The face of the new 10,000 yen bill, Eiichi Shibusawa, and the words of marketing grandfather Drucker [Learn about marketing from history's greats, Part 2]

Kenji Morioka, a small and medium-sized business consultant and author of “Success and failure of Sengoku warlords through SWOT analysis,” explains the strategies of Sengoku warlords and historical greats in this series. Following Nobunaga Oda last time, the second installment will focus on Eiichi Shibusawa, the face of the new 10,000 yen bill and known as the “father of modern Japanese economy.”

The focus is on Shibusawa’s achievements and social contribution ideas, which were highly praised by Drucker, known as the “grandfather of marketing,” and the comparison with Yataro Iwasaki, whose rivalry was depicted in the historical drama “Seiten wo Kike.” We will also explain the relationship with the Mitsui family. Learn important lessons for modern business through the similarities between Shibusawa and Drucker.

Eiichi Shibusawa on the new 10,000 yen bill highly praised by Drucker

Do you know a Japanese person who is highly praised by

Peter Drucker

?

Drucker is said to be the father of management, and has written nearly 40 books and has made numerous statements regarding marketing.

Marketing guru

Philip Kotler

praised Drucker, saying, “If I am the father of modern marketing, then Drucker is the grandfather of modern marketing.”

There is a Japanese businessman who was highly praised by Drucker and featured in his books.

That person is Eiichi Shibusawa, who will be featured on the new 10,000 yen bill from July 2024. He attracted attention as the main character in NHK’s historical drama “Seiten wo Kake”.

Drucker comments in his book as follows:

“Before anyone else, Eiichi Shibusawa raised essential questions in the 1870s and 1880s about the relationship between corporate and national goals, corporate needs, and individual ethics.”

“Japan rose as an economic power in the 20th century, and this was largely due to the ideas and achievements of Eiichi Shibusawa.”

In this way, Drucker highly values Shibusawa as a predecessor who laid the foundations for today’s economic superpower. What kind of person was Shibusawa?

Eiichi Shibusawa: From farmer to samurai to father of Japanese capitalism

Shibusawa’s birthplace is Musashi Province’s Haisawa District, which is now Fukaya City in the northwestern part of Saitama Prefecture.

His family was a farm that also engaged in the production and sale of indigo balls, sericulture, and wheat cultivation, and he was born as the eldest son of Shibusawa Ichiroemon and Ei.

From an early age, he helped out with everything from purchasing, processing, and selling dyes, so it seems that he was trained as a merchant even though he was a farmer.

Since childhood, he has studied the Analects of Confucius and the Four Books and Five Classics, and has even traveled to Edo to practice swordsmanship. Shibusawa also came to believe in the idea of sonno-joi and began his activities as a patriot, but after many twists and turns, he was later appointed as a vassal of Tokugawa Yoshinobu.

Then, he was chosen to be part of the retinue of Yoshinobu’s half-brother, Akitake Tokugawa, and was invited to visit the Paris World’s Fair in France. Shibusawa’s many experiences in developed countries became the basis for his subsequent thinking.

During this trip, the restoration of imperial rule, the Boshin War, and the inauguration of a new government took place, and by the time Shibusawa returned to Japan, Japan’s national system had changed dramatically.

Shibusawa was ordered to serve in the new government and worked at the Ministry of Finance to improve the monetary system.

Around this time, he led the establishment of the Tomioka Silk Mill with Shigenobu Okuma and others. It was also during this time at the Ministry of Finance that I met Yukichi Fukuzawa.

He later resigned due to conflicts over budget planning. Since then, I have been involved in the founding of a wide variety of companies, including shipyards, insurance companies, railway companies, and construction companies, as well as the founding of banks as a private business manager.

It is said that there are more than 400 to 500 companies, of which about 167 still exist.

The industries are diverse, including ENEOS, KDDI, Mitsui & Co., Mizuho Bank, Kansai Electric Power Company, Tokio Marine & Nichido Fire Insurance, Sompo Japan Insurance, Daiichi Sankyo, Kikkoman, Nippon Suisan, and Sumitomo Heavy Industries. He came to be known as the father of Japanese capitalism.

Drucker highly values these achievements. This may be because Drucker saw something in Shibusawa that he had in common with himself.

Therefore, I would like to take a look at Shibusawa’s thoughts and achievements based on the famous words left behind by Drucker.

The goal of marketing is “optimal position in the market”

In his book, Drucker states that the goal of marketing is, “The position that a company should aim for in the market is not the maximum, but the optimum.”

This is based on the idea that in a new market, competition between multiple companies will lead to healthier market development, rather than a single company having a monopoly.

If one company monopolizes a market, that company will be able to obtain stable profits and will avoid further growth and innovation. As a result, the market stagnates and shrinks.

In addition, customers will begin to feel a strong sense of resistance to companies that have such pricing power.

In the early Meiji period, Yataro Iwasaki’s Mail Steamship Mitsubishi Company implemented a thorough price-cutting strategy in the Japanese shipping market, successfully excluding foreign companies and small and medium-sized enterprises. This gives it a near monopoly on the shipping market.

As mail steamers gained price control, they began to demand higher freight rates. Iwasaki’s policy sparked growing dissatisfaction and concern from political and business circles.

Shibusawa, who places emphasis on market development, establishes a new joint transportation company with politicians and the Mitsui family to compete with mail steamers.

When Kyodo Transport entered the market with lower prices, Mail Steamship also responded by lowering prices, and the market suddenly changed to one that was more customer-oriented.

However, perhaps due to the emotional intensity of this competition, both companies began to focus on defeating their rivals rather than customer satisfaction, leading to the exhaustion of both companies.

Ultimately, in order to prevent the market from collapsing due to mutual collapse, Shibusawa merged Postal Steamship Mitsubishi Company and Kyodo Unyu Kaisha to once again seek an optimal position in the market.

Although the market optimization by Shibusawa and his colleagues led to intense price competition, it greatly contributed to the shipping industry that followed.

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A company is not a “profit organization”

In his book, Drucker says, “If you ask anyone, even economists, what a corporation is, they will answer that it is a for-profit organization, but that is wrong and misses the point.”

It is often thought that the purpose of a company is to pursue profit, but profit is a condition for continued existence, and there is a separate purpose.

The purpose of a company is to contribute to society. For that purpose, they say it is necessary to make high profits.

Drucker’s focus goes beyond maximizing the profits of a single company to the development of society as a whole.

Shibusawa, like Drucker, is said to have operated based on the idea of “gathering the most suitable human resources and capital to promote business in order to achieve the purpose of pursuing the public interest,” rather than focusing on the profit of a single company. I am.

This way of thinking is known in modern times as combinationalism.

Shibusawa also advocated that the purpose of a company is not to increase its own profits, but to expand the public interest, which can be called the benefit of society as a whole.

We also believe that organizational leaders should be able to understand and act on their objectives, so even if they are starting a company or organization, they will discover and develop suitable human resources to take over the top position. I’ll go.

The reason why Shibusawa was actively involved in the establishment of banks was to prevent monopolization by a few people with capital, to encourage the development of society and the market, and to create a social system that could widely collect capital and make effective use of it in a fluid manner. Because we were aiming to build it.

This seems to have finally come close to Shibusawa’s ideal after the dissolution of the zaibatsu after World War II.

“Contribution” in three areas

Drucker said, “Every organization requires performance in three areas.”

What are the three areas that Drucker preaches?

1. Direct results

2. Commitment to value

3.Human resource development

I’m referring to

The first direct result is sales and profits for the company, which is a natural contribution for a manager.

The second is value initiatives, which differ depending on the industry, but contribute to society by transforming the market with new technology and providing new satisfaction to customers with products and services.

The last step is to develop human resources, and in order to ensure the longevity of the organization, we need to develop the next generation of managers who can adapt to the changing environment.

Drucker believes that these three outcomes are important for an organization.

Shibusawa also places great importance on these issues, and has a number of achievements in developing human resources.

A famous example is the training of managers at Shimizu Corporation, a major general contractor. When Mannosuke Shimizu, the third generation representative of Shimizu-gumi, suddenly passed away, he took on the role of advisor and supported the young fourth generation, helping to develop them as managers.

Another example is Shuzo Toyama, who later became president of Hanshin Electric Railway. He became involved in bank management after his boss from the Ministry of Finance, Shibusawa, offered him the position of auditor general of the Osaka 32nd National Bank. In addition to Hanshin Electric Railway, he was involved in the establishment of many other companies.

Takeshi Yamabe, the president of Osaka Boseki, the predecessor of modern-day Toyobo, was sponsored by Shibusawa to study economics and mechanical engineering in England. We are contributing to the development of modern Japan’s spinning industry.

We support Tomiji Hirano of Ishikawajima Hirano Shipyard, the parent company of current IHI, not only with capital but also with management. After Hirano’s death, Shibusawa served as chairman and provided management guidance, training people such as Seiichi Umeura, who had previously served as president of Tokyo Bay Kisen.

Shibusawa will continue to develop human resources who will contribute to society, including participating in the management of the Commercial Law School, which is the origin of Hitotsubashi University. We support Jo Niijima for the establishment of Doshisha University.

What is management? We will explain the definition, role, and KPI management in marketing.

Yataro Iwasaki, another Japanese admired by Drucker

Besides Shibusawa, there is another Japanese businessman whom Drucker highly praised. That person is Yataro Iwasaki, the founder of Mitsubishi, who fought with Shibusawa in the shipping market.

Iwasaki rose from an underground ronin to a goshi in the Tosa domain, which is now Kochi Prefecture, and was recognized for his administrative skills and started trading in Nagasaki. There, I am in charge of handling the backlog of Ryoma Sakamoto’s Kaientai.

He developed Kujuku Shokai, which focused on the shipping industry, and later established Mitsubishi Shokai. By taking sole responsibility for military transportation for the government, they came to monopolize the shipping market. This is also the reason why it is called political business.

Iwasaki placed emphasis on the pursuit of profits and idealized the integration of capital and management. This ideal was inherited, and the Mitsubishi Zaibatsu was formed by developing various businesses with the shipping industry as its base.

The Mitsubishi Zaibatsu became one of the eight major zaibatsu in the Showa period, but after World War II, it was designated as a zaibatsu to be disbanded by GHQ for its complicity in Japanese militarism. The current Mitsubishi Group includes Mitsubishi Corporation and Mitsubishi UFJ Bank.

On the other hand, because Shibusawa emphasized the public interest and insisted on separating capital and management, only the Shibusawa family’s asset management company remained, and with the exception of Shibusawa Warehouse, the only major shareholder, even the companies he was involved in founding had a small percentage share. I only owned stocks. We did not form conglomerates that monopolized profits.

Because Iwasaki approached management with an attitude of pursuing profits, he is often compared to Shibusawa, who emphasized the public interest.

However, both men have one thing in common: although they rose from a low status that allowed them to wear their surnames and swords, they both became samurai warriors, but were captivated by the business world and went on to become private managers.

Drucker evaluates the great legacy left behind by these two men during the Meiji era. However, Iwasaki’s emphasis is on maximizing profits, while Shibusawa’s emphasis is on expanding the public interest, including the development of human resources. In a sense, the values of the two men were at odds with each other in corporate management.

However, Drucker believes that both are important for corporate management. Particularly in Meiji Japan, where modernization was lagging behind, Drucker may have believed that the competition between these two people’s ideas promoted the rapid development of society and the market.

Thoughts common to Eiichi Shibusawa and Drucker

It is said that Shibusawa’s mission was to spread the principle of “promote business by gathering suitable human resources and capital in pursuit of the public interest.”

Shibusawa, who adhered to the principle of consolidation, established companies but later entrusted management to others, so he never formed a conglomerate like Mitsubishi or Mitsui.

After Shibusawa’s death, all that was left was Shibusawa Dozoku Co., Ltd., which was used to manage assets. However, in 1946, after World War II, GHQ misidentified Shibusawa Dozoku Co., Ltd. as a zaibatsu and ordered its dissolution.

Afterwards, GHQ admitted that it had been misidentified and notified the president, Keizo Shibusawa, to request that the designation be lifted. dissolve.

This is said to be an action that he inherited from his grandfather Shibusawa’s spirit of public service.

Drucker is also critical of companies’ pursuit of only profits, and believes that contributing to society is their highest priority.

I think what we both have in common is that we are looking at the world beyond, rather than focusing on the convenience of a single company. This commonality may be a major reason why Drucker highly rates Shibusawa.

That’s why I think there are many similarities between Drucker’s famous words and Shibusawa’s accomplishments.

By the way, in addition to Shibusawa and Iwasaki, there are other early modern Japanese figures that Drucker highly praised. That person is Takatoshi Mitsui, the founder of the Mitsui Group.

He is praised for being the first in the world to bring the concept of marketing into business around 1650, and to achieve success.

The Mitsui family became a merchant house for the government of the Shogunate, and reached the beginning of the Meiji Restoration. Shibusawa also had ties to the Mitsui family, and was later involved in the founding and management of Mitsui-affiliated companies such as Mitsui & Co. and Mitsui Sugar.

Although it is a coincidence that Shibusawa teamed up with the Mitsui family to establish a joint transportation company and came into conflict with Iwasaki of the Postal Steamship Mitsubishi Company, it shows that the Japanese people Drucker admired fought together on the one hand and competed on the other. I think it’s interesting history.