Hiroshi Tsukakoshi, chief adviser and former president and chairman of Ina Food Industry, an agar producer, died on 29 June of old age. He was 88.
Tsukakoshi was known as the pioneer of ‘Tree-Ring Management’, a management philosophy geared towards steady corporate growth.
Ina Food Industry and the man who built it
Ina Food Industry is an unlisted company, and with the late Tsukakoshi’s son, Hidehiro Tsukakoshi, now at its helm as president, it can fairly be called family-run. Although it has a hit product in ‘Kanten Papa’, it is not exactly a household name nationwide; it is better described as a local firm in Nagano prefecture.
Among Japan’s business leaders, however, Hiroshi Tsukakoshi enjoys a high profile. The reason Ina Food Industry is not famous nationwide, moreover, may itself be traced to his management philosophy.
Ina Food Industry was founded in 1958. Tsukakoshi joined that same year, not as a founding member but dispatched by relatives to turn the ailing business around.
After he joined, the company threw its weight behind research and development, though not without lean years along the way. R&D remains central: even today a tenth of the workforce sits in the division. Dogged product development through the hard times, coupled with the boon of a stable supply of raw materials, allowed ‘Kanten Papa’, a brand launched in 1980, to grow into the core of Ina Food Industry’s business. The range spans agar-based sweets and prepared dishes, and reportedly commands 97% recognition in its home prefecture of Nagano.
Tsukakoshi went on to become president in 1983. He was made chairman in 2005 and, in 2019, stepped down from that post to take up the role of chief adviser.
‘Tree-Ring Management’, embraced even by Toyota’s chairman
As noted at the outset, Tsukakoshi championed the management philosophy known as Tree-Ring Management.
Because natural conditions vary from year to year, a tree’s growth varies with them. Yet however much the pace of growth differs from one year to the next, in every year the tree grows a little more surely than the last. The thinking is to apply this to the running of a company.
Conversely, Tree-Ring Management is wary of rapid growth. When a tree shoots up in a single year, a gap opens between that year’s ring and the one before, and the tree tends to grow weak. A strong, long-lived tree, by contrast, shows little variation in the spacing of its rings from year to year, and that spacing is tight. Translated into management, such headlong growth is akin to a company that can no longer attend properly to recruiting people who fit its culture, or to embedding that culture — and, over the long run, it saps the organisation’s strength.
As noted earlier, Ina Food Industry is well known in its home prefecture of Nagano but far less so nationally. During the agar boom that swept Japan in 2005, Tsukakoshi is said to have rebuffed an approach from a big supermarket chain to take the products nationwide. His reason, by his own account, was a fear that ‘a sudden jump in sales might outrun what we could properly cope with’.
In this way, a fair number of Japanese executives back Tree-Ring Management, which pursues a high-quality organisation even at the cost of time. One of them is the chairman of Toyota Motor Corporation, Akio Toyoda.
In May 2014, while still president, Toyoda said Toyota’s forecast for the year to March 2015 would be broadly flat on the previous year (in the event, revenue rose 6.0% and operating profit 20.0%). By then the downturn from the Lehman shock and the recall crisis had eased, and the market had been hoping for a counter-offensive. Toyoda put the flat guidance down to the time that sustainable growth demands, describing that interval as a ‘deliberate pause’ (ishi aru odoriba). It is widely read as a nod to Tree-Ring Management.
Partly because of this affinity, Tsukakoshi also sat for an interview with Toyota’s own media outlet.
In investors, companies have a stakeholder of real heft, and that brings genuine pressure for rapid growth. There is nothing wrong with this in itself. But if a fixation on speed leaves the groundwork neglected and grave damage follows, every stakeholder — investors, business partners and employees alike — ends up worse off. That would be to mistake the means for the end.
Tsukakoshi, one might say, pointed to a way for free-market capitalism to endure.
