I’m reading a book called Practical Management Philosophy. It was written by Konosuke Matsushita, who founded Panasonic, one of the most innovative and creative brands of the 20th century.
This is, of course, not the only book written by Matsushita, who was born in Wakayama, in Japan in 1894. I had a look at his other books on the Internet. His writing, in essence, is a way of sharing his experiences by practically telling about the decisions and processes through which “success-focused” management philosophies are developed in daily life.
Matsushita managed every stage of his business life that he had to begin as an “apprentice” when he was just nine based on the “principles” explained in his books. He said he owed his success to his passion for those principles and to his determination.
As he stated, business life is not just about producing high-quality products at reasonable prices, valuing consumers, and protecting and appreciating your suppliers. In his words, “you must have a mission that can realise more than these in order to be at the top and survive in business life“.
“A business must have a soul”
Matsushita decided to share his thoughts on this subject with his employees and consumers, and told them their business had to have a “soul” in 1932, before the World War II. He said “What you do becomes meaningful and permanent only if this soul penetrates into the entire business”.
It was seen that Panasonic recovered quickly by using its management philosophy after the war. Matsushita emphasised that we could rely on a management philosophy in which decisions are made based on the fundamental reality in the essence of humanity and natural laws, and that it was not only valid for Japan but also for all the other markets.
He said that the ultimate goal of companies was not making “profit”, and that companies also functioned to add value and to make contributions to society. He stated that “profit” would automatically be made when the mission of business management was defined in that way.
If we set off from Konosuke Matsushita’s experiences, which are full of numerous useful hints for today’s global competition, we will end up with the concept called “responsibility”. If corporate reputation affects our company’s brand value up to 80%, we cannot ignore that reputation originates from our responsibilities. The management philosophy that Matsushita believed in, pursued and shared with tens of thousands of his employees almost a century ago is actually about what these responsibilities are and what kind of corporate behaviour should be assumed in terms of them.
“Our Credo”, the principles that are still valid without any need to amend a single word, were written by the founders of Johnson & Johnson in 1942. Today, the first thing that a new employee at Johnson & Johnson does is to read these principles.
“Our Credo” came to the rescue when innocent people were dying since a psychopath put cyanide into Johnson & Johnson’s painkiller capsules called Tylenol at the beginning of 1980s. Open and transparent communication with the government agencies, media and society brought Johnson & Johnson a long-lasting reputation that nobody could ever have.
I wish we could say the same thing for Union Carbide who caused a disaster in early 1980’s. Two years later, the chemical gas leaked from a plant owned by Union Carbide, a poisonous chemical producer, in Bhopal, in India affected 500.000 people in the area. If the money spent on whitewashing the disaster which resulted in 3787 deaths and thousands of people having to live with different lifetime illnesses had been spent on taking precautions, that disaster might not have happened. However, the “soul” in Union Carbide’s management philosophy was not as mature as the one defined by Matsushita.
Highly-competitive companies which are the leaders of their industries have one thing in common: They do not see their business just as any “business“, they also believe that they are responsible for society and natural life. We see that they manage their business on the basis of a management philosophy trying to add “value” to their society and to the world instead of just “producing things, selling them and earning money“. This value is called “ethics” in today’s world. In other words, it is our behaviour which will make us wrestle with our conscience when laws, regulations and official guidelines end, and which will make us come to terms with society “one day”.
A Never-ending Competition for Being Reputable
There has been a competition for being reputable in the business world in recent years. As positive contributions of being reputable to business outcomes keep coming out, a great number of companies try to “take sides in the league of reputation”.
However, there is something they are forgetting: Reputation management is not a project but a “philosophy”! Reputation shows how much we have our responsibility for society, for nature and for the basic principles of business life at heart. It is about whether you have that responsibility in the DNA of your corporate life. In other words, it concerns whether we are “ethical” towards life itself.
Reputation is related to being responsible for “the olive tree around the corner” instead of assuming “it-is-all-mine” type of policies in terms of human resources, purchasing, sourcing, marketing, advertising, competition etc. It is not about individual love that a night watchman gives to a stray animal that uses its own breath to keep warm at the front of a factory, but about corporate love to be given to it.
We should note that we can talk about reputation when we stop trying to rip consumers off for all their lives by making them sign those contracts written in the smallest font possible.
We are as Reputable as the Scope of Our Responsibilities Allow
The things within the scope of our responsibilities and the things out of the scope of our responsibilities are our management philosophy. “Let’s produce things, sell them and make money. The rest is not our concern” is a philosophy. However, “turning an approach that can add value to our society when we produce things, sell them and make money into a part of this process” is a philosophy, too.
If our management policy is the latter, it includes problem-free audits of how much our shuttle bus drivers obey the traffic rules when driving our employees to/from work, how they dress and what they say as well as top-level checks of how much cafeteria food conforms to hygienic conditions.
British Telecom made “triple reporting” obligatory for its suppliers at the beginning of 2000s, before “sustainability reporting” could be pronounced properly in the business world. Thus, it began assuming a responsibility approach which could be universally recognised within its ecosystem and which started its economic, social and environmental performance from its suppliers.
A decade before that, we were introduced to the concept of “fair trade“. Craig Sams and Josephine Fairley, the founders of Green & Black’s, announced that they were not only responsible for the economic dimension of the underdeveloped regions where they sourced raw materials from but also responsible for the social and environmental dimensions of them at the beginning of 1990s. They included farmers’ training, educational support for their children and regional development support in their responsibilities whilst determining staff wages higher than those of their competitors. Their practices caused “fair trade”, which is now adopted and supported with a certification process by thousands of companies in 74 countries. Producers without this certification will soon not be included in the EU public tender processes.
It doesn’t matter whether we are a company of 5 or 5000 employees. Are we a part of the e-waste system which produces 50 million tons of electronic waste in the world every year? Where does 12.500 tons of water used for producing a smart phone stand in our responsibility area when more than 1.5 billion people cannot access potable water? Do we think that the issue of more than 200 million refugees in the world will not affect our business and our future? Are we going to wait in our corner for someone to do something for more than 600 million people with disabilities on earth? The more responsible we are for the issues that are directly connected to our existence and that are a natural extension of our ecosystem such as animals, women, children, agricultural land, water sources, flora, bribery, corruption and abuse, the more reputable we can be.
For the attention of the companies that would like to enter the league of reputation!
(*) This article was published in TEID’s IN magazine winter 2018 issue