Dr. Masayoshi Fuse, Sumitomo Electric

Introduction into a Japanese Conglomerate

Sumitomo Electric is one of the old school Japanese conglomerates, and its business practices reflect the values and culture we commonly associate with Japanese business. Dr. Fuse, a Haas MBA and PhD, described the core value principle of Sumitomo: “You create value to the society around you, and then profits will be returned.” The enterprise is seen as a service to the community, and the technologies used by Sumitomo, (electricity, computers, heavy machinery...) complement the natural habitat we live in, rather than challenge it.

The Japanese concept of lifetime employment is another of Sumitomo’s principles. “If a member of the Sumitomo family underachieves, he will not be fired, but he will rather approach his manager, requesting to find a job within Sumitomo, that is more appropriate for his skills”, says Dr. Fuse. Compensation is based on seniority with the company, rather than overachievement. Hard work and superior results will be rewarded in terms of promotion, but not necessarily in terms of monetary compensation.

A business relationship is based on trust and Gentlemen’s agreements, at Sumitomo. If you need to get legal counsel, this usually indicates a lack of trust, and occurs when a trustful relationship has been broken. Similarly, recruitment is based on mutual trust between employer and employee - skills can be taught and updated on the job, and are of secondary importance. What really counts is the personality of the candidate.

Entrepreneurship is encouraged at Sumitomo through “in-house ventures”. Talented engineers (Sumitomo’s workforce is comprised of 80% engineers) with a brilliant idea are given the time, freedom and capital resources, to turn their project into a business. If successful, they become the Manager of this product. The risk seems high, as only 3 out of 1,000 such in-house ventures reach maturity, according to Dr. Fuse.

Sumitomo’s outlook on business has three layers: on the market level, a trend towards globalization is visible; on a social level, the rise of knowledge-based industries is identified, and on the environmental level, “nature awareness” is promoted. After visiting, the impression was that Sumitomo will have a lot of work to do on all levels, if this is to be more than a strategy on paper: if they are serious about globalization, they will have to rethink many of their corporate values, to be internationally competitive; the transition towards knowledge-based products will be difficult in their hard-hat world, and many of their products will have to be redesigned to really reflect environmental concerns. To our group of Silicon Valley employees, Sumitomo’s traditional value scheme and industrial product line seemed strangely distant and outdated...