Treasures are hidden in the vineyards of Japan

May 20, 2019
by Noriyuki Morimoto

Once upon a time, a farmer nearing his death gathered his lazy sons and told them that treasures were hidden in the family vineyard. After their father’s death, the sons dug up the whole field from corner to corner, but no treasure was found: instead, they had a great grape harvest. This is one of Aesop’s fables. The moral: hardship is the real treasure.

If we consider this fable as an allegory of corporate philosophy in the modern era, we can say that cultivating your own vineyard is the true source of corporate profit. Supposing that the farmer is the founder, his founding philosophy is that treasures are always hidden in your own vineyard, and the essence of corporate management is to continue searching for that treasure.

So what does the vineyard stand for? None other than your own customers: the ones that have a real business relationship with you. The scope of customers is strictly defined: prospective customers, which are not yet customers, are excluded here.

It is generally understood that the purpose of sales activity is to acquire new customers. Certainly, if you create a truly new product, you are surrounded only by prospective customers. However, basic industries that form the foundation of human activity retain the same basic structure, although small innovations are always taking place in terms of the technical composition. Finance is a representative example of such industries.

Being a basic industry means that its social demand is standardized, so there is basically no difference whoever the provider is. At the same time, the social demand is large, so a fair number of providers are needed. Moreover, because of their huge social responsibility, strict regulations have to be imposed on them, which reduce the range of differentiation in goods and services. Thus, in the financial industry, a large number of financial institutions are competing despite the absence of differentiation in the real sense.

In such an industry, efforts to acquire new customers are futile. Customers are not offered anything new through competition, and financial institutions only see their profitability diminish in the exhausting competition.

In a shrinking economy like Japan, financial institutions cannot grow by stealing from the vineyards of others, that is, developing customers in other companies’ turf. Therefore, in Japan’s finance industry, we have to revisit the allegory of searching for treasures in one’s own vineyard.

 

[Category / Fiduciary Duty]