Konosuke Matsushita

Japanese manufacturer and businessman

• Born: November 27, 1894
• Birthplace: Wasa, Wakayama Prefecture, Japan
• Died: April 27, 1989
• Place of death: Osaka, Japan

Matsushita was an energetic manufacturing and marketing genius who built the world’s biggest multinational electric home appliance industry Matsushita Electric Company. In the process, he developed a revolutionary management system that has influenced industry worldwide.

Early Life

Konosuke Matsushita (koh-noh-soo-kee mawt-soo-shee-tah) was born in Wasa, Wakayama Prefecture, south of Osaka. The youngest of eight children, he had two brothers and five sisters. His father, Masakusu, was a well-to-do farmer but became impoverished because of his loss in speculative investments in the rice market. Losing all fortunes, including house and land, Matsushita’s parents were forced to leave the village and move to Wakayama City, where they started a small shop selling wooden clogs called geta. Matsushita was then four years old. The clog business did not go well, and worse, Matsushita’s two brothers and a sister died of influenza. In desperation, Matsushita’s father left home for Osaka looking for a job and eventually found one. When Matsushita was ten, his father found him an apprentice job in a hibachi (charcoal brazier) shop in Osaka. Matsushita was then in his fourth year at the local elementary school, but his formal education had to be terminated, and he had to start practical training as an apprentice, learning about careful work and sound business practices. Three months afterward, Matsushita moved on to a bicycle shop, where he worked as an apprentice. Repair work was not a matter of simply replacing parts but also of producing new parts. Matsushita worked for the shop for five years, acquiring needed skills that would later prove to be most essential for producing the electrical devices that would make him Japan’s richest man. In 1910, foreseeing the potential opportunity in growing electric power and technology, fifteen-year-old Matsushita left the bicycle shop to join the Osaka Electric Light Company as an assistant wiring technician. After one year of hard work, he was promoted to foreman of the installation technicians the youngest foreman on the payroll. For the next few years, he would gain the invaluable experience of managing people and making decisions, which would later prove to be most indispensable in his managerial career in one of the top corporations in the world.

In September, 1915, Matsushita married Mumeno Iue, who would play a vital role in establishing Matsushita Electric Company as cofounder and faithful supporter throughout their nearly seventy-four years of marriage. In 1917, Matsushita left Osaka Electric Company to manufacture an electrical light socket that he had designed. His entire capital for the venture was about one hundred dollars. The first experiment was a failure. After persistent efforts, Matsushita succeeded in making an electric attachment plug that brought him a profit of about forty dollars. Encouraged by this success, Matsushita decided to establish Matsushita Electric Company (MEC) with his wife and her brother. The company was established on March 7, 1918, in the Matsushitas’ small tenement house in Osaka, which would afterward be developed into Japan’s largest electric and home appliance industry.

Life’s Work

The three hardworking members of MEC gave everything to improve the quality of attachment plugs and two-way sockets, which Matsushita designed. The sales of the plugs escalated quickly, because the products were attractive and of high quality. Moreover, Matsushita’s plugs were considerably lower in price than others on the market. Toward the end of 1918, the sales of the plugs increased sharply, and, consequently, Matsushita had to increase the number of his employees to twenty. The company was now producing five thousand plugs a month. By this time, Matsushita had learned many lessons in business and management. He was firmly convinced that the major ingredients for success in business were establishing a solid plan, making steady and consistent effort, winning complete loyalty of employees, giving careful training to employees, manufacturing a product one believes in, and winning the trust and confidence of customers and suppliers. These elements would later be incorporated into the governing principles of management in MEC.

In 1923, Matsushita’s company took a major step by designing and manufacturing a battery-powered lamp for bicycles, the major mode of transportation for commuting workers, who were forced to travel on risky roads after dark. Matsushita was confident that the new product would sell well because it would replace the troublesome, old-fashioned candle-lit lanterns. Moreover, the battery lamp was more economical than candles and was much easier to operate. To Matsushita’s surprise, sales of the lamp did not go well at all, because retailers were distrustful of dry-cell batteries. Matsushita, therefore, adopted a revolutionary sales campaign. He decided to convince the retailers that his lamp would shine for thirty hours by placing a battery lamp in each one of the skeptic retailers’ stores and turning on the switch. The plan worked, and soon the orders for the lamp poured in. His bold salesmanship successfully gained the great confidence and trust of his retailers and customers. By 1929, MEC had three hundred employees and produced electric irons and heaters, in addition to the plugs and battery lamps. In 1929, MEC’s sale of lamps hit 1.8 million a year.

In December, 1929, MEC, like all other companies in Japan, was critically affected by the worldwide depression. The Japanese newspapers were filled with reports of factory closings and labor disputes resulting from wage cuts and layoffs. At this critical time, Matsushita made a significant decision that would become his company’s governing policy the policy was that of lifetime job security. The company would not dismiss or lay off any worker. This policy of giving complete job security to his employees brought about very positive and beneficial results. The employees were more loyal to the company and worked harder, and the company’s operations quickly revived. By February, 1930, the company thrived despite the fact that the depression dragged on. The company business went so well that Matsushita had to build two new factories during the first half of that year.

The year of 1932 was an important landmark for Matsushita. In this year, his philosophy of life was clearly defined and firmly crystallized. One day, he visited a temple, where he witnessed a large number of the Buddhist congregation building their temple diligently and with profound devotion. Matsushita vividly realized that religious groups had a well-defined purpose in life, a fact that makes them different from others. This realization prompted him to define his own mission: As an industrialist he was to serve society, and his duty was to produce and supply useful goods to improve living conditions of people in the society. He believed that material abundance was an important precondition for creating a prosperous, happy, and peaceful society.

In the same year, an employee training institute was established to educate young employees to become core members of the company. The institute offered them a three-year course of electrical engineering and business curriculums. The students would study four hours and receive four hours of practical training. This program was established based on Matsushita’s firm belief that the success or failure of the company depended entirely on its employees, and the high standards of the company must be maintained by the high caliber of employees.

In 1933, Matsushita established the divisional management system, dividing the company operations into three main product groups radios, storage batteries and lamps, and electric fixtures. The major aim of the system was clearly to evaluate performance and achievement of each division and to develop capable managers who would be able to manage their own division by themselves. By the end of 1936, MEC was producing more products, including radio sets, electric heating appliances, phonographs, batteries, fans, stoves, and other electric appliances. The company’s sales volume was estimated at about 4.7 million dollars. The scope of the company’s business grew, and it expanded further. By 1940, it had thirty plants with ten thousand employees.

During World War II, MEC, like all other major companies, was drafted for military production. It produced two-hundred-ton wooden transport ships and airplanes. Immediately following the war, MEC quickly resumed the manufacturing of home appliances with a workforce of fifteen thousand. Its operations were abruptly suspended, however, by the American occupation authorities. The occupation authorities designated Matsushita a zaibatsu (financial clique) and froze all of his assets. The occupation authorities saw that the zaibatsu system, made up of a dozen giant families, had controlled 80 percent of the country’s industrial and financial enterprises, and such excessive concentration of economic power was a serious obstruction to the democratization of Japan. In fact, MEC was not a zaibatsu, although it had grown to a giant size and had the look of a powerful combine, and that led to the misconception of the occupation authorities. In October, 1950, after four years of appeals, Matsushita’s people, including the company labor union, managed to convince the occupation authorities that MEC was not a zaibatsu, and Matsushita’s name was finally lifted from the purge list.

In the beginning of 1951, the Matsushita Electric Company resumed its production operations with its workforce of thirty-eight hundred employees. With Japan’s speedy economic recovery, partly the result of the Korean War, MEC enjoyed a rapid growth. Now the Japanese could afford Matsushita’s newly manufactured washing machines, refrigerators, and televisions. The sales of the company rose from 17 million dollars in 1951 to 186 million dollars in 1961. In that year, the company’s empire swelled to eighty-nine plants, employing forty-nine thousand workers. The company added a startling array of products, including television sets, tape recorders, electric pencil sharpeners, freezers, and computers. Matsushita’s products would rapidly change the Japanese lifestyle. In January, 1961, Matsushita, with gratifying conviction that the company was soundly established with his management philosophy, resigned as its president, assuming the role of chair of the board. He was succeeded by his son-in-law and adopted son, Masaharu. (Matsushita’s only son died when he was two years old.) Matsushita remained as chair until 1977. Thereafter, he served the company as executive adviser until his death on April 27, 1989. At the age of ninety-four, he died of pneumonia in a hospital that he had founded.

Significance

Matsushita indeed was one of the most successful industrial and managerial tycoons of the twentieth century. He rose from near poverty to establish the world’s largest manufacturing empire of home appliances. In 1986, the Matsushita empire had a workforce of 165,000 and had 101 overseas subsidiary companies and plants engaging in production in thirty-eight countries. In the same year, the total annual sales of the sixty-five Matsushita Group companies in Japan were estimated at 40 billion dollars. The Matsushita employees were producing more than fourteen thousand varieties of products to be distributed to every corner of the world.

The impact of Matsushita products on the social life of people during the second half of the twentieth century was great. An abundance of Matsushita’s products not only raised the standard of living for millions but also radically changed their lifestyles. Matsushita’s products also considerably liberated millions of women from long days of household drudgery and gave them more leisure time to engage in creative activities. In the early 1960’s, when Anastas Mikoyan, then the Soviet Union’s vice premier, was boastfully explaining to Matsushita how the Bolsheviks had liberated the Russians from exploitation, Matsushita braggingly declared that he was instrumental in liberating Japanese women from the heavy burden of labor in their households.

Matsushita made many significant contributions in the business and managerial sectors. He was the first employer in the modern business world to implement the policy of lifetime employment and to found a welfare system that provided workers with housing, gymnasiums, hospital care, and wedding halls. He was the first Japanese employer to institute the five-day workweek and was also the first one to establish an employee training institute to train young workers. He was also the first man to establish the divisional management system to facilitate efficient performance of company operations. It is not surprising to find that some of the best-managed corporations in the United States have adopted the Japanese model of management instituted by Matsushita.

Bibliography

“Background to PHP 30 Years.” PHP Intersect, September, 1976, 75-80. An invaluable interview article by the staff of the Peace, Happiness, and Prosperity (PHP) Institute. Gives an excellent background account of the PHP Institute told by Matsushita, the institute’s founder. The article discusses the founding of the institute in 1946, the goals of the institute, and how to achieve those goals.

“Following Henry Ford.” Time, February 23, 1962, 93-97. This article covers Matsushita’s success story. Shows how the Matsushita Electric Company was established and how it expanded to become the biggest home appliance industry in the world.

“Konosuke Matsushita of Matsushita Electric, Interview.” Nation’s Business 59 (January, 1971): 32-37. Matsushita responds to many questions about his early apprentice years, the founding of his company in 1918, the establishment of his division system, the post-World War II period, and his success. A brief but valuable account of Matsushita’s life.

Kotter, John P. Matsushita Leadership: Lessons from the Twentieth Century’s Most Remarkable Entrepreneur. New York: Free Press, 1997. Kotter, a Harvard University business professor, recounts Matsushita’s life and career, focusing on the lessons to be learned from Matsushita’s management techniques and business practices.

“Matsushita.” Harvard Business School Bulletin, February, 1983, 8-9, 49-116. This work, a very informative account of Matsushita’s life, philosophy, and contributions, consists of four parts: Part 1 traces the historical development of Matsushita’s industrial complex in Osaka from 1918 to the early 1980’s; part 2 describes the success story of Matsushita Industrial Canada; part 3 provides comprehensive details of the founding of the Matsushita School of Government and Management in 1979; and part 4 recounts the personal story of the lifelong friendship between Matsushita and Shozo Hotta, an honorary chair of the Sumitomo Bank.

Matsushita, Konosuke. Quest for Prosperity: The Life of a Japanese Industrialist. Tokyo: PHP Institute, 1988. An excellent autobiography the last of Matsushita’s major works written one year before his death. The author relates many interesting and invaluable anecdotes of his many years in the business. Contains a good chronology and a bibliography.

Pascale, Richard Tanner, and Anthony G. Athos. The Art of Japanese Management: Applications for American Executives. New York: Simon & Schuster, 1981. This book is well worth reading for those who wish to study and learn about the ways in which Japanese industries become so successful. The authors use the Matsushita Electric Company as a Japanese example.