04 June 2018

Daikin Industries

Action Leads to Further Action: The Source of Daikin’s Competitive Strength To Enable Action, A Company Must First Cultivate Capable Human Resources

Action Leads to Further Action: The Source of Daikin’s Competitive Strength To Enable Action, A Company Must First Cultivate Capable Human Resources

Daikin Industries

Yoshihiro Mineno

Daikin Industries is the world’s top air conditioning company. Their global strategy focuses on five regional operations—Japan, the United States, China, Europe, and Asia-Oceania—and in recent years, they have bolstered their presence significantly in the Asian-Oceanian area. In addition to the company’s ability to accurately predict and respond to the changing times, their successes can be attributed to Daikin’s efforts to create a new market in said region.
Daikin’s Senior Executive Officer Yoshihiro Mineno, who serves as General Manager of the Global
Operations Division, took some time to talk with us. “If you don’t act, nothing will change. Taking action is really the only way to achieve success,” says Mineno, explaining the strategy Daikin applied in Asia-Oceania as well as ways to motivate the employees who actually implement this strategy.

Nobody knows the answer at the outset - that’s why it’s best to just take action

Yoshiko Taguchi (CELM ASIA): Here at CELM ASIA,we began operations in Singapore in 2014. We noticed that, as air conditioning became more widespread throughout mainland Asia, Daikin Industries’ presence grew bigger and bigger. I’d like to talk about that time of growth for your company in Asia.

Yoshihiro Mineno (Daikin Industries): I’ve spent more than half of my career outside of Japan, and just before coming back here I was working at subsidiaries in Singapore and Malaysia. After returning to work at the head office in 2010, the first thing I did was to establish an independent region of operations for Asia-Oceania, and as a result many changes have been taking place there in recent years.

When I say that we established an “independent region” for Asia-Oceania, what I mean is that we separated our larger-scale operations in the Chinese and European markets from Global Operations Division, and were put them under direct control of the CEO instead. As a result, what remained of the Global Operations Division came to focus mostly on Asia-Oceania, with Division employee numbers dropping from around 200 to 70. I was now in-charge of Asia-Oceania, which was Daikin’s smallest-scale business region in terms of sales, however, being smaller in size actually made it easier to handle and we have been able to get a fresh start on business in this region.

At the time of these changes, company operations centered primarily on China and Europe, where a strategic focus on high-end markets had led to organization-wide success. However, the scale of high-end products in Asia-Oceania market was much smaller, so we directed most of our efforts there toward volume zone residential air conditioners, which accounted for 70% to 80% of the total market. We achieved lower price points by developing Asia-oriented cooling-only type Inverter products, and worked to raise awareness regarding energy efficiency and air conditioning products in general while adding new high-quality products to our regional lineup, all of which helped boost sales volume. And as numbers of units sold continued to rise, we were able to continue reducing our manufacturing cost—even for lower-end models—and raked in increasing profits.

After securing market leader position in the Asia-Oceania market, we were able to take the lead in terms of establishing regulations related to energy savings while also maintaining our lead in pricing, thus remaining just ahead of our competitors—way ahead of them in some cases, actually. And as the popularity of our residential AC grew, we also began meeting with increasing demand from corporate and government organizations for commercial AC products for larger commercial buildings and offices. In other words, we saw a synergetic effect, and today we devote a lot of efforts toward commercial products as well.

Taguchi: It sounds like you built an entirely new market. Was this approach your idea?

Mineno: No, I can’t take credit for that. We all came up with the idea together, through discussions.

When it comes to truly new ideas, nobody possesses the experience and knowledge needed right from the outset, so the best thing to do is just take action. By doing that, everyone involved can contribute a range of different opinions, and that leads to accumulation of a new knowledge.

Nobody knows from the get-go whether something is going to succeed, and timing also plays a big role in determining the outcome—that’s why it’s best to act quickly. I’ve only recently come to understand the merits of this approach; it’s not as if I’ve had the answers all along.

Assigning responsibility is key

Taguchi: It seems to me that, in order to “take action,” as you say, the first step is to have the right employees act. Mr. Mineno, I notice that you often use the phrase “you know better than me” when talking to local staff at overseas subsidiaries. What factors do you think are important when trying to foster capable human resources?

Mineno: I try to see if they are willing to take risks for the company, which tells me whether or not they have the motivation to succeed. I’m happy even if they’re just driven to further their career, or to make more money. If someone is ambitious about a goal, it’s best not to hide it. I can tell what kind of employee a person is from content of our conversation.

In my view, talented individuals take decisions rationally. I always look forward to utilize individuals who are ambitious and curious. It’s best to have as many talented individuals as possible, and if I can leave business operations in the hands of such people, then the strength of the company and overall business results will change dramatically.

In martial arts, there is a phrase called mushin, which means freeing one’s mind from unnecessary things or, in simpler terms, emptying one’s mind. By making your mind a blank canvas from the start, it is easier to absorb and respond to new things. I think the same concept can be applied to business: although a general sense of direction is important, the ability to act and react quickly is more effective than merely a complex series of intricate strategies. Business is, in the end, powered by the people behind it.

The importance of experiences: creating an environment that brings out people’s strengths

Mineno: It’s really challenging to cultivate potential talent. The only way to really do it is to have them gain as much experience as possible.

Every year, the Global Operations Division in Japan sends out a certain number of people to other parts of the world to work. In the lively and dynamic work environment outside of Japan, people are able to learn a lot of new things—for example, just imagine what an employee could learn if they were assigned to an overseas sales company on a mission to boost its size to the greatest extent possible. Whether the employee is from Japan or other countries, I expect them to fully immerse themselves in learning and personal growth. If everyone does this, we will eventually acquire the right talent to take on key roles in the company.

It’s important for employees to distinguish themselves at their actual workplace. No matter how clever or knowledgeable they may be, they can’t contribute to company operations as a whole if hey don’t have ground-level market knowledge. If a worker distinguishes themselves, they may earn a higher position such as branch manager or move on to run one of our sales companies, where they will find new challenges. Repeating this process over and over results in good human resources.

Recently, I assigned an overseas employee in his thirties to take over certain business operations. I later sent some other staff to assist him, and his results continued to improve. The reason why I chose this man was that, when I asked others what they thought of him, they responded by telling me things like “he seems really motivated” and “he always gets the job done quickly.” That’s why I decided it was worth investing in him and see what he could do. If an employee like this fails to succeed in their new position, I can always re-assign them to a more suitable role. This may sound harsh, but it makes sense when you think about it.

Taguchi: When I talk to employees at your company’s overseas locations, they often tell me Daikin is a company that really focuses on its people. They say that, even if the company can be strict at times, they are never impersonal or uncaring.

Mineno: Now that you mention it, Daikin does do a good job in taking care of every one of our employees individually. In my case, just a week before joining the company, I was struck down with pleurisy, a type of inflammation in the lining around the lungs. Because they were concerned about my health, company gave me extra six months for joining, and I was assigned to a role in head office for a while after I joined. Despite a rough start, company still allowed me to go on to work overseas in order to fulfill my dream. That was when I felt that Daikin really cared about me as an individual.

Nowadays, when we have meetings with employees I have selected, I always try to travel to the meeting site and participate in discussions in person. If I simply stayed at my desk in Japan, nothing new would happen.

Daikin only does air conditioning: if we lose in this field, we lose as a company.

Mineno: Despite how big Daikin has become, I feel that, at its core, it still has the characteristics of an SME [small and medium-sized enterprise]. Chairman Inoue is a real super star and the company has come a long way under his leadership, and looking back, I feel that the rest of us have probably not put in enough effort. Today, we’re worried about whether or not we will be able to continue to make new, innovative changes essential for success in the future. Our business has been going almost too smoothly up until now, and if we simply take the safe route and remain comfortable in our position, things will not end well.

Daikin is an air conditioning company; it doesn’t do anything else. So if we lose in the air conditioning market, we are done as a company. We have to succeed in our specialized field, and in order to do that we need to come up with a lot of new ideas, which is actually really fun—even more fun when those ideas lead to tangible products and results. That’s the kind of company Daikin is.

If human beings ever succeed in colonizing Mars, people living there will need air to breathe. It’s just a dream of mine, but I hope that Daikin will be the company to supply that vital air, and “Air by Daikin” will be etched onto every building on the planet. That has a nice ring to it, don’t you think?

Taguchi: Mr. Mineno, your ideas are inspiring. They make me feel like I can accomplish more in my own life. Thank you for taking the time to talk with me today.

Interviewer :

CELM ASIA Pte. Ltd. Managing Director Yoshiko Taguchi

04 June 2018

※Department, title and the contents of the article are as of the time of interview.

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