From manpower to machines: SP Alarm, Japan’s first online security system (1966)

A bet on revenue that does not scale with headcount

The core of this decision was cutting off the manned guarding that was actually selling in order to move the company onto electronic security, which at the time barely sold at all. Orders were pouring in after the Olympics, and simply hiring more guards would have grown revenue. Iida closed that road and staked the company’s future on unmanned work that, three years after development, still accounted for 0.5% of sales. From a structure in which costs swell as headcount grows, to one in which profit accumulates as contracts stack up — this was a decision to rebuild the way money is made.

It was not an easy transition. There was the headwind of the Fuchu robbery, customer distrust of machines, and a sales force that wanted to sell the product it knew. Still, the choice of a revenue structure independent of headcount became Secom’s skeleton. The pattern — build up contracts, thicken the recurring revenue, and use that money to attack new territory — carried on from home security into medicine and insurance and through to today’s labour-saving AI and drones. In an era of deepening labour shortage, this decision put the question of how far machines can substitute for people at the centre of the company’s management early on.