A PROVEN RECIPE FOR SUCCESS
An inconspicuous Japanese firm that doesn’t make cars or cameras or TVs became a business pioneer in America and replicated that success story around the world.
It is a common observation in boardrooms and CEO conferences around the world that Yuzaburo Mogi, the Honorary CEO of Kikkoman Corporation, has learned to defy time. Although he joined the company back in the 1950s and became its President in 1995, he still keeps up a daily work regimen that embarrasses younger colleagues. His energy and positive attitude have driven Kikkoman from being a well-known domestic producer of soy sauce to a growing giant in the global foods business.
Kikkoman has been making its mainstay product, soy sauce, for more than 350 years, and Mogi’s family has played a key role in it for most of that time. In 1960, the young Mogi went to the United States to study Western business and earned an M.B.A. from Columbia.
Everything he had learned overseas told him that the only way for the company to grow was to become more of an international business, and that meant producing locally. He surveyed numerous possible sites in the country and repeatedly explained the benefits of establishing a production base in the US to Kikkoman’s senior management, which eventually led to the successful completion of the company’s first US factory.
“We started shipping product from our Wisconsin factory in 1973, and while we faced some difficulties in the beginning, after the first few years we started to grow, and we’ve been growing ever since,” he reminisces.
Success in America was just a stepping stone for the firm. “We created a sound business model in America, then replicated it in Europe, Asia, and around the world,” Mogi explains. “Now we derive about 70 percent of our operating income from overseas operations.”
Kikkoman’s legendary success has made it a case study in famous business schools worldwide. Students examine what secret ingredients made a soy sauce maker one of the world’s most admired international businesses.
To Mogi, there is no big secret: “The first step was getting people to try our product. At first they didn’t even know what shoyu (soy sauce) was, and then gradually they discovered that they like it. The next step was to show them that they can use it in their own daily cooking to enhance flavors. We are strong believers in ‘food culture’ and ‘food education,’ so it was natural to show people in different countries how they could use this allpurpose seasoning to make their own foods taste even better.”
One might say that showing your product to potential customers doesn’t require marketing genius. There must have been something else.
“Well, another key to success abroad is chiiki kyosei, or living in harmony with the place where we are doing business. That means buying goods and raw materials locally, hiring locally, using local vendors, practicing environmental conservation, and especially, interacting proactively with the local community. One area that we care deeply about is education,” said Mogi. There are many examples, but one clear case was just a few months ago: When the Wisconsin factory celebrated its 45th anniversary, the company donated US$600,000 in scholarship funds to a group of six local high schools. “Supporting education is just one way that we engage with communities. It goes far beyond what most companies think of as good corporate citizenship.”
Mogi is a highly respected elder statesman in the business world both inside and outside of Japan. That makes his views on the state of the economy particularly influential: “Companies that produce added value reap profits. Added value translates to GNP growth. In the 1960s and '70s, Japanese companies were highly innovative. By constantly adding value to products, they created enormous demand, which led to a huge economic boom. In order to grow now, companies need to become innovative again. It is essential to create new demand, and that means a need for innovation and for new investment. Innovation drives demand, which drives growth.”
For half a century, Mogi says, Kikkoman has worked hard to be innovative, not simply to expand its product range, but to create increasing demand for its products. And it is still growing worldwide. Clearly, they have found a recipe for success that continues to serve the company well all over the globe. Yuzaburo Mogi is a descendant of one of the founding families of Kikkoman, which is among the oldest continually running businesses in Japan. He became company President in 1995, was named Chairman in 2004, and assumed the title of Honorary CEO and Chairman of the Board of Directors in 2011. Mogi holds an MBA from Columbia University.