A Very Japanese Company

Toshimichi Miyashita believes in harmony and hard work. That's led him to build a very profitable company.

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Toshimichi Miyashita believes in harmony. If his foreman saw two of a subcontractor's employees fighting, Miyashita would not tolerate it. He would withdraw his business from the subcontractor -- even if both the contractor and the workers involved had served him faithfully for years.

But miyashita's is a very Japanese conception of harmony. He explains that he would never tell the workers or their boss why he was getting rid of them. That, he says, would be too abrupt.

Miyashita is a very successful small businessman. His Misuzu Construction Co. had the highest profit-to-sales ratio of any medium-sized building company in Japan in 1979 and 1980, according to the prestigious Yano Economic Institute. It earned $1,650,000 on sales of $8,700,000 last year.

But Miyashita is more than just a successful entrepreneur. He seems to have succeeded largely by being more "Japanese," in several senses, than his competitors in metropolitan Tokyo's home-building industry.

He has emphasized traditional values of harmony, dependability, hard work, and long-term commitment to the community. He says he would never sell his business; that would leave his employees, customers, banks, and subcontractors in the cold. He brings his white-collar men together regularly for educational meetings. He maintains a company villa in a resort town and has arranged a company trip to Europe next year. He has traveled several times to the United States and Europe to study foreign construction methods, but he says he would never use one Western management tactic: He would never openly fire anyone.

The Japanese concept of harmony does not permit open firings or open acknowledgement of why a relationship has grown unproductive. If two roofers were in a fight, for example, Miyashita would gradually, perhaps over six months, withdraw business from the men's employer. "Building a house requires the cooperation of more than 100 workers in 30 specialties, and any lack of cooperation is a serious problem," Miyashita says. Buddhists believe one is fated to be with one's fellow workers, he asserts, and that therefore one should live peacefully with them.

Miyashita has rarely gone to the lengths of actually withdrawing business from a subcontractor to get rid of some workers. But he has also never laid off any of his regular employees, of which he now has 14.

Miyashita got into the construction business after a house-hunting trip with a friend in the mid-1960s revealed to him that many Tokyo builders were sloppy or dishonest. No one knew how to match a good house with a good site.

At the time, Miyashita was a reporter for the Japanese magazine Zaikai (Financial World). He had graduated from high school near the end of World War II when his family, like nearly everyone else in Japan, had virtually no money. By the time he was 30 he had earned college degrees in law and economics and had joined Zaikai after finding that the great trading companies -- where he really wanted to work -- were facing hard times and hiring few people. He knew he had little chance of entering a really big company after joining Zaikai because giant Japanese companies rarely hire anyone but recent school graduates.

While a sarariiman ("salary man") at Zaikai, Miyashita accumulated money by investing in stocks and real estate and in his spare time studied for and passed an exam certifying him as a tax accountant. Just before his house-hunting excursion, he read an insurance company study predicting that construction would thrive in the coming years. Their incomes were soaring, and the Japanese became discontented with Tokyo's tiny apartments. Miyashita knew traditional single-family home building offers few economies of scale, so small builders would face little competition from giant companies. After discovering how weak the existing companies in the industry were, Miyashita began buying vacant land and hiring workers to build houses. Soon he disregarded the advice of his co-workers at Zaikai and quit to give full time to the business.

Miyashita hid his journalism background, because Japanese builders consider themselves practical men and believe writers are critics rather than doers. He ran into "every conceivable problem" because of his inexperience, but he had a clear idea of the kind of firm he wanted to create: "A customer-oriented, high-quality builder of traditional homes," he says.

The insurance company study was right. There was plenty of opportunity in Japan's housing industry. And that meant that some of the sloppy operators Miyashita found when he surveyed the market in the mid-1960s could survive and prosper. Much of Japan's new housing over the past three decades has been thrown up with poor materials on lots that lacked such necessities as sidewalks to the nearest railroad station.

Miyashita is proud of an integrated strategy worthy of Toyota or Mitsubishi. Before he buys land, he visualizes what kinds of houses will go on it, how they will fit into the neighborhood, and who will buy them at what price. He keeps overhead low, turning off air conditioners when no one is in an office, restricting advertising and promotion to just over 1% of sales, and limiting payments to his lawyer and his outside accountant to $1,300 and $3,500 a year respectively.

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