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A
Very Japanese Path To Profits
Ricoh's reforms
avoided American-style layoffs
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The
1000 Biggest Companies
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It must seem so long ago now — a different age, a different
world — when Ricoh suffered its first-ever operating loss.
Actually, we're only talking about the early 1990s, and Japan
was just beginning to feel the impact of its post-bubble recession.
But while the broader Japanese economy has never really recovered
from that blow, Ricoh is now in the middle of what it hopes
will be its sixth consecutive year of record sales, its seventh
straight year of record profits. And if you diminish the accomplishment
as virtually preordained, given that Ricoh is a technology company
in a technology-crazy world, then you're forgetting about the
recent performance of what was perhaps Ricoh's closest competitor,
Xerox Corp. The U.S. company that once dominated the market
for office copiers and pioneered key personal computer technology
has lately been rumored near bankruptcy. Its stock price is
barely a tenth of what it was 18 months ago.
Especially amazing has been the fact that Ricoh has achieved
its turnaround while embracing a management philosophy that
has become much maligned — Japanese management. For example,
Ricoh chairman Hamada Hiroshi laid down the law when he was
the company's president in the mid-1990s: He said every possible
restructuring option would be pursued "except laying off workers."
That sort of regard for employees has been a traditional Japanese
corporate philosophy, and it was a founding tenet of Ricoh's
in 1936. But more recently it has been assumed that Japanese
companies should follow an American model that traded layoffs
for efficiency. "At Ricoh, we don't have a term 'lay-off' in
our vocabulary," says Tsuruga Hiroshi, one of the corporate
leaders of the company's information technology strategy.
What Ricoh did have was a Japanese-style restructuring that
encouraged bottom-up suggestions for change. An early proposal
to digitize all the company's design materials seems pedestrian
now, but at the time it was a revolutionary way to share information
with customers and employees. Follow-up was critical. Few ideas
were allowed to be lost in the kind of bureaucracy that corporations
in Japan are sometimes criticized for. Innovations like an online
ordering system were conceived, approved and installed in record
time.
Ricoh also spent heavily on technology infrastructure and software
— more than $100 million in the three fiscal years leading
up to March 1999, for instance — but never a dime on consultants.
The irony is that Ricoh's managers are now in such demand to
talk about their strategies for reinventing the company that
they have begun selling the company's knowledge through a consulting
arm. Ricoh says it especially targets smaller companies that
wouldn't consider hiring high-priced consultants — and
who may need the copiers, printers, fax machines and networked
office equipment that it sells. That sort of cross-fertilization
among different business units isn't necessarily Japanese —
just profitable.
— By Murakami Mutsuko/Tokyo
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