IT is fitting that the man charged with reviving the biggest of Japan's staggering corporate zombies, Japan Air Lines, is a Buddhist priest.
IT is fitting that the man charged with reviving the biggest of Japan's staggering corporate zombies, Japan Air Lines, is a Buddhist priest.
Kazuo Inamori has needed every ounce of Zen-like calm as he's looked to revive the airline, staring down bankers as well as JAL's blinkered and bureaucratic management team. The 78-year-old former head of Kyocera divulged last week that he had lost 4kg since February, when he was charged with leading JAL out of bankruptcy protection.
Amid mounting losses, JAL entered bankruptcy protection in January this year after cash injections from the government and various merger and recapitalisation plans failed.
The company defaulted on loans worth hundreds of billions of yen, but has since received a Y=350 billion ($4.4bn) from the government's Enterprise Turnaround Initiative Corporation of Japan and is confident of securing another Y=50bn in private financing.
The billionaire Mr Inamori was an interesting choice by the Japanese government to revive JAL, even though he is strong supporter of the ruling Democratic Party of Japan.
He is a maverick figure, an entrepreneur who created Kyocera as an electronics powerhouse and founded KDDI, Japan's second-largest mobile carrier.
He's described Japan as a "bureaucratic dictatorship" and argued that its dinosaur companies should be allowed to fail.
Despite those remarks, he said a sense of duty to Japan and JAL's 47,000 employees -- soon to become about 35,000 -- persuaded him to spearhead the revival effort.
Last week, in a speech to the Foreign Correspondent's Club of Japan, he said JAL had already returned to profit and the turnaround was proceeding quicker than expected, with JAL forecasting an operating profit of Y=64.1bn for this fiscal year.
He revealed in the speech that upon assuming office at JAL, he found all of the worst elements of a moribund corporate culture that one suspects you would see on lifting the lid off many of Japan's companies, something Inamori seemed to acknowledge when he said: "The reason that Japanese society is stagnating is that we don't have enough people who have this kind of burning desire to change things."
JAL managers were able to hide behind woolly revenue and profit data that often came out after several months had elapsed. "When I looked at the top management of JAL, I thought they are not exactly an encouraging bunch of people," Mr Inamori said.
"The people in top management had very, very little personal individual resolve to try to break even, much less become profitable. There was no clarity within JAL as to who bore responsibility for each section.
"There was great fragmentations in the company; there was a great divide between headquarters and the employees in the field.
"There was a great gap between the corporate planning side and operations and also between corporate management and individual employees.
"There was little feeling of unity and there was little feeling that everyone must pull together to reconstruct the company."
Mr Inamori is seen in Japan as something of a management guru, although perhaps that term is misleading. His solutions seem like basic common sense rather than the faddish self-promotional jargon peddled by some of his ilk in other countries.
"Leaders must push forward ideas to maximise revenue and cut costs," was one of the basic maxims he put to JAL's stagnant and stunned management team.
Poaching staff from other firms was out of question, so he decided to crack some heads. Managers who came up with spurious reasons to defer change were reprimanded, while the company's accounting systems were rebuilt to allow more up-to-the-minute results to be produced, which are now publicly read out by those responsible for individual units.
At an operating level, unprofitable routes (including Tokyo-Brisbane) were cut and wasteful spending slashed.
But having ridded JAL of elements of its culture of underperformance, the environment for airlines remains tough.
Mr Inamori acknowledged that all airlines remained vulnerable to "event risk" and, when asked how he would reposition JAL amid the shift in power and profitability from high-cost, high-service carriers to budget airlines, he had no clear answer.
JAL is competing with its low-cost Japanese rival ANA, and other budget carriers such as AirAsia are now flying to and from Japan.
Mr Inamori said he was grappling with what JAL's best market position would be. "There are many, many new low-costs carriers entering the airline industry, especially the Japanese market. The fact that they have been able to make inroads into the Japanese market indicates that there is a need or desire for such services," he said.
"Certainly, in the past, we have seen other major airlines start low-cost services, but most of these ventures have collapsed after a couple of years, so we want to take those experiences as we plan our future.
"We don't have a final position yet, but one of the great attractions of JAL is that it does have an image for high quality providing very, very high quality services."
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