When Kyocera was established, fine ceramics were completely new materials. Repeat orders were thus rare. Orders received were for entirely new products. The products were delivered. Fresh orders were received for yet other unique products, and so on. In such circumstances, cost calculation delayed by several months was useless. Therefore, in a market undergoing bewildering change, timely cost management had to be exercised, as the product was being made. Meanwhile, Dr. Inamori realized "Maximize Revenues, Minimize Expenses" was a basic principle of management.
As the organization grew, Dr. Inamori sensed the limits of his ability to ensure thorough implementation of this basic principle throughout the organization. He thus divided the entire company into small unit operations, and set up a mechanism whereby the units would be buying and selling amongst each other within the company. By examining the state of profitability of each unit, the business operator can attain an accurate grasp of the company as a whole. The outcome is detailed management of the entire company. The resulting divisional accounting system could be called the prototype of the Amoeba Management System.
Management of small Amoeba organizations still required maintenance of revenue and expenditure accounts. A minimal level of accounting knowledge was necessary. To meet this need, Dr. Inamori devised the "Hourly Efficiency Report." This mechanism would enable anyone to understand the profitability state of an Amoeba, even without any special knowledge. The Hourly Efficiency Report enables calculation not only of an Amoeba's revenue and expenditure, but also the added value derived from the difference between the two. Added value per hour, or Hourly Efficiency, is calculated by dividing Added Value by Total Hours Worked. This easily understood mechanism allows an Amoeba member to determine how much added value the Amoeba created in one hour.
Furthermore, comparison of Hourly Efficiency Report results with planned figures gives the Amoeba leader a timely grasp of progress of sales, production, expenditure and other matters planned at the beginning of the month. Countermeasures can therefore be promptly implemented as needed.
The basic principle of company management is maximizing revenues and minimizing expenses. To practice this principle throughout the company, the organization is divided into small units. Divisional profit management applied in each unit enables immediate response to market changes. This is the first objective of the Amoeba Management System.
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As a company grows in scale, it becomes impossible for the top manager and people in charge of various divisions to directly manage the entire company. Division of the organization into small unit operations and implementation of independent accounting gives unit leaders accurate awareness of the state of their units.
Leaders entrusted with small unit operations are running organizations with a small number of members. This simplifies organizational operations, such as tracking progress of day-to-day work and process control. Leaders can satisfactorily operate their units, without high-level administrative skills or specialized knowledge.
A leader entrusted with management of even a small unit begins to see himself or herself as a "business owner." This awareness is accompanied by a sense of responsibility as a manager, and the leader therefore strives to improve unit performance as much as possible.
As a result, perspective changes from "what the company can do for me" as an employee, to "what I can do for the company," as a leader. This change in stance is the beginning of managerial awareness. Joint managers with a sense of managerial responsibility emerge one after another from among such leaders. |
In Amoeba Management, the company is broken down into small groups. All members of an Amoeba take part in management, centered on the Amoeba leader. Accordingly, all main information relating to the state of operations in the Amoeba and the company is passed on to all employees, via morning gatherings and other means. Maximum possible disclosure of information on the company prepares the environment for voluntary participation in management by all employees. Management by all thus becomes possible.
With active participation in management, employees strive independently to fulfill their functions and meet responsibilities. In such case, employees are no longer simply workers; they become partners working together and acquire awareness as managers. By fulfilling their own responsibilities, employees find pleasure and a feeling of achievement in their work. They can work toward the objective of contributing to the company, feeling their meaningful life. |
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