At Japan’s Nidec, the CEO as Comic Book Hero
Ambition matters more than brains in Shigenobu Nagamori’s world. As chief executive officer of Japanese motor maker Nidec, Nagamori is known for his eccentric management style. Prospective employees have faced off against each other in eating and shouting competitions; new hires at headquarters in Kyoto have had to clean toilets. “Motivated people can do anything if they work hard,” Nagamori says in his autobiographical comic book, The Man Hotter Than the Sun. “It’s not people’s talents that matter,” the CEO tells his acolytes in one strip. Passion matters, and enthusiasm, and tenacity. And, if Nagamori is a role model, something else matters as well: a sizable ego.
Employees embrace his hard-line approach, says Ken Kusunoki, a professor of business strategy at Tokyo’s Hitotsubashi University. They’re motivated to work as hard as the CEO tells them to. “That’s how he’s able to make these businesses so profitable,” Kusunoki says.
The businesses include more than 41 companies that Nidec has acquired since its founding in 1973. Many were distressed and near bankruptcy. Most of the acquisitions after 2001 expanded Nidec’s operations beyond Japan. The corporation is the world’s biggest maker of precision motors, supplying more than 80 percent of the motors in hard-disk drives. In recent years, Nidec has started to produce motors for factory equipment, appliances, and cars. The company’s market value is $23 billion, and Nagamori’s shares, worth $2 billion, have made him the 10th-richest man in Japan.
He boasts of a rags-to-riches rise: Starting with three employees, he made small motors in a prefabricated hut next to his mother’s Kyoto farmhouse. Japanese companies, questioning the upstart’s abilities, refused to place orders with him. So Nagamori went to the U.S. and landed a contract with 3M to make a smaller motor for a tape recorder. “With this, Nidec Corporation’s reputation grew both inside and outside Japan,” according to the comic book.
Nidec employs about 128,000 people globally. Corporate executives such as SoftBank Group founder Masayoshi Son seek Nagamori’s advice about acquisitions and management. The CEO has met with such leaders as Prime Minister Narendra Modi of India, where Nidec recently built a factory and has four more under way. Executives polled last fall by Nikkei BP, an influential Japanese business publication, voted Nagamori the country’s best CEO.
He looks the part, except maybe for the neon-green ties, the color of the company’s flashy logo. The iconoclast in him comes out as soon as he opens his mouth. “In the early days, we had no choice but to hire rejects,” he says in his folksy Kansai dialect. “Nobody else would come. But we trained the hell out of them, and they became great.” Employees who’ve graduated from top business schools such as Harvard and MIT are incompetent when it comes to making profits, Nagamori has said, so he started an internal business school for his workers. His formula for turning around unprofitable companies: sell more stuff, cut costs. An inspirational poster in Nidec’s offices declares, “Do it now, do it without fail, and do it until it’s completed.”
In the 1990s and early 2000s, Nidec acquired Japanese companies that were on the edge of bankruptcy and purchased castoff units of Toshiba and Hitachi. As consumers bought tablets and smartphones, the market for hard-drive motors started to dry up. Nagamori went on another buying spree. Nidec has acquired 14 companies since 2010. One of the first deals was the purchase of the motor business of U.S. appliance maker Emerson Electric.
“Most people didn’t expect him to be able to do the pivot and find a new growth driver,” says Scott Foster, an analyst at Advanced Research in Tokyo. Nidec’s sales have increased tenfold since 1998, topping 1 trillion yen, or about $8.4 billion as of March. The next target is 10 trillion yen by 2030. If Nidec reaches that, it will rank as one of Japan’s six biggest companies, larger than Sony and Hitachi today. Nagamori, 70, has promised to stick around until Nidec gets there: “I’m joking when I say I’ll keep going until I’m 120, but I plan to keep doing it at least until we hit the target.”
In 2003, when Nidec bought Sankyo Seiki Manufacturing, an industrial robot maker based in the foothills of the Japanese Alps, the company was headed for a $280 million loss, its third bad year in a row. Twelve months after the acquisition closed, it had $178 million in profit. “The same people who were losing billions of yen—these same managers, same workers—they learned how to make money,” Nagamori says.
Not everyone finds working at Nidec so magical. Setsuo Matsui, who retired in 2010 after 42 years at a Sankyo factory in Nagano, says that after Nidec bought the company, Nagamori demanded that workers come in early every day to clean the facility; vacation was discouraged, and a chill came over the place. Matsui still remembers the unpaid Sunday he spent at a training session on office manners. Nagamori ordered that everyone learn how to bow properly. “I didn’t feel comfortable claiming overtime or taking time off,” Matsui says. “Neither did anyone else.”
After the acquisition of a German water pump maker closed in February, Nagamori traveled to Merbelsrod, Germany, to tour the plants and offices. He was looking for dirt and grime, walls that needed painting, anything to be cleaned up. “There was a lot that could be improved,” he says. “It made me happy to see it. I’m always disappointed if I don’t see anything that needs fixing.”
The bottom line: Nidec’s CEO says motivation, not smarts, was key to building one of Japan’s most profitable companies.