Two weeks ago I joined a Japan Lean study trip tour led by Makoto Investments and had the opportunity to visit three different Japanese manufacturing organizations.
The first company that I visited was Mirai Industry, a company with a unique management philosophy that has a deep understanding of how to delivery value to its customers through constant innovation by their employees.
Mirai is a manufacturer of electric installation equipment – basically anything that an electrician would use – based north of Nagoya, Japan. They have six large factories and twenty-seven sales offices in Japan. Mirai has 830 employees and last year made its highest profit margin to date.
Mirai has one of the highest numbers of patents in Japan and has the largest market share in its space.
Mirai’s unique management practices and deep commitment to its employees is evidenced in the story of how Mirai was founded by the cast-out thespian son of a Japanese businessman.
The only rule is “no rules”
Mirai attempts to “abolish” rules and management as much as possible. There are some rules “so that there is no chaos”, but as our guide explained: “we don’t want rules. With rules people are torn. When we make rules, we put people in a box and they can only think inside of the rules. Innovation is suppressed because people think that ‘if I break the rules, I’ll be punished.'”
I think this is an interesting countermeasure to the Japanese cultural norm of rule-following, and has clearly made an impact on the company’s ability to create innovative products that customers want to buy.
Management’s role is to “draw out employee motivation”
Given that the company wants to minimize management, during the Q&A I asked what the role of managers are at Mirai. I was told that “the only responsibility of managers is to draw out the motivation of employees”. Managers have to do the typical duties such as allocating staff and resources, but their primary function is to support the development of innovative ideas.
Treat your employees well
Some of the employee benefits that our host touted included:
- overtime is prohibited
- all employees are full-time, but get 180 paid vacation and holiday days (including weekends)
- every five years the entire company goes on an overseas vacation
- three-years maternity leave (one year paid, two years not paid but job guaranteed)
- mandatory retirement by age 70
- no uniforms
Spirit of kaizen
Mirai strongly believes in the value of “small, but meaningful” new ideas. It pays its employees JP500 (roughly US$5) for any suggestion that will improve the work (either their own or someone else’s). The only things not permitted are comments about your salary or “defaming your boss” (I suppose this is one of the rules to help keep chaos at bay). Employees get the equivalent of $500 if the idea is implemented.
Last fiscal year, 12,000 ideas were generated, which is approximately 14 ideas per employee, with some employees submitting hundreds.
Our host said that when they started the employee suggestion process a few years ago, it made making improvements “more fun”.
Some small innovations include putting a bucket of umbrellas out by the front door that employees can borrow so that they don’t get wet walking to the next building and hanging cords from every light so that people can more easily turn the lights off when not in use.
Creating value for the customer
Mirai’s culture of innovation and kaizen was evident by walking into their demonstration room. Our guide demonstrated some of the new products just launched to market, as well as some of the other unique ideas and products it produces.
Their goal is to make products that are easy to use and that include innovative ideas to make it easier for electricians to do their jobs. If Mirai isn’t able to make something better than what currently exists, it won’t make it.
Mirai also does not give it’s sales people quotas. Instead of focusing on the outcome of achieving greater sales, they want their sales people to go to gemba, to work alongside of electricians and to understand the problems that electiricans encounter every day.Through this deeper understanding of their customer’s needs, the sales team is able to work with other staff to develop small innovations to delight their customer.
The sales people are able to “share our excitement” about new products with electricians and experiment with new product ideas out in the field. Mirai counts on it’s products to sell themselves, which they clearly go given their roughly 70% of market share in Japan.