Kanagawa Chihiro’s presidency and “run flat out, sell everything” company-wide (1990)

How to read profits this far outside the norm

At the centre of this decision is a paradox demonstrated in practice: even an undifferentiated commodity can earn high returns depending on how it is managed. While competitors cut output to match the cycle, Kanagawa expanded in downturns and held utilization high on the discipline of carrying no debt. The method itself is not exotic. What is unusual is that it was never broken across successive cycles and was pushed consistently through every business and every subsidiary at home and abroad. Testing it for years in a single subsidiary before extending it company-wide combined a refusal to bet the firm with the boldness of buying against the market.

It cannot be denied, though, that the system depended heavily on the judgement of one man. Evaluating each subsidiary’s head personally and replacing them promptly when results slipped works while a single executive can see the whole, but does not scale the same way. After Kanagawa’s death, president Saito Yasuhiko and his colleagues have said they inherited both the “run flat out, sell everything” doctrine and the no-debt discipline. How far can a style of management that looks so personal be preserved as an organizational practice detached from the individual? Shin-Etsu today stands in the middle of that question.