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Kongo Gumi: The 1,400-Year-Old Company

Less than two months ago, the renowned British travel agency Thomas Cook laid off more than 21,000 employees the world over and liquidated its assets, bringing to an end an era that lasted 178 years. At the time they folded, the company was pulling in more than £9.5 billion in revenue per year and making a profit of £163 million—a hardly partly sum. In the past few years, we have seen many corporate behemoths—companies “too big to fail”—failing spectacularly. Lehman Brothers, Saab Automobile, General Motors, Compaq, Sears, Blockbuster were once industry leaders, but fell to the point where bankruptcy was their only solution.

Seiganto-ji

Seiganto-ji, built in 593 CE was the first Buddhist temple to be built in Japan. Image credit: Nattee Chalermtiragool/Shutterstock.com

Most businesses last less than two decades, according to one recent study. The average lifespan of an American company had fallen by 50 years in the last century, from 67 years in the 1920s to just 15 years today. And these are some of the top companies in America, listed in Standard & Poor’s 500 index of the US stock exchange. The average lifespan is expected to shrink even further to just 12 years by 2027, the study predicts. At this rate, about half of all S&P 500 companies will be gone over the next ten years.

You can say that the American market is in a constant state of flux, with mergers and acquisitions, bankruptcy and speculation. In Europe and in the far east, the market is much more stable. Worldwide there are over 5,500 companies that are over 200 years old. But their distribution is heavily weighted to just a few. Japan dominates the list with over three thousand companies older than two hundred years, followed by Germany (837), the Netherlands (222), and France (196). There are more than 21,000 companies in Japan alone that are over a hundred years old. Eight businesses are over one thousand years old.

The longest lasting company in recorded history is Kongō Gumi, a construction company specialized in building and repairing Buddhist temple. Its founder, Shigemitsu Kongo, was a skilled carpenter who was invited from the Korea to build Japan’s first Buddhist temple at Shitennoji. When Kongo arrived in Japan in 578 CE he saw an incredible opportunity. Japan had recently started embracing Buddhism, and Prince Shōtoku was actively encouraging its adoption across the state. But the Japanese had no experience building Buddhist temples, which is where Kongo came in.

Kongō Gumi

Several workers of Kongō Gumi in early 20th century.

Construction, maintenance and repairing of Buddhist temples ravaged by fire and war became the main source of revenue for Kongō Gumi. The company also participated in the construction of many famous buildings such as Hōryū-ji (607) and Koyasan (816), as well as Osaka Castle (1583). Throughout its long history, Kongō Gumi weathered many socio-political changes that threatened its existence. It survived the Meiji Restoration in the 1800s when the government destroyed thousands of Buddhist temples as it sought to eradicate Buddhism in Japan. During the Second World War, when resources for building temples and maintaining ancient structures dried up, Kongō Gumi was forced to make wooden coffins instead. After the war, Kongō Gumi found work again restoring the temples that had been destroyed in the conflict. It was only in the late 20th century and the 2000s that the company began to feel the pinch of declining funds for temple maintenance, as well as increasing competition from other firms. After more than fourteen centuries of independent existence, in 2006, Kongō Gumi allowed itself to be bought by the Takamatsu construction company. It still exist but as a subsidiary of Takamatsu.

Kongō Gumi’s longevity is remarkable and worthy of study. During the Meiji Period, the company’s 32nd leader left a creed titled Shokuke kokoroe no koto (or “family knowledge of the trade”) listing 16 precepts intended to guide and preserve the family’s operations into the future. Writes Work That Works:

Western observers might be surprised to discover that while the creed addresses ‘business’ subjects such as quality control and customer satisfaction, it puts equal emphasis on ‘personal’ issues such as how to dress (in keeping with one’s station), how much to drink (in moderation) and how to treat others (with utmost respect). Indeed, the first article of the creed states that minding the precepts of Confucianism, Buddhism and Shinto, and training to use the carpenter’s rule are ‘our most important duty’, suggesting that the standards against which a Kongō measures his life are as critical to success as the instrument by which he measures his work.

Horyu-Ji,

The Horyu-Ji, a temple in Irakuga, Nara Perfecture, was built by Kongō Gumi. Image credit: RPBaiao / Shutterstock.com

Horyu-Ji,

The main building of Horyu-Ji. Image credit: M Andy / Shutterstock.com

Aside from high quality of workmanship, Kongō Gumi gives emphasis on building a strong relationship with customers. “Listen to what the customer says”, “Treat the customers with respect” and “Submit the cheapest and most honest estimate”, are some of the precept in the Shokuke kokoroe no koto that reflect this approach. The creed also discusses relationships in general, such as “Do not put yourself forward”, “Never fight with others”, “Do not shame a person or boast” and “Communicate with respect”.

A lot of companies fail because they put profit above everything else, believes Professor Richard Foster of Yale University. Many Japanese companies have survived for so long because they are small, mostly family-run, and because they focus on a central belief that is not tied solely to making a profit.

Kongō Gumi’s success also lied in its leadership, and herein the company showed unusual flexibility. Unlike many family businesses, where leadership automatically went to the eldest son, Kongō Gumi’s successors were chosen based on competence and not on heirship. If the eldest son was judged incapable of leading the company, the leadership went to the younger brother. If there was no suitable male heir, a son-in-law was chosen instead. The company’s 39th president, Toshitaka Kongō, was one such son-in-law. When the 37th leader Haruichi Kongō committed suicide because of his inability to provide for his family during the Shōwa Depression, his widow Yoshie stepped up to become the first and only woman to lead Kongō Gumi.

osaka castle

Osaka Castle in Osaka. Image credit: Sean Pavone/Shutterstock.com

Kongō Gumi is not a large company. Before its liquidation, the company had an annual revenue ¥7.5 billion ($70 million) in 2005, with as little as 100 employees. In fact, the majority of successful companies with a history of hundred or more years employ fewer than 300 people.

The fallacy of “too big to fail” has been exposed far too often in the past few decades. The English economist E. F. Schumacher in his 1973-book Small is Beautiful writes that large enterprises are horribly inefficient. “What characterizes modern industry is its enormous consumption to produce so little … It is inefficient to a degree that goes beyond imagination!,” Schumacher writes.

However, Professor Richard Foster believes that for the greater good of the economy, companies should die once they had run their course. “If the economy stops changing then productivity would go away,” he explained.

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