Inamori Library

Working for Shofu Industries, Inamori began his career as an engineer focused on fine ceramics. In the first year, his research produced a significant achievement when he became the first person in Japan to synthesize forsterite successfully. Forsterite has superior, high-frequency insulation properties, and was used in televisions and other equipment.

The television era was just dawning, and Inamori developed a forsterite-based television component known as the U-shaped Kelcima. It was an essential component of cathode-ray tubes used in televisions of the day. Later, the forsterite-based U-shaped Kelcima became a core product that supported Kyocera's growth in the company's early years. Forsterite became a widely used material in television components, resistor cores and other products of the time, contributing to the spread of household products, including televisions, radios and cameras.

As production of the U-shaped Kelcima increased, Inamori sought to improve the efficiency of mass production. Consequently, he designed a continuous electric tunnel kiln to replace the conventional batch(1) electric kiln that was previously used.
With the electric tunnel kiln, products are placed on base plates and moved through the tunnel using a pusher. Previously, products were fired in batches and transferred through three different kilns for the calcination, sintering and residual heating processes. The new method was an epic innovation at the time, enabling a dramatic improvement in efficiency by consolidating all three processes into one kiln.

*1 Each process was completed more or less separately in different kilns ― in the case of firing ceramics, the processes include calcination, sintering and residual heating. For each process, the materials are gathered together and loaded into a different kiln.

In April 1959, alongside seven like-minded colleagues, Inamori established Kyoto Ceramic and was appointed to its Board of Directors and General Manager for Engineering. The company began operations in a small, rented corner of the warehouse of Miyaki Electric Manufacturing Company, a Kyoto-based maker of power switchboards. Inamori understood the necessity of setting high goals in order for the business to develop. Therefore, whenever the opportunity arose, he spoke to employees about his grand vision for the future: First, they would become the No. 1 company in Kyoto; next, No. 1 in Japan; and ultimately, the greatest company in the world. This goal encouraged his employees. It stirred their passion toward work and became the driving force behind Kyocera's growth.

When the Shiga Gamo Plant was completed in 1963, Kyocera became a two-plant company, with its headquarters plant in Nishinokyo-Haramachi.
In 1965, Inamori devised the Hourly Efficiency system, which functioned as a management accounting indicator. Its purpose was to provide timely awareness of the state of the business as the company grew in scale. When "Maximizing Revenues and Minimizing Expenses," the difference between revenues and expenses -- called Added Value -- is also maximized. Hourly Efficiency depicts this management principle in the form of a profit table. The Added Value created through work is divided by total working hours, resulting in Added Value per Hour. He named this last figure Hourly Efficiency.
Additionally, Inamori created a unique "small-unit profit center" system, which he named Amoeba Management. This mechanism was designed to heighten employee awareness of participation in management and to consolidate individual strengths. Under Amoeba Management, an organization is divided into independent profit units, called Amoebas. Employees appointed as Amoeba leaders are entrusted with general managerial responsibilities such as management plans, performance management and labor management. They can acquire managerial thinking and skills through managing these units. Moreover, in this system, the operational results of each Amoeba are disclosed to all employees in that Amoeba unit, thus enabling management participation by all employees.

In the early 1960s, alongside the rise of the US semiconductor industry, Inamori applied fine ceramics technology to develop the first multilayer ceramic packages. These packages are essential for protecting semiconductors. To succeed in commercializing these packages, he went above and beyond the conventional wisdom of ceramics technology at the time to develop methodologies, including tape-molding, simultaneous firing and other groundbreaking methods.
Convinced of the tremendous potential of this new product, Inamori decided to undertake bold capital investment. He overcame numerous problems along the way and succeeded in leading the world in mass production.
After that, Kyocera continued to achieve rapid growth while adhering tightly to its Customer-First Principle. Kyocera thus made significant contributions to the global semiconductor industry's development.

During the recession following the first "oil shock" in 1973, Kyocera's product orders fell dramatically, by 90%. Facing a recession and having vowed to safeguard employment by all available means, Inamori set about implementing all conceivable countermeasures. These included maintaining productivity, diverting all available employees to sales activities, and developing new products.
Even so, demand remained stagnant. Realizing that this was the greatest crisis since the company began, Inamori made some painful decisions: He reduced wages for management-level employees and proposed a freeze on wage increases to the labor union. Employees understood that the company was in a crisis. They accepted a temporary freeze on wage increases and united in applying earnest efforts toward restoring business performance.

Two factors brought about this cooperative employee attitude:
1) Employees fully understood that Inamori had always devoted himself to achieving the material and intellectual growth of employees since the company was founded; and
2) Due to the practice of transparent management, employees were well aware of the true state of the company's business.
Inamori's decisions proved beneficial: When the economy finally began to recover, Kyocera was well ahead of other companies in recovering its business performance. Inamori repaid the efforts of employees the following year with a substantial wage increase that included the pay increase not given while wages were frozen, plus a one-time bonus. The major trial of the first oil shock further strengthened Kyocera's corporate structure and led to development that exceeded pre-oil shock levels.

In 1979, Inamori purchased Cybernet Electronics Corporation, a communications equipment manufacturer. Four years later, he purchased a camera manufacturer, Yashica Company. Both acquisitions were the result of requests from the companies for assistance.
Although Inamori had previously pushed forward with diversification strategies, entering the electronic equipment and camera businesses was considered too risky. They were not extensions of ceramic technology; they instead entailed expansion into completely different business areas. However, the managers of the acquired companies had made a sincere appeal to help their companies' employees. Furthermore, Inamori was touched by the employees' enthusiastic and resolute approach toward work, despite uncertainty about the future. Inamori therefore made a benevolent decision to purchase the companies.
After the acquisitions, despite badgering from extremist labor unions, Inamori's mind was set on saving the employees of both companies, and he succeeded in resurrecting the businesses. Later, personnel from both companies became a driving strength behind the Kyocera Group's development. They became the core of Kyocera's communication equipment business, for example, and contributed substantially to establishing Daini-Denden (DDI), the communications company.

Ever since the company was founded, Inamori encouraged employees to hold Kyocera shares, to stimulate their awareness and participation in company management. Following its stock exchange listing, Kyocera established an internal investment association for the company's stock. However, buying Kyocera shares was prohibitive due to the high stock price. To celebrate Kyocera's 25th anniversary on April 1, 1984, Inamori invited employees on a four-day trip to Tokyo to reward their hard work over the past quarter of a century. A Foundation Anniversary Ceremony took place during the trip. During a party after the ceremony, Inamori expressed his sincere appreciation to employees and presented every employee with Kyocera shares taken from his personal holdings.
In addition to showing appreciation for their long-term efforts, by making all employees shareholders in Kyocera, Inamori hoped to raise their awareness of participation in management as employees engaged in their work.

In 1990, aiming to strengthen the electronic components business on a global scale, Inamori brought AVX Corp. (currently known as KYOCERA AVX Components Corporation), a major US electronic components manufacturer, into the Kyocera Group. The acquisition was achieved through a method unprecedented in Japan ― an exchange of shares with a foreign company. Until then, it was thought that domestic commercial law effectively prevented stock swaps with foreign companies.
However, after carefully examining the law in detail, Inamori determined it was entirely possible. He achieved the stock swap after tenacious negotiations with the relevant administrative authorities.Inamori refused to accept so-called common sense on blind faith. By examining the essence of the law, he was able to achieve what was previously regarded as impossible.
Furthermore, though he left the management of AVX Corp. to that company's existing management team, Inamori worked hard to build a shared and thorough understanding of Kyocera's Management Rationale and Philosophy with the company's employees, based on the idea that we must "Do what is right as a human being." In a short time ― less than five years after the acquisition ― AVX was successfully relisted on the New York Stock Exchange. Since then, AVX has continued to achieve steady growth and development.

Mita Industrial Company., a mid-sized copier manufacturer, collapsed in 1998. In response to a request for help, Inamori led the restructuring of the company. Mita had slipped into an operating crisis due to lax business practices and failure to keep up with digitalization. The company's president at the time hoped to keep the company in existence for the sake of its employees and to avoid causing problems for dealers and end-users of Mita Industrial products. He applied for corporate bankruptcy reorganization and asked Inamori for help.
Inamori concurred with his thinking and accepted the request out of a genuine desire to help the company's employees. Mita received full support from Kyocera, the company name was changed to Kyocera Mita Co., Ltd., and business recovered relatively quickly. The original reorganization plan took seven fewer years than anticipated and was completed at the end of March 2002.
Later, the business was integrated into Kyocera's printer business. Today, the combined business is achieving sound growth as Kyocera Document Solutions Incorporated.

In 1975, while repercussions of the oil shock were still being felt, Inamori took a step toward developing solar cells. He wanted to apply Kyocera technology to help solve the global energy crisis stemming from our planet's depleting oil supply.
However, after the oil shock, oil demand and supply problems eased, and the business opportunity for developing alternative energy sources quickly diminished. The solar cell market thus entered a long period of stagnation. As R&D budgets in various countries were curtailed, company after company withdrew from the business and ceased research. Despite such difficult times, Inamori's belief in the potential for solar power to contribute to the world did not waver. He continued his commitment to solar cell research through developing cells with greater power efficiency and other improvements.
This struggle lasted for about a quarter of a century. Then, in the late 1990s, interest in environmental issues began to rise, and governments started introducing policies aimed at promoting renewable energy use. The business environment started to improve, and Kyocera soon established its position in the solar cell market as a global manufacturer.

This graph illustrates business performance trends for the consolidated Kyocera Group, from its foundation through the present day. Sales are shown in green; pre-tax profit is shown in blue. Since the company began, Kyocera has never suffered an annual loss. In the face of diverse business challenges, the company has maintained profit ratios that generally exceed 10%.
The lower left graph represents the company's first ten years in business. In 1966, Kyocera succeeded in obtaining an order from IBM for alumina substrates. Sales increased rapidly after that. In the company's first year, sales reached 26 million yen, with three million yen in profit. From the very beginning, Inamori took every opportunity to impress upon employees that their goal was to become No. 1 in Nishinokyo-Haramachi (the district where the company was first located), then No. 1 in Kyoto, No. 1 in Japan, and ultimately, No. 1 in the world. In fact, Kyocera did become the world's leading maker of ceramics. The company's performance embodies Inamori's belief in the importance of always holding a vision, never giving up, maintaining hope and continuously pursuing goals.

Inamori had long felt that telephone charges in Japan were high and imposed a burden on people's lives. In 1984, when the decision was made to deregulate telecommunications, Inamori hoped that private enterprises would move into the sector and reduce long-distance telephone charges for the people's benefit.
However, standing up to the monolithic NTT carried enormous risks, and hardly any enterprises entered the market. Because of these circumstances, Inamori began thinking about entering communications as a venture business. His philosophy was to be of use to society and people through corporate management, so he contemplated the new venture from that perspective.
Before entering the telecommunications business, Inamori repeatedly examined his own intentions. He wanted to be sure that his motive was purely to lower telephone charges to benefit the people, rather than being even slightly for his own self-interest. For nearly six months, he asked himself, "Is my motive virtuous or selfish?" Finally, he was convinced that his motive was pure, without any self-interest driving him. He then set out with invincible determination to establish Daini-Denden (DDI) and to see the project through any difficulties that may emerge, for the benefit of the people.

As a new provider of dedicated line service for corporations and other organizations, DDI lacked significant backers such as large shareholders, big corporations or government authorities. DDI was therefore obligated to deal with market challenges on its own.
Thinking he would not be able to move the business forward under the circumstances, Inamori returned to his original reason for starting the company: "To stimulate fair competition in telecommunications and lower telephone charges for the people." Taking advantage of starting long-distance telephone services, he promptly shifted the company's emphasis from the original focus on dedicated line service to long-distance telephone services for the public.
Stepping ahead of his two competitors, he created a marketing team focused exclusively on long-distance telephone services, filled it with talented personnel, and actively engaged in sales promotion. As a result, by the time long-distance telephone services began in September 1987, DDI had signed up an overwhelming 450,000 subscribers, compared with 270,000 and 150,000, respectively, by its two competitors. With this success, DDI was firmly on the road to growth, positioned at the top of the new telecommunications companies.

In the 1980s, car phones comprised the majority of mobile phones. Constraints set out in Japan Radio Law meant that NTT continued to enjoy a monopoly. At the time, advances in miniaturization technology for semiconductors and other components indicated that the miniaturization of mobile phones was not far off. Inamori anticipated the arrival of an era in which people would be walking around carrying mobile phones in their daily lives. When Inamori established DDI, he already had a keen interest in mobile communications.
When mobile communications were deregulated in August 1986, he immediately declared that Kyocera would enter the business. Inamori had set his sights not on the car phones popular at the time, but on today's mobile phones that any person could walk around carrying. However, due to constraints on available frequencies under Radio Law, each service area could only have two mobile carriers -- and that included NTT. Carrier availability in service areas thus had to be divided between two companies, Nihon Kosoku Tsushin and DDI.
This configuration resulted in all kinds of difficulties that affected the fate of the entire business, effectively preventing a smooth rollout of services. Realizing that failure to align these services areas would ultimately hurt the people, Inamori relinquished both the Tokyo metropolitan and Chubu Tokai regions ― where most usage was expected ― to Nihon Kosoku Tsushin. DDI would take all of the other service areas, and a settlement was reached. For Inamori, it was a reluctant compromise. Even so, while it was unavoidable in order to start the mobile communications business as soon as possible to benefit the public, Inamori accepted it as "a defeat that was also a win."
Inamori knew that the success of the mobile phone business depended on services being firmly established in the different regions. He therefore set up a cellular business company in each region, solicited funding from power companies and other well-established regional enterprises, and called for their participation in the business. His strategy succeeded, and cellular business began to grow steadily.

On September 3, 1993, DDI took the lead among the three new telephone companies and achieved listing on the second section of the Tokyo Stock Exchange. Listing took place just nine years after the preceding planning company, Daini-Denden Planning was established, and eight years after the planning company began operations. Market expectations were high, and the opening price reached 5.5 million yen, well above the public offer price of 3.7 million yen. Stock exchange listing improved DDI's ability to raise funds and heightened public awareness of the business. For employees, exchange listing increased their pride in the company and their levels of motivation, encouraging them to work hard for the business.
In November 1987, before DDI was listed, Inamori provided an opportunity for all employees who wished to do so to buy shares in the company. He hoped to raise awareness of individual employees as "managers," and to repay the efforts they had made since the company was founded. Inamori himself held no shares in the company, as he had entered the business with the pure and selfless motive of lowering telephone charges in Japan.

Although the communications business had been deregulated, in 1999, the NTT group still dominated the market. Knowing this, Inamori had already concluded that true communications deregulation was not possible within the current structure of three new telephone companies individually competing against the giant NTT. He became convinced that a firm axis of opposition to NTT was essential for the healthy development of Japan's communications industry, and began looking for opportunities to integrate with other communications companies. In due course, discussions about a merger with the international telephone business KDD and the mobile phone business IDO came to the fore. However, negotiations on mergers were extremely complicated, because they exposed differences in opinion and philosophies among the various companies.
In the face of repeated setbacks, Inamori stood by his conviction that "Japan cannot achieve true communications deregulation unless the three companies stand together in opposition to NTT." Based on the high ideal, "Discard minor differences and focus on the common good for the benefit of the public," Inamori led the three companies into a merger, all the while tenaciously espousing the importance of communications deregulation and the roles the three companies must play in achieving that goal.
The outcome was not a consolidation on an equal basis, but a merger of the three companies centered on DDI. This path was taken to accelerate decision-making and define management responsibilities, and to clarify the management core. It was an important factor behind the later advancement of KDDI.

The fiscal structure of Japan Airlines had continued to deteriorate due to a prolonged period of stagnant business performance. The Japanese government realized that drastic reformation of the airline was essential to maintain Japan's airline network amid increasing international airline competition. The government, therefore, decided to apply Corporate Bankruptcy Reorganization Law and rebuild the company. Inamori was the business manager entrusted with resurrecting the company. Firmly refusing the government's request repeatedly on the grounds that it was not his place to rebuild JAL, he finally consented and accepted the post of JAL chairman. Inamori's decision to accept was based on three just reasons:

1. JAL's decline symbolized the decline of Japan's economy. Resurrecting the airline would restore people's confidence in Japan's economy.
2. Someone needed to rescue the remaining JAL employees and safeguard their employment.
3. Resurrecting JAL would stimulate market competition, enabling the airline to offer people less expensive quality service.

After assuming the post of chairman and undertaking business reconstruction, Inamori declined any salary or payment in kind on the grounds of his age (he was 78) and because he had other business commitments that prevented him from concentrating full-time on the work.
At the time, the mass media repeatedly stated that resurrecting JAL would be impossible, and a second bankruptcy was inevitable. They cited reasons including a corporate structure that had been dependent on government assistance for many years, complex union problems, the need for a broad business contraction, and fatal damage to JAL's brand image.

Inamori strongly felt that the cause of bankruptcy was a lack of leadership awareness among senior management. Convinced that resurrecting JAL would be impossible without reforming their awareness, he began with executive employees.
In June of 2010, he gathered about 50 executives and conducted intensive retraining over 17 sessions on the theme, "What is the right thing to do as human beings, and as leaders of organizations?" Meanwhile, he visited main airports including Narita and Haneda, where he explained the proper attitude toward work directly to employees in their workplaces, including those who worked in sales, reservations, maintenance, cabin crews and ground crews, among others. At first, some executives and general employees felt uncomfortable being lectured on the topic, and initially, there was a certain level of resistance. However, as Inamori continued to speak with absolute sincerity, a significant change emerged in employee attitudes.
Additionally, he created the JAL Philosophy, which set the standard for employee's decisions and actions. As a result of his efforts to build shared awareness among all employees, Inamori improved the customer service mentality and attained unity in cooperation that transcended individual departments. Japan Airlines saw the birth of an approach in which individual employees took the initiative in thinking about company concerns and acted accordingly.

When Inamori took the post of chairman, he discovered that Japan Airlines had only minimal awareness of profitability. It seemed that almost no executives or employees had any interest in the management figures. So, he took the following steps. By applying the Amoeba Management system, he created a way to attain prompt statistics on the revenue and expenditures for individual flight routes, as well as for individual aircraft. Such timely information empowered employees to take specific actions that could improve the results. He gave individuals responsibility for specific flight routes. Those people then took the leading role in devising and applying measures for raising the profitability of their specific flight routes.
Based on Amoeba Management, Inamori thus built a management accounting system designed specifically for Japan Airlines. The system provided detailed management figures for individual departments with minimal delay. Furthermore, he established monthly Management Review Meetings in which leaders of the various JAL departments and affiliated companies presented management results for their respective departments.
Giving individual department leaders the ability to pinpoint operational problems and then implement improvement measures led to increased profitability in each department. At the same time, employees gained a higher awareness of costs. All employees thus began to take the initiative in working toward improving profit, which contributed significantly to overall profitability.
The management philosophy that unified employees was known as the JAL Philosophy. Measures to reform the awareness and attitudes of employees were based on this philosophy. At the same time, the introduction of Amoeba Management and the resulting rise in profitability led to rapid improvements in the company's business performance and financial structure.
JAL was reborn as the airline with the highest profitability among all major airlines worldwide. On September 19, 2012, Japan Airlines was relisted on the stock exchange. Just two years and seven months after delisting, this short turnaround was unprecedented in Japan's history.
The graph to the right illustrates JAL's business results before and after Inamori became chairman. Before his appointment, sales were 1.5 trillion yen with a substantial operating deficit of negative 133.7 billion yen. The following year, sales fell slightly to 1.3622 trillion yen, but operating profit achieved a V-shaped recovery to 188.4 billion yen. In the year after that, sales were 1.2048 trillion yen, but operating profit had increased to 204.9 billion yen, with a profit ratio of 17 percent. Japan Airlines was resurrected into a high-profit airline.

Amoeba Management is a unique management control system that Inamori created to support his management philosophy while leading Kyocera. Under Amoeba Management, an organization is divided into small business units (Amoebas). Each Amoeba is run as an independent, market-oriented profit center. This management system fosters leadership development by diffusing managerial awareness throughout the work force, and allowing all employees to participate in management -- known as "Management by All."

The Philosophy is essential for Amoeba Management

Amoeba Management is not a style of management expertise that is exalted by the business world in general. The methods of the Amoeba Management system may be copied or emulated, but in many instances, it does not function effectively. That's because Amoeba Management is a "total management control system" based on a management philosophy, and in which all systems involved in company operations are deeply intertwined.

When he founded Kyocera, Inamori, who was trained as an engineer, had no detailed knowledge of management or accounting. As soon as the company began operating, Inamori was called on to make decisions about all manner of management-related issues. After spending considerable time debating within himself on what criteria should be used for reaching decisions, Inamori decided to base his decision-making on "What is right as a human being."
He applied this also in the field of accounting. Whatever problems might emerge in accounting, Inamori determined that he would always return to the essence of the matter and look for solutions based on "What is right." This approach led to the creation of "Kyocera Accounting Principles," a system based on fundamental principles of accounting rather than adherence to commonly accepted accounting practices.