Kyocera Corp.’s distinctive management system seeks to promote profitable growth by extreme decentralization — with thousands of small, customer-focused business units.
A persistent challenge for companies as they become larger and more established is how to maintain the high level of dynamism and employee commitment that drove their success in the early days. Over the years, thoughtful managers and management theorists have formulated an array of approaches for dealing with the problem, including self-managing teams, self-organizing systems and division spinoffs — all designed to give managers and employees a more direct feeling of responsibility and accountability for the performance of their own profit centers. But very few companies have taken things as far as Kyocera Corp.
Founded in 1959 as Kyoto Ceramic Co. Ltd., Kyocera, headquartered in Kyoto, Japan, produces a range of industrial ceramics, semiconductor components, electronics devices and information and telecommunications equipment. In the year ending March 31, 2012, it had revenues of $14.5 billion and employed more than 70,000 people globally. The company reported net income of $1 billion for its fiscal year ending in March 2012 — which represented Kyocera’s 53rd consecutive year of profitability.
During its more than five decades in business, a key driver of Kyocera’s growth and success has been its distinctive entrepreneurial culture, known internally as “amoeba management.” The use of the word “amoeba” is meant to capture the concept of an entity at its smallest, most elemental level, as well as to describe its ability to multiply and change shape in response to the environment.1 In other words, amoeba management is intended to offer a spontaneous, homeostatic response to a business world characterized by rapid, dynamic change.
The Leading Question
What can executives learn from Kyocera’s amoeba management system?
- Each “amoeba” unit is expected to operate independently and to develop its own ways of working with other amoebas to achieve profitable growth.
- Amoeba management is best suited for business environments characterized by intense competition and fast technological change.
- Organizational cultures that foster collective, collaborative behavior are more compatible with the use of amoeba management than highly individualistic cultures.
Unlike other successful electronics manufacturers, Kyocera is structured as a collection of small, customer-focused business units.