This week, I’d like to share some insights from a lecture given by Kazuo Inamori on December 14, 2004, at a joint Kanto-region meeting of Seiwajyuku, his management philosophy study group. Inamori was 72 years old at the time.
What is remarkable about Inamori’s philosophy of practical management is that its principles can be applied not only to running a business but also to managing household finances!
Below are a few examples from Inamori’s approach to practical management.
Interestingly, many of these principles seem to go against conventional wisdom.
What do you think?
- Buy Only What You Need, When You Need It—Don’t Buy in Bulk
When we buy in bulk, we tend to think we have plenty on hand, which can lead to unnecessary consumption and waste.
We may also become less careful about how we use what we have.
Inamori believed that, despite the discounts offered on bulk purchases, buying only what is needed at the time can actually save more money in the long run.
- Reduce Both Accounts Receivable and Accounts Payable
It makes sense to collect outstanding payments from customers as quickly as possible.
But Inamori also emphasized the importance of paying suppliers promptly.
After all, accounts payable represents money that must eventually be paid.
When we hold on to money that we already owe, a large bank balance can create a false sense of financial security.
We may mistakenly believe we have more money available than we actually do.
This can ultimately lead to a cash shortage.
- Eliminate Unnecessary Inventory
In personal finances, this is similar to danshari, the Japanese practice of decluttering and letting go of unnecessary possessions.
In business, eliminating excess inventory directly reduces warehousing and storage costs.
This principle is also reflected in Toyota’s Kanban system, which helps minimize unnecessary inventory through just-in-time production.
More Principles from Inamori’s Practical Management Philosophy
And these are only a few examples!
Inamori’s practical management philosophy includes several other important principles, such as:
The Principle of One-to-One Correspondence: Ensuring that every transaction is accurately matched with its corresponding goods, money, and documentation.
The Principle of Perfectionism: Striving for accuracy and excellence without overlooking even small details.
The Principle of Double-Checking: Establishing systems in which important work and transactions are independently verified.
The Principle of Cash-Based Management: Managing a business with a clear understanding of actual cash flow rather than relying solely on accounting figures.
If these ideas interest you, I highly recommend reading Kazuo Inamori’s book, Practical Management (Inamori Kazuo no Jitsugaku).
And if you do read it, I’d love to hear what you think!