Some of the most surprising things about Japan are the shops you stumble upon - you can find many businesses that have been open for hundreds of years. Most of these are not large companies, but rather the local town’s artisanal {insert product here}. We’ve encountered sake breweries, restaurants, tea makers, and many other craft businesses that have been open well before World War Two, some before Commodore Perry ‘opened’ Japan to the West, and some even before the famous 47 ronin revolted. Insanely enough, one hotel has been running for over 1,300 years (before Constantine became the Catholic Pope)! These businesses have survived war, famine, modernization, and growth. What enables their longevity and what can modern-day businesses learn from them?
This question has no doubt been asked and answered before. I am, hopefully, going to take a slightly different take - one based on my brief understanding of Japanese culture and my background in social impact. I believe there are three key takeaways:
Strive for mastery - These businesses strive for perfection beyond their customers’ expectations. They are labors of love that respond to the needs of the community and even preempts their customers’ desires. This hyperfocus on details and perfection leads to deep trust with customers and, eventually, a tradition (and brand) of excellence.
Innovate responsibly - All of these businesses started somewhere and grew. Some grew more than others and some have grown and shrunk. But all grew carefully and with intention - they did not take outsized risks that jeopardized their core product or organizational foundation (e.g., a sake brewery that continues to make the local temples’ special sake and expanded to offer a suite of other sakes for the public or a factory that switched to making a different product but retained all of its highly skilled staff).
Invest in people - The foundation of these organizations are the staff. They almost all have low turnover rates and high tenure - many are even multi-generational family businesses (often with new leaders adopted into the family). The idea seems to be that as employees develop mastery (picture ‘Jiro Dreams of Sushi’ level mastery), they will ultimately be the vanguard of the future of the business - never losing sight of the core values and mastery vital to the identity and success of the organization.
In regard to social impact, I think the biggest lesson to pull from all of this is the scale of investment, especially the time investment. Responsible and effective change takes time - time for mastery to manifest into the community as trust and excellence, time for appropriate innovations to disrupt with intention and minimal detrimental impacts, and time for leaders to grow into their mastery to be able to continue to make change. Thus, organizations intent on longevity seeking to make change should either foster mastery internally (e.g., by focusing long-term on a few causes/locations and retaining institutional knowledge) or support other organizations in fostering their mastery (e.g., with long term partnerships and support).
All this being said, I don’t believe every organization should follow these tenants, as there will always be a need for the big and bold disruptors. Instead, I would guess that there likely is an ideal balance of both types of businesses in each sector. For example, I would guess that the food sector could benefit from more organizations centered on longevity than there are currently today given the state of our soil, diet, and environment.
A critical component of inspiring more businesses to focus on longevity would be fixing incentives. Right now, there are very few incentives for for-profit businesses to focus on longevity and minimizing negative externalities over short term gains. I believe implementing something like Pigouvian taxes (e.g., a carbon tax) would help cause a huge shift in many organizations’ strategy towards a longevity focus [but this opens a whole can of worms on how to properly price negative externalities that I do not have the expertise or knowledge to begin to riff on here].
I should learn more in the coming weeks as I spend time in Kyoto, the place with the highest concentration of old businesses in Japan, but I wanted to document my current hypotheses. I’ll provide a followup if anything new arises and I would love to hear any reactions!