Magazine Fall 2012 Research Feature

Amoeba Management: Lessons From Japan’s Kyocera

Kyocera Corp.’s distinctive management system seeks to promote profitable growth by extreme decentralization — with thousands of small, customer-focused business units.

Ralph W. Adler and Toshiro Hiromoto Reading Time: 20 min 

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Solar modules from Kyocera are shown on the roof of this award-winning building in Switzerland.

Image courtesy of Kyocera.

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?

Findings
  • 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.

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About the Authors

Ralph W. Adler is a professor of accounting and Director of the Centre for Organisational Performance Measurement & Management at the University of Otago in Dunedin, New Zealand. Toshiro Hiromoto is a professor of accounting at Hitotsubashi University, in Tokyo.

References (20)

1. K. Inamori, “Respect the Divine and Love People: My Philosophy of Business Management,” (San Diego, California: University of San Diego Press, 1999): 57.

2. Ibid., p. 31.

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Comment (1)
hamricca
I first met Inamori-San in 1970, and met him on many occasions, as Kyocera was a major supplier of ceramics to our company. I also met many of his company leaders, and one of his VPs became a good friend. My master's thesis was on Japanese management accounting systems, and Amoeba Management was a large element.

Your article is quite accurate, and I would highly reinforce those words that refer to the loyalty element. I have many stories of how this played out amongst the leadership team. You are probably correct in the assessment that his influence will fade; however, hopefully it does not, as he is a visionary in many ways. His approach in negotiation was unlike other senior Japanese leaders of the time, and it always made it much easier to deal with Kyocera as a result.

Charles Hamrick
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