How to survive the first 100 years of business — Lessons from Nintendo
We all know Nintendo as a modern innovator of cool products and as the inventor of epic video games such as the Super Mario franchise.
But what many people don’t know is that, despite its modern image, Nintendo is actually a quite mature, traditional Japanese company: it has been running successfully for over a century.
Nintendo`s knowledge is more valuable now than ever.
As governments ask their publics to stay home, businesses all over the world are facing an existential crisis: employees work from home, customers can’t buy, deals are cancelled.
Surviving this crisis is now the main goal of many businesses, regardless of size and industry.
However, at some point every business must face a crisis. External factors, such as market fluctuations, disruptive innovation or pandemics may put a business into crisis, but they are out of the business’ control. The question to ask is how to set up a business that lasts and survives shock waves.
https://www.youtube.com/watch?v=whW1qJZwxs0&t=324s
Answers to this question are found in Japan, where many companies have been thriving for centuries. Japan has over 20.000 Japanese companies older than 100 years. The oldest Japanese firm, Kongō Gumi, started in 578AD and operates successfully even today.
Over the past centuries, Japanese companies have developed effective strategies to maintain their success for generations and to survive crises such as wars, economic crises and natural disasters.
So, what can we learn from Nintendo?
Nintendo was founded in 1889 in Kyoto, the former Japanese capital, by Fusajirō Yamauchi. The company originally produced playing cards, or hanafuda, but is now one the most influential players in the video game industry and a major manufacturer of consumer electronics.
While Nintendo’s history is a rollercoaster of challenges and business successes, a mainstay feature of the company is its determination to ensure stability so that the business will survive for more than a century.”
Here are the strategies Nintendo devised to survive its first 100 years:
1) Play many games at the same time!
Japanese companies are constantly looking for new business areas in which to invest. In contrast their Western counterparts, Japanese companies do not choose industries in which they have experience or are already operating.
Thus, Japanese conglomerates, called keiretsu, can be simultaneously found in numerous industries, such as banking, automotive or even logistics. Nintendo is no exception here!
The company has been rather adventurous when breaking into entering new industries. In the past century, Nintendo has operated a love hotel business, invested in a taxi business and even sold instant rice.
The chance of surviving economic changes increases with every profitable industry. So, simultaneously growing business in diverse industries and constantly expanding into new ones is a popular, low-risk strategy to survive crises.
If one industry is not doing well, another will. Even today, Nintendo operates in both the hardware and software markets, producing innovative devices and consoles as well as extremely popular and bestselling games.
2) Don’t look back!
While Japanese companies can be adventurous in setting up business in unfamiliar industries, they are certainly not afraid to abandon their former business model. This is because Japanese companies assume that the business environment is constantly changing and may even disappear. Indeed, most successful companies have a history of radically changing their business model without looking back. Nintendo was adventurous when investing in very different kinds of businesses; but it never hesitant to drop them if they proved nonprofitable.
For example, before moving in to develop computer game hardware, Nintendo invested in the toy market. When electric toys became popular in the 1970s, Nintendo had its first taste of success with a laser clay shooting game.
Nonetheless, many Japanese companies can remain nostalgic about their original business models. Nintendo still produces playing cards and regularly holds tournaments. Of course, one of the recent editions of these cards feature none other than Mario and other famous Nintendo characters.
3) Grow your business family!
Despite many Japanese companies being family-owned, they have sustained their businesses for centuries. This happens through adopting talented young managers into the family. Adopting young men (often relatives of the family) into the family is a traditional Japanese way to keep the family line and to cede the business to a relative.
Sure enough, Nintendo followed tradition in the 1920s, when Sekirō Kaneda inherited the company and became its CEO after marrying Yamauchi’s daughter, Tei.
Today, many family-owned Japanese businesses are run by professional managers — unrelated to the owner but treated as family members. Managers are nowadays no longer adopted to inherit the business, but rather given long-term prospects in the company, allowing them to devote themselves to the business and its success for several decades.
This is the case for Shigeru Miyamoto, Nintendo’s groundbreaking designer. Miyamoto started at the firm as an apprentice in 1977 and went on to develop the games that made the company famous. Like many Japanese, Miyamoto spent his whole career in one company, dedicating himself to Nintendo.
Miyamoto no longer heads the development division, but because of the trust and admiration he earned within the Nintendo company family he still has a hand in shaping Nintendo’s direction.
4) Trust your teams!
Japanese product development teams often have a lot more autonomy than in Western countries. They are responsible for developing both new products and business ideas. Most development teams consist of members that each illuminate a different aspect of the product.
Often, they will start development by playing around with an idea or slogan, then quickly introduce these ideas into the market to test the buyers’ reactions.
Nintendo does not use focus groups to test new products. Rather, if the developers themselves like playing a new game, they rush the product to market. the customers’ decisions to buy ensures success, so presenting new products to them quickly is key!
5) The customer is a god, not only king!
The customer is the center of every management process in Japan: the customer is not only a king, but a god! Japanese companies extensively train their employees in precisely developed customer-oriented processes.
Service improvement is a must in every Japanese company.
Additionally, where creating something new and exciting is the overall goal of the company, Japanese marketers strongly motivate their existing customers to buy new and innovative products.
Nintendo’s first business success was based on strong customer focus. The company’s first product, popular hanafuda playing cards, stood out among others across Japan because their especially beautiful designs were made to please customers.
Even today at Nintendo, aiming to provide the best quality and the best experiences for customers drives developers and managers alike; in return, customers thank them with enthusiastic loyalty!
There is a lot to learn from Nintendo about how to sustain business and survive a crisis.
Looking at Nintendo now, we may not realise that it is actually a very mature, traditional and typically Japanese company. For more than a 100 years, the company has developed many successful strategies to sustain the business, finally finding its greatest success to become the world leader in the video game industry.
Who knows, perhaps it will venture into new industries to survive another 100 years.
But for the time being, Nintendo’s abundance of enjoyable home entertainment products can surely help many families around the world make this current crisis somewhat bearable.
Prof. Dr. Parissa Haghirian is a professor for Japanese Management at Sophia University in Tokyo. Her research and consulting focus lie on Japanese management, intercultural management and leadership in Asia. www.haghirian.com
To learn more about Asian Management follow her on Linkedin: https://www.linkedin.com/in/parissa-haghirian-7399554/
