CEO Column

The essence of a company



The essence of a company

The word Shinsho, part of our company name, refers to a particular size of book (105 x 173mm). And when I first joined Kamakura Shinsho in 1990, it was—as implied by the name—a publishing company. The company’s business at the time was to create, speculatively produce, stock in warehouses, and ship books to order.

Time passed, and we found ourselves in the 21st century, attempting to cope with the advent of the Internet Society and the frenetic pace of change it brought. We watched as the sales of internet-based information services grew yearly in proportion to publishing.

During this period, I was reviewing the company’s profit and loss statement one day and noticed that, among our expenses, the proportion of personnel expenses was increasing while those related to printing were on the decline. I suppose it was natural that this was the case.

It occurred to me that if this trend were to continue, we would need to adopt a new way of thinking about management. I wondered how we as a company could thrive amidst such change, as personnel expenses rose steadily. The conclusion I arrived at was simple. And though it felt like something of an epiphany at the time, it was natural: Attract talented personnel and create an environment that will make them want to stick with us for the long haul. At the time I wrote a column below, which I admit was a poor writing, inspired by a friend who was earning a handsome salary working for a foreign financial company.

Companies are competing for people (CEO Column: Perspective, September 11, 2011 *Japanese only)

Today, there is a rapidly growing gap in productivity between people who have advanced education and technological capabilities and those who do not. For some time I suspected that this gap in the quality of human resources would end up becoming the difference between one company and another. And it appears my suspicions were founded, as it has become the norm at leading companies to position human resources as valuable capital rather than just workers. The United Nations Sustainable Development Goals have inspired a new way of thinking that has taken hold worldwide, effectively bringing the curtain down on an era dominated by financial capitalism.

Careful consideration of the optimum way to lure top talent to our company led us to the decision to execute an initial public offering. While most companies go public to raise capital, we did not need a large-scale injection, nor did we have much in the way of debt. We simply wanted to attract the best people possible. And while I didn’t consciously recognize it at the time, this decision meant we were aware that people are the most valuable capital.

My next thought was about what such talented people would need—and want—from a company. Smaller firms often have limited resources and cannot afford to pay high salary. And even if they could, many of those talented people would jump ship if they thought there was more money available elsewhere. So it came to me that it’s incumbent upon us as a company to provide non-monetary incentives as well.

At the end of the day, it’s a matter of what the company is attempting to achieve, and whether or not that objective resonates with people—the company’s mission and vision. This led me to conclude that we should be a company that recognizes that sales and profits are no more than the fuel and the means to propel us toward realizing that mission and vision. It may not put a company in the best light to acknowledge that it began as a quest for financial gain and happened upon its mission and vision through a series of twists and turns.

Our aim, through our mission-focused approach of resolving issues in a rapidly aging society as well as our recognition and appreciation of diverse work styles, is to take on board more people who firmly grasp our view of the relationship between the mission and sales and profits.

With such personnel, I am confident that establishing a system to drive the constant improvement of our organization and corporate culture will result in our medium- and long-term growth and the satisfaction of our stakeholders. Even if the business model were to become obsolete, it shouldn’t be an issue provided the people and organization are in place. And while a gap still exists between my previous perception and the reality of the situation, it is my firm belief that a company derives its permanence from its people and structure. I guess that’s what is now referred to as sustainable capitalism.

When reading magazines and newspapers, I customarily underline passages that hold particular interest for me. The following is an example:

During the era of industrial capitalism, money ruled the day. And profits were available provided wages for laborers were kept low and capital was invested in mechanical factories. As we transitioned into post-industrial capitalism, the source of profit became the brains of human resources that were capable of creating something new and different. Unlike machines, human beings are not things that can be purchased. And profit is no longer something that can be gained solely through financial investment. Contrary to common sense, money has lost some of its value in the era of post-industrial capitalism.

But there’s more. As money declines in value, people are increasingly finding value in things that can’t be acquired using money—things that are appealing precisely because money can’t buy them. We’re talking about things like leisure time, friends we can rely on, a life rich in culture, and above all, contributing to society. This seems more prevalent among creative people and is a movement that has the potential to transform the very essence of the company in the era of post-industrial capitalism.

Katsuhito Iwai, April 10, 2021; Is There a Future for Capitalism, Weekly Toyo Keizai

I was encouraged when I read this. It seemed to reinforce what I’d thought. That gave me the confidence to believe I could effect significant change in the way the company operates. I hope to create a manifestation of Professor Iwai’s prescient insights.

Hirotaka Shimizu
Chairman and CEO
Kamakura Shinsho, Ltd.