Management
Inamori Accounting
The Seven Principles of Inamori Accounting
At the time of Kyocera's founding, Inamori, an engineer by training, had no in-depth knowledge of management or accounting. As soon as he started the company, he was faced with serious managerial decisions. As he grappled daily with what standards to use for making judgments, Inamori resolved to base his decisions on "What is the right thing to do as a human being?"
He applied the same criteria to accounting. When he came across an accounting matter that he disagreed with, he insisted on understanding the essence of the matter and tried to make decisions based on "What is the right thing to do as a human being?" This approach gave birth to "Inamori Accounting," which is not constrained by conventional wisdom, but grounded in the true essence of accounting.
Accounting figures are like the instrument panel in an airplane. A pilot is able to fly the plane by looking at the instruments and judging altitude, speed, and bearing. In a similar manner, successful managers look at accounting figures to judge the state of the enterprise and navigate the way forward to attain the company's performance targets.
If the plane's instrument panel gives incorrect information, the pilot cannot fly correctly. Similarly, if accounting figures are inaccurate, the company will head in the wrong direction. Therefore, accounting plays the pivotal role of a "compass" in corporate management, and is central to operations.
The Inamori Accounting Principles contain seven basic concepts that will allow managers to accurately assess the current state of the company and enable them to lead the company to prosperity.
The Seven Basic Principles
- The Principle of Cash-Basis Management
- The Principle of One-to-One Correspondence
- The Principle of Muscular Management
- The Principle of Perfectionism
- The Principle of Double-Check
- The Principle of Profitability Improvement
- The Principle of Transparent Management
The contents introduced in Inamori Accounting are included in the book Selected Lectures on Management by Kazuo Inamori, Vol. 6: The Essence of Corporate Management.
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