Konosuke Matsushita (1894-1989) started with nothing but an idea for an electric plug, and created a vast business empire that spread around the world. As the owner of Panasonic Corporation and other profitable business ventures, he amassed a personal fortune valued at more than three billion dollars.
Since his name has never been prominently displayed, Konosuke Matsushita is not as well known as Sam Walton or Henry Ford or Honda or any of the other business giants who used their names on their products. But his company, Matsushita Electric Industrial Co. Ltd., generated more revenue during his lifetime than any of the others. Although he was generally unknown outside his native land of Japan, his company's sales eventually exceeded sixty three billion dollars every year.
Matsushita was born into humble circumstances in the Japanese village of Wasa, on November 27, 1894. He grew into a nervous, rather sickly young adult with an un-promising future. At a time when you had to be well educated, charismatic, even rich, to succeed, he seemed destined for a life of struggle. The youngest of eight children, Matsushita had a father who gambled away the family's money. At the age of nine, he took a job as an apprentice in a bicycle shop to help the family survive.
One of the traits that followed Matsushita throughout his career was a willingness to take risks. He did that when he quit his bicycle shop job to accept employment at Osaka Light, an electric utility company. Matsushita was quickly promoted and eventually became an inspector, a respectable job at which many might have stayed until retirement. Perhaps Matsushita even considered that. However, while working at Osaka Light, he had managed to create a new type of light socket, one that was better than anything available at the time. Matsushita showed the invention to his boss, who was unimpressed.
Matsushita had no money and no real business experience, but he did have drive and ambition. So, in 1917, he decided to manufacture the device himself. With the help of his wife and three eager assistants, Matsushita began his business. The combined education of the five amounted to less than a high school education, and none had any experience in manufacturing an electric plug. But they had ambition. In a cramped two-room tenement house, they worked long hours, seven days a week. After several very lean months, they had completed a few samples of the new product.
Wholesalers generally rejected his new style electric plug. They told him it was acceptable, even innovative, but that he needed far more than one single item for the large wholesalers and retailers to be interested in his company. He persevered, and gradually people began to buy the plug, when they saw that it was better in quality and almost 50% lower in price. Matsushita kept his business afloat by taking on contracts for other items, such as insulator plates. By 1922, his firm was introducing new items every month. He was also developing business strategies that made him stand out from his competitors. He learned that a new product had to be 30% better and 30% less expensive, than one already on the market. By giving his products away, he could eventually sell many more of them. He also pioneered an effective after sale service program.
Designed Bicycle Lamps
Bicycle lamps, a very necessary item in Japan, had bad reputations. They seemed to constantly fail. Matsushita realized that an efficient lamp for the millions of bicycles in his country could become a popular item. So he designed one. Although it wasn't an immediate success, his "bullet lamp" eventually became the standard by which the entire industry was judged. Matsushita's battery powered lamp became so successful that many people bought them for use in their homes to replace the traditional kerosene lamps. Matsushita Electric was on the way to becoming a giant in the industry.
The 1923 bullet-lamp was followed by an electric space heater, an electrically heated table, and a new type of thermostat. The first Matsushita radio, a 3 vacuum tube model, was introduced in 1931. It won first prize in the Tokyo Broadcasting Station radio contest. Other inventions followed, including electric motors and electric fans.
Times were not entirely smooth along the way. Although refrigerators, washing machines, air conditioners, color television sets, and stereo equipment would eventually be produced, there were some setbacks. With the Great Depression of the 1930s, Matsushita saw sales fall dramatically. But unlike other companies, he didn't lay off his growing number of employees, people he considered a part of his family. Instead, he shifted them about, moving factory workers to sales positions. At the same time he cut production schedules. Still, his warehouses were full of unsold merchandise.
Matsushita would not change his mind when managers insisted that the company must lay off employees and shut down facilities in order to survive. He cut work hours by half, but continued to pay his employees full wages. He also asked his workers to help sell the backlog of stock, and they responded. As other companies were failing, Matsushita Electric held on.
World War Two
Matsushita's company was beginning to recover, when the Second World War brought devastation to his country. It is difficult to say how Matsushita felt about the war since he was a very private man, but his company did manufacture materials for the Japanese war machine. When Japan was defeated and the Allied powers took control, Matsushita was ordered to cease all production. Since his company had manufactured products to help Japan in the war effort, Matsushita Electric was burdened with severe restrictions. It appeared to be the end of his company, as it was with many other Japanese companies who never recovered after the war. Matsushita, himself, was nearly removed from the leadership of the company he created. His employees petitioned the military government to allow him to stay.
Matsushita convinced General Douglas MacArthur and other military governors that his company should be allowed to resume production of peacetime products. He promised that Japan would once again be a world power, but this time by peaceful means. He believed that his country could lead the world in electronics. The military governors, realizing that such a strategy would help Japan recover from the devastation of war, permitted Matsushita's company to reopen. Matsushita and his management team began to rebuild. Soon Matsushita Electric was back in production and making a profit. Morale among employees was strong.
Matsushita Electric continued to expand, acquiring many other companies. In 1952, it offered consumers the first black and white television sets. By 1959, Matsushita had established not only the Kyushu Matsushita Electric Company, the Osaka Precision Machinery Company (later renamed Matsushita Seiko), and the Matsushita Communication Industrial group (which manufactured the first tape recorder), but also Matsushita Electric Corporation of America. The company's first color television sets was marketed in 1960, as it continued to spread around the world with brand names like "National" and "Panasonic."
Paternal Management Philosophy
When Matsushita began his company with a handful of nondescript electric plugs, few could have predicted the phenomenal success that lay ahead. He believed that a company should create wealth for society as well as for shareholders, and should always work to alleviate poverty. Matsushita's business philosophy led to the Japanese "paternal management" tradition, whereby employees are viewed as being part of a "family" within the company, and are assured of lifetime employment, without fear of layoffs.
Outside the office of the Matsushita company, engraved in stone, is the creed and basic management objective of its creator and long-time president. The plaque says, "Recognizing our responsibilities as industrialists, we will devote ourselves to the progress and development of society and the well-being of people through our business activities, thereby enhancing the quality of life throughout the world."
One of the most lasting of Matsushita's business sayings was, "If we cannot make a profit, that means we are committing a sort of crime against society. We take society's capital, we take their people, we take their materials, yet without a good profit, we are using precious resources that could be better used elsewhere." His companies always made a profit. At one point, an American shopping for a video cassette recorder might look at GE, RCA, Sylvania, Magnavox, Montgomery Ward, Quasar and Panasonic without the knowledge that every one of these models was made by Matsushita.
Konosuke Matsushita was 94 years old when he died in Tokyo on April 27, 1989, leaving behind a vast manufacturing empire.
Further Reading on Konosuke Matsushita
Fortune, March 31, 1997
Matsushita Leadership, http://www.amazon.com