3 Lessons on Business Longevity from the Oldest Company in the World

http://blog.idonethis.com/oldest-company-in-the-world/

Nishiyama Onsen Keiunkan is the oldest company in the world. Founded in 705 A.D.,
the Japanese hot spring hotel has operated continually for an astonishing 1,300
years. Think about it: this company has existed since before Charlemagne became
the first emperor of the Holy Roman Empire.
The companys founder, Fujiwara Mahito, was the son of a close aide to Emperor
Tenji, Japans 38th emperor, and he built the hotel in a mountainous village in
Hayakawa, Yamanashi Prefecture. Its said that some of the most famous shoguns
and samurai soaked in the hot springs there, so that when you go for a dip, youre in
good historical company.
Having survived a mind-blowing 52 generations of successive ownership within the
same family, the hotel is no doubt a study on how to achieve longevity in business.
Learn these three vital lessons from the hotel on building a business that lasts.

Put Your Employees First, Ahead of Growth and Shareholders

As of just a few years ago, Nishiyama Onsen Keiunkan wasnt the oldest company in
the world, another Japanese company was. Kongo Gumi was founded in 578. In the
business of construction, Kongo Gumi mainly focused on building Buddhist temples.
But in 2006 after a 1,428-year run Kongo Gumi met its abrupt end 1) because it
broke one of the fundamental laws of longevity.
Kongo Gumis business started with Buddhist temples and eventually grew to
include commercial buildings and even coffins during the rough times of World War
II. Through fourteen centuries, the company survived and thrived. What did the
company in was the boisterous2) bubble economy of the 1980s.
During this time, in a bout of excessive exuberance 3), the company borrowed
heavily to invest in real estate. But when the bubble burst in the 1992-1993
recession, the companys real estate holdings shrank in value. Then by 1998,
demand for temple-building declined sharply. In 2006, the end had arrived the
companys borrowings had ballooned to $343 million and it was no longer possible
to service the debt. Kongo Gumi was no more, and Takamatsu, a larger
construction company, acquired its assets and made it a subsidiary.
In contrast, Nishiyama Onsen Keiunkan is a company that put its employees first,
ahead of shareholder interests and growth. They never tried to open numerous

branches and build a hotel chain. The numbers bear this out: 89.4% of the
companies with more than 100 years of history are businesses employing fewer
than 300 people.

Making growth a priority is anathema4) to long-term survival. Small companies

survive.
Not only has the same family run the hotel for 52 generations, there are families
among the staff who have held the same post for generations. Thats why they run
the business in the spirit of service, as a way to earn wages and protect the hotel
not as a way to profit.

Find Stability, but Be Flexible

The hotel business is one of the oldest in the world. In fact, most of the oldest
businesses in the world are hotels, breweries, pubs, or restaurants. Finding an
industry with relative stability is essential for building a company that lasts.
Nintendo is a prime example. You may not realize it, but the company is 125 years
old and long pre-dates their 1985 video game console. Founded as a card company
back in 1889, Nintendos first product was a playing card game called Hanafuda.
With the success of their handmade cards, they quickly moved into mass-producing
playing cards and thats what they focused on until 1956.
But beginning in 1956, the company began struggling because of the limitations in
the playing card market. In 1964, the playing card market crashed and Nintendo
stock tumbled from 900 yen to 60 yen.
Thats the kind of market shock that kills companies, and Nintendos run could have
ended their if they hadnt been flexible. They realized that playing cards were just a
type of toy. They applied the experience they had making playing cards to toys and
found success. Eventually, making toys eventually led them to making electronics
and then video games.
Rather than living and dying with the playing card trend, Nintendo was flexible in
how it interpreted its industry and value, and it found longer-term stability in
applying creativity to making games and there will always be a market for
products that are fun.

Dedicate Yourself to Service

Of the 5,586 companies in the world older than 200 years, a startling 56% percent
of them, or 3,146 companies, are Japanese. The next-highest country is Germany
with 837 companies, about a quarter of that of Japan.
Its Japans unique dedication to service that sets it apart. Intergenerational
patronage5) takes the concept of the repeat customer to its extreme and its the
lifeblood of a company thats existed for centuries.
Its natural then that Japanese companies that last have focused on serving the
domestic Japanese market. For Nishiyama Onsen Keiunkan, thats meant focusing
locally and in their own community, where their repeat customers lived. Thats how
the hotel became much loved by Kyoto residents, military leaders, and the
literatiand its reputation grew from there.

While its hard to quantify the quality of service in Japan, compare the western
saying, the customer is king to its Japanese counterpart: the customer is god.
***
Today, the average lifespan of a company in the S&P 500 is a shockingly-low 15
years. In an age when corporate turnover is higher than ever, we could learn a
thing or two from companies that have lasted nearly a hundred times as long.
Nishiyama Onsen Keiunkan is the best example of whats such a powerful idea in
Japan that it has a name: shinise means established and long-standing company
in Japanese. The lessons above point to the broader philosophy about building
companies that shinise companies shareits not about building something big, its
about building something remarkable, that lasts.

1)
2)
3)
4)
5)

abrupt end = tiba-tiba berhenti

boisterous = riuh
in a bout of excessive exuberance = in a bout of excessive exuberance
anathema = kutukan
intergenerational patronage = perlindungan antargenerasi