The Wisdom of Shinise

"Strength from living over 100 years"

Following are some of the results of research from my colleague, Makoto Kanda from Meiji Gakuin University in Japan. In 2009 he sent surveys to nearly 3,000 small to medium-sized companies that were over 100 years old (exculding those with less than 10 employees) and received responses from 500 (a 16.8% response rate). These companies were spread over various industres: 37% wholesale, 34% manufacturing, 12% construction, 12% retail, and 5% services.

Kanda uncovered three factors, which he calls the "three sacred principles of Shinise." These are:
1. Credo: Most companies have a strong sense of corporate vision and values, often established by the founding family. Half of the companies had a written credo and others passed it on verbally.
2. Family ownership and control: Not only were almost all shinise privately-owned companies, over 80% were still owned and run by the founding family! Only 10% did not have any ownership or management involvment by the founding family.
3. Continuity of business, company name and brand: Though most companies have diversified their business, their traditional business still remained (more than 60% have retained their orignial line of business); 40% of the companies have made no changes in company name or brands for more than 100 years, 30% have changed one but not the other, and only 30% have changed both their company name and the brand name under which they do business.

Kanda goes into detail on what practices make up these three factors, which I will explain at a later date.

Japanese Shinise

I have kept in touch with the Japanese professor who first spurred my interest in 100 year old company research (Makoto Kanda) and he has given me permission to share the results of his updated research on small-medium sized old Japanese companies. Stay tuned!

Data Base is Almost Ready

A recent email from Cargill's archives director (as they prepare for their 150th anniversary) reminds me that I have not updated this blog in a while. My student researchers have been busy building our data base of 100 year old U.S. companies and and Katelyn Rumsey is now doing an analysis based on size, industry, etc. The results of this work will be presented at the Association for Global Business Conference to be held in New Orleans in November. Hopefully they will see it as worthy for publication in their journal.

We have done a few surveys along the way (talking to these companies is much more fun than the data base work), but we will begin surveying in earnest in 2011. In the meantime, if you run across an "old" company of which you think I might not be aware, please post a comment or email me.

Not All 100-Year Companies are Dinosaurs

DeWitt Barrels is a 117-year-old company that just won the Michigan Family-Owned Business of the Year award. In the Grand Rapids Press article announcing the award, president Peter DeWitt (whose great-great-grandfather started the business) says "We looked forward to see trends and adapted and made changes to meet demands.....We wouldn't make it if we stayed the same." DeWitt Barrels has never made barrels - it reconditions them for re-use. Today that mostly means cleaning 55-gallon steel drums for oil and chemical companies rather than wooden barrels.

Though their business has changed over the years, how they run it has not. "There are no shortcuts," says Peter DeWitt. "You follow all the rules, even if it's expensive or you have to work more." This particularly comes into play in the area of environmental care: the company has been a state-designated Clean Corporate Citizen since 1999.

Businesses overall are using barrels less often and the DeWitts have watched many other re-conditioners leave the industry. But Peter DeWitt is confident the company will adapt again and last another generation. "Our father gave the company to us [Peter runs the company with two of his brothers] with the same mandate he had - to build it, take care of it and pass it on. When we pass it on to Jason [Peter's son, who is currently the plant manager] it needs to be in a situation for him to make it grow."

Many Old Companies Are Family Businesses

An article recently appeared in the Muskegon Chronicle about a 100-year-old shoe store in Fremont, Michigan. The owner of Vredeveld Shoes is Lon Vredeveld - the fourth-generation of his family to run the store, which opened in 1909. In the article Vredeveld likens his and other independent stores to dinosaurs for their old-fashioned methods of customer service and community involvement.

But what Vredeveld characterizes as dinosaur behavior may just be a type of business-savvy wisdom passed on through the years. Family Business magazine has been researching old family-owned businesses and their research offers four lessons of survival:
1. Stay small
2. Don't go public
3. Stay out of the big cities
4. Keep the business in the family

Vredeveld says that the poor economy has hurt his store, but he thinks a niche for independent shoe stores like his will remain. "We're not getting to 100 years and stopping," he reports. Though Vredeveld has three grown children, he said he is not sure if any of them will every take over the business. He's hoping there is still plenty of time to figure out the future.

In a recent profile in the Holland Sentinel, Max Lokers (co-owner with his brother Tom of Lokers Shoes) also uses the dinosaur analolgy when describing their family shoe store as a dying breed. "I would call us one of the dinosaur types of businesses.....We're still in our brick-and-mortar building, doing what we've been doing for going on 100 years." However, within the last decade Lokers has added services, including some provided by Max's step-son, and he reports that he and Tom hope to continue selling shoes in downtown Holland for generations to come.

Since they appear to be following the advice given in the Family Business research, perhaps these "dinosaurs" will survive.

305 Companies and Counting.....

One of my student researchers, Alison Meshkin, has put together our first "scrubbed" list of U.S. companies over 100 years old and it has over 300 companies on it. This list consists mostly of large, national companies. Another student researcher, Kurt Goldsby, has a list of around 30 Michigan companies we have culled from various sources, including newspaper stories and ads. I'm sure there are many smaller local or regional companies we can add to our data base as we hear about them, so I am sending this appeal to my "followers" out there to post a comment when you hear of a company that should be part of this Century Club.

100-Year-Old Businesses Lost in 2009

According to CNN Money.com more than 45,000 businesses closed their doors for good in 2009, including some that survived for longer than a century. They profile six of these historic companies that vanished, including a candy company and several retailers in businesses as varied as school supplies, food and a department store.
http://money.cnn.com/galleries/2009/smallbusiness/0912/gallery.100_year_old_business_deaths/index.html

I just heard from a friend that the century-old independent bank for which he had been a board member is being acquired. These economic times are tough on many companies, but it is particularly sad to see these old companies with all their history go away. For many customers and community members, it's like losing an old friend. (One owner reports that he is still receiving condolences from area residents about the store's closing in August.)

It is my hope that identifying common success factors of those century-old companies that do survive might help other companies weather tough times.