The truth about Amoeba

Curated by Alibaba Global Initiatives

Author: Run Liu

The Amoeba in Japan did not assess employees

Amoeba originated from Mr. Inamori, the Saint of Japanese business. He used the “Amoeba” management method to establish two world top 500 companies.

At the age of 78, he was appointed CEO of JAL on the verge of bankruptcy. One year later, he not only turned losses into profits, but also made a profit of 11 billion yuan.

What exactly is Amoeba?

Amoeba, in fact, refers to a single-cell amoeba in biology. Mr. Inamori used the concept of amoeba to break up the company and split it into business entities with independent financial accounting. Each amoeba changed from the original department cooperation relationship to transaction relationship.

This is Amoeba.

A few years ago, when I first heard about the concept of amoeba, I thought it was the internal marketization called by western management.

But many people don’t think so. They say that amoeba is very different from internal marketization. Most of the world’s top 500 are using amoeba model.

I wonder. I have never heard of amoeba at Microsoft, nor have I heard of amoeba among my IBM, Intel and McKinsey friends.

Isn’t that bragging?

But after all, there are successful application cases of Kazuo Inamori. So I began to study the difference between amoeba and internal marketization.

I found that amoeba and internal marketization are really not the same thing.

Why is that?

After each amoeba has calculated independently, we will know the value created by each amoeba. Should we pay wages, bonuses and shares according to the value created?

It turned out that Inamori did not do so.

When I found this, I couldn’t believe it.

I originally thought that both internal marketization and Amoeba introduced the competitive trading mechanism of the external market into the enterprise, that is, introduced the external market economy into the enterprise to replace the internal planned economy.

Then, through the assessment, reward the departments that create great value and mobilize the enthusiasm of employees.

But the amoeba in Japan did not assess, which gave me a great shock.

If not, how to motivate employees? Will employees be convinced?

So at that time, many people said that this was the real essence of amoeba, and the essence of amoeba was not to be assessed.

But I don’t think it makes sense. Behind everything, there is a commercial nature. And I continue to study.

The Troika of Japanese management

I found that when Kazuo Inamori used amoeba in Kyocera in the 1960s, there were very special cultural differences between Japanese enterprise management and Western management.

What cultural differences?

That is, the Troika of Japanese management.

They are lifelong employment, working year sequence system and internal labour union system.

Lifelong employment system means that when an enterprise recruits an employee in Japan, it expects the employee to serve it all his life. Of course, enterprises should also ensure that they cannot lay off people, even if they lose money. Enterprises would usually retrain employees and transfer them to other positions if they are not qualified rather than laying them off.

The working year sequence system means that the salary is not paid according to the employee’s contribution, but according to the years of working in the enterprise. Japanese enterprises believe that every person’s ability to work increases every year, based on which to increase the salary.

The essence behind this is that the longer employees stay in an enterprise, the more wages they will get, so that employees will not leave the enterprise.

After World War II, Japanese enterprises also introduced the labour union system, but the labour union of Japanese enterprises is essentially different from that of Western labour unions. For example, labour unions in the United States are opposed to enterprises, while it in Japanese enterprises are not opposed to enterprises. They are called internal labour unions, that is, they put labour unions in the company. In this way, employees and enterprises are not antagonistic relations, but friends and family relations.

After World War II, Japanese enterprises adopted such a management method.

Some people may frown when they hear about it. This greatly limits the competition and the flow of talents. Will it be good for enterprises?

Such a management system has something to do with Japan’s small population after World War II, but such a system also has a good side.

For example, such a system will prevent employees from mutual suspicion and easy to cooperate with each other; Employees will also be loyal to an enterprise, and the boss is also willing to cultivate employees.

Japan is very proud of the troika, saying that it is the three pillars of Japanese business, namely, lifelong employment system, working year sequence system and internal labour union system.

Therefore, before Inamori implemented amoeba, the troika was deeply embedded in the blood of every Japanese enterprise.

Under this system, Inamori felt that this would not work. Employees are paid according to their working years and do whatever they are arranged to do. But how can I know their contribution? Employees should also know their contribution.

So there was amoeba. In this way, each amoeba will know the value they create.

Revere nature, love people

If everyone knows the value of their contribution to the enterprise, they will naturally have an idea that my income should be linked to my contribution.

But once linked, it is contradictory to the “troika” management method.

How to solve this problem?

Inamori Kazuo chose a very interesting way, that is “Revere nature, love people”.

What does it mean?

It means, the value we create and our contribution are for the collective.

Therefore, if a person creates more value and makes high contributions, we will reward you spiritually, for example, by inviting you to have a meal to praise you and recognize your contributions.

If you ask me, will you give me the money?

Sorry, no money. Because the money is distributed according to the working year sequence system.

Hearing this, you may not understand. Isn’t it “flickering”?

The boss asked the employees to respect nature and love people. The employees believed it, and the boss made all the money.

Does the boss need to follow “respect nature and love people” together?

In 1984, on the 25th anniversary of Kyocera, Inamori gave all his shares to his employees.

This means that Inamori does not hold shares in Kyocera. Later, when Inamori took charge of JAL, he had no salary at all.

So Inamori really believes in his phylosophy, he walks the talk.

Amoeba is actually a prescription drug

Let’s review the internal marketization of Western management mentioned earlier. It is to introduce the external market economy into the enterprise to replace some of the original planned economy within the enterprise, which is called internal marketization.

This system is conducive to motivating employees and is a very effective system.

However, in Japan, if enterprises want to promote the system of internal marketization, they will encounter the challenge of working year sequence system.

What can we do?

So Inamori patched the internal marketization with the phylosophy of “Revere nature, love people”.

Amoeba is actually an internal marketization with a patch of “”Revere nature, love people” under the cultural soil of “troika” management in Japan.

Many Chinese enterprises have seen that Kazuo Inamori has created two of the world’s top 500 with amoeba and think amoeba must be a magic medicine to cure all diseases. So they want to learn this method. However, amoeba is actually a prescription drug, which is specially taken by some “special genetic patients”.

Last words

If you are not such a special genetic patient, I suggest you should directly study internal marketization.

If you must learn amoeba, you should first learn Kazuo Inamori’s phylosophy of “Revere nature, love people”.

You have to ask yourself, will you give all your shares to employees?

If you cannot, I suggest you study internal marketization.

Finally, there is no medicine package to cure all diseases in this world.

The seemingly magical panacea is likely to be specially taken for people with “special genetic diseases”. If you don’t follow the doctor’s advice and study blindly, you may lead the enterprise to die suddenly.

Other people’s honey is sometimes my poison.