Kazuo Ichijo is professor of organisational behaviour at IMD.
The Yazaki Corporation has become the 12th recipient of the highly prestigious IMD LODH Distinguished Family Business Award. Professor Kazuo Ichijo explains the history of the company and why it was so deserving of the award
The Yazaki Corporation was awarded the 12th annual IMD Lombard Odier Darier Hentsch Distinguished Family Business Award at the FBN summit (see page 16). The award is regarded as one of the greatest honours for a business family and is awarded in recognition of a firm's corporate governance, focus of family values, involvement of multiple generations and sustainability of its social endeavours. "We are delighted to honour the enlightened leadership of Yazaki Corporation, which is an inspiration to business families across the globe," said Thierry Lombard, a senior partner of Lombard Odier Darier Hentsch.
A pioneer in automotive wire harnesses
Yazaki Corporation, headquartered in Minato-ku, Tokyo, Japan, is a 100% privately-owned corporation with a diverse range of products in the global automotive and environmental systems sectors. More recently, the company has begun to expand into a third business sector, mainly in the areas of nursing care and environment-related businesses. Above all, Yazaki is the world's largest producer of automotive wiring harnesses, with a market share of approximately 30% as of 2006.
The Yazaki Group has achieved a significant global presence with 169 companies and 410 business sites in 39 countries. It has production facilities in the US, Mexico, South America, Africa, Australia, Southeast Asia, India and China as well as throughout Europe, which has developed into a major market since 1980. Yazaki Corporation acts as the central hub of the Yazaki Group of companies, which employ approximately 200,000 people worldwide. For the fiscal year 2005–2006, the group registered worldwide sales of $11 billion, a year-on-year increase of approximately 11%.
Since its founding, Yazaki has been owned and governed by the Yazaki family. Currently, the family is the primary shareholder, and the company is governed by the second generation of the family with the third playing important roles in the company's growing global business.
Yazaki's operations date back to 1929 when Sadami Yazaki began selling wire harnesses for automobiles and for the next 45 he grew the company to become one of the global leaders in automotive harnesses with branches in Europe and the US (see time line on page 22).
In August 1974, Sadami died suddenly at the age of 64. His son, Yasuhiko, became the second president of Yazaki at the age of 33.
When he succeeded his father, Yasuhiko had not yet developed the charisma his father had, and the management and governance of the company was an enormous challenge. Additionally, in the wake of the 1973 oil shock, Yazaki was faced with increasing material costs, unfavourable currency exchange rates, and a global economy that was in a deep depression. To overcome the crisis, Yasuhiko sold off $175 million in assets, including the corporate headquarters.
He then launched two strategic initiatives, which resulted in big successes for the company. First, he grew Yazaki's overseas operations more aggressively. As a result, overseas sales grew from $40 million in 1974 to $1 billion in 1990. During the same period, overseas employees grew from 2,922 to 33,703.
His second initiative was to invest additional corporate resources into growing the solar-powered energy business and the environmental systems sector, which had also become global businesses.
As Yazaki's overseas business continued to grow rapidly, Yasuhiko recognised the need to develop people. He launched a number of global human resource development programmes, including an overseas adventure school for all new employees and a global training programme for employees in overseas subsidiaries. In addition, the educational support of the children of Yazaki employees was considered to be very important, so Yazaki held annual summer camps for their employees' children in Japan and overseas.
Social responsibility: a key corporate concern
Under Yasuhiko's leadership, corporate social responsibility (CSR) was assigned the status of a separate corporate goal at Yazaki. Since Yazaki's inception, it has remained close to the tenets of its corporate vision: to become a company that is trusted and respected by society. Adherence to this mission insured that CSR was part of all management decisions at Yazaki.
Yazaki built the world's first solar-power based air conditioning, heating and hot water supply system in 1974. Since then, it has been committed to accepting its share of responsibility for the care and maintenance of natural life and sustaining resources. Yazaki believes that economic success and ecological accountability go hand-in-hand. Therefore, the company strives daily to strike a balance among the needs of its customers, the protection of the environment and the interests of Yazaki.
Currently, the company is expanding its activities in various businesses such as the operation of nursing care, healthcare, environment-related businesses and recycling.
Yazaki actively discloses environmental and other data in its annual Social & Environmental Report. Through this publication, Yazaki explains how it fulfills its CSR with respect to both the social and environmental aspects of its activities.
Handing over the presidential keys
After more than 25 years as president of Yazaki Corporation, Yasuhiko stepped down in 2002 and his brother, Shinji, became the third president. Yasuhiko remained chairman of the corporation, mainly working on matters relating to CSR, overseas subsidiaries and local communities. The new president would be responsible for growing Yazaki's business with a focus on QCD (quality, control and delivery).
Shinji reevaluated Yazaki's corporate activities in order to strengthen its relations with stakeholders. One significant result was a more efficient system for the dissemination of information to different stakeholders. Shinji believes that sharing information, regularly and accurately, helps all stakeholders understand the company's commitment to social responsibility, and he will continue to promote bi-directional communication with all who have a stake in the company.
The Yazaki family puts a high priority on keeping good relationships with its stakeholders. All three presidents considered the formation of relationships based on mutual understanding and trust with all the stakeholders in Japan and overseas as the single most important element in ensuring continuous business development.
Engaging in effective bilateral communication with each stakeholder based on corporate policy and fundamental management policy is considered a part of Yazaki's CSR.
Strengthening the core business
The improvement of Yazaki's core automotive business was a key leadership mission for Shinji, and the company won various awards from suppliers, including Ford.
Under Shinji's leadership, the company also revitalised its innovation capabilities. With the US market demanding more and more hybrid vehicles, Yazaki bolstered its hybrid component sales in the region by launching the production of high-voltage automotive products for hybrids and other vehicles in 2005. These products included inverters, battery packs, connection systems for motors and other related products.
Although Yazaki Corporation's overseas sales had moved upwards, the company was still overdependent on Japan for its sales. Concerned that this overdependence might have a negative impact on the company's growth if, for example, there were a downturn in domestic demand, Shinji intensified Yazaki's overseas business growth.
The third generation: on the road to leadership
At Yazaki, the third generation of the founding family is already playing an important role in growing Yazaki globally. Yasuhiko has two sons who represent the third generation of the family – Riku and Ko, both of whom are directors in the company.
All of the family members have taken senior management positions while they were young. In addition, all of them became directors of Yazaki Corporation in their 20s or early 30s. They faced tough challenges in these key positions, and in their efforts to overcome the challenges, they developed their management and leadership capabilities.
Currently Yazaki has three core operating locations: Japan, the US and Europe. The third generation of the Yazaki family is located overseas, where they have been asked to take the lead in growing Yazaki's business in these important markets. They report directly to Shinji and Yasuhiko, who has supported all of their business initiatives as a mentor, brother and father.
A family tradition: navigating with consistency
Since its foundation, Yazaki's corporate policy has been "a corporation in step with the world" and "a corporation needed by society." This unchanging pillar, espoused by all three presidents of Yazaki, supports all of the business activities of the Yazaki Group.
Despite the many changes that society has undergone, Yazaki operates with a uniform stance and code of conduct based on its corporate policy to fulfill its responsibilities and mission as a manufacturer of high quality products.
The three presidents of Yazaki Corporation have all tried to create a multicultural corporation that can develop with the rest of the world. And they have created a unique corporate management and culture based on autonomy, equality and harmony. The third generation of the family, Riku and Ko, will also adhere to this principle.
Yazaki – time line
1929 –Sadami Yazaki starts selling wire harnesses for automobiles.
1935 – Japanese companies, such as Toyota and Nissan, start automotive production in Japan.
1939 – Sadami expands the business to produce wiring harnesses.
1941 – Yazaki Electric Wire Industrial is established with about 70 employees.
1949 – Sadami decides to focus on the production of automotive wire harnesses and stop production of general electric wire.
1950 – Yazaki starts producing automotive meters and Yazaki Meter Company is established.
1955 – Yazaki establishes its first export division and begins to grow its overseas operations.
1962 – The company establishes its first overseas factory in Thailand.
1966 – The American Yazaki Corporation is formed in Chicago.
1972 – American Yazaki Corporation begins the production of components for supplying a major US automaker.
1974 – Sadami dies suddenly and his son, Yasuhiko becomes president. Yazaki develops the world's first solar-powered energy generation system.
1980 – The company establishes Yazaki Europe in the UK.
1986 – The first European production plant opens in Portugal.
1997 – American Yazaki Corporation is restructured as Yazaki North America and major business units are established.
2000 – Yazaki Corporation announces its intention to become the global leader in vehicle multimedia network system integration for OEMs (original equipment manufacturers).
2002 – Shinji, Yasuhiko's brother, becomes president. GM honours Yazaki with its "2001 Supplier of the Year" award.
2005 – Yazaki relocates some of its production from Japan to the US in order to meet the growing demand for hybrid vehicles in North America. Yazaki is selected by Ford as one its premium suppliers. Yazaki Europe plans to build a facility in Bulgaria for the manufacture of automotive electrical equipment. The company receives DaimlerChrysler's "2005 Global Supplier Award" in recognition of its supply performance and product quality. Yazaki plans to acquire a 25% stake in Hesto Harnesses (Pty) Ltd, a leading supplier of automotive wiring harnesses based in South Africa. The transaction is valued at $3.3 million.
2006 – Yazaki North America accomplishes the first and second phases of a three-phase programme to move its high-voltage manufacturing capabilities from Japan to North America.