Messages from Monthly Keidanren, May 1999

A corporate philosophy reflecting the changing business environment

- In considering an ideal corporate philosophy -

Kenji Kawakatsu
Vice Chairman of the Board of Councillors, Keidanren
Senior Adviser, The Sanwa Bank, Ltd.

The environment surrounding our nation's economy is facing unprecedented difficulties with a lagging recession after the burst of the bubble economy, a chain of corruption charges placed on various corporations, a gloomy future, and the list seems endless. Japan, which in the 1980's stood stern as an economic power house, now appears to be suffering from a crisis of confidence. It is at these times that we must endure ourselves to return to the basic, placing especial emphasis on the necessity to reconsider the importance of a corporate philosophy.

A corporate philosophy, which reflects the company's ideal status, acts as a compass for the corporate management. With the present economic society becoming more globalized, complex and speed-oriented, we are persistently being pressed by time on a daily basis, thus further increasing the importance of a corporate philosophy.

However, it will be absolutely meaningless if it was simply printed words. A corporate philosophy should be practical and fully understood, and thus, it must reflect the shifting business environment. Japanese companies are presently being forced to initiate changes in its traditional management structures, such as placing focus on the importance of stockholders, investors and the market in general. Furthermore, with corporate scandals endangering the very existence of a company and raising numerous issues related to its management bases, it has now become indispensable for companies to reconsider its management policies, including compliance and code of conduct, from the perspective of risk management.

Under the light of these new trends, we must review the company's philosophy and absorb it into every corner of the company system by reflecting it in specific activities and corporate strategies, and in the check-and-balance system.

A research shows that the essence for a "Visionary Company" (American companies which have managed to survive despite the recession during the 1980's) is to have the basic philosophy and the ambition to progress rooted into the entire structural system.

In order to revitalize the Japanese economy for the next millennium, Japanese companies must transform themselves. To do so, I strongly believe that it is essential to review the corporate philosophy by reflecting the current business environment and reconstruct the company system by utilizing the corporate philosophy as a basic tool to consolidate each and every staff.


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