaks
I think one important factor, if an organization, company, etc., is to act forcefully in a positive way, is unity, with everyone agreeing on goals. Cooperation and team spirit, with bonds between everyone, everyone pooling their strength, a shared mission, striving toward one goal. I believe it is this that enables people to work with vitality and produce results. So then, what should be done specifically to achieve and enhance this harmony, this unity of purpose? I think there are many ways to do so. One way would be to generate a sense of mission, the desire on everyone's part to achieve some important goal. Another simple example would be to involve everyone in performing a shared activity. This sort of thing encourages unity.
From Konosuke Matsushita , Management that Motivates People (Japanese only)
Amid the chaos of wartime—when Matsushita Electric was forced to produce for military demand—and the confusion of the immediate postwar period, when restrictions were placed on the company, Konosuke worked collaboratively with the company labor union to overcome the difficulties everyone faced.
Creating cheerful work environments even in the midst of chaos
Efforts toward better wartime work environments
Amid chaotic, dark times, Konosuke strived to create cheerful work environments. To foster employee solidarity and motivation, he undertook to hold a wide variety of in-house events and activities. The enhanced feeling of unity became a foundation that helped Konosuke and Matsushita Electric survive the difficulties they encountered in the first years after the war.
1. Holding the Annual Management Policy Meeting on the Festival of Ebisu
The first Annual Management Policy Meeting was held in 1940. It has since become a regular event held on January 10, the day of a festival honoring Ebisu, the god of wealth and fortune. In the first meeting, Konosuke set forth his management policy in detail. The sight of Konosuke explaining the company's situation and earnestly calling on his employees to rise to the occasion served as a centripetal force binding the members of the Matsushita Group, which had become a giant industrial group.
2. The Hoichi-kai Society holds large-scale sporting events
Since its founding in 1920, the Hoichi-kai Society continued to hold activities in spring and autumn, with excursions to scenic locations and pleasure resorts. But in 1931, the society held a sporting event at the athletic grounds of Tennoji Park. In 1940 and 1941, the event was moved to Japan's largest baseball stadium , and held on an even larger scale. More than 8,000 members participated as around 50,000 invited guests, employees, and their families filled the stands. The sporting event was an occasion to demonstrate the Cooperation and Team Spirit, one of the Seven Principles, to those inside and outside the company. Spectators were impressed by the well-organized competitions and the sense of unity they conveyed.
3. In-house variety show during wartime
During the war, everyone worked hard to meet the tough demands for output. To enhance employee's cooperation and team spirit as well as motivation, in September 1944 the company rented a first-rate theater in Osaka for eight nights, and presented an in-house variety show entirely produced and managed by the employees. Amid the grim atmosphere late in the war, the show was an oasis of cheer and enjoyment for employees who had been working hard every day with no entertainment at all.
The bonds between Konosuke and the members of the labor union during the difficult early postwar period
Amid restrictions under GHQ rule and funding shortages
The Pacific War ended on August 15, 1945. Japan's future was uncertain, but Konosuke was determined not to leave his employees in anxiety for a single day. The day after the war ended, he held an emergency meeting of his Osaka-based senior managers to announce the direction to be followed by the company. Moreover, in 1946, the policy of the General Headquarters (GHQ), Supreme Commander for the Allied Powers, led to Matsushita Electric being designated as a restricted concern, and all of the company's assets were frozen. With most of his business activities forbidden, Konosuke penned a statement for the company's in-house newspaper titled "On the Designation as a Restricted Concern," in which he encouraged his employees strongly to persevere.
In 1948, there was hope that the GHQ was going to relax its policy on zaibatsu dissolution before long. However, a monetary tightening policy adopted by the Japanese government caused industries to suffer seriously from shortages of funds. In addition, the company's finances deteriorated, and by October 1948, even salaries had to be paid in installments. Konosuke asked employees for understanding and support in overcoming this crisis by issuing a written request entitled "A Sincere Request to Our Employees for Support to Our Company at This Critical Moment."
Konosuke speaks
In the face of any difficulty, we must take everything positively and prove ourselves by demonstrating the art of turning each and every curse into a blessing, which is something traditional to Matsushita Electric. As part of our mission as industrialists, we must maintain a firm presence in whatever situation, increasing the efforts we put into our work with hope and desire to add greatness to our company.
From the statement for Matsushita Electric's in-house newspaper, "On the Designation as a Restricted Concern"
I wish I were able to remunerate you sufficiently with a bonus or an extra allowance for the New Year. However, I could only decide to do so if I could be sure that such an action would not eventually result in endangering your continued employment status, rather than contributing to your well-being. Our future is bright if we act now to consolidate our management structure and prepare for a leap in growth.
On the issuance of "A Sincere Request to Our Employees for Support to Our Company at This Critical Moment"
Konosuke at the rostrum during the labor union inaugural meeting
In October 1945, as part of the economic democratization policy, the formation of labor unions was encouraged, and the Labor Union Law was promulgated. In response, a labor union was formed at Matsushita Electric in January 1946. The union began with 15,000 members and 42 branches. The union's inaugural meeting was held at Osaka City Central Public Hall in Nakanoshima, Osaka. Though he was not invited, Konosuke attended the meeting and addressed the members. "I believe that the formation of this union will spur the adoption of democratic management at Matsushita Electric. In anticipation of this, I wish to conduct management based on truth. The goals of proper management, and of a proper labor union, are one and the same." The audience broke into enthusiastic applause in response to this heartfelt declaration.
The labor union organizers later called on Konosuke and told him, "There are few precedents for the managers or the president of a company to attend the inaugural meeting of a labor union and give a speech endorsing its formation. Because of this, we are profoundly impressed."
Many of Japan's new labor unions engaged in destructive actions, but labor and management at Matsushita Electric preserved a spirit of mutual understanding and collaboration. Amid the social and economic dislocation of the immediate postwar years, the two sides worked together to improve labor conditions as they laid a firm foundation for Matsushita Electric's future growth.
Movement to rescind the order for Konosuke to step down as president
In 1946, despite his best efforts to convince GHQ otherwise, Konosuke was ordered to step down as president, because Matsushita Electric had manufactured military hardware during the war. But the labor union demonstrated support for him with a petition, signed by over 90% of the union's members, to rescind the resignation order.
This movement on the part of the union to oppose the banning of a wartime manager was almost unprecedented. Matsushita Electric union representatives visited Niro Hoshishima (the then-Minister of Commerce and Industry), one of the members of the committee charged with making such decisions. Hoshishima was impressed and told them, "Your labor union is different from others." He added, with words of encouragement for the union leaders, "Labor and management must join hands to help Japan recover. I will do everything I can, and you should do the same."
As a result, and in a rare reversal of policy, the GHQ reinstated Konosuke and the company's directors. And the fact that not just a few union leaders, but 90% of the entire union applauded this move, is extremely significant, and proof of the bonds between Konosuke and the union.
A saturated home appliance market, combined with an economic slump, forced the industry into a dangerous position.
Konosuke reinforced the spirit of co-existence and mutual prosperity with the sales companies and distributors, and embarked on a distribution revolution. The result was further growth.
Chaos in the home appliance industry
Matsushita Electric's situation
Beginning around 1963, Japan's market for major home appliances was becoming saturated, and sales were stagnating. Sales competition among manufacturers spread, but they did not reduce production, instead taking a "pressurized sales" approach to sales companies and distributors. Large distributors were forced to take on more inventory, pushing them further into debt, stretching out payment cycles, and leading to unauthorized distribution channels. Of the 170 sales companies and distributors at the time, only 20-plus entities were showing a profit.
EPISODE
An industry on the brink
Manufacturers, wholesalers, and retailers competed ruthlessly, and finally competition reached the ultimate in excessiveness. The industry truly seemed on the brink of collapse. Consumers vs. manufacturers, manufacturers vs. themselves; in an environment that fostered distrust, malice, and irresponsibility, doing business without profits became the norm. Tit for tat price competition reached a nadir, and many called for the industry to be reformed, but there was no solution in sight, and every day was filled with anxiety.
From Kikuji Toyoda, President, Hita National Products Sales Co., Ltd. , Shoyu Journal (Japanese only), June 1976
Sell even at zero profit
The sales companies and their retailers built up excessive inventories, and with discount pricing, funding problems and other factors, some entities went bankrupt, others issued bad debt notes or were forced to delay payment, and this became more and more prevalent. Most businesses were operating in the red. Even consumers, given the economic slump, were not responsible about paying on time, and businesses had to make considerable allowance for non-recoverable accounts payable.
From Yoshiro Yamada, President, Miyakonojo National Products Sales Co., Ltd. , Shoyu Journal (Japanese only), June 1976
The spirit Konosuke brought to the Atami Conference,
and the bonds with sales companies and distributors
"This won't do. We need to hear what everyone has to say."
Konosuke was quickly aware of the danger facing the sales companies and distributors. He proposed gathering the heads of these companies together for an opportunity to exchange views in detail, and in a resort setting to thank them for their service. This was the "Meeting of the Presidents and Owners of Sales Companies and Distributors," the so-called Atami Conference, a three-day meeting held from July 9-11, 1964, at the New Fujiya Hotel in the seaside resort of Atami.
Atami was chosen to avoid giving the participating sales companies and distributors the impression that they were being "summoned." Instead, the event was positioned as a friendly gathering in a relaxing setting. Careful consideration was also given to the form of the invitation. This is reflected by the fact that the invitation letter was revised three times before it was sent out. In addition, after a dinner party held on the evening before the conference, Konosuke went to the conference hall at 11:00 p.m. and ordered the staff to change the seating arrangement so that he could see everyone's face, and to adjust the height of the stage so that everyone could see his face. He also gave detailed instructions relating to the height of the microphone and the room lighting. The seating chart was also revised, and preparations for the conference continued until 5:00 a.m. on the day. The care given to these preparations shows the importance Konosuke gave to being able to communicate with each of the participants.
Reaffirming the spirt of co-existence and mutual prosperity
Around 300 people accepted invitations to the conference, including the presidents of 170 sales companies and distributors throughout Japan. Excessive competition was causing confusion in the distribution of products and worsening management conditions, and participants gave their unvarnished opinions about the causes and challenges this posed. They also voiced their complaints and desires relating to Matsushita Electric's products, sales policies, and the stance taken by its personnel. Some of these exchanges became quite heated. Konosuke stood alone at the lectern and responded to each speaker. His position was that the fundamental cause of the management problems facing the sales companies and distributors was a lack of spirit for autonomous responsible management. The sales companies and distributors, on the other hand, maintained that the problem lay with Matsushita Electric's policies. The discussion continued with both sides refusing to back down and talking past each other. At the end of the three-day meeting, Konosuke summed up the discussions by declaring that the responsibility was his. He voiced his commitment to fundamentally improving every aspect of the sales companies' and distributors' relationship with Matsushita Electric, including products and business transactions, and brought the meeting to a conclusion. He also presented each participant with a placard bearing a calligraphic inscription of "Co-existence and Mutual Prosperity" in his own hand.
Konosuke speaks
Matsushita Electric is clearly to blame
After reflecting deeply, I must say that simply put, Matsushita Electric is clearly to blame. […] Long ago, when Matsushita Electric started making light bulbs, even though they were not yet first class, you gave us a chance because we were determined to succeed. Matsushita light bulbs quickly improved, became "grand champions," and the company grew. Today, I believe Matsushita's success is truly thanks to all of you. When I think of that, I cannot say a word against you. Starting now, I hope to make a new start. I'll think boldly to find a way for all of you to achieve stable management. This is my promise to you.
A wave of emotion overcame me as I spoke, and I was moved to the verge of tears. […] Human beings are fundamentally good. If you put yourself in the shoes of another and communicate with them honestly, each is sure to benefit. I felt strongly that this is how the human heart works.
From Reminiscences of Konosuke Matsushita's Management (Japanese only)
EPISODE
The spirit of co-existence and mutual prosperity
At the end of the Atami Conference, Mr. Matsushita said, with tears in his eyes, "Matsushita Electric is clearly to blame." Hearing him say this, in that atmosphere, the essence of his sentiment was borne in on us for the first time. […] He stood there, back straight, with tears streaming down his face. It was moving, and evoked deep emotion in his listeners as well. I would think that Mr. Matsushita's feelings just then were very complicated. That the situation would become this difficult despite Matsushita Electric's efforts must have frustrated him. But even more, I think his tears reflected strong concern for the market, the industry, and for customers. […] It made me truly happy to be able to have that sort of relationship with Mr. Matsushita.
From Gentaro Seino, Yamagata National Electric Co., Ltd. , Konosuke Matsushita Research (Japanese only), Spring 1999 issue
A vow to walk together
Mr. Matsushita had tears in his eyes and his voice faltered as he expressed his regrets for having put us through so much trouble. He told us that the responsibility belonged to Matsushita Electric. Those of us sitting in the audience were so impressed by his sentiments and warm-heartedness that we realized we could follow no one but Mr. Matsushita, and we tearfully promised ourselves that we would work with Matsushita Electric for the rest of our lives.
Masaaki Kamo, President, Hamamatsu National Products Sales Co., Ltd. , Shoyu Journal (Japanese only), July 1976
Putting "Co-existence and Mutual Prosperity" on the wall
After the Atami Conference, Konosuke had the photographs of himself and the president that were on the wall at each business division removed. As his organization grew larger, Konosuke had had the photographs put in place to remind everyone that he was working alongside them. At the Annual Management Policy Meeting in 1965, the year following the Atami Conference, Konosuke made the following remarks.
Konosuke speaks
I have impressed upon you repeatedly the importance of the spirit of co-existence and mutual prosperity—always having respect for suppliers and retailers and working in close collaboration with them. I want you to understand this to the marrow of your bones. Co-existence and mutual prosperity are a promise to achieve stable growth, and if we can't achieve that in reality, what we say won't matter. That is why, until we realize the fruits of co-existence and mutual prosperity, I had the photographs of myself and President Masaharu Matsushita at the workplaces removed. Matsushita Electric must truly coexist with society and with its sales companies and distributors. It must coexist with its retailers. It must coexist with its customers. It must coexist with its suppliers, and I believe that until all of these entities have achieved mutual prosperity, this will be a year for us to return to focusing our activities on the fundamentals of our work.
From the address to the Annual Management Policy Meeting, January 10, 1965
Soon after striking out on his own, Konosuke and his wife Mumeno encountered daunting challenges. Let's explore the bonds that sustained them through those hard times.
Shortly after becoming independent
In 1917, Konosuke quit his job at Osaka Electric Light Company and began preparations to manufacture his improved electrical socket.
But wherever he went, potential buyers turned him away, and soon it became difficult to make ends meet. Mumeno lent her support by pawning her kimonos and jewelry. Looking back, she recalled those days this way.
"People often tell me that they feel sympathy for the pain I must have experienced at difficult moments of my life. However, I want to tell you that I did not experience any pain. […] It was also my firm belief that no matter how much I worked, any difficulties I might encounter were due to some shortcoming on my part. In addition, my husband worked harder than anyone else, and I was confident that if we worked, we would manage somehow, so I wasn't especially worried."
EPISODE
Postponing the rent
Perhaps it's due to my carefree outlook, but I don't really recall many instances where we struggled to make ends meet. There is one instance that has stayed in my memory. This was when my husband quit his job [at Osaka Electric Light Company]. […] We had just begun the business, and I think we became short of cash because we had to lay in supplies. Consequently, we were unable to pay the rent. When rent day came, I went to the landlord and asked him for an extension of five days, because we had no money just then. The landlord replied, "I'm impressed with what you young people are doing. […] Don't worry. Pay me when you have the money." He was very encouraging. I was so thankful, because the landlord was also helping us weather our difficulties. I don't think my husband knows about this. I never discussed it with him.
Not enough money for a bath
As I recall, at the time it cost two sen (0.02 yen) to enter the public bath. My husband spent all day in the factory, engrossed in his work, and he got very sweaty. His clothes were dirty, so he really had to take a bath. He came to me with a towel in his hand and said, "I'm going to the bath, give me some money." I could hardly tell him we had no money for him to bathe. I didn't want him to worry. I don't remember clearly how I answered. I tried to delay by talking about other things. "Someone asked me to have to take a look at this product, it doesn't seem to be working well…." Things like that. He said "Really?" tossed his towel aside, and started trying to figure out what was wrong. He was completely absorbed, and completely forgot about going to the bath.
From Mumeno Matsushita, Joy in Overcoming Difficulties (Japanese only)
Another co-founder (the Ohiraki-cho era)
Masaharu Matsushita, Konosuke's son-in-law and the second president of Matsushita Electric, recalls the relationship between Konosuke and Mumeno this way.
"Until the company moved its head office to Kadoma, Mother (Mumeno) helped Father (Konosuke), who tended to be sickly, and worked alongside him every day. Back then, there was a live-in system for employees, and Mother and Father shared their daily lives with the workers. Mother took care of the live-in workers like family members, not only preparing three meals a day for them, but keeping house for them as well. In a sumo wresters' stable, the wife of the stable master raises her children, takes care of all housework, and does chores for the many wrestlers of the stable. In the same way, Mother took care of all kinds of work behind the scenes so that Father could focus his passion on the business. Moreover, she was also in charge of accounting and other aspects of the company, so in that respect I suppose she worked even more than the mistress of a sumo stable. When Father became discouraged or dejected, her inherent cheerfulness, courage, and strength invariably revived his spirits. One can honestly say that without her, Father would not have developed as he did, and Matsushita Electric might never have grown into the multinational enterprise it is today."
From the foreword to Mumeno Matsushita, Joy in Overcoming Difficulties (Japanese only)
Related Links
