What We Can Learn from Kazuo Inamori -BK29

What We Can Learn from Kazuo Inamori 

Ancient Wisdom for Modern Life and Business

Fang Tianliang ·

BK29 · L4

Preface: An Ancient Question for a Modern Age

On 19 January 2010, Japan Airlines filed for protection under Japan's Corporate Reorganisation Act. Its debts came to about 2.3 trillion yen, making it the largest bankruptcy of a non-financial company in Japan since the Second World War. A few weeks later, a 78-year-old man walked into a JAL boardroom as its new chairman. He took no salary, knew almost nothing about the airline business, and brought with him only two assistants from Kyocera.

Many people could not understand why he had come. His family and friends tried to talk him out of it: at his age, and after surgery for stomach cancer, a failure would ruin the reputation of a lifetime. The press was blunter. A man who had started out making ceramics could not save an airline that the government and the banks had already given up on.

He gave only three reasons. To stop a second collapse of JAL from dragging down an already weak Japanese economy. To protect the jobs of the tens of thousands of employees who remained. And to keep healthy competition in Japanese aviation, so that passengers would not be left with a single carrier. Not one of the three reasons had anything to do with himself.

Two years and eight months later, JAL was listed again on the Tokyo Stock Exchange.

The man's name was Kazuo Inamori.

If we look only at that ending, it is easy to write him up as a legendary "god of management". Yet his life began a long way from anything godlike. He was born into the family of a small printing workshop in Kagoshima. As a boy he failed the entrance exam for a good middle school twice, and caught tuberculosis at a time when there was almost no cure. He failed again at university entrance and again in looking for work, and finally joined an old factory that could not even pay its staff on time. At 27 he and a few colleagues raised three million yen and started Kyoto Ceramic in a borrowed warehouse. At 52 he founded DDI to challenge Japan's state-owned telephone monopoly. At 65 he was ordained as a Buddhist monk. At 78 he walked into JAL.

The question worth asking is not how much he achieved, but what he relied on to achieve it. Inamori's own answer never changed, and it was very plain: what is the right thing to do as a human being? Do not lie. Do not be greedy. Do not harm others. Keep other people's happiness in your heart. These are lessons parents teach small children. Yet he insisted that it was exactly these simple principles that gave him something to judge by in the most complicated business situations.

This brings us to the question this book wants to explore with its readers: can a person pursue success at work while holding on to conscience, refining their character, and keeping the happiness of others at heart? The question is both ancient and modern. Ancient, because more than two thousand years ago Confucius said that the benevolent person "loves others", the Buddha taught cause and effect and compassion, and Wang Yangming taught the unity of knowledge and action. Modern, because we live in a commercial civilisation driven by efficiency, competition and profit, where short-term pressure and the pull of self-interest are everywhere.

Kazuo Inamori's life offers one attempt to answer modern business with traditional wisdom. He inherited the motto "Revere Heaven, Love People" from Saigo Takamori, the great figure of his home region. He absorbed the Buddhist ideas of cause and effect and the cultivation of the mind. Without setting out to, he also came close to the spirit of Wang Yangming's School of Mind. Most importantly, he did not leave these ideas on the lecture platform. He tried to turn them into management systems that could be carried out, measured and handed on — Kyocera's management philosophy, its accounting principles and Amoeba Management all came out of this effort. This is what sets him apart from many business leaders who talk about ethics, and it is what this book most wants to explore.

This book is written with Chinese-speaking readers in mind as well as English-speaking ones. Since the start of this century, Inamori's best-known book — published in Japanese as Ikikata (2004), in English as A Compass to Fulfillment, and in Chinese as Huofa — and his other books have sold in very large numbers in China. Many Chinese business owners have studied at his Seiwajuku management school, and Amoeba Management has been introduced in many Chinese companies. Along with this have come some misreadings. Some treat Inamori as an idol of "success studies"; some treat Amoeba Management as a cost-cutting tool; some use "altruism" as a slogan for publicity. This book tries to put Inamori's thinking back into his real life and real business, to see where it came from, how it worked, and what its costs and limits were.

For Chinese readers there is also a particular sense of familiarity. "Loving others" comes from the Analects; "a family that accumulates goodness will have abundant blessings" comes from the Book of Changes; Wang Yangming's unity of knowledge and action and Yuan Liaofan's teaching that fate can be changed are home-grown Chinese wisdom. Transformed by modern Japanese thought, they came back to life in the practice of a business leader. Rereading Inamori is, in a sense, a way of rediscovering a shared Asian heritage. For readers from other traditions, his story offers a concrete example of how ethical ideas can be turned into everyday working practice.

The book has four parts and fifteen chapters. Part One tells the story of his life: from illness and failed exams, to the turning point at Shofu Industries, to Kyocera, DDI, ordination and JAL. Part Two returns to the core ideas of A Compass to Fulfillment, placing his life equation, the Six Endeavours and his principles back into his real experience. Part Three traces where these ideas came from — what came from Chinese Confucian and Buddhist thought, what came from modern Japanese tradition, and what he worked out himself in business. Part Four looks at practice today: what to do when altruism and profit collide, how Amoeba Management really works, how to make decisions in a crisis, and finally, how we should measure a human life.

Throughout the book I try to keep three kinds of statement apart: what Inamori himself believed, what the historical record shows, and my own interpretation. His views on the soul, karma and the "laws of the universe" are presented faithfully as his beliefs, not as proven facts; business results are tied to their documented causes; and where I offer a judgement, I say so.

Each chapter includes one or more true stories, most of them from Inamori's own books and recollections. Each chapter ends with a short section, "Lessons for Today", which offers a concrete situation, an action you can take straight away, and a question for you to answer for yourself.

We do not read Inamori in order to become another Inamori. Many of his beliefs belonged to his own spiritual world, and his success also depended on his era, on technology, and on the efforts of countless colleagues. But his life showed one thing: even in fierce commercial competition, a person can still choose conscience as the starting point for judgement. Whether that path is worth taking is a question each reader must answer.

Now let us go back to Kagoshima in the 1930s, and begin with a boy who cried a great deal.

 

Chapter 1: Poverty and Illness in Kagoshima

Kazuo Inamori was born in January 1932 into an ordinary family in Yakushi-cho, in the city of Kagoshima on the southern tip of Japan's Kyushu island. His father, Kei'ichi, ran a small printing workshop; his mother, Kimi, kept the household going. He was the second of seven children, with an elder brother, two younger brothers and three younger sisters. The family was not well off. His parents worked late into the night, and the children were often left to look after themselves.

His father and mother had very different temperaments. His father was extremely cautious: he would rather earn less than take the risk of borrowing money. His mother was cheerful and decisive, rarely flustered, and always found a way through. Inamori later said that he carried both characters within him. His caution in business and his insistence on accurate numbers came from his father; his courage to try new things and his optimism came from his mother. Both can be seen later — in Kyocera's policy of operating without debt, and in the bold challenge of DDI.

As a small child Inamori was known as a "three-hour crybaby". If his mother was too busy to pay attention to him, he would cry and cry, sometimes for three hours. At home he was wilful and demanding; outside he was shy and timid. In primary school he gradually became the leader of a gang of children, playing in the streets after school, while his marks fell away. In the spring of 1944, on leaving primary school, he stubbornly applied to the best middle school in the area, Kagoshima First Middle School, and failed. He tried again the following year and failed again. His old playmates went off to good schools; he was left behind.

Then came worse. A rash appeared on his body and a low fever would not go away. The doctor diagnosed a pulmonary infiltrate — an early stage of tuberculosis. In the years before streptomycin and other anti-TB drugs were widely available, tuberculosis was close to incurable. An uncle and aunt had both died of it, and another uncle living next door was coughing blood. As he remembered it, people were already whispering that the Inamori house was "a nest of TB".

At 13, lying in bed, the boy was gripped by fear. He kept imagining himself coughing blood, wasting away and dying like his uncle. In the past, whenever he passed his uncle's isolation room, he had held his nose and run past, terrified of catching the disease. His father, on the other hand, nursed the sick relative himself, and his elder brother did not seem worried. In the end it was the most careful one — Kazuo — who fell ill, while the father who cared for the patient stayed well.

A neighbour handed him a book over the garden fence: The Truth of Life by the religious writer Masaharu Taniguchi. It was the first book of ideas he had ever read. One sentence pierced him: "What you hold in your mind will appear as a phenomenon in reality." He began to wonder whether his extreme fear of the disease had actually drawn it towards him, while his father, who cared for his relatives out of love, had not been infected.

It should be made clear that this was the personal understanding of a 13-year-old boy in a sickbed, not a medical explanation of tuberculosis. TB is caused by the tuberculosis bacterium. Whether someone is infected depends on how they are exposed, their nutrition and their body's resistance — not on whether they are afraid. When Inamori told this story later in life, his point was not medical but about the mind. It was the first time he realised that a person's attitude changes how they see the world and how they act. That thought planted a seed which later grew into his repeated emphasis on "way of thinking".

In 1945, as the war entered its final stage, Kagoshima was heavily bombed. The family home and the printing equipment were almost completely destroyed. The family struggled to survive among the ruins, and their life changed overnight from just getting by to real poverty. According to Inamori's recollection, in the extreme shortages after the war his mother took out the kimonos she treasured, one by one, and exchanged them for rice and food to feed the large family. After his printing machines were destroyed, his father became even more cautious and could not bring himself to borrow money to restart the business. His mother did everything she could to keep the family going. Young Kazuo saw it all: his father's fear of risk, and his mother's optimism and resilience in hard times.

His illness slowly improved amid the upheaval. Thanks to post-war school reforms and help from teachers, he entered a private middle school and then high school. To help the family, he cycled around the city selling paper bags made by his father to sweet shops and general stores. He later recalled that it was during those days of selling paper bags that he first learned how to observe customers, plan a route and make a business steady — his earliest "management lessons".

With the family in such circumstances, his father at one point wanted him to start work early to support the household; only after a teacher stepped in to persuade the family was he able to continue his studies. On leaving high school he applied to the pharmacy course at Osaka University's medical faculty, and failed once more. The family could not afford for him to spend a year preparing to retake it. In the end he entered the Department of Applied Chemistry in the Faculty of Engineering at Kagoshima University, which had only recently been founded.

These early experiences seem a long way from the later image of a "saint of management". A crybaby, a boy who failed exam after exam, a young man nearly killed by illness — none of this suggested any special talent. And setbacks do not automatically make people grow. Many people in similar situations become bitter, or simply give up. That Inamori was later able to turn these experiences into raw material for refining his character had something to do with the book he read in his sickbed, something to do with his father's attitude in caring for the sick, and something to do with the local culture of Kagoshima, which prized endurance and revered Saigo Takamori. But most important of all, he began to ask a question: what do these things mean for my mind?

Story: The Other Path He Nearly Took

Around 1954, Inamori was about to graduate from Kagoshima University. He studied extremely hard; when classmates went out to enjoy themselves, he was often in the library or the laboratory. His main subject was organic chemistry, and he was set on working for an oil company. But this was the slump that followed the end of the Korean War procurement boom, and big companies were hiring very few people. A graduate of a regional university, with no family connections at all, ran into closed doors almost everywhere. One company after another that he hoped to join turned him down.

Disappointment and resentment welled up together. He later admitted that during that period he wandered near the office of a yakuza gang on the streets of Kagoshima, thinking: "If society is this unfair, I might as well become an educated gangster." The thought never turned into action, but he never hid how close he had come to a wrong turning.

The turning point came from a university teacher, who introduced him to a company in Kyoto that made ceramic insulators — Shofu Industries. The problem was that the company wanted someone who knew inorganic materials, while he had studied organic chemistry. With only a few months left before graduation, he switched his research topic and wrote a thesis on clay from the Kagoshima area in a great hurry. By his own account, this thesis, written on a hastily changed subject, was highly praised by his professor.

Looking back many years later, what mattered most in those days was not which company took him on. It was that, at the moment of deepest resentment, he did not let the feeling that "life is unfair" make his decisions for him. The feeling was real. But where it leads a person depends on a single thought at that moment.

Lessons for Today

Imagine this: you, or someone close to you, have just experienced a clear failure — an exam failed, a project rejected, a health problem, or a business in temporary trouble. People around you say "that's bad luck" or "the circumstances are against you", and the person concerned easily slides into complaint and fear.

Something to do: on a quiet evening, spend fifteen minutes writing down the thoughts that kept recurring in your mind when this happened (for example, "I'm finished", "everyone else is better than me", "this is unfair"). Then ask yourself one simple question: is any of these thoughts making the difficulty bigger, rather than helping you see the next step? You don't need to change your attitude straight away. Just see it first.

Ask yourself: what is the smallest concrete step you could take this week if you treated this setback as material for growth rather than plain bad luck?

 

Chapter 2: Shofu Industries: From Complaint to Focus

In the spring of 1955, 23-year-old Kazuo Inamori graduated from Kagoshima University and joined Shofu Industries in Kyoto. It was an old factory that made high-voltage porcelain insulators. Before the war it had enjoyed a good name, but by the time he arrived it was in steep decline. It had made losses year after year, wages were often paid late, and labour disputes never stopped. The dormitory was shabby, its outer walls flaking, its tatami mats thick with dust. On the very first night, the handful of new graduates who had joined with him gathered and agreed: "A company this run-down — the sooner we quit, the better."

At first Inamori joined in the complaining. Times were hard and jobs scarce; he had got in only through his teacher's introduction and ought to have been grateful, but the reality in front of him was hard to bear. As he recalled, the owner of a shop nearby even told him sympathetically that if he stayed in a place like that, he would never find a wife. One by one his colleagues resigned, and by the autumn he was the only graduate of his year left.

He wanted to leave too. He and another colleague applied to the officer candidate school of the Self-Defence Forces and both passed. To enrol he needed a copy of his family register, and he wrote home asking for it. But his elder brother Toshinori, back in Kagoshima, never sent it. As Inamori remembered it, his brother's view was this: your teacher went to great trouble to find you that job, and you want to quit after less than six months? If you can't stick it out there, you won't stick it out anywhere. The colleague went to the Self-Defence Forces; Inamori stayed behind.

With no way out, his head suddenly cleared. Complaining achieved nothing. Instead of grumbling about everything every day, he decided to turn his attitude around completely: since he could not leave, he would first do the work in front of him as well as it could possibly be done. He moved his pots, pans and bedding into the laboratory, cooked his meals on an electric furnace, and stayed on site from early morning until late at night. Experiments that had seemed dull began to grow interesting. The more interesting they became, the more absorbed he was; the more absorbed he was, the more results he got.

The project he had taken on was to synthesise a new ceramic material called forsterite. It had excellent high-frequency insulating properties and was well suited to the television sets just then taking off, but no one in Japan had yet produced it in practical form. Development did not go smoothly. Traditional ceramics rely on the stickiness of clay to shape the powder, but impurities in clay would ruin forsterite's properties. Without clay, the powder would not hold a shape; with clay, the product failed. For months he experimented back and forth with formulas, temperatures and processes.

One day he tripped over something in the laboratory. Looking down, he saw it was a lump of wax stuck to the sole of his shoe. An idea flashed into his mind: what if paraffin wax were used as a binder, mixed with forsterite powder and moulded while warm? During firing the wax would burn off and leave no impurities behind. He tried it, and it worked.

This discovery solved one key step — shaping — not the whole technical breakthrough. Before it, he had already done a great deal of work on raw-material ratios and firing conditions; after it, dimensional accuracy, yield and mass production still had to be conquered bit by bit. The idea came at that moment because he had been immersed in the problem for long enough. He later said: "There are gods in the workplace." He did not mean that gods descend for no reason, but that when a person faces their work with total seriousness, answers often rise up from the work itself.

Once forsterite ceramics had been developed, they were used to make U-shaped insulating parts for the electron guns of television picture tubes. Orders from Matsushita Electronics grew from a few thousand pieces a month to twenty or thirty thousand. According to Inamori, this was the first practical application of forsterite ceramics in Japan. In 1956 his research group became an independent special ceramics section, and he, still in his twenties, effectively became its head. Shofu Industries, once on the brink of bankruptcy, gained a little breathing space thanks to this product.

Holding On During a Strike

But the company's labour troubles did not ease. According to Inamori, there was a period when the union called a strike and production at the factory almost completely stopped. If his section stopped too, the Matsushita orders would be cut off and the customer's hard-won trust would be destroyed — and those orders were the company's last lifeline.

He decided that his section would keep producing. He and his team ate and slept at the factory, found ways to get the finished products out, and delivered them to the customer on schedule. In the union's eyes this was strike-breaking. He was fiercely criticised and called a company lackey. It should be remembered that the union members were fighting for their own wages, working conditions and job security in a company that had treated them poorly for years; their collective action was a reasonable response to their situation, not simply an obstacle. This account gives Inamori's side, as he later told it. He later said he was not taking the company's side against the workers. He believed that if even the last orders were lost and the company went under, the people who would suffer most were all the employees.

This experience taught him, for the first time and deeply, that "the right thing" in business is often not a matter of which side you stand on, but of which choice allows more people to survive. Being misunderstood is a price that has to be paid for holding to that kind of judgement.

Inamori later called this period the turning point of his life. Once he moved from complaint to focus, a vicious circle was broken and a virtuous one began: effort brought results, results brought recognition, recognition brought greater drive. The environment itself had not improved — wages were still late, disputes still bitter. What had changed was him.

The turning point also had a price. In 1958 a new technical director joined the company. The two men clashed over the development of a new product, and, as Inamori recalled, the director told him in effect that his ability was not up to the task and that others would take it over from there Inamori realised that in this company his skills and his effort would not be trusted. He decided on the spot to resign. Several colleagues who had worked with him all along said they would leave with him. This was the starting point of Kyocera.

He often said later that all the other graduates of his year had left and only he had stayed, and his friends felt sorry for him. Yet it was precisely because he had been pushed into a corner where there was nothing left to do but work that he truly felt the power of "total seriousness". The turning points of life often come not at the moment outside conditions change, but at the moment one's attitude changes. This simple experience became one of the core ideas of A Compass to Fulfillment.

Story: Listening to the Voice of the Product

In the early days of developing fine ceramics, Inamori ran into a stubborn problem. When thin plates were fired in the kiln, they came out curled up like dried squid — and each time they curled in a different direction. Changing the formula or adjusting the temperature made no difference.

So he stationed himself in front of the furnace and watched the samples through the spyhole. As the temperature rose, the plates slowly curled up. He said later that he had wanted to reach into the furnace, at more than a thousand degrees, and press them flat from above. Of course he could not put his hand in. But that urge gave him the answer: place a heavy, heat-resistant weight on top of the plates. When they were fired this way, they came out perfectly flat.

Inamori summed up this experience as "listening to the voice of the product". When a product has a problem, the answer is often hidden in the product itself; you only need to look and listen with enough care. He also said something many people thought exaggerated: you should love your product so much that you want to hold it in your arms as you sleep. This was not romantic rhetoric but another way of saying "total seriousness". When a person pours all their attention into what is in front of them, details normally invisible begin to surface by themselves.

Lessons for Today

Picture a familiar situation: your current job or project is far from ideal — little support from management, limited resources, colleagues leaving, progress blocked. You spend a lot of time each day complaining, or quietly working out when you can get away.

Try this: choose one specific piece of work you are doing now (however small), and for three days in a row shut yourself in with it, setting aside your judgements of your surroundings and other people. Record what changes over those three days when you focus only on "how can I do this a little better" — even if it is only that your thinking becomes clearer, or you complete one more step.

To reflect on: before you decide whether to stay or go, have you done this work as well as it can be done? If not, where would you start this week?

 

Chapter 3: Founding Kyocera and the First Test

At the end of 1958, Kazuo Inamori resigned from Shofu Industries. He had no money and no equipment, but he had several colleagues willing to follow him. According to Kyocera's founding records, these men made a pledge together and sealed it with their blood: to work as one, and to do something for society and for the world. Today this seems to carry the particular intensity of that era.

The money problem was solved through his former superior at Shofu, Masaji Aoyama, who introduced him to the president of Miyaki Electric in Kyoto and its managing director, Mr Nishieda, among others. They agreed to invest and helped arrange a bank loan. As Inamori recalled, Nishieda even put up his own house as security for the loan. What the investors were backing was not any existing track record, but the earnestness and character of a young man in his twenties. Nishieda also gave him a particular warning: never become a slave to money.

On 1 April 1959, Kyoto Ceramic Co., Ltd. was officially founded. Its capital was three million yen. It borrowed a warehouse belonging to Miyaki Electric in Nishinokyo-Haramachi, in Kyoto's Nakagyo ward, using the ground floor as a factory and the first floor as an office. Including the young people newly hired, there were 28 people at the start. At a simple party that evening, the 27-year-old Inamori made a bold declaration: first we will become number one in Haramachi, then in Nakagyo, then in Kyoto, then in Japan — and finally in the world. Everyone there knew they did not even have a proper factory.

The company's founding motive was "to show the world Kazuo Inamori's technology". In its first two years, orders for forsterite insulating parts got the business moving. Orders were plentiful and hands were few; overtime became routine. Inamori himself often worked until late at night, and he asked everyone else to give their all.

A Demand Sealed in Blood

In April 1961, the company's third year, eleven high-school graduates who had joined the previous year came to Inamori together and handed him a written demand sealed with their blood. They wanted the company to guarantee regular pay rises and bonuses every year — and to put in writing that this would continue into the future. If he refused, they would all resign.

The shock to Inamori was enormous. From where he stood, the company had only just survived; no one knew what tomorrow would bring. How could he guarantee anything for years, or decades, ahead? Such a promise could only be empty words. But from where the young employees stood, things looked completely different.

They were 18 or 19. Straight out of high school they had joined a small company only two years old. The factory was borrowed, there were only one or two products, and they worked late every day. Their parents may not have approved of their going to such a small firm. In the Japan of that time, large companies offered lifetime employment, but small firms could collapse at any moment — their own president had come out of a company on the brink of collapse. After a year of working flat out, they wanted to know what kind of future all this effort would buy them. Sealing their demand in blood showed it was not said lightly: they had staked their futures on it.

This is what makes the story worth dwelling on. Neither side was wrong. A manager cannot make promises he cannot keep; employees have the right to ask to see a future. The conflict did not come from anyone's greed. It came from a question that no one had yet seriously answered: who, in the end, does this company exist for?

Three Days and Three Nights

The talks got nowhere at the company and moved to Inamori's home. Altogether they lasted three days and three nights. He did not use "agree or leave" to pressure them, nor did he make easy promises to keep his workforce. Again and again he explained his thinking: I cannot guarantee an uncertain future, but I can promise that I will give everything I have to make this a company you will feel, from the bottom of your hearts, you were right to join.

According to Inamori's own account in A Compass to Fulfillment and other books, in the end he told them something like this: whether what I say is true or false, follow me in the spirit of "let's try, even if we're being fooled". If one day I betray you — if I run this company for my own gain, or manage it irresponsibly — then you can kill me.

Today these words sound extreme, and they need to be understood in their context. They were neither a threat nor a performance. They were the only security that a young manager with no capital to pledge could offer: himself. Different translations word the sentence slightly differently, but the meaning is the same. In the end the young people believed him, withdrew their written demand, and stayed.

From "My Technology" to "the Happiness of All Employees"

The matter was settled, but Inamori could not sleep. He later recalled that in those days he thought of his parents, brothers and sisters back in Kagoshima. Since leaving home he had hardly been able to help them; he could not even look after his own family properly. Now he was expected to take lifelong responsibility for dozens of young people who were no relation to him, and for the families behind them. For the first time he truly understood what running a company meant.

He had believed the company existed to show the world his technology. But the employees had entrusted their lives to it. If the company's purpose was only to fulfil the manager's personal dream, why should employees work their hearts out for it? After long reflection, he rewrote Kyocera's management philosophy: "To provide opportunities for the material and intellectual growth of all our employees, and through our joint efforts, contribute to the advancement of society and humankind."

This change was not easy. He admitted that when he gave up the goal of "showing the world my technology", he felt a pang of loss — an engineer's romance had been shattered by reality. But it was precisely this price that gave Kyocera a "just cause" that both management and employees could accept. From then on, when he asked employees to give their all, he could do so with a clear conscience, because the fruits of everyone's effort belonged first to all the employees. And when employees threw themselves into their work, they were no longer just labouring for the president's dream.

This philosophy did not stay as a slogan on the wall. Kyocera went public in 1971, and the fruits of the company's growth were shared with employees through bonuses and pay. In economic crises it held firmly to avoiding layoffs wherever possible. Through Amoeba Management, it let each person see the results of their own work. Later chapters of this book will return to these practices. All of them can be traced back to that written demand sealed in blood in the spring of 1961.

"Compa": Connecting Hearts

To put a philosophy into practice, people also need to talk to one another honestly. Kyocera has a tradition that continues to this day, known as "compa" — informal gatherings. After work, colleagues in a department sit together, drink a little beer, eat some simple food, and talk openly about work, about life, and about the company's philosophy. Kyocera's head office even has tatami-matted rooms set aside for such gatherings.

Inamori himself was the most enthusiastic participant. At these gatherings the president sat alongside young employees; they could tell him their complaints and doubts directly, and he would share his own thinking openly. He believed that if the relationship between managers and employees was nothing more than orders and obedience, they could never truly work as one. Only on the basis of hearts connecting could what he called a "great family" take shape. In a sense, those three days and three nights of talks in 1961 were Kyocera's first — and fiercest — compa.

The change of identity from engineer to manager was completed at that moment. A tiny company with almost no resources could survive and grow not just because of technology and orders, but because of the bond between people and a purpose everyone could embrace from the heart.

Story: Holding a Water Pipe Through the Night

Not long after Kyocera was founded, it received an order to make a large ceramic water-cooling pipe. At the time Kyocera had made only small parts; it had neither the experience nor the right equipment. Common sense said the order should be turned down. But for a small company just starting out and badly in need of credibility, every order was a matter of survival. Inamori accepted it.

The difficulty lay in drying. The pipe was so large that different parts dried at different speeds, and it either cracked or warped. Several attempts failed. In the end he found a spot near the furnace at just the right temperature, took the still-damp pipe gently in his arms, and turned it slowly all through the night so that it dried evenly and gradually.

He later recalled that his feelings that night were like those of a father hoping his child would grow up safely. A small company with no money and no equipment had nothing else to offer but this kind of commitment. In the early years, credibility was built up one job at a time, just like this.

Lessons for Today

Consider this situation: you are leading a small team in a start-up or pushing forward a project. Resources are limited and everyone is working long hours. Some members start to worry about the future, ask for better pay or security, and some say they will leave if they cannot see any hope.

A practical step: find a quiet moment and write down your answers to two questions — "What is the primary purpose of this team or project right now?" and "If this purpose does not make members feel, from the heart, that it is worth staying, how does it need to change?" You don't need to make any promises yet. Just write the answers down clearly first.

A question to sit with: what would change in the way you lead if your team's wellbeing and growth came before your own technical or business ambitions?

 

Chapter 4: DDI, Ordination and JAL: Three Great Choices in the Second Half of Life

1. Challenging a Monopoly: DDI

In the first half of the 1980s, Japan decided to open up its telecommunications market. Until then, domestic telephone services had been run exclusively by the state-owned Nippon Telegraph and Telephone Public Corporation, and long-distance calls cost far more than in Europe or America. Kazuo Inamori thought this was wrong. Communications are the lifeblood of society; if they cost too much, the burden ultimately falls on every ordinary citizen.

But who would challenge such a giant? The big companies were all waiting to see. The public corporation had a century of accumulated assets, lines across the whole country and hundreds of thousands of employees. Of the two other newcomers that later entered the market, one was backed by Japanese National Railways and could lay fibre-optic cable along railway lines; the other was backed by the Japan Highway Public Corporation and Toyota, and could run lines along the expressways. Kyocera made ceramics; Inamori himself was a chemist who knew almost nothing about communications and had no existing network at all. If the venture failed, much of the money Kyocera had built up over the years would be lost.

He did not act at once. Every night before going to sleep he asked himself: "Is my motive good? Is it free of selfishness?" Am I really entering this industry for the sake of the public? Is there any hidden wish to profit Kyocera or myself? Do I want to show off, to have people say "What a remarkable man Kazuo Inamori is"? He questioned himself like this for about six months. Only when he was sure his motive was pure did he make up his mind.

In June 1984, a planning company for the new carrier was established; it later became DDI (Daini Denden). To build long-distance lines as quickly as possible, DDI chose the hardest road of all: building microwave relay stations, one after another, on mountain tops between Tokyo, Nagoya and Osaka. Workers carried equipment up the mountains on their backs and rushed to meet deadlines in harsh weather. A company that began with only twenty-odd people had the weakest starting position of the three newcomers, yet after it launched its service, it led the new entrants in performance.

Inamori later attributed this to the power that comes from "a good motive and no selfishness". When employees believe they are doing something to lower communication costs for society, rather than to make their boss rich, the effort they are willing to give is different. To show that he was not acting for himself, he personally held no founding shares in DDI. Chapter 11 looks at this decision in detail. In 2000, DDI merged with KDD and IDO to form KDDI, today Japan's second-largest telecommunications company.

2. Letting Go: Ordination and Alms Rounds

In 1997, at the age of 65, Inamori was diagnosed with stomach cancer. An operation removed most of his stomach. Not long after leaving hospital, he was ordained at Enpuku-ji temple in Kyoto under its head priest, Tansetsu Nishikata, receiving the Buddhist name Daiwa. He had long ago agreed with his teacher that he would enter the Buddhist order at 65; the illness did not change that decision, it only made it more real.

He stepped down as chairman of Kyocera and DDI, becoming chairman emeritus, and lived for a while as a true trainee monk: the same quarters, the same plain food, the same early-morning meditation as the others. As winter set in, he went out on alms rounds with the other monks.

One day, wearing a bamboo hat and straw sandals, he had been walking for hours collecting alms. His sandals had worn through and his toes were bleeding. On the way back to the temple in the evening, an elderly woman who was sweeping in a park put down her broom, hurried over, and pressed a 500-yen coin into his hand. As Inamori later recalled her words, she said something like: "You must be tired, Reverend. Please buy yourself some bread." The moment that rough hand placed the coin in his, a shock ran through his whole body and tears came to his eyes.

She did not know who this monk was. She simply, naturally, gave a little kindness to a stranger. Inamori later said that in that moment he felt a happiness he had never known before — this was what Buddhism calls compassion, and the purest form of what he called altruism. A business leader who had once commanded enormous sums of money came to understand the meaning of "giving" anew in front of a single coin.

3. Walking into JAL at 78

In January 2010, Japan Airlines filed for bankruptcy protection with debts of about 2.3 trillion yen, the largest bankruptcy of a non-financial company in post-war Japan. The government repeatedly asked Inamori to become chairman. At first he refused again and again: he was too old and knew nothing about aviation. In the end he accepted for the three reasons described in the Preface, and said he would take no salary.

What kind of company did he walk into? JAL had long been steered by government, and it was heavily bureaucratic. Routes were often opened for political reasons; many unprofitable regional routes and too many large aircraft weighed on its finances. Senior managers were used to waiting for rescue by government and banks, and paid little attention to frontline staff. Departments were walled off from one another, and no one was truly responsible for overall profit and loss. After the bankruptcy, morale among many employees was low, and some were suspicious of the outsider "ceramics boss".

The Rebuilding Was Not Just a Movement of Ideas

When people talk about the rebuilding of JAL, it is easy to talk only about Inamori's philosophy. But to understand fully why JAL recovered, we must first look at the institutional arrangements of the time.

First, the legal framework. JAL was reorganised under the Corporate Reorganisation Act, under court supervision. All existing shares were cancelled and the stock was delisted; financial institutions wrote off about 520 billion yen of claims. This fundamentally lightened the company's debt burden.

Second, public money. The Enterprise Turnaround Initiative Corporation of Japan, a government-backed body, injected about 350 billion yen of capital to fund the rebuilding. Under Japanese tax law, JAL's huge past losses could also be set against taxable profits for a number of years afterwards. This led to criticism within the industry that JAL had gained an unfair competitive advantage — a debate that continued for years.

Third, painful downsizing. JAL cut large numbers of unprofitable domestic and international routes and retired its fuel-hungry large aircraft early. The reorganisation plan called for the group's workforce to be cut by about 16,000 within the 2010 financial year. Corporate pensions were reduced by about 30 per cent for retirees and about 50 per cent for current employees. On 31 December 2010, the company also dismissed 165 pilots and cabin crew, which led to years of litigation (see Chapter 12). The cost of these measures was borne by many employees and their families.

These institutional measures formed the "foundations" of the rebuilding. But foundations do not automatically become a house that works well. Many companies that have received public money have fallen into trouble again after being rescued, often because the organisation itself has not changed. What Inamori did was mainly to change JAL's way of managing, and the way its people thought, on top of these foundations.

Three Things Inamori Brought to JAL

The first was numbers. He introduced a "divisional profitability system", breaking down income and costs by route, flight and department in enough detail to be seen clearly each month. Every month there was a performance review meeting, where each department head reported their figures in front of everyone, explained the gaps and set out how to improve. Management data that used to take months to compile gradually became available within the month.

The second was philosophy. He personally gave intensive lectures to JAL's senior managers on "what is right as a human being" and on the qualities a leader should have. On this basis, JAL drew up the "JAL Philosophy" of about forty principles, and used it to train all employees.

The third was the front line. He asked managers to go out to the front line and listen to captains, cabin crew, engineers and ground staff. He also helped frontline staff understand that saving a sheet of paper, a unit of electricity or a litre of fuel was directly connected to the company's survival.

In the 2010 financial year, the first year of the rebuilding, JAL's operating profit reached about 188.4 billion yen; in the 2011 financial year it was about 204.9 billion yen, a record high. In September 2012, JAL was relisted on the Tokyo Stock Exchange, about two years and eight months after filing for bankruptcy. Inamori himself called it the culmination of more than fifty years in business.

Judging this result means seeing both sides. Legal reorganisation, debt write-offs, public money, tax arrangements and large-scale cuts all created the conditions for recovery — and included real sacrifices by those who lost out. The change in the organisation's mindset and way of working turned those conditions into lasting profitability. Talk only about the first, and Inamori's role disappears; talk only about the second, and a complex rebuilding is reduced to a story of spiritual triumph.

What the Three Choices Had in Common

On the surface the three choices were very different: one was challenging a monopoly from scratch; one was setting aside his identity as a business leader to go on alms rounds; one was taking on a giant company on the verge of collapse in old age. But they had something in common. Each time, he first checked again and again whether his motive was pure, whether it went beyond his own or his company's self-interest. Each time there were obvious risks and costs: he might fail, be misunderstood, find his health could not bear it, or tarnish his reputation late in life. A "just cause" cannot guarantee success. But it gave him the confidence to keep acting through long uncertainty, and gave those who followed him a shared direction.

Story: A Lesson in the JAL Boardroom

In February 2010, Inamori walked into a JAL meeting room as chairman for the first time. He soon discovered something that astonished him: no one could say clearly how much each department or each route was earning or losing, and monthly figures took several months to compile. For a manager who had come up through monthly accounts for every amoeba at Kyocera, this was almost like flying a plane blindfold.

According to JAL managers' later recollections, he told them bluntly that even the owner of a corner greengrocer knows how much he sold today and how much he spent — yet they could not say. He then arranged intensive leadership training for several dozen senior managers, packing more than ten sessions into little over a month, and lectured them himself on "what is right as a human being".

At first many managers resented it: the company has gone bankrupt and we're being given lessons in morality? But at the "compa" afterwards — simple gatherings over beer — the 78-year-old sat with them, glass in hand, and talked for hours. Gradually, some began to change the way they spoke, and to report their departments' real figures in meetings. JAL's later transformation began in meeting rooms like these.

Lessons for Today

A common scene: you face a major decision that could change the course of your company or your own life — entering a completely unfamiliar field, taking on a very high-risk project, or sticking to something that benefits others but brings no short-term gain when resources are tight. Some people question your motives, and you keep hesitating yourself.

This week: on a quiet evening, spend ten minutes on three evenings in a row writing your answer to the same question: "If this ultimately fails, why would I still think it was worth doing? How much of that reason is for my own or my company's benefit, and how much goes beyond that?" Write the answers on paper rather than just thinking them.

Ask yourself: is there a decision in front of you now whose motive you have never honestly examined?

 

Chapter 5: The Meaning of Life and the Formula for Character

At the very start of A Compass to Fulfillment, Kazuo Inamori makes a direct claim: the meaning of life lies in raising the level of one's mind and polishing one's soul. A person comes into the world, goes through all kinds of storms, joys and sorrows, and keeps striving until their last breath. This process is like sandpaper, rubbing the soul until it is purer and nobler than at birth. To leave this world with a soul a little finer than the one we were born with — that, he said, is the purpose of life.

This differs from the default goals of many people today. We often measure a life by wealth, status and career achievement, or by whether it was comfortable and whether others approved. Inamori did not deny the value of these things; he took the achievements of Kyocera and KDDI very seriously. But he believed they all stay behind when we die. The only thing a person can take with them is a mind that has been refined over a lifetime.

Inamori believed that life's experiences change not only a person's circumstances, but also their character. Illness, failure, poverty, betrayal and setbacks are what most people call misfortune; success, wealth and praise are seen as good fortune. In his eyes, both are tests. Hardship tests whether a person can avoid resentment and not give up. Success tests whether a person can avoid arrogance and greed. He even believed success was the harder test, because in good times people often fail to notice that they are getting worse.

Character = Personality + Philosophy

How is character formed? Inamori expressed this idea in a simple formula: Character = Personality + Philosophy. He did not mean it as a scientific equation. His point was that temperament may shape our natural tendencies, but the principles we choose to live by can profoundly influence the kind of person we become. Personality, in his sense, is largely inborn: some people are cheerful, others reserved; some quick, others slow. Philosophy is what we learn, understand and practise along the road of life. We cannot choose our temperament, but we can choose our principles — and that, he believed, is what ultimately decides who we become.

Over decades in business he met many brilliant managers. Some were quick-witted and bold, and their companies grew fast for a time — then failed through arrogance, greed or contempt for the rules. Inamori often said that what these people lacked was not ability but a philosophy capable of restraining them. Talent is a gift, but a gift has no direction of its own. Without a sound philosophy at the helm, the greater the talent, the greater the harm when it goes astray.

When it came to choosing leaders, Inamori was especially fond of quoting the Ming-dynasty thinker Lü Kun's Groaning Words (Shenyin Yu): "Depth and steadiness are qualities of the first rank; openness and boldness are qualities of the second rank; cleverness and eloquence are qualities of the third rank." In other words, a steady, trustworthy character is the most important quality in a leader; openness and drive come second; a clever mind and a ready tongue only third. He lamented that modern society tends to reverse this order, valuing cleverness and eloquence first — and so puts many people with talent but little character into positions of leadership.

The philosophy he meant was not an academic system, but the question "what is right as a human being?" Do not lie. Do not cause trouble for others. Be honest. Do not be greedy. Do not think only of yourself. These are simple lessons parents teach children, and ethics humanity has upheld since ancient times. Yet as people grow older, they often stop judging by these simple rules and start following social inertia instead: what is everyone else doing, what is fashionable now, how can I make money faster?

Inamori believed that if we could judge what to do and what not to do by these simplest of rules, life would become much simpler. Complex business and technical problems would not disappear, but the standard of judgement would stay clear. Business environments change, technologies become obsolete, competitors adjust their strategies, and a person's own ability and enthusiasm rise and fall. But rules such as "do not lie", "do not be greedy" and "do not harm others" do not depend on any particular era or industry.

Philosophy Needs Constant Watering

It is worth noting that Inamori did not believe a philosophy could be learned once and used for life. He liked to compare it to a tree: philosophy is like the roots, which need watering and feeding every day. Even if a person adopts sound principles when young, without daily reflection and constant reaffirmation those principles slowly decay as status rises and temptations grow.

That is why he repeatedly asked Kyocera's managers to study the "Kyocera Philosophy" again and again, even material they had heard dozens of times. To outsiders this could look like the practice of a religious group. To him, the human heart loosens all too easily, and a good philosophy must be revisited over and over if it is to work when it really matters. Even in old age he kept up the habit of daily reflection.

Making "polishing the soul" the purpose of life was Inamori's personal belief. It blended his understanding of Buddhism and also echoed the Confucian tradition of self-cultivation. Readers need not accept this belief wholesale to take something from it: rather than first succeeding and then thinking about the mind, we can treat cultivating the mind as the purpose that runs through everything, with success or failure as results that appear along the way.

Story: Ninomiya Sontoku's Hoe

When Inamori spoke about character, he often mentioned a farmer of the Edo period, Ninomiya Sontoku (1787–1856). Ninomiya lost both parents as a boy and went to live with his uncle. He worked in the fields by day and wanted to read by lamplight at night, but his uncle scolded him for wasting lamp oil. So he planted rapeseed on waste ground, traded the seeds for lamp oil, and went on reading.

As an adult, his diligence and steadiness led feudal lords in various places to ask him to revive one ruined village after another. He held no scholarly title — only a hoe. From morning to night he worked alongside the farmers, clearing land, digging channels and keeping accounts.

Inamori wrote in A Compass to Fulfillment that this farmer, who had only a hoe in his hands, was later summoned to the residences of great lords, and his bearing was as composed and dignified as that of someone born into a noble family. Character is not decoration provided by learning or status; it is polished through wholehearted work, day after day. This is why Inamori saw work as a training ground for the mind.

Lessons for Today

Picture this: you are making a business or personal decision, and the people around you offer all kinds of reasons — "everyone else does it", "if you don't seize the chance now it'll be too late", "as long as the result is good, it's fine". You feel uneasy, because if you judged strictly by "don't lie, don't harm others, don't be greedy", the choice would become harder, and you might miss out on some immediate gain.

One thing to try: take a sheet of paper and write the decision as one sentence. Underneath, list three questions and write short answers: (1) If I judged entirely by the simple rules I was taught as a child (don't lie, don't be greedy, don't cause trouble), would this choice stand? (2) If not, what is the reason I most want to avoid looking at right now? (3) If I hold to the simple rules, what specific step do I need to give up or adjust?

For reflection: which choice from this week would look different if you had begun with the question "what is right as a human being?"

 

Chapter 6: Way of Thinking, Passion and Ability

Kazuo Inamori proposed what became a widely quoted "equation of life": the result of life and work = way of thinking × passion × ability.

The equation grew out of a very practical puzzle. Inamori himself had graduated from a regional university; he was not from an elite school and did not think he had any exceptional gift. After founding Kyocera, most of the people he recruited were ordinary too, because graduates of top universities did not want to join a small company. He often wondered: how can ordinary people like us build an extraordinary business? The equation was his answer.

Ability and Passion: Multiplied, Not Added

Ability means intelligence, physical strength, health and talent. It is largely inborn and can be scored from zero to 100. Passion means effort and drive, also from zero to 100 — but it is entirely up to us. The two are multiplied. Someone with an ability of 60 and a passion of 90 scores 5,400; someone with an ability of 90 who will only give a passion of 30 scores 2,700.

Inamori saw many such cases at Kyocera. He said more than once that quick-minded people who thought themselves capable often did not want to do tedious work and moved elsewhere at the first difficulty. Those who seemed a little clumsy but worked steadily and single-mindedly often became the backbone of the company ten or twenty years later. In his view, "clumsy earnestness" is an underrated strength.

Way of Thinking: The Sign That Sets the Direction

The most important factor in the equation is the way of thinking. It ranges from minus 100 to plus 100, and covers a person's attitude to life, values and standards of judgement. If the way of thinking is positive, the result is positive. If it is negative — envy, resentment, selfishness, using any means necessary — then the greater a person's ability and passion, the larger the negative result. A brilliant and hard-working fraudster does far more damage to society than a fraudster of ordinary ability.

That is why Inamori placed way of thinking above ability and passion. A "positive way of thinking", for him, came with a very concrete list: being positive and constructive; cooperating well with others; being cheerful and optimistic; having good will; being humble and not arrogant; working hard; being content and grateful; not being selfish or greedy. None of this is profound. The hard part is keeping to it under pressure and temptation.

This Is Not a Mathematical Law

It must be said that the equation is not a mathematical formula into which data can be plugged for a precise result. It is a framework for thinking. No one can give their own "way of thinking" an accurate score, and outside circumstances, opportunity and luck are not in the equation at all. Its value lies in reminding us that when results fall short, we should not only look at ability and circumstances, but also check whether our way of thinking has quietly slipped to the negative side — for example, starting to complain that colleagues aren't trying, envying competitors, or fixing only on short-term gain.

See Ability in the Future Tense

There is another, easily overlooked meaning to "ability" in the equation: it is not fixed. Inamori often said that ability should be seen "in the future progressive tense". Something we cannot do today is not necessarily something we cannot do next year or the year after. People's abilities grow as they take on challenging tasks and keep trying and improving.

In Kyocera's early years this had a very practical meaning. As a small latecomer, Kyocera could not win orders for products big companies already made well. It could only take on things others could not make or did not want to make. When customers asked, "Can you make this?", if the company had answered honestly according to its current ability — "No, we can't" — it would have had no future. Inamori's approach was to judge first whether the thing was possible in principle. If it was, he took the order, then led his team in an all-out effort to make it.

He was well aware of the risks. If a company merely exaggerates its abilities and then cannot deliver, it is deceiving the customer. So "the future progressive" had two conditions: first, being honest with the customer about the difficulty and the progress; second, genuinely putting every effort into overcoming it. Without the second, the first is empty talk; without the first, the second is a gamble.

Strong Desire and Careful Preparation

In Inamori's language, the "passion" in the equation often appears as "strong desire". He said a desire should be so strong that you think about it when you fall asleep and when you wake up, so strong that you can "see" the finished result in your mind, down to the last detail.

But he stressed just as much that strong desire must go with careful preparation. He summed up the process this way: conceive optimistically, plan pessimistically, execute optimistically. In the conception stage, dare to dream without being bound by "impossible". In the planning stage, imagine every difficulty that might arise and prepare for it. Then in the execution stage, go ahead with renewed confidence. With only optimism, plans are careless; with only pessimism, nothing ever begins.

Story: Say Yes First, Then Become Able to Do It

In the mid-1960s, Kyocera received a large order from IBM in the United States for ceramic substrates for the integrated circuits in its computers. For a small Japanese company at the time this was a huge opportunity, but IBM's specifications were far stricter than anything Kyocera's technology could yet achieve; the required dimensional accuracy was much higher than industry norms.

Inamori accepted the order. What followed was a long ordeal: samples were sent again and again, and rejected again and again. People in the factory worked shifts day and night, improving equipment, processes and inspection methods step by step. After repeated trial production, the products finally passed inspection and the order was delivered. It made Kyocera's name internationally and lifted its technology to a new level.

This is the best illustration of "seeing ability in the future progressive tense": when it accepted the order, Kyocera did not yet have the ability; by the time it had delivered, it did.

Lessons for Today

Imagine this: you are unhappy with the results of a project or piece of work. You feel you have tried hard and have the ability needed, yet progress is slow or keeps going backwards. You begin to wonder whether your methods are wrong, or your circumstances too poor.

Something to do: find a quiet moment and write the result as one sentence. Then score the three factors: ability (0–100), passion (0–100), and way of thinking (−100 to +100). Look especially at way of thinking: have you recently had thoughts like "nobody else is trying", "it won't change anyway" or "as long as the result is good, it's fine"? Write down the thought closest to a negative score, and then what you could concretely do next if you turned it positive.

To reflect on: which single thought, if you turned it from negative to positive, would make the biggest difference to your results?

 

Chapter 7: The Six Daily Practices: Cultivating Character Through Work

Kazuo Inamori summed up his everyday attitude to work and life in six points. He called them rokushōjin, usually translated as the "Six Endeavours". In this book we also call them the six daily practices, because they are not abstract religious doctrine but six rules of conduct anyone can apply at work:

1. Work harder than anyone else.

2. Be humble, not arrogant.

3. Reflect on yourself every day.

4. Be grateful simply for being alive.

5. Do good deeds and think of others.

6. Do not dwell on emotional worries.

Read quickly, these six points seem ordinary, and they are easily treated as slogans to hang on the wall. But Inamori said he had worked them out bit by bit through the hardships of his youth and tested them repeatedly over decades in business. The difference between a slogan and a practice is whether it can be carried into the concrete details of each day. Let us look at each point in everyday life.

1. Work harder than anyone else

At Shofu Industries, Inamori moved his pots, pans and bedding into the laboratory and practically lived at work. When he founded Kyocera, he told his employees they must run the whole marathon at the speed of a 100-metre sprint. Some said they would collapse from exhaustion. His answer was that as latecomers, unless they ran like this they would never catch up with those ahead.

The key words are "than anyone else". Not "I've already worked very hard", but whether one's effort really holds up compared with others in the same trade and with competitors. In everyday life this can look very simple: the owner of a small restaurant spends an extra twenty minutes after closing each day noting which dishes customers left most of, and adjusts the recipes the next day. Day after day, that is "working harder than anyone else". It means accepting the tedium and repetition of work, rather than just waiting for inspiration or opportunity.

2. Be humble, not arrogant

Inamori often quoted the old Chinese saying, "Humility brings benefit; complacency invites loss." He particularly stressed that humility is hardest not in difficult times but after success. During Kyocera's years of rapid growth, he saw many people — himself included — beginning to grow self-important. He said that once a business leader starts to think "this is all down to my ability", failure is not far away.

Everyday humility shows in being willing to hear different views. For example, a newly promoted department head might invite younger colleagues to raise problems in a meeting before giving their own opinion, and when a subordinate points out a mistake, say "thank you for telling me" first. Humility does not mean belittling oneself; it means acknowledging that one's own judgement may be limited.

3. Reflect on yourself every day

Reflection was a habit Inamori kept all his life. This chapter's story tells how he would say "Forgive me, God" to himself in the mirror. He saw reflection as weeding the garden of the mind: miss a day and nothing seems to change; miss a month and the garden is overgrown.

In daily life it can be done like this: spend five minutes before sleep thinking back over the day. Did I speak too harshly to anyone? Did I make an unfair decision out of self-interest? Did I promise something and fail to do it? There is no need for a long diary — just take an honest look.

4. Be grateful simply for being alive

Inamori's understanding of gratitude goes back to something that happened when he was four or five. In the Kagoshima area the Jodo Shinshu school of Buddhism had once been banned, and believers met secretly in the mountains to chant the name of the Buddha; this was called "hidden nembutsu". One night his father took him to such a gathering. The priest leading it told little Kazuo that from that day on, he should say every day, "Naman, naman, arigatō" — "Namu Amida Butsu, thank you" — to express his gratitude to the Buddha. He remembered those words and said them all his life.

He said that gratitude should not be felt only in good times. Even in difficulty, we are still supported by many things: people willing to work with us, customers willing to buy our products, a body still able to work. Everyday gratitude can be very concrete: thanking the driver who delivers on time every day, telling a colleague who stayed late that you appreciate it, saying "thank you for all your trouble" to whoever cooked dinner at home. Gratitude calms the mind, and it makes others more willing to work with you.

5. Do good deeds and think of others

Inamori believed that "a family that accumulates goodness will have abundant blessings" — a line from the Chinese Book of Changes. In business he made altruism concrete: let the other party profit too in any deal; consider the customer's means when setting prices; do everything possible in a crisis to keep employees' jobs.

Everyday altruism often begins with small things: a buyer who, when a supplier has cash-flow problems, offers to pay a few days early; an experienced employee who teaches newcomers everything they have learned, holding nothing back. Altruism does not mean giving up one's own interests. It means keeping the other person in mind while considering one's own.

6. Do not dwell on emotional worries

"Emotional worries" means going round and round over what has already happened, over others' opinions, over a past that cannot be changed. Inamori's attitude was this: when you fail, reflect deeply and find the cause; but once you have reflected, stop worrying about it and turn your energy to new action. Spilled water cannot be gathered up again. Rather than circling in emotion, think about the next step.

In daily life, this point can help us tell a "problem" from an "emotion". Suppose an important negotiation has failed. You might spend an hour carefully reviewing it: where was I under-prepared, what will I change next time? When the review is done, close the notebook and move on to the next thing. This is not suppressing feelings; it is not letting them take up unlimited time.

Work Is Practice

These six points belong in work because Inamori saw work as the best place for spiritual practice. Practice in a monastery has fixed forms; practice at work happens in orders, research, management and conflicts between people. When a person keeps working hard, staying humble, reflecting, giving thanks, thinking of others and letting go of useless worries at work, work itself becomes a process of refining the mind. Work is no longer just a way to make a living or fulfil ambitions, but a discipline that can be practised every day.

Story: "Forgive Me, God" in Front of the Mirror

Inamori kept a habit for many years. At the end of each working day, if he felt he had been overbearing towards a subordinate, said something smug, or not worked hard enough, he would reflect on it when he got back to his hotel room or home.

What is more interesting is the next morning. After waking and thinking back over the previous day, he would scold himself sternly in the bathroom mirror — by his own account, something like "You fool!" — and then, almost involuntarily, add: "Forgive me, God!" Sometimes the words slipped out aloud, and even he found it funny.

This little habit may look childish, but it is the simplest form of "reflecting every day". A man already called a "saint of management" still found fault with himself every day. What is lost most easily after success is precisely this strictness with oneself.

Lessons for Today

Picture a familiar situation: you have grown tired of, or irritated by, a routine part of your work. The task itself is not difficult, but it is repetitive, progress is slow, and no one around you gives much feedback. You begin to feel it is meaningless, or to wonder whether you have chosen the wrong path.

Try this: choose one of the Six Endeavours and, for the next three days, practise it only in relation to this piece of work. For example, if you choose "reflect every day": before leaving work each day, spend five minutes writing down the least satisfactory detail of today's work on this task, and one concrete action you can adjust tomorrow. Or choose "work harder than anyone else": put an extra thirty minutes into this work, focused on one small part that can be improved. Write down the endeavour you chose and the specific action.

A question to sit with: which of the six practices could you begin tomorrow, in the work you already have?

 

Chapter 8: Principles, and Decisions Made from First Principles

In business, Kazuo Inamori kept returning to one standard of judgement: decide not by gain and loss, but by "what is right as a human being". Gains and losses fluctuate with time, circumstances and information. A choice that looks advantageous today may become a burden tomorrow; one that looks like a loss today may bring more stable results in the long run. Principles are relatively stable. When a person shifts the centre of judgement from "is this good for me?" to "is this right in principle?", the basis of decisions shifts from short-term fluctuation to more fundamental ethics and logic.

This chapter will not repeat the major choices described earlier. Instead it looks at the most everyday part of business, and the one most likely to go wrong: money.

An Engineer's Accounting Lessons

When Inamori founded Kyocera, he was an engineer who knew nothing about accounting. Financial statements often baffled him, so he kept asking the accountants questions. To professionals these questions seemed naive, yet they forced him to understand business from the most basic principles. This chapter's story is about one of them: if there is a profit, where is the money?

He later organised the principles that came out of these questions into what became known as "Kyocera Accounting". Some of the most important are:

Cash-based management: judge the state of the business by the actual movement of cash, not just by profit on paper.

One-to-one correspondence: every movement of money or goods must be matched at the same time by the corresponding document; no filling in paperwork after the event.

A "muscular" business: remove surplus people, stock and expenses, so the company is lean like an athlete, with no fat.

Perfectionism: no "near enough" with figures; one wrong number can lead to a wrong decision.

Double-checking: important documents, cash and seals must be handled and checked by at least two people — both to prevent mistakes and to protect employees from suspicion.

Raising profitability: let every department see its own income and costs, and measure work by the added value created per hour.

These principles look trivial, but together they point in one direction: building the business on clear, verifiable facts rather than vague expectations or personal feelings.

Profit, Cash and Debt: A Simplified Example

To show why these principles matter, let us take a hypothetical example.

A small factory sells £1 million of products in a year. After all costs, its profit on paper is £100,000, and the owner is pleased. But at the end of the year the bank balance is lower than at the start. Why?

First, customers still owe £300,000 for goods they have received. These are receivables: counted as income on paper, but no cash has come in. Second, to get a bulk discount, the buyer purchased six months' worth of raw materials at once, tying up £200,000 in stock. Third, the owner, confident about the future, borrowed money to buy a new machine and must pay interest every year. The profit on paper has been swallowed up by receivables, stock and equipment. If a major customer now goes bust, or the bank tightens lending, this "profitable" factory could collapse for lack of cash.

Inamori's principles target exactly these points:

For receivables, he insisted on collecting quickly, preferring to take fewer orders on very poor payment terms.

For raw materials, he advocated "buying only what is needed, when it is needed". Bulk buying looks cheaper per unit, but surplus stock ties up cash and space, and may be wasted if specifications change.

For equipment, he preferred to use second-hand machines first, or adapt them in-house, and to buy new ones only when they were truly needed and could be paid for from the company's own funds.

For borrowing, he pursued "debt-free management". Kyocera paid off its bank loans at a fairly early stage and afterwards kept a very high equity ratio for a long time.

These practices share a cost: growth may be slower and some opportunities will be missed. In return they bring stability. When recession comes, the company does not have to lay people off or sell assets cheaply because it has run short of cash.

Dam Management

This thinking was deeply influenced by Konosuke Matsushita's idea of "dam management". As Inamori often told the story, in a lecture Matsushita said that a business should be run like a dam: store water in normal times, so that there is still water in times of drought. Someone in the audience asked: "That's all very well, but how do we build the dam?" Matsushita thought for a moment and replied: "First, you must want to build it." Some people laughed — what kind of answer was that? But Inamori was deeply moved. Everything begins with a strong desire; the concrete methods come after. He later turned this idea into concrete financial discipline: build up cash and equity in good times, to leave room for bad times.

When Principle and Interest Collide

Deciding from first principles does not mean ignoring interests. It only means putting interests after principles rather than before them. When a choice is both right and profitable, deciding is relatively easy. The real test comes when the two collide.

In the late 1980s Japan entered its bubble economy, and land and share prices soared. Many companies poured money unrelated to their core business into property and shares, making large paper profits through "financial engineering". Kyocera had plenty of cash, and banks and brokers came calling again and again. Inamori did not take part. His reason was simple: real profit is profit earned by creating value through one's own sweat; money made from trading land creates no new value. When the bubble burst, many companies were left with heavy bad assets. Kyocera avoided the disaster.

Another principle was "pricing is management". Inamori believed that prices should not be set casually but are the most important judgement a manager makes. Too high, and customers will not buy; too low, and the company cannot survive or pay its employees properly. The ideal price is the one point at which customers are happy to buy and the company still earns a reasonable profit. Finding it requires a deep understanding of customers, the market and one's own costs.

This way of deciding resembles the Confucian distinction between righteousness and profit: ask first what is right, then ask what is profitable. But Inamori grounded it in concrete accounting principles and daily judgement, rather than leaving it as abstract argument.

Story: "So Where Is the Money?"

In Kyocera's early days, an accountant once reported to Inamori that the month's profit was good. He was delighted, and then asked: "So where is the money?" The accountant explained that the profit was still in receivables, in stock, and partly turned into equipment.

He simply could not understand: if we have made money, why don't we have money? He asked again and again; to the accountant these were "amateur questions". Yet it was precisely this refusal to let things go that later led him to the principle of cash-based management, and to the principle of one-to-one correspondence: every movement of money must be matched by a document.

He said later that precisely because he did not understand accounting, he could only ask questions starting from "how should it be in principle?" Many practices experts take for granted do not necessarily stand up when tested against principle. An amateur's naive question can be the way back to first principles.

Lessons for Today

Consider this situation: you face a choice that would bring clear short-term gains, but requires a compromise somewhere — perhaps not being fully transparent with a customer, holding back on a commitment to a partner, or shifting costs you ought to bear onto someone else. People around you think this is normal, and you feel you will lose out to competitors if you don't do it.

A practical step: write the choice as two sentences. The first describes the specific benefit you might lose if you don't compromise; the second describes the principle you might depart from if you do (for example, "don't lie", "don't harm others", "one-to-one correspondence"). Then write: if I had to choose between the two, which consequence would I rather bear? Keep your answer to three lines.

Ask yourself: is there a decision you have already made where principle was used to justify the outcome, rather than to guide it?

 

Chapter 9: Revere Heaven, Love People: Origins and Meaning

Walk into a Kyocera office and you will often see four Chinese characters: 敬天愛人 — "Revere Heaven, Love People". This is Kyocera's company motto, and it was the creed Kazuo Inamori treasured most throughout his life. He did not invent it. It came from the great historical figure of his home region: Saigo Takamori.

Who Was Saigo Takamori?

Saigo Takamori (1828–1877) was born into a low-ranking samurai family in the Satsuma domain (today's Kagoshima Prefecture). He was one of the central figures of the Meiji Restoration and, with Okubo Toshimichi and Kido Takayoshi, is counted among its "Three Great Nobles". As a young man he was noticed by the enlightened domain lord Shimazu Nariakira; later, caught up in political storms, he was twice exiled to small islands in the south. In 1868, as commander of the new government's forces, he negotiated with Katsu Kaishu of the old shogunate, securing the peaceful surrender of Edo Castle and sparing the city's million inhabitants from war.

After the Restoration succeeded, he rose to the rank of state councillor and army general, yet lived simply and cared nothing for wealth or honours. Later, after a policy dispute, he resigned and returned home to run schools. In 1877, samurai in Kagoshima who were unhappy with the new government launched the Satsuma Rebellion and made Saigo their leader. After their defeat he died at Shiroyama in Kagoshima. Both a hero of the Restoration and a man who died fighting the new government, Saigo became a tragic hero in the hearts of the Japanese.

In Kagoshima, Saigo is almost the embodiment of good character. Inamori grew up in this atmosphere, hearing stories of Saigo and learning the sayings passed down locally. In later life he wrote a whole book interpreting Saigo's teachings, The Royal Road of Life, and called Saigo his spiritual teacher.

Where Did "Revere Heaven, Love People" Come From?

The phrase appears in Nanshu-o Ikun, a collection of Saigo's sayings compiled after his death (Nanshu was one of his names). Article 21 says, in essence, that the Way is the way of Heaven and Earth and of nature; therefore the aim of learning should be to revere Heaven and love people, with self-cultivation and self-discipline as its beginning and end.

Behind the phrase lie clear roots in Chinese thought. The idea of "Heaven" goes back a very long way in China; the Book of Documents and the Book of Songs both speak of revering the mandate of Heaven and following the Way of Heaven, and Song and Ming Neo-Confucianism saw the "principle of Heaven" as the foundation of human morality. "Loving people" comes straight from the Analects: when Fan Chi asked what benevolence was, Confucius replied, "To love people." As a young man Saigo read the Confucian classics closely, and was deeply influenced by scholars such as Sato Issai. These ideas were the foundation of his spirit.

Whether Saigo coined "Revere Heaven, Love People" as a four-character phrase himself, or was inspired by other writings of the time, is still debated by scholars. For example, the early Meiji thinker Nakamura Masanao wrote an essay entitled On Revering Heaven and Loving People, and some researchers think Saigo may have read it. What we can say with confidence is that the phrase brings together the Confucian idea of the Way of Heaven and the ideal of benevolent love; that through Saigo's character and teachings it spread widely in modern Japan; and that Kazuo Inamori finally carried it into a modern company. This was not a single line of transmission, but a web woven from the Chinese classics, Japanese Confucianism and Saigo's own example.

Revering Heaven: Doing Things According to Their True Nature

A note on the word "Heaven" is needed for readers from other traditions. Here it does not mean a personal God, as in Western religion, nor a place where souls go. In the Chinese and Japanese tradition that Saigo and Inamori drew on, Heaven (ten) refers to the moral order of the world — the principles that hold true beyond any individual's desires, and that a person of integrity should respect.

Inamori's explanation of "revering Heaven" was very plain. Heaven means reason, the laws and essence by which things work. To revere Heaven is to act in line with reason and not go against the nature of things.

To make ceramics, you must understand the physical and chemical properties of the materials, rather than relying on experience or wishes. To run a business, you must accept the basic laws of markets, costs and human nature, rather than forcing things through by personal will. The question "where is the money?" in the previous chapter, together with cash-based management and one-to-one correspondence, are all expressions of "revering Heaven" in business: respecting the facts behind the numbers, deceiving neither oneself nor others. Revering Heaven also means acknowledging one's own limits, and being willing to adjust one's judgement to the facts rather than covering objective conditions with subjective wishes.

Loving People: Keeping Others in Mind

Inamori interpreted "loving people" as an altruistic heart: thinking not only of oneself but also of others' happiness. At Kyocera it appeared first in the management philosophy of "the material and intellectual growth of all employees", and then extended to customers, suppliers and society.

Loving people does not mean giving up profit or competition. Inamori asked employees to give their all and to be strict about figures; he also required them not to deceive customers, not to squeeze suppliers, and not to harm other departments for the sake of their own numbers. Strictness and kindness were, for him, two sides of the same thing. If you are truly responsible for someone, you cannot let them grow slack; if you truly care about someone, you cannot treat them merely as a tool for hitting targets.

From Motto to System

"Revere Heaven, Love People" did not decay into a slogan because Inamori turned it into a whole set of concrete practices. Kyocera gathered decades of his talks on work, management and life into the "Kyocera Philosophy", compiled into a small handbook employees carry with them. Its several dozen items range from "base your actions on love, sincerity and harmony" to "be customer-oriented in everything". New employees study it when they join, and managers discuss it again and again.

For Inamori, philosophy and systems must support each other. Philosophy without systems remains a slogan; systems without philosophy are exploited by people looking for loopholes. The accounting principles institutionalised "revering Heaven"; Amoeba Management, which lets employees share in results and take part in management, institutionalised "loving people". This is what most distinguishes Inamori from many business leaders who only talk about ethics.

"The Hardest People to Deal With"

Nanshu-o Ikun contains another saying Inamori especially loved: a person who wants neither life, nor fame, nor rank, nor money is the hardest to deal with — but unless one has such people, one cannot share hardships with them and accomplish great things for the nation.

These words describe Saigo himself: after the Restoration he held the highest offices, yet lived simply and owned no private fortune. When Inamori founded DDI without holding a single share, and took on JAL without taking a salary, he was in a sense putting this saying into practice. Only a person who seeks nothing for himself can remain fair amid complex interests, and make others believe his judgements are not made for his own sake.

Story: A Book of Teachings Compiled by Former Enemies

Nanshu-o Ikun, the record of Saigo's words and deeds, has a moving story behind it. In the Boshin War of 1868, the Shonai domain in north-eastern Japan fought on the side of the old shogunate against the new government's army, in which Saigo served, and eventually surrendered. By the custom of the time, the defeated side could expect harsh treatment. But Saigo ordered that Shonai be treated leniently and with courtesy.

The people of Shonai were deeply moved. Afterwards, the former lord of Shonai and his retainers travelled all the way to Kagoshima to learn from their former enemy, and on returning home they wrote down Saigo's words one by one. After his death they compiled and published these records as Nanshu-o Ikun. The article containing "Revere Heaven, Love People" is among them.

The book that best represents Saigo's thought was compiled by his former enemies. That in itself is the most powerful footnote to "loving people": true benevolence is not only being good to one's own side, but being good to one's opponents in the hour of victory. When Inamori made these four characters Kyocera's motto, this was the spirit he was handing on.

Lessons for Today

A common scene: you are pushing a project forward or managing a team. One option would speed things up or raise short-term profit, but it requires concealing a fact, or shifting part of the cost and risk onto partners or subordinates. You feel this is common in your industry, and that if you don't do it you may fall behind.

This week: for this choice, write two sentences. First: judged by "revering Heaven" (respecting the true state of things, not hiding key facts), does this choice stand? Second: judged by "loving people" (considering the basic interests of those affected), does it stand? Then write down, if both point to "no", the one specific step you need to change.

For reflection: where in your work does "Revere Heaven, Love People" appear only in words — and where could it appear in practice?

 

Chapter 10: Buddhist Wisdom: Cause and Effect, Compassion and Cultivating the Mind

Kazuo Inamori's connection with Buddhism began early. As Chapter 7 told, at four or five his father took him to a "hidden nembutsu" gathering, and from then on he remembered the words "Naman, naman, arigatō". As an adult he formed a long relationship of teacher and student with Tansetsu Nishikata, head priest of Enpuku-ji, a Rinzai Zen temple in Kyoto, and at 65 he was ordained there. For him Buddhism was not a field of study but a way of life.

This chapter looks at several core Buddhist ideas — cause and effect, compassion, spiritual practice — and asks what form they took in Inamori's life and business, and how his understanding compares with the Buddhist tradition.

The Story of a Ming-Dynasty Scholar: Fate and Cause and Effect

In A Compass to Fulfillment, Inamori devotes a passage to a Chinese book: the family instructions written by Yuan Liaofan of the Ming dynasty for his son, later known as Liaofan's Four Lessons and known in Japan mostly as Inshitsuroku (Records of Hidden Virtue). Inamori said he came across it through the writings of the Japanese thinker Masahiro Yasuoka.

As a young man, Yuan Liaofan met an old man named Kong who was skilled in fortune-telling. Kong told his fortune: in which year he would pass which exam and in what place, when he would take office, that he would die at 53, and that he would have no son. For years afterwards everything in Yuan's life came true exactly as predicted, down to his rankings in the exams. He concluded that life was fixed in advance, stopped striving for anything, and spent his days sitting quietly.

Later he visited the Chan master Yungu at Qixia Mountain near Nanjing. The two sat facing each other for three days and nights without Yuan having a single stray thought. The master was surprised and asked how his practice had become so deep. Yuan said: my fate has already been calculated, so there is no point thinking about anything. The master laughed: I took you for a hero, but you are just an ordinary man! He told Yuan that although fate exists, it is not unchangeable; if a person resolves to do good and correct their faults, they can rewrite their destiny. Yuan took this advice to heart, recording his good deeds and faults every day, and kept it up. Afterwards his life began to depart from the old man's prediction: he had a son, and lived beyond 53.

From this story Inamori drew his own view of life. Life is woven from two forces: fate, and the law of cause and effect. Fate is like a great river, something we bring with us at birth. The law of cause and effect is "good causes bring good results, bad causes bring bad results": every thought and action is a cause we plant. Of the two, the law of cause and effect is slightly stronger than fate. So although we cannot escape fate entirely, we can gradually change the direction of our lives through good thoughts and good deeds.

He also admitted that cause and effect do not always show at once. Sometimes good deeds bring no visible reward for a long time, while wrongdoers do well for a while. His view was that the workings of cause and effect must be seen over a long span — in units of twenty or thirty years — before they become clear.

Cause and Effect in the Buddhist Tradition, and in Inamori's Understanding

We should distinguish between the two. In the Buddhist tradition, "cause and effect" and "karma" form a fairly complex body of theory. It speaks of cause and effect across past, present and future lives, and of dependent origination — every result arises from many causes and conditions together, not mechanically from a single cause. Different Buddhist schools also explain how karma works in different ways. Inamori's understanding was closer to a practical ethic. He was less concerned with the metaphysics of cause and effect than with the question: where will my present thoughts and actions take my life?

Precisely because results arise from many causes and conditions, we cannot simply attribute someone's illness, accident or bankruptcy to their personal "karmic hindrances". That would go against the Buddhist spirit of dependent origination, and it would hurt people who are already suffering a second time. When Inamori spoke of "when disaster comes, karma is being cleared away" (see this chapter's story), it was his way of interpreting his own experience, to change his own stance towards disaster. It was a form of inward self-cultivation, not a tool for judging others.

Compassion: Altruism Learned on an Alms Round

Buddhist compassion means wishing all beings happiness (loving-kindness) and wishing them free from suffering (compassion). Inamori's "altruism" is close to this. Chapter 4 told how, on an alms round, he received a 500-yen coin from an elderly woman sweeping a park. That moment taught him that compassion does not require great wealth or status, but is simply one person's natural care for another.

In business he made this care concrete in practices that could be carried out: the first purpose of management is the happiness of employees; avoid layoffs in a crisis as far as possible; do not take advantage of suppliers' difficulties to force prices down; give part of what you earn back to society. Here compassion is not religious ritual but thinking one step further when deciding: who will suffer because of this decision? Can we make that suffering less?

Practice: The Six Endeavours and the Six Perfections

Inamori's view of work as practice corresponds clearly to the "Six Perfections" of Mahayana Buddhism — the six ways of practice of a bodhisattva: giving, discipline, patience, diligence, meditation and wisdom. Inamori discussed them in A Compass to Fulfillment, explaining them in the language of modern life:

Giving: altruism — thinking of others and giving to them.

Discipline: keeping to the rules of being human, not doing what should not be done.

Patience: not resenting or giving up in adversity.

Diligence: working with all one's strength.

Meditation: letting the mind grow still, even for a moment each day.

Wisdom: the understanding of life and the universe that appears naturally through sustained practice of the other five.

The "Six Endeavours" of Chapter 7 can be seen as his translation of the Six Perfections into six rules for work and life for modern people who practise outside the monastery. In later years he often said that working hard is the best practice; you do not have to enter a temple.

No-Self: Letting Go of Attachment to "I"

Buddhism also teaches "no-self" — letting go of attachment to the self. Inamori's practice of no-self shows most clearly in his vigilance against "selfishness": six months of self-questioning before founding DDI, and taking no salary at JAL, were both attempts to set the "I" aside in major decisions. He said the human heart has two sides, a "true self" and an "ego". The true self is altruistic and pure; the ego is self-serving and greedy. Practice means letting the true self gradually prevail over the ego.

Between Faith and Business

These understandings belonged to Inamori's personal faith. Readers may not accept ideas such as the soul, cause and effect, or karma, and still take inspiration from his business practice: making employees' happiness the purpose of management, keeping finances sound, checking one's motives before deciding, and showing consideration to those affected. These practices can be observed and discussed in their own right. What was special about Inamori was that he turned Buddhist ideas of practice into concrete actions that happened in a company every day.

Story: "When Disaster Comes, Karma Is Being Cleared Away"

In the mid-1980s, Kyocera manufactured and supplied ceramic artificial knee joints for medical use without the necessary approval. The matter was widely reported in the media, and Kyocera was severely criticised. Inamori did not make excuses; he simply apologised in public, again and again.

During that time, exhausted in body and mind, he went to Enpuku-ji to visit Tansetsu Nishikata, hoping for some comfort. After listening, his teacher said (as Inamori recalled it): "That's very good. When disaster comes, it is the moment when the karma you created in the past is disappearing. If a little criticism is enough to clear your karma, you should be celebrating."

At first Inamori found these words rather cold. But as he thought them over, his heart grew calmer. This did not mean the mistake could be excused — the knee joint affair was Kyocera's fault, and he took responsibility for it. But his teacher's words changed his stance towards disaster: not blaming heaven or others, not being crushed by shame and fear, but accepting it, reflecting on it, and then taking a new step forward.

Lessons for Today

Picture this: you have recently felt strong resentment or anxiety about something. You keep dwelling on the other person's faults, or worrying that things will not turn out as you hope. These thoughts take up a lot of time but lead to no clear action. You begin to feel caught in a loop of emotion.

One thing to try: take ten quiet minutes and write down the strongest of these thoughts. Underneath, write two lines: (1) If this thought keeps commanding my attention, what is the one thing I am most likely to do in the next three days? (2) If I shift my attention from "what they are like" or "how it will turn out" to "one concrete action I can adjust now", what is that action? Write just one action, and try it tomorrow.

To reflect on: which thought keeps coming back to you, and what does it lead you to do?

 

Chapter 11: Wang Yangming: Turning Knowledge into Action

That Night at Longchang

In 1506, the Ming-dynasty official Wang Shouren submitted a memorial defending colleagues who had been framed by the powerful eunuch Liu Jin. He angered the court, was flogged forty strokes, and was banished to Longchang in Guizhou to serve as a minor keeper of a post station. Longchang lay deep in the mountains, thick with malarial vapours; he could not speak the local language and life was extremely hard. There he had almost nothing, and could only face his own mind.

According to the Chronological Biography of Wang Yangming, compiled later by his disciples, at Longchang he "made a stone seat and vowed: I shall simply await my fate". He sat in stillness day and night, asking himself again and again: "If a sage were in my place, what Way would he follow?" One night he suddenly understood, and "without realising it cried out and leapt up, startling his attendants". He now saw that "the Way of the sage is complete within my own nature; I was wrong to seek principle in external things". In other words, the principles of being human are already within each person's own mind and need not be sought outside. This is known as his "enlightenment at Longchang".

It should be noted that the Chronological Biography was compiled by his disciples after his death. Some details are retrospective and embellished, and scholars differ over the dating and context of certain entries. Popular accounts of him "carving a stone coffin and lying in it" are largely later elaborations. What we can say with certainty is that the hardship of Longchang was the turning point in his thinking. Later he came to be known as Wang Yangming, and his teaching as the School of Mind.

The Unity of Knowledge and Action: Not "First Know, Then Act"

The best-known idea of Wang Yangming's teaching is "the unity of knowledge and action". Many people take it to mean "once you know, you must act". That is only half right. Wang meant something deeper: true knowing and acting are one and the same thing.

In the Instructions for Practical Living (Chuanxi Lu) he gives an example. The Great Learning speaks of "loving a beautiful colour, hating a bad smell". When you see a beautiful colour, you love it at the moment of seeing; you do not first see it and then form a separate intention to love it. When you smell something foul, you dislike it at the moment of smelling. True knowledge already contains the power of action. That is why he said: "Knowledge is the beginning of action; action is the completion of knowledge." If someone says they know about filial piety yet never treat their parents with filial care, it is not that they "know but do not act" — they do not yet truly know.

This is a sharp reminder for people today. We often say, "I understand the principle, I just can't do it." By Wang Yangming's standard, if you cannot do it, you have not truly understood. When you truly understand, it hurts; it makes you uneasy; it leaves you no choice but to act.

Extending Innate Knowing: Polishing the Mirror of the Mind

In later life, Wang Yangming summed up his teaching in three words: "extend innate knowing" (zhi liangzhi). Innate knowing is the ability, present in everyone from birth, to tell right from wrong and good from bad; no one has to teach it. Mencius said that anyone who sees a small child about to fall into a well feels alarm and compassion — this is innate knowing showing itself. The problem is that innate knowing is often clouded by selfish desires, like a mirror covered with dust. To extend innate knowing is to keep wiping away the dust, so that it can work in concrete situations.

Wang Yangming also stressed "training through practical affairs": "One must be tempered in real affairs in order to stand firm." Innate knowing cannot be trained by sitting quietly and talking in a study; it can only be tested and strengthened when dealing with real tasks and facing real temptations and pressures.

Inamori's "Extending of Innate Knowing": Not a Single Share

Kazuo Inamori seldom used terms such as "extending innate knowing" or "the unity of knowledge and action". Yet many of his decisions can be understood precisely through Wang Yangming's teaching. The clearest example is the DDI shares.

When DDI was founded in 1984, it would have been normal for Inamori, as founder and chief driving force, to hold a large number of founding shares. Telecommunications was an industry with great prospects; if the company succeeded and went public, those shares would be worth a great deal. Instead he decided to hold not a single share himself, and let the employees who joined the venture buy shares at face value.

Why? Because in six months of self-questioning he kept asking: "Is my motive good? Is it free of selfishness?" He knew very well that if he held shares, then even if his motive were pure at first, the thought "is this good for my shares?" might creep into every later decision. Employees and the public would also suspect that, for all the talk of lowering the nation's phone bills, it was really about making himself rich. He later said that if he had held even one share at the time, the company might have followed a completely different path.

This is what "extending innate knowing" looks like in a concrete decision. His innate knowing told him that the just cause of this venture was "for the public"; his selfish desire whispered that this was a great chance to get rich. He did not settle for the comfortable feeling that "my motive is good". He used a concrete action — giving up the shares — to close off the path for selfish desire. Here knowledge and action became one.

Intellectual Influence and Kindred Spirit, Not a Line of Teachers

Japanese Yangming studies began in the Edo period with Nakae Toju and passed through Kumazawa Banzan, Oshio Heihachiro, Sato Issai and others. By the late Edo and early Meiji periods they had deeply influenced a generation of Restoration activists, including Yoshida Shoin and Saigo Takamori. This chapter's story tells how Saigo copied out Sato Issai's sayings by hand in exile. So from Wang Yangming to Saigo Takamori we can trace a line of intellectual influence.

But we should not describe "Wang Yangming — Saigo — Inamori" as a line of master and disciple. Saigo absorbed not only Yangming learning but also the Zhu Xi school of Neo-Confucianism, Zen, and the samurai education of Satsuma. Inamori never studied Yangming learning systematically; what he inherited from Saigo came mainly through the concrete teachings of Nanshu-o Ikun, not through Yangming theory. It is more accurate to say that the School of Mind was one of the sources that nourished Saigo, while between Inamori and the School of Mind there is above all a kinship of spirit: both value the innate conscience within, and both insist that principles must be carried out in action.

How Much of Inamori's Thought Comes from Chinese Tradition?

Readers may now ask: how much of Kazuo Inamori's thinking actually comes from traditional Chinese culture? The question deserves a serious answer. We can roughly divide the sources of his thought into three layers.

The first layer is the Chinese classics and Chinese thought. Besides the Confucian roots of "Revere Heaven, Love People" discussed in Chapter 9, there are the old sayings from the Book of Changes and the Book of Documents quoted in Chapter 7, the Groaning Words in Chapter 5, Liaofan's Four Lessons in Chapter 10, and the School of Mind, which reached him indirectly through Japanese Confucianism. Much of what he said about "Heaven", "the Way" and "altruism" has close parallels in Confucian and Chinese Buddhist thought.

The second layer is modern Japanese thought and people. Saigo Takamori's "Revere Heaven, Love People", Konosuke Matsushita's "dam management", Ninomiya Sontoku's philosophy of hard work, Masahiro Yasuoka's interpretations of the Eastern classics, Masaharu Taniguchi's idea that thoughts become reality, the personal teaching of Rinzai Zen masters, and the distinctively Japanese spirit of craftsmanship and the company as community — these formed the immediate soil of his thought. Chinese ideas mostly reached him after being "filtered" and "transformed" by this layer.

The third layer is his own business experience. The equation of life, Kyocera Accounting, Amoeba Management, "pricing is management", "see ability in the future progressive tense" — all of these he drew from concrete problems and failures over decades of practice. They resonate with traditional thought, but they were not deduced from books.

Of the three, the third layer is Inamori's most distinctive contribution. Chinese tradition gave him a direction in values; modern Japanese thought gave him concrete models and a language; what he did himself was to turn those values into systems within a company that could be carried out, measured and handed on. For Chinese readers today, learning from Inamori may also mean rediscovering this wisdom in their own tradition. For readers everywhere, it raises a practical question: how can such values truly take root in our work and business today?

Story: The Man Who Copied Books in an Island Prison

Saigo Takamori was twice exiled to small islands in the south. During his second exile, he was confined on Okinoerabu Island in a cell open to the wind on all sides. Conditions were extremely harsh, and his health almost broke down.

In these circumstances he studied again and again the Four Records of Aspiration (Genshi Shiroku) by the Confucian scholar Sato Issai. From more than a thousand sayings he copied out 101 by hand, carried them with him, and pondered them day and night. This copy later became known as Saigo Nanshu's Hand-Copied Records of Aspiration. Sato Issai was an official Confucian scholar of the shogunate; outwardly he taught Zhu Xi's teaching, but inwardly he was deeply influenced by Wang Yangming, and people of his time described him as "Zhu Xi on the outside, Wang Yangming within". It was through him that Saigo absorbed the spirit of the unity of knowledge and action and of extending innate knowing.

For Saigo, reading was never for scholarship's sake, but for tempering his mind in adversity, and for turning it into action once he was free. More than three hundred years after Wang Yangming found enlightenment in the hardship of Longchang, Saigo was copying books in an island cell. Both men, driven to the very edge, looked within their own minds for strength.

Lessons for Today

Imagine this: you feel uneasy about a recent decision. You know what you ought to have done by the principles you usually profess, but what you actually did was different. You tell yourself it was a special case, or that you will put it right later. The unease keeps returning, but nothing changes.

Something to do: pick a recent decision that, afterwards, did not feel quite consistent. Write three sentences: (1) What principle did I say (or believe) I should follow? (2) What did I actually do? (3) What is the smallest action I could take tomorrow to bring the two closer? Keep the third sentence to one concrete, doable action.

A question to sit with: where is the widest gap this week between what you say you believe and what you actually do?

 

Chapter 12: When Altruism and Profit Collide

The easiest mistake in telling Kazuo Inamori's story is to turn it into "good people are rewarded": because he was kind-hearted and devoted to others, his business thrived. Told this way, the story is neither true nor useful. In real business, altruism and profit often collide. Employees' interests and the company's survival can force a choice; kindness to one party can mean loss to another; and kindness itself can be exploited.

This chapter does not discuss principles. It looks at a few real conflicts — how Inamori faced them, and what they cost.

Conflict One: Rescue a Bankrupt Company, or Answer to Your Own Shareholders?

In August 1998, the Osaka copier maker Mita Industrial, after years of window-dressing its accounts and carrying huge debts, applied for reorganisation under the Corporate Reorganisation Act. It had thousands of employees, as well as many dealers and suppliers. From the start, Kyocera said it was willing to support its rebuilding.

For Kyocera this was no sure-fire deal. Taking on a company that had just gone bankrupt over fraudulent accounts meant committing money and people, and risking damage to its brand and entanglement in debt disputes. Kyocera's shareholders could reasonably ask: why use our money to clean up someone else's mess?

In the end Inamori decided to help. His reasons had two layers. One was business: Kyocera was then developing its printer business, and Mita's copier technology and sales network would complement it. The other, which he valued more, was this: if no one stepped in, thousands of employees and their families would lose their livelihoods, and many small suppliers would be dragged down too.

According to Kyocera's corporate history, Kyocera first sent a survey team headed by one of its directors, who was then appointed by the court as trustee for the business. All the existing directors stepped down, and about 800 employees left through early retirement. Amoeba accounting was introduced from 1999. In January 2000 the reorganisation plan was approved by the Osaka District Court and the company was renamed Kyocera Mita; that year Kyocera invested 12 billion yen to make it a wholly owned subsidiary. In November 2001 the company announced that it would complete the reorganisation plan about seven years ahead of schedule. The business went on to become the core of the Kyocera group's document solutions division, and in 2012 it was renamed Kyocera Document Solutions.

The business outcome is clear. But it must be said that a successful outcome does not prove that every original judgement was right. The result also owed much to growth in the printing and copying market and to Kyocera's technology and management — and it came at the cost of some 800 people leaving. Inamori's approach was: first confirm that the thing is right in principle; then calculate carefully whether it is commercially viable; and finally keep the risk within what Kyocera could bear. Altruism did not replace calculation; it gave calculation its direction.

Conflict Two: A Business That for Years "Was Not Yet a Business"

After the oil crisis of 1973, Inamori judged that solar power would one day become indispensable for Japan. In 1975 Kyocera began research and development on solar cells, and set up a solar company together with Sharp, Matsushita and others, in which Kyocera held a majority stake.

According to Kyocera, solar cells then cost twenty to thirty thousand yen per watt and their efficiency was very low; in the words of Kyocera's own people, it was "nowhere near the level of a business". For a long time it could be used only in a few places, such as communications relay stations in remote areas and aid projects in places without electricity. In terms of short-term profit, the investment was very hard to justify.

Inamori persevered, while pushing the team to bring costs down. In 1982 Kyocera began mass-producing polycrystalline silicon solar cells; in 1993 it launched a solar power system for homes; in 1998 it fitted solar panels to the walls of its own head office building in Kyoto. From the start of research to the point where solar power really reached ordinary homes took almost twenty years.

This example shows that the conflict between altruism and profit is sometimes a conflict of time: something good for society may take a very long time to reach scale. How long a business leader can hold on depends on two things: their judgement of the work's significance, and whether the company's other businesses can carry the long investment. The latter is exactly what "dam management" is for. Of course, persistence alone does not guarantee success; the solar industry later went through fierce international price competition, but that is another story.

Conflict Three: JAL's 165

The sharpest conflict came at JAL.

The reorganisation plan required the group's workforce to be cut by about 16,000 within the 2010 financial year. Most of the reduction was achieved through repeated rounds of voluntary early retirement. But by the end of the year, the number of pilots and cabin crew taking early retirement had still not reached the company's target. In November 2010, when the court approved the reorganisation plan, Inamori said publicly that he would ask employees to "bear the unbearable" and that the company would carry out dismissals no matter what. On 31 December 2010, JAL dismissed 165 pilots and cabin crew.

The company's reasons. JAL was still in reorganisation proceedings, and the plan had been agreed with creditor banks, the Enterprise Turnaround Initiative Corporation and the court. Cutting staff as planned was a condition of financial support and of avoiding a second collapse. According to Japanese press reports, Inamori also said that the dismissals were a commitment to the banks and others that could not be broken. From this point of view, carrying out the plan meant taking responsibility for the tens of thousands of employees who remained, and for the rebuilding as a whole.

The situation of those dismissed. Among those dismissed were senior captains and cabin crew with decades of service, as well as active union members. According to reports, some pilots were put on the dismissal list because of past sick leave. They feared this would make colleagues afraid to report their health honestly in future, with consequences for flight safety. The plaintiffs argued that the company's performance had clearly improved in the second half of 2010, so the dismissals were not unavoidable. The leader of the plaintiffs also said they had asked many times to meet Inamori face to face, without ever receiving a response.

Inamori's words. In February 2011, Inamori said in a talk, in essence: if you ask whether it was impossible, from a business point of view, to keep those 160 people, the answer is no — I think you all understand that. The plaintiffs used these words as evidence that "the dismissals were unnecessary" and cited them repeatedly in court. According to reports, in September that year the Tokyo District Court also scheduled Inamori himself to be questioned as a witness.

The lawsuits and their outcome. Those dismissed sued in two groups, pilots and cabin crew. In February 2015 the Supreme Court of Japan rejected their appeals, confirming that the dismissals were valid. But the dispute did not end there. The union continued to ask JAL to explain the staff reductions of that time. According to Japanese press reports, in early 2026 the Tokyo Metropolitan Labour Relations Commission found that JAL had failed to explain adequately to the union the number of flight crew after the dismissals, which constituted an unfair labour practice, and ordered JAL to bargain with the union in good faith.

This is the hardest story in Inamori's business career to tell — and because it is hard to tell, it is all the more worth telling. From the company's side, one can say that without these dismissals there might have been no rebirth of JAL. From the side of those dismissed, years of litigation and upheaval in their lives were real harm. A court ruling that the dismissals were lawful does not mean the decision was beyond moral question; nor does the success of JAL's rebuilding prove that every decision taken was the only right one.

Inamori's candid remark shows precisely that he did not present the decision as flawless. A man who sincerely made the happiness of employees the purpose of management still, in a giant company on the brink of a second collapse, made a decision that deeply hurt some employees. Altruistic leaders also make decisions that hurt people; they may misjudge; and they must carry the moral weight of those decisions for a long time. What readers can learn from this story is not that "Inamori was always right", but this: when interests cannot be reconciled, face those who are hurt honestly, and acknowledge the cost.

How Inamori Approached Such Conflicts

From these examples we can see several things Inamori did when altruism and profit collided:

First, ask about motive before doing the sums. He would ask first: who am I doing this for? If it was mainly for his own face, power or wealth, he would stop. If it was for employees, customers and society, he would go on to calculate whether it was commercially viable.

Second, keep those affected in plain view. Even when he had to make a decision that hurt some people, he insisted on explaining the reasons, minimising the harm and offering compensation, rather than looking only at the financial figures.

Third, distinguish "small good" from "great good". Inamori often quoted a saying: "Small good resembles great evil; great good resembles heartlessness." Being endlessly lenient with employees and never criticising them may look kind, but it can end with the company collapsing and everyone losing their jobs — a "great evil" caused by "small good". Being strict at critical moments and making hard decisions may look heartless, but it can save more people's livelihoods — this is "great good". Of course, the saying can also be abused as an excuse for cold decisions. The key to telling the two apart is still motive: is it truly for the other person, or for oneself?

Fourth, stay clear-eyed about kindness being exploited. Altruism does not mean having no boundaries. When employees, partners or customers treat kindness as a signal that they can take without limit, Inamori's approach was to remain respectful but make the rules clear, and let everyone bear the consequences of their own actions. Kindness without boundaries is eventually used up.

Fifth, take responsibility afterwards and keep promises. Choices made in a crisis must be tested afterwards: were the promises made to people kept? Were those who were hurt treated as they deserved? Was one's own judgement wrong?

What Is Profit?

Inamori did not look down on profit. He said that a company without profit cannot protect its employees, invest in the future or give back to society. But he believed profit is the result of managing rightly, not the purpose of management itself. Profit must be pursued openly and honestly: profit gained by creating value, cutting costs and raising efficiency is legitimate; profit gained by deceiving customers, squeezing suppliers or exploiting legal loopholes, however large for a time, is not true profit.

The tension between altruism and profit will not disappear because of any philosophy. What Inamori offered was not a formula for removing conflict, but a way of staying clear-headed within it.

Story: Giving Money Back to Society

In 1984, the same year he founded DDI, Inamori set aside personal assets worth about 20 billion yen to establish the Inamori Foundation and create the international Kyoto Prize, honouring people who have made outstanding contributions to human progress in advanced technology, basic sciences, and arts and philosophy.

He was 52, and his business was still rising. His reason was simple: his wealth came from society and should return to society. He saw his success as the result of help from many people and the opportunities of his time, not of his own ability alone.

This story makes the relationship between altruism and profit more concrete: profit is not an end in itself, but the result of doing business well, and a resource for continuing to do good. Making money and altruism are not necessarily opposed; what matters is how the money is earned, and where it finally goes.

Lessons for Today

Picture a familiar situation: the team or company you manage is under cost pressure. One measure would clearly improve the finances, but it would directly affect some people's income or job security. You know that if you don't do it, the company or project will struggle more; if you do, it contradicts your usual emphasis on "looking after everyone". People around you are pressing you to decide quickly.

Try this: write the choice as three lines. Line one: if I don't take this measure, what specific consequence is most likely? Line two: if I do, who will be most affected, and what will they lose? Line three: if I must choose one, to which side would I rather explain my decision, and how will I explain my reasons to them? Keep the explanation in line three to five sentences or fewer, and write it down.

Ask yourself: which trade-off are you avoiding by telling yourself that "it will all work out in the long run" — and what boundary do you need to state clearly?

 

Chapter 13: Amoeba Management: Making Everyone a Business Partner

Amoeba Management is the best-known management method Kazuo Inamori left to the business world. Many companies have studied it, and quite a few have found it disappointing after adopting it — some have even seen departments undermining one another. The reason is usually that they learned only the surface, "split the company into small groups and let each calculate its own profit", without understanding the design and philosophy behind it. In this chapter we use a simple example to explain how it works.

Where It Came From

As this chapter's story tells, Amoeba Management grew out of Inamori's frustration at not being able to be everywhere at once. Once Kyocera grew, he could no longer personally oversee every order and every process. His solution was to divide the company into many small units, each keeping its own accounts like a small company, and each led by someone who thought like a business owner. These units could split, merge and reshape themselves freely as markets and work changed — like the amoeba in a pond — hence the name.

Inamori gave Amoeba Management three purposes:

First, to establish a system of divisional accounts linked directly to the market, so that every small unit feels changes in market prices, rather than only seeing results in head office's financial statements.

Second, to develop people with a sense of ownership, letting more people practise being managers in small units and so training the company's future leaders.

Third, to achieve management with everyone taking part, so that every employee can see how their work relates to the company's results, shifting from "working for the boss" to "running our own unit".

This is what the title of this chapter means by "making everyone a business partner". The phrase is a metaphor for a sense of responsibility and participation. It does not mean that employees become legal partners or receive shares in the company.

The Key Measure: Added Value per Hour

Amoeba Management uses a form known as the "hourly efficiency report". Its logic is simple:

Income minus all expenses (but not labour costs) gives the "added value" the unit has created.

Added value divided by the total working hours of all members gives "added value per hour".

Why not deduct labour costs? First, because pay is set by the company as a whole; if it were included, unit leaders might try to hold down others' pay or push out older employees. Second, to focus everyone on "how can we create more value in the same time" rather than "how can we pay people less". Time is something everyone can understand and everyone can control.

A Bakery Example

Let us take a hypothetical example. A bakery has eight employees, split into two amoebas: a baking team of five, who make the bread, and a shop team of three, who sell and serve customers.

This month, the shop sold £60,000 of bread. Under internal rules agreed in advance, the shop team takes 10 per cent of sales as its "sales commission" — £6,000. The remaining £54,000 counts as the baking team's income from "selling" bread to the shop.

The baking team: income of £54,000; flour, butter, eggs, packaging, electricity and depreciation for the ovens, and its share of the kitchen rent come to £30,000 in total; added value is £24,000. The five members worked 1,000 hours in total this month, so added value per hour is £24.

The shop team: income of £6,000; its share of shop rent, utilities, the till system and so on come to £2,000; added value is £4,000. The three members worked 600 hours, so added value per hour is about £6.67.

Seeing these two figures, someone might say the shop team is very inefficient. This is the most common misreading of Amoeba Management. How high or low the two teams' figures are depends largely on how the "10 per cent" internal rule is set. If the shop's commission were raised to 15 per cent, the two teams' figures would look very different. That is why setting internal transfer prices is the part of Amoeba Management that most calls for fair judgement.

One more point needs particular emphasis: "added value" here is not each team's net profit. Labour costs have not been deducted, and it depends on how internal prices are set. Look at the two teams together, as the whole shop, and things become clear:

Whole-shop item	Amount
External sales income	£60,000
Baking team's non-labour costs	£30,000
Shop team's non-labour costs	£2,000
Whole-shop added value	£28,000
Whole-shop total hours	1,600 hours
Whole-shop added value per hour	£17.50

(Hypothetical figures, following the example above; labour costs are not deducted, so this is not net profit.)

The whole shop's added value of £28,000 is exactly the baking team's £24,000 plus the shop team's £4,000. Whether the shop's commission is set at 10 or 15 per cent, this total does not change; only how it is divided between the two teams changes. Internal pricing can change each team's "report card", but it cannot create income for the company out of thin air. There are only two ways to make the whole shop better: sell more things of value to customers, or do the work with less cost and less time.

To calculate the whole shop's profit, the wages, social insurance and other labour costs of the eight employees must also be deducted from the £28,000. If labour costs total £20,000, the shop's operating profit is £8,000. Amoeba figures guide everyday improvement; the company's financial statements show the final profit or loss. The two serve different purposes and must not be confused.

Amoeba figures are most useful not for comparing teams with each other, but for comparing over time: against last month, and against the plan. For example, the baking team might find that a batch of bread was thrown away this month because proofing time was not controlled, losing £1,000 of materials; the shop team might notice that there are very few customers after four in the afternoon, yet all three staff are in the shop. The first can raise added value by improving the process; the second can reduce hours by adjusting the rota. The point of the numbers is to let everyone see where they themselves can improve.

Internal Pricing and the Interest of the Whole

At Kyocera, internal transfer prices are usually based on market prices: start from what the customer is willing to pay for the final product, then work backwards, allocating it reasonably across each stage of production. If the market price falls, the pressure passes straight to every amoeba, and everyone must find ways to cut costs, rather than waiting to be told by head office.

But internal pricing inevitably causes disputes. Every amoeba wants to "sell" a little higher and "buy" a little lower. If the amoebas are left to haggle among themselves, the result is internal friction. Inamori's solution was for the leader one level up to decide in such cases — and to decide not by which amoeba shouted loudest, but by "what is right as a human being": what division is fair to all sides and best for the company as a whole.

This is why Inamori kept stressing that Amoeba Management cannot work without philosophy. Independent accounts stimulate each small unit's energy, but they also stimulate departmentalism. Amoebas only work when everyone understands that they are not enemies but partners in the same boat, and when leaders are willing to choose the company's interest over their own unit's figures when the two conflict. Without philosophy, amoebas easily become "each sweeping only the snow in front of their own door".

The Real Costs of Amoeba Management

Amoeba Management is not a cure-all. It has costs and limits.

First, the cost of accounting. For every small unit to see accurate figures every month requires detailed bookkeeping rules and information systems, and a lot of staff training. For a small business, that is a significant investment.

Second, the pressure of numbers. When everyone has to face their own figures every month, some feel constant pressure and may even make short-sighted decisions to make the numbers look good — such as postponing necessary maintenance, or being unwilling to spend time training newcomers.

Third, the problem of support departments. The contribution of finance, HR or R&D is hard to measure in income. Forcing them into amoebas can lead to unreasonable internal charges; leaving them out can leave them outside the accounting altogether.

Fourth, dependence on leaders. Amoeba Management demands a great deal of its unit leaders' ability and character. If leaders look only at numbers and not at people, or favour their own unit in internal pricing, the whole system loses trust.

That is why Inamori kept warning that Amoeba Management is not a tool that can be imported on its own, but part of a whole that goes together with the Kyocera Philosophy. When JAL adopted it, it did not copy Kyocera's approach either, but built a "divisional profitability system" based on routes and flights to suit the airline business.

From Philosophy to System

Looking back, the significance of Amoeba Management is that it turned the ideal of "the material and intellectual growth of all employees" into a system that runs every day. The ideal says employees are masters of the company; amoebas let employees actually see, and actually influence, the performance of their own unit. The ideal says people must be developed; amoebas let young people practise a manager's judgement again and again in small units. This is what is most distinctive about Inamori: he was not content to say the right things, but set out to design systems that allow the right things to be carried out, measured and handed on every day.

Story: The Monkey King's Hairs

A few years after Kyocera was founded, the number of employees kept growing. Inamori still did everything as he had in the early days — chasing orders, managing research, overseeing production, involved in everything. Soon he felt he could not be everywhere at once.

He later recalled that at that time he often thought: if only I could be like Sun Wukong, the Monkey King in Journey to the West, who plucks a hair, blows on it, and creates many copies of himself to deal with different tasks. Of course that is impossible in real life. So he turned the thought around: could the company be divided into many small units, with a leader in each who thinks like he does?

This idea was the starting point of Amoeba Management. Its original intention was not to control employees more tightly, but to let more people share a manager's responsibilities — and a manager's sense of achievement. That original intention is also the test of whether a company has truly learned Amoeba Management.

Lessons for Today

Consider this situation: you lead a small team of about ten people, or are responsible for a fairly independent project. Everyone is busy every day, but few people know how much value the team created this month, where most of the costs go, or whether their own time is being wasted on inefficient tasks. You want everyone to feel more responsible, but find that repeating it in meetings changes little.

A practical step: choose one part of the team's work that can be measured fairly independently (for example, a product line, a group of customers or an internal support process). On a sheet of paper, list the three main sources of income or output for this part of the work this month, and its three main costs or uses of time. Then sit down with two team members for fifteen minutes and ask just one question: which of these could we make a small adjustment to next week? Write the adjustment as one concrete action, and agree to look at the result together next week.

For reflection: which simple figure could you start sharing with your team this week, so that they can see the results of their own work?

 

Chapter 14: Risk, Crisis and the Leader's Decisions

Business risks do not come only from sudden changes in outside markets; they also come from errors of judgement inside. Kazuo Inamori said on many occasions that companies usually fail not because of a completely unforeseeable disaster, but because problems have already built up in ordinary times: over-expansion, tight cash, insensitivity to numbers, too much self-interest in decisions. These problems are hard to see in good times; when circumstances change, they erupt all at once.

In this chapter we take Kyocera's first major crisis — the oil crisis of the 1970s — as a complete case: what was prepared before the crisis, how decisions were made during it, and how it was brought to a close afterwards.

Before the Crisis: Water in the Dam

Chapter 8 described how Inamori, deeply influenced by Konosuke Matsushita's "dam management", insisted on building up cash and equity in good times, paying off loans early, and avoiding speculation unrelated to the core business. In ordinary times these practices look too conservative: why sit on a large pile of cash when you could borrow and grow faster?

The answer only becomes visible when crisis arrives. In the autumn of 1973 the first oil crisis broke out, and Japan's economy shrank in real terms for the first time since the war. Companies slashed investment, and orders for electronic components collapsed. Kyocera was hit hard. According to case material published by Kyocera, by July 1974 orders had at one point fallen to about a tenth of their peak, and surplus staff on the production lines reached as much as about 30 per cent.

Many companies rushed to lay people off. For Kyocera, without the "dam" built up in ordinary times, the same choice would have been almost unavoidable. Precisely because it had enough cash, Inamori was in a position to consider another way.

During the Crisis: No Layoffs, but No Spreading the Work Thin

Inamori decided there would be no layoffs. His basis was Kyocera's management philosophy: the material and intellectual growth of all employees. The demand sealed in blood in 1961 now faced its real test.

But no layoffs did not mean everyone doing a little less, with the whole workforce idling. Inamori refused to spread the remaining work evenly across everyone, because that would lower efficiency on the lines and breed slack habits, leaving the company unable to keep up when orders returned. Instead, he had the production lines run at full efficiency according to the orders that existed, and took the surplus staff off the lines to do other things.

What did they do? Some took technical training to prepare for the recovery. Some repaired buildings, cleaned up the grounds and improved the surroundings. Some were sent out to sell — Inamori told employees that at a time like this, every employee is a salesperson. The materials department even proposed making and selling Go stones from ceramic material. People were not left idle, and morale did not collapse.

At the same time, the pain had to be shared. In November 1974, starting with Inamori himself, managers at assistant section chief level and above took pay cuts of 7 to 30 per cent. The company then asked the union: in order to avoid layoffs, would it accept a freeze on pay rises for the following year, so that everyone shared the hardship? After discussion, the union's leaders unanimously accepted.

This was unusual in Japan at the time. Labour relations were often bitterly confrontational, and company unions usually followed their national federations in making uniform wage demands. Kyocera's union even left its federation over this, because it did not want to follow uniform pay demands that ignored the circumstances of individual companies. Behind this choice lay years of trust built up between management and workers.

After the Crisis: Keeping the Promise

In June 1975, Kyocera's orders returned to pre-crisis levels. In September that year Kyocera's share price overtook Sony's, making it the highest-priced individual stock in Japan at the time.

Inamori did not forget the agreement. Once business recovered, he paid the frozen pay rises as a special bonus, and the following year approved a substantial increase in base pay. The sacrifices employees made in the crisis were repaid. The account above of the fall in orders, the managers' pay cuts, the pay freeze and the later repayment is based on case material on management philosophy published on Kyocera's official website.

This ending matters a great deal. Decisions in a crisis are judged not only by the trade-offs made at the time, but by whether, after the trade-offs, the promises made to people are kept. If, once the crisis has passed, a manager counts all the money saved as his own achievement, no one will be willing to share the burden next time.

Principles Left by This Crisis

First, responding to a crisis begins in good times. Without cash and trust built up in ordinary times, there is no room for choice in a crisis.

Second, leaders bear the burden first. Pay cuts began with the president himself, then managers, then employees. This is both fair and a source of trust.

Third, protect people and protect efficiency. No layoffs and no loss of efficiency can both be achieved, if the surplus people are given meaningful things to do rather than spreading the work thin.

Fourth, tell employees the truth. Only when employees understand the company's situation can they understand and accept a request such as a pay freeze.

Fifth, keep promises after the crisis.

A Contrast with JAL

Put Kyocera in the oil crisis beside JAL more than thirty years later, and a telling contrast appears. Kyocera avoided layoffs in its crisis because it had a dam built up in ordinary times and years of trust between management and workers. When Inamori took over JAL, its dam had long since run dry and trust had already collapsed; the company stood on the edge of a second bankruptcy, and in the end he had to accept large-scale staff cuts, including dismissals (see Chapter 12).

The same man, holding the same philosophy, made different decisions under different conditions. This shows that philosophy can give direction but cannot replace conditions — and that one of a leader's most important jobs is to create, in good times, the conditions needed for future crises. If you only remember to protect employees once the crisis has arrived, it is often too late.

Deciding Under Uncertainty

Decisions in a crisis are always made with incomplete information. No one knew when orders would return, and no one could guarantee that the company would survive after a pay freeze. Inamori's approach was: before acting, confirm that the motive is pure; while acting, rely on principles already established; after acting, adjust according to the results, and accept responsibility for them. Checking one's motive cannot remove risk, but it can reduce the extra errors caused by self-interest and fear.

Story: Go Stones and Brooms

At the worst of the oil crisis, an unusual sight could be seen in some of Kyocera's factories. The production lines were still running at full efficiency, but there were far fewer people on them than usual. The employees taken off the lines were elsewhere — some with brooms and paintbrushes, repairing buildings and painting walls; some in classrooms on technical courses; some, samples in hand, going out to sell for the first time.

The materials department came up with an idea: use Kyocera's ceramic technology to make stones for the game of Go. This had nothing to do with Kyocera's main business and earned little money. But it showed that employees were not sitting and waiting for the crisis to pass; they were thinking about what else they could do for the company.

It was in a crisis like this that the trust between employees and the company was put to the test — and held. The union unanimously accepted the request for a pay freeze; after the crisis, the frozen rises were paid back in full. Sharing hardship together in bad times, sharing gains together in good times: this was what Inamori meant by running the company as a "great family".

Lessons for Today

A common scene: the project or team you are responsible for suddenly comes under pressure from cash flow or falling orders. Someone suggests taking a drastic step at once to relieve the immediate difficulty — sharply cutting an expense, delaying payment to partners, or shifting the risk onto someone else. It might work, but you worry it will damage long-term trust or break your own principles. Time is short and information incomplete.

This week: take a sheet of paper, write down three questions and answer each in two sentences: (1) What is the root cause of this pressure (a temporary fluctuation, or a problem that had already built up)? (2) If I take the drastic step, which long-term relationship or principle is it most likely to damage? (3) If I don't, what is the smallest adjustment I can make first in the next two weeks (for example, recalculating one specific cost, or talking directly with the people involved)? Write the third answer as an action you can begin within 48 hours.

To reflect on: which risk in your work would you rather prepare for now, in calm conditions, than face for the first time in a crisis?

 

Chapter 15: What Makes a Life Worth Living?

On 24 August 2022, Kazuo Inamori died peacefully at his home in Kyoto at the age of 90. As the news spread, media in Japan and around the world looked back on his life: founder of two Fortune Global 500 companies, the man behind the rebirth of JAL, creator of the Kyoto Prize, author of A Compass to Fulfillment. These are achievements that can be written into a CV.

But if we asked Inamori himself how he would measure his life, his answer would probably be: is my soul, at death, a little finer than it was at birth?

This chapter does not repeat stories already told. Instead it uses his life to think about three questions: What is wealth? What is success? And what should a human life ultimately be measured by?

Wealth: Not Ownership, but Trust

Inamori created enormous wealth in his lifetime, but his attitude to it was unlike that of many rich people. Early on, he put a large part of his personal assets into the Inamori Foundation and the Kyoto Prize; in later life he made large donations to his home region of Kagoshima, to his old university and elsewhere. His own life, meanwhile, remained simple.

In his view, wealth does not truly belong to the individual. A person is able to build up wealth because society gave them opportunities, employees gave their effort, and customers bought their products. Wealth is more like something society has entrusted to them for a time, and they have a responsibility to use it for the good of society. This idea echoes the Confucian saying that "the gentleman loves wealth, but obtains it in the right way", and the Buddhist view of wealth as a coming-together of conditions that will in the end disperse.

This does not mean pursuing wealth is wrong. Inamori never objected to companies making money or employees becoming well off. He objected to two things: obtaining wealth by improper means, and making wealth the purpose of life. The first harms others; the second harms oneself — a person whose purpose in life is making money becomes less at peace the more they earn, because wealth can always be lost, and there can always be more of it.

He once said that success or failure in life is not measured by how much property one leaves behind at death. Not a penny can be taken with us, and status and fame are forgotten with time. The only thing we can truly take is a mind that has been refined.

Success: A Harder Test Than Failure

Inamori held a view that seems a little strange at first: success is also a test, and often a harder one to pass than failure.

When failure and hardship come, people become alert, reflect, and grit their teeth. But when success comes, people often fail to notice that they are changing. With more praise, it is easy to believe everything is down to one's own ability; with more power, it is easy to stop listening to different voices; with more wealth, it is easy to become self-indulgent and forget one's original purpose. Many business leaders fall not in the hard years of starting out, but in the arrogance that follows success.

This is why, in old age, Inamori kept up his daily reflection; why, at the height of his success, he chose to become a monk; and why, at 78, he was still willing to risk his reputation to take on JAL. For him, success was not a finishing line but a new examination hall: the test was whether, after success, a person could still remain humble, grateful and altruistic.

The Three Imperishables: How the Ancient Chinese Measured a Life

On how to measure a life, the ancient Chinese had a well-known answer. The Zuo Zhuan records Shusun Bao of the state of Lu saying: "Highest is establishing virtue; next is establishing achievement; next is establishing words. When these do not fade with time, this is called imperishable." The highest is building virtuous character, then accomplishing great deeds, then leaving behind words and writings. Only what can withstand time without being forgotten deserves to be called imperishable.

If we measure Kazuo Inamori's life against the traditional Chinese "establishing virtue, achievement and words", we find that he left behind not only companies and books — founding Kyocera and KDDI, rebuilding JAL, writing A Compass to Fulfillment and dozens of other works — but that what he most hoped people would remember was how a person refines their character over a lifetime. Shusun Bao's "three imperishables" and Inamori's "polishing the soul" come from different eras and intellectual backgrounds and are not the same thing. But both place character before achievement.

Achievement and words require opportunity, talent and the conditions of the times; not everyone can attain them. Establishing virtue, however, is something everyone can do. Someone who runs a bakery in a small town all their life, a nurse quietly caring for patients in a hospital, an old technician who has worked conscientiously in a factory for forty years — they may have no deeds for the history books and leave no writings, yet how they treat their work and the people around them every day is also "establishing virtue". In this sense, what Inamori called "polishing the soul" is a life goal open to every ordinary person.

Results or Process?

Does this mean achievement does not matter? No. Inamori never looked down on results. His strictness about numbers, his pursuit of efficiency, his demand to "work harder than anyone else" all show how much he cared about the fruits of work. He simply believed that results are the product of a process, and that the character a person forms in that process is what truly belongs to them and what they can take with them.

We must also admit that there is no necessary link between character and achievement. People of fine character may live ordinary lives, and even meet injustice; people with flawed characters may achieve great success. Inamori's life happens to be an example where character and achievement came together — partly through his own efforts, and partly thanks to his times and his opportunities. We learn from him not because character will certainly bring success, but because, successful or not, character is worth pursuing for its own sake.

Back to the First Question

In the Preface, this book asked a question: can a person pursue success at work while holding on to conscience, refining their character, and keeping the happiness of others at heart?

Kazuo Inamori answered yes, with his life. But his answer is not a formula that can be copied. His way was to ask himself every day, "what is right as a human being?"; to check his motives again and again before major decisions; to turn an altruistic heart into systems within a company that could be carried out, measured and handed on; and to keep reflecting every day, even after success.

For readers today, the most important thing may not be to remember his achievements, but, starting tomorrow, in one small decision, to ask ourselves: is this right?

Story: The Closing of Seiwajuku

In 1983, a group of young business owners in Kyoto asked Inamori to talk to them about management. A small study group was born, which later grew into Seiwajuku. For more than thirty years Inamori served as its head as a volunteer, without pay. Its members came from Japan, China, Brazil, the United States and elsewhere, and numbered more than ten thousand.

At the end of 2019, at 87, Inamori decided to dissolve Seiwajuku formally. He said he was getting old and did not want an organisation centred on himself to continue after he was gone. For many members the decision came as a surprise; for Inamori it was consistent with his attitude all along: what should remain is the thinking, not an organisation held together by a name.

Three years later he died peacefully. Besides companies and a foundation, he left behind a question he asked all his life: when a person leaves this world, is their soul a little finer than when they arrived?

Lessons for Today

Picture this: you have just finished a piece of work or come through a busy period. People around you judge you by results — whether the project was achieved, whether your income rose, whether your position changed. You are used to judging by these too whether the time was "worth it". But when you are quiet, you remember some of the choices: in some places you held to your principles, in some you compromised; sometimes you considered others, sometimes you did not.

One thing to try: on a quiet evening, spend fifteen minutes looking back over the past month. Don't write down your achievements first. Instead, write three specific things: (1) A time you chose between interest and principle — what was your reason then? (2) A time you considered (or failed to consider) someone else's situation — what happened at that moment? (3) If you ask yourself, "Has my mind become a little clearer than before during this time?", what is the closest answer? Write these three things on paper, without giving yourself a score.

A question to sit with: looking back on this month, which everyday choice says most about the kind of person you are becoming?

 

About the Stories and Sources in This Book

The stories in this book are retold mainly from Kazuo Inamori's own books and talks, with reference to published company materials and news reports. Many details come from Inamori's recollections many years after the event, or from others' accounts; specific dates, figures and exact words may differ slightly between editions and translations. Where content is based on recollection or second-hand report, the book indicates this with phrases such as "as he recalled" or "according to reports". The figures for profit, stock and the bakery accounts are hypothetical examples to illustrate the ideas. Readers who wish to quote should refer to the original sources.

Japanese names in this book are generally given in Western order (given name first) for modern figures such as Kazuo Inamori and Konosuke Matsushita, and in traditional Japanese order (family name first) for historical figures such as Saigo Takamori and Ninomiya Sontoku, following common English usage. Chinese names are given in pinyin.

References

1. Books by Kazuo Inamori (Japanese editions)

Inamori, Kazuo. Ikikata 生き方. Tokyo: Sunmark Publishing, 2004. Published in English as A Compass to Fulfillment: Passion and Spirituality in Life and Business.

Inamori, Kazuo. Inamori Kazuo no Gaki no Jijoden 稲盛和夫のガキの自叙伝 (autobiography). Tokyo: Nihon Keizai Shimbunsha, 2002.

Inamori, Kazuo. Amēba Keiei アメーバ経営. Tokyo: Nihon Keizai Shimbunsha, 2006. Published in English as Amoeba Management: The Dynamic Management System for Rapid Market Response.

Inamori, Kazuo. Inamori Kazuo no Jitsugaku: Keiei to Kaikei 稲盛和夫の実学 経営と会計. Tokyo: Nihon Keizai Shimbunsha, 1998.

Inamori, Kazuo. Jinsei no Ōdō: Saigō Nanshū no Oshie ni Manabu 人生の王道 西郷南洲の教えに学ぶ. Tokyo: Nikkei BP, 2007.

Inamori, Kazuo. Kyōsera Firosofi 京セラフィロソフィ. Tokyo: Sunmark Publishing, 2014.

2. Company and institutional sources

Kyocera Corporation. "Case Studies: Oil Shock." Kyocera Philosophy website. https://global.kyocera.com/philosophy/case/oil-shock.html (Chapter 14).

The-shashi.com. "Kyocera (6971): Chapter 4" (corporate history, including the rebuilding of Mita Industrial). https://the-shashi.com/tse/6971/chapter-4/ (Chapter 12).

Kaden Watch (Impress). Column on the history of Kyocera's solar business. https://kaden.watch.impress.co.jp/docs/column/solar/472285.html (Chapter 12).

Kagoshima City. "Inamori Kazuo-shi no Ayumi to Kōseki" (The Life and Achievements of Kazuo Inamori). https://www.city.kagoshima.lg.jp/kan-senryaku/miraisenryaku/documents/inamorikazuosinoayumikouseki.pdf (Chapter 12).

3. News reports: JAL's rebuilding and the labour litigation

J-CAST News. "JAL no Kōsei Keikaku Ninka: Seiri Kaiko 'Shinobigataki wo Shinonde'" (JAL's reorganisation plan approved; dismissals to go ahead). 30 November 2010. https://www.j-cast.com/2010/11/30082189.html

nippon.com (Japanese edition). Article on JAL's bankruptcy and rebuilding (public funds, debt write-off, pension cuts, relisting). https://www.nippon.com/ja/currents/d00051/

Shimbun Akahata. Report on JAL's dismissals and Chairman Inamori's remarks. 10 March 2011. https://www.jcp.or.jp/akahata/aik10/2011-03-10/2011031001_03_1.html

Shimbun Akahata. Report on the JAL dismissal lawsuits. 29 September 2011. https://www.jcp.or.jp/akahata/aik11/2011-09-29/2011092915_03_1.html (Akahata is the newspaper of the Japanese Communist Party and sympathetic to the plaintiffs; fact and comment have been distinguished when citing it.)

Bengoshi JP News. "JAL Seiri Kaiko kara 15-nen de 'Shin-kyokumen'" (Fifteen years after the JAL dismissals: Tokyo Labour Relations Commission finds unfair labour practice). January 2026. https://www.ben54.jp/news/3102

Cnyes (Anue). Article on Kazuo Inamori, the artificial knee joint affair and Tansetsu Nishikata's words. https://hao.cnyes.com/post/23378

4. Historical and philosophical texts

Nanshū-ō Ikun 南洲翁遺訓 (Saigo Takamori's sayings, compiled by former retainers of the Shonai domain), 1890.

Sato Issai. Genshi Shiroku 言志四録; Saigo Takamori, Saigō Nanshū Shushō Genshiroku 西郷南洲手抄言志録.

Wang Shouren (Wang Yangming). Chuanxi Lu 传习录 (translated into English as Instructions for Practical Living); Qian Dehong et al. (eds.), Wang Yangming Nianpu 王阳明年谱 (Chronological Biography).

Yuan Liaofan. Liaofan Sixun 了凡四训 (Liaofan's Four Lessons; known in Japan as Inshitsuroku 陰騭録).

Lü Kun. Shenyin Yu 呻吟语 (Groaning Words).

The Analects; The Book of Changes; The Book of Documents; Zuo Zhuan.

Where direct quotations from Inamori are given, they are translated from his Japanese books or from Chinese editions of them; page references vary between editions, and readers should consult the original texts.

For more information, please visit theFTL.org.