Establishing a growth model built on acquisitions (1997)

The strength and the limits of a method that turns waste into resource

The heart of this decision lay not in the selection of which company to buy at what price, but in building a repeatable template for turnaround: take in cheaply a firm that owns something good yet has gone slack and sunk, and, simply by installing discipline, flip it into high profitability. Treating waste not as a defect but as untapped resource, and generating profit through cleaning and a change of mindset rather than by cutting people, was also a way of investing — picking up, at a discount, sound assets worn down by price wars or recession. The willingness to buy a company’s history and credit along with it, in one lot, became the passage over the wall of a Japanese market that prizes a track record.

Yet whether the template kept turning depended heavily on the personal, centripetal force of Nagamori himself, who visited each acquisition every week and moved its shop floor. Mindsets changed through cleaning because the man at the top got covered in oil himself, and there is a limit to pouring that same heat evenly into dozens of companies. The more acquisitions it stacked up, the more organisations there were to digest, and the skill of integration governed the whole. This method of turning waste into resource pushed Nidec up into a comprehensive motor maker, yet because it was inseparably bound to the founder’s own ability, it left open the question of how far it could ever be handed to a successor.