Tuesday, April 28, 2015

Management Practices of the Business Century Club

How I Got Interested in Old Companies

After over 25 years in business, the last decade as an executive in a $3 billion international company, I began my second career as a college professor at the start of a new millennium. I looked forward to trying to guide future business leaders into seeing the role business plays in building our society, for better or worse, and how – by becoming competent, caring business professionals – they could help the companies they join (or start) to be positive contributors to society as a whole, not just to the owners or investors. I have loved my interactions with students and the role of college professor. However, I didn’t realize at the time I made this transition that performing the work of a college professor as a real career (as opposed to an avenue to ease into retirement) meant that in addition to teaching I needed to do scholarly work.

My first attempt at writing a paper for an academic conference followed that of many other former executives: pontificating on my beliefs about leadership. That paper, titled “Everyday Leaders” (which I later discovered is not an appropriate title for an academic paper – it’s way too short), actually received more attention than I could have hoped for: it was accepted for publication and was later picked up and quoted by The Futurist and Training magazines, among others. Having built my case for the importance of good, everyday management I didn’t have much more to say about that topic and found myself a little at sea as to how to proceed to build a real scholarly agenda.

So it was my good fortune that the professor who was supposed to lead our school’s Japan May Term in 2004 had to withdraw and our international education office was desperate to find a substitute. Ever since backpacking through Europe between my junior and senior years in college I have loved traveling to other countries and learning about different cultures, so I readily volunteered to step in. Hope College has had a decades-long relationship with Meiji Gakuin University in Tokyo – in fact, we are celebrating 50 years of exchange programs in 2015. This relationship enabled our May Term in Japan to be much more than travel and touring, since we spent most of the month in Tokyo taking in lectures from various MGU professors. One such lecture was given by economics professor Makoto Kanda on his work studying shinise, which are very old and honored Japanese companies, or “old shops of long standing.” I was fascinated by his presentation: the common characteristics he described in many ways echoed the beliefs I had regarding how businesses should be run. Here, potentially, was proof that my ideas weren’t impractically idealistic, even though the practices he described weren’t necessarily what is taught in business school.

Several of the oldest known continuously-operating companies in the world are Japanese, with seven having been founded prior to 1,000. In analyzing a database of Japanese companies over 100 years old, it is evident that firms do not have to grow large in order to survive. In fact most shinise are small- to medium-sized, private (often family-owned) businesses. This revelation is especially interesting considering how ingrained is the maxim of “grow or die” in our modern management theory.

I could not stop thinking about Mako’s presentation, and several questions came to mind. How unusual is it for a company to live to be 100 years old? If it is rare, how have some companies managed to beat the odds? Are there any secrets to corporate longevity we could learn by studying the management practices of the old companies? Since Japan has such a concentration of old companies, how culturally specific are these behaviors? Would old companies in the United States exhibit similar practices? And so on.

I had found my research agenda.

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