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Thursday, Oct. 21, 2010

JAL chief touts 'amoeba' style of management

Staff writer

Japan Airlines Corp. CEO and Chairman Kazuo Inamori voiced confidence Wednesday in turning the ailing airline around, saying it is improving financially and will achieve restructuring goals through his "amoeba" management style.

News photo
Kazuo Inamori

"I have spent many years in management and know from my experience that it's important to have a system to allow you to grasp details of real-time figures and results so that all employees can pitch ideas to improve business operations," Inamori told reporters at Foreign Correspondents' Club of Japan.

"However, JAL did not have such a system and employees did not have real understanding of which flights and routes were making how much profit. So they failed to make appropriate management decisions," said the 78-year-old Inamori.

Inamori is known for his creation of the amoeba management method, under which workers are divided into small groups called amoeba.

Each amoeba group is provided with real-time figures of their business operations and goal achievements, encouraged to work as if it was an independent microorganism within the company. Some firms formerly led by Inamori — including Kyocera Corp. and KDDI Corp. — that have incorporated the amoeba system have successfully grown into major players in their fields.

Inamori said he plans to introduce this business practice to JAL starting next April.

Working as JAL chairman since February, Inamori said many things surprised him in the early stages. The company was bureaucratic, he said, and "executives in the management team did not have a strong sense to improve the business."

He also said it was unclear who was responsible for what business. So, Inamori, who is also an ordained Buddhist monk, held leadership seminars four times a week in June for 50 executives, thoroughly teaching basic leadership concepts, as well as fundamental accounting and corporate managing principles.

Although some were not very interested in his approach at first, "their eyes now look greatly changed, and the awareness of leadership changed quite a lot by the end," Inamori said, adding that the business results have been far better for JAL than expected this fiscal year.

Kyodo News reported Tuesday that four major creditor banks have launched talks to extend additional loans of ¥320 billion to JAL.

But Inamori neither mentioned the report nor was asked to discuss it during the news conference.

He said only it will be difficult to persuade creditors to extend more loan money to JAL, although he is ready to start any negotiations for it.

On top of ¥350 billion in financing from Enterprise Turnaround Initiative Corp. of Japan, JAL hopes to raise another ¥50 billion to bolster its capital, Inamori said.

He also said JAL has not reached any conclusion about whether to launch a budget carrier to compete with rival airlines. Previously, he had said JAL would study the feasibility of such a low-budget carrier business.

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The Japan Times

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