Lessons From the World’s Oldest Company
How sticking to your principles can help your business stand the test of time
Some time back I came across an article from the early 1970s about my grandfather (also named George DeMet), a Greek immigrant who spent more than 60 years running several candy stores, soda fountains, and restaurants in Chicago.
While the DeMet’s candy and restaurant businesses were sold decades ago, the brand survives to this day and you can still buy DeMet’s Turtles in many grocery and convenience stores.
While I never really got to know my grandfather (he died when I was seven years old), I have heard many of the stories about him that were passed down by my grandmother, my father, and other members of the family.
And from those stories, I’ve gotten a glimpse into some of the principles and values that helped make the business that he ran so successful for so long. Simple things, like a commitment to good service, honesty, and listening to other people’s good ideas.
As I was thinking about those things, I started doing some research into the values held by family businesses, which include some of the oldest and most enduring companies in the world.
The longest lasting company in recorded history was Kongō Gumi, a Japanese Buddhist temple builder that was founded in the year 578 and lasted until 2006. At the time that Kongō Gumi was founded, Europe was in the middle of the Dark Ages, the Prophet Muhammed was just a child, and the Mayan Empire was at its peak in Central America. Renowned for the quality of its work, Kongō Gumi helped build many famous and historic Japanese buildings over the centuries.
Even though the Buddhist temple construction and repair business is a fairly stable one, Kongō Gumi still had to contend with a lot of socio-political changes that took place in Japan over its 1,400 year history.
Part of what helped was that the company had unusually flexible succession planning; even though Kongō Gumi technically was in the same family for 40 generations, control didn’t automatically go to the eldest son; it went to the person in the family who was deemed the most competent, even if that person was a distant relative or related by marriage.
Kongō Gumi also built a reputation not just for quality, but also for its focus on customer service. The company built relationships with their customers that lasted for centuries, just like their temples.
But the biggest factor in Kongō Gumi’s longterm success was probably its unwavering commitment to a set of core principles that were documented in the 18th century, and included advice such as:
- Always use common sense
- Concentrate on your core business
- Ensure long-term stability for employees
- Maintain balance between work and family
- Listen to your customers and treat them with respect
- Always submit the cheapest and most honest estimates
- Drink only in moderation
These principles were used by succeeding generations to help guide the Kongō Gumi into the 20th century, when the temple business started to decline and the company started branching out into private and commercial construction. Kongō Gumi didn’t shy away from changes in technology; it was the first in Japan to combine traditional wooden construction with concrete and the first to use CAD software to design temples. And while business had declined in the early years of the 21st century, the company was still earning more than $67 million a year in revenue in the mid-2000s.
What ultimately led to the demise of Kongō Gumi were the speculative investments that the company had made during the Japanese real estate bubble of the 1980s and early ‘90s. In the years that followed, Kongō Gumi became massively over-leveraged and was unable to service the more than $343 million in debt that had accumulated since the collapse of the bubble. In 2006 the company ended up being absorbed by a larger construction firm.
In the end, Kongō Gumi was no longer able to survive as an independent entity after 1,400 years in business not because of economic upheaval or changes in technology, but because its leadership strayed from the company’s core principles, stopped taking the long view, and went for the quick cash.
Principles are designed to help answer the question of how a company does things, and what criteria they should use to make business decisions. Companies that want to be successful in the long run need to identify their core principles and stick to them, even when doing so means passing up potentially lucrative opportunities in the short term.
Regardless of whether the business involves building Buddhist temples or making chocolate-covered pecans, a focus on sustainability over growth encourages companies to put customers and employees first, instead of shareholders and investors. These kinds of companies are uniquely positioned to learn from their failures, build on success, and learn how to thrive in an ever-changing business landscape.
You can learn more about Kongō Gumi in Building on Tradition — 1,400 Years of a Family Business from Works That Work.
