Case 17 Toshio Doko: The Sense of Crisis Harbored by the “Fine Physician of the Business World” and “Mr. Administrative Reform”

Abstract

This chapter introduces Toshio Doko, president of Ishikawajima Shipyard (which later changed its name to Ishikawajima Heavy Industries (IHI)). Doko later became chairman of Toshiba and Keidanren. He harbored a sense of crisis in the 1980s, when the Japanese economy was maturing.

Building the Foundation for “Doko the Turbine Man”

Our last case study from World War I to the 1980s “growth era” is Toshio Doko.¹ Doko was called “the fine physician of the business world” because he successfully revived a series of companies that had fallen into crisis. In his later years as chairman of Keidanren (Japan Federation of Economic Organizations) and as “Mr. Administrative Reform (Gyokaku),” he also devoted himself to the revitalization of the Japanese economy and society. Before he passed away, Doko warned the Japanese who were riding the economic bubble era to prepare for the end of the “growth era.”

Toshio Doko was born in 1896 (Meiji 29) in Ono Village, Mitsu County (present-day Okayama City), Okayama Prefecture. He was the second son of Kikujiro, a farmer, and his wife Tomi. The Doko family had been devout followers of Nichiren Buddhism for generations and Toshio was raised under his mother’s strict discipline and devotion to education and to Nichiren Buddhist teachings. Tomi was not only devoted to her own children’s education but also to girls’ education in general, believing that “a nation without capable mothers will decline.” In spite of the difficult circumstances during World War II, Tomi’s 1942 (Showa 17) founding in Yokohama City of Tachibana Gakuen, a school for girls, reflected her enthusiasm for the cause.

In 1911, Toshio entered the private Kanzei Junior High School (now Kanzei High School), where he met the principal, Sataro Yamauchi. A man of character who combined strictness and gentleness, Yamauchi told him: “Do what you think to the best of your ability. Do what you think is worth doing, not what others force you to do.²” These words became deeply engraved in young Toshio’s heart.

After graduating from Kanzei Junior High School, Toshio entered the mechanical engineering department of Tokyo Higher Technical School in 1917 (Taisho 6). At the school, he became head of a student movement to raise the status of the school to a university, sometimes leading demonstrators. This movement continued even after his graduation, and in 1929 (Showa 4) Tokyo Higher Technical School became Tokyo Institute of Technology, the university it remains to this day.

While a student at Tokyo Higher Technical School, Toshio came across a book in a used bookstore in Kanda, Tokyo, titled “Steam Turbines.” From then on, he devoured every technical book on turbines written in English or German that he could get his hands on. The language barrier was high, but Toshio overcame it by finding English and German speakers working in Tokyo, teaching them Japanese in exchange for English and German lessons. These efforts paid off, and before long he was the most knowledgeable person on turbines at Tokyo Higher Technical School, more so than any of the other students or teachers. This expertise became the foundation for his future nickname, “Doko the Turbine Man.”

Delivery of the First Domestically Produced Turbine

In 1920, Toshio Doko graduated from Tokyo Higher Technical School and went to work at Ishikawajima Shipyard. Although many of his classmates joined better paying companies, Toshio chose Ishikawajima because, at the time, the Shipyard focused on turbine research and development, matching Toshio’s strong desire to help domesticate production of turbines in Japan.

For Toshio, the opportunity to lead turbine research and development at Ishikawajima Shipyard came quickly. Due to the shipbuilding depression after World War I and Japan’s signing of the Five-Power Treaty following the Washington Naval Conference of 1921–1922, Ishikawajima shifted its focus of turbine development from marine to land-based applications. To that end, the company sent a researcher to Escher Wyss, a leading Swiss manufacturer of land-based turbines. Toshio was selected as a researcher. He left for Switzerland in 1922. His diligence at Escher Wyss surprised researchers from all over the world, putting into practice the spirit instilled in him by Sataro Yamauchi. He was also living up to his lifelong principles of “thorough diligence” and “thorough proficiency.” In Switzerland, Toshio spent what little leisure time he had for skiing, his only means of relaxation.

Toshio returned to Japan in October 1923. The various insights that he brought back from Escher Wyss helped to jump-start Ishikawajima Shipyard’s land-based turbine business. The delivery of Japan’s first domestically produced steam turbine by Ishikawajima Shipyard for a large power generator at Chichibu Cement in 1929 (Showa 4) reflected the value of such insights. At that time, Chichibu Cement‘s purchasing staff was hesitant to use a domestically produced turbine, but Toshio told them that “Ishikawajima has absolute confidence in its technology. Please do not say that domestic products are inferior to foreign ones without having used them first. Full domestication of production is necessary to encourage Japan’s own technological development and for the future of Japan. I urge you to use Ishikawajima’s turbines.³” With the delivery of the first domestically produced turbine, the nickname, “Doko the Turbine Man,” became widespread throughout the industry.

Revamping the Management of Ishikawajima Shibaura Turbine

Although Ishikawajima Shipyard steadily expanded its business through the rapid growth of its land-based turbine business, the company was hit hard by the Showa Depression, forced to lay off 550 workers in 1931. This was an unforgettable painful event for Toshio Doko. Although his position within the company at the time did not enable him to stop the layoffs, he vowed that he would never allow the company to repeat this action. After the war, as president of Ishikawajima Heavy Industries and Toshiba Corporation, Toshio worked to rebuild the ailing companies, but maintained his policy of “not laying off even a single employee.” It is safe to say that his belief in securing employment as a corporate social responsibility was based on his painful experiences during the Showa Depression.

In 1936, sometime after the Japanese economy emerged from the Showa Depression, Toshio was transferred to the newly established Ishikawajima Shibaura Turbine Co. (IST) – a joint venture between Ishikawajima Shipyard and Shibaura Seisakusho, with the two both spinning off their turbine divisions. At IST, “Doko the Turbine Man” continued to play an active role. He recalled his time at IST:

Immediately after my transfer to the new company, I was dispatched to GE headquarters in the United States with plant manager Uematsu and several others, and was given the opportunity to study and observe. We had a frank exchange of opinions with the engineers there, which proved very beneficial.

We returned to Japan in February of the following year, and five months later, I was appointed a member of the board. I was 41 years old.

Even after becoming the engineering division’s chief and then a board member, my work remained the same. We all discussed and worked together on site to make the best turbines possible. We also traveled all over Japan for assembly and repair. There was literally no time for our seats to stay warm during this period. It was a very busy time for us engineers, as if we were working on turbines before and after every meal.⁴

Toshio, who worked at IST to the end of WWII, was appointed president of the company in April 1946, partly because top management was ousted as part of the postwar reforms. IST had four plants in Nagano Prefecture (Matsumoto, Tatsuno, Kiso, and Ina), in addition to its main plant in Tsurumi, Yokohama. President Doko actively traveled back and forth among these factories, orchestrating the shift from military to civilian production in efforts to rebuild the company. Looking back, he recalled: “First, we made pots and pans to secure a living for our employees, and then we continued to make round trips between Tsurumi and Matsumoto for full-scale reconstruction. The trains we used were usually overnight trains. There were several nights when I slept standing up in the packed, overcrowded train.⁵”

Sustaining Toshio as president of IST was his iron-willed determination that “not a single employee and her or his family should go hungry.⁶” To secure funds for paying wages, Toshio sometimes had to negotiate all night long with banks. Thanks to his leadership efforts, IST was able to overcome its postwar difficulties earlier than its parent company, Ishikawajima Heavy Industries.

Rebuilding the Management of Ishikawajima Heavy Industries

Ishikawajima Shipyard changed its name to Ishikawajima Heavy Industries (IHI) in June 1945, shortly before the end of the war. IHI was unable to break out of its postwar slump, and in 1950 it posted a deficit as large as 150 million yen. This led to calls for Toshio Doko, who had successfully restructured the subsidiary IST, to return to the IHI parent company. Eventually, he did so in June 1950. Exactly 30 years had passed since Toshio had joined Ishikawajima Shipyard in 1920.

Upon taking office as president of IHI, Toshio told the labor union that “I will not lay off any employees.⁷” Then on New Year’s Day 1951, his first after taking office, Toshio stood at the entrance of the company and handed each employee the first issue of the company newsletter, “Ishikawajima,” which he had personally prepared. The newsletter contained the following specific goals for the company’s reconstruction: (1) establishing a plant-by-plant profitability system; (2) establishing sound management; (3) planning order-taking and consolidating product models; (4) utilizing the organization and improving administrative efficiency; and (5) enhancing corporate culture and spirit. This managerial approach gradually permeated IHI and the labor union began to cooperate with corporate restructuring, softening its confrontational tone. President Doko succeeded in restructuring IHI without layoffs.

In 1954, when Toshio was hard at work rebuilding IHI, the so-called shipbuilding scandal broke out, when kickbacks tied to the government’s assistance for shipbuilders’ interest payment reached political circles, leading to the arrest of more than 100 people from the political, public, and private sectors. The prosecutors’ investigation extended to IHI as well, and even though he was not involved, Toshio was detained for twenty days, and recalled the incident as follows:

I was arrested as one of the presidents of shipbuilding companies and spent twenty days in detention. I was waiting for the bus at the bus stop in front of my house as usual when a prosecutor from the Tokyo District Public Prosecutor’s Office approached me and asked: “Do you have a moment to go back to your house?” After a two-hour search of my house, I was ordered to turn myself in voluntarily. The chief prosecutor of the Tokyo District Public Prosecutors Office was Mr. Nobutaro Kawai, but I think my case was assigned to Prosecutor Terashima.

I heard that the prosecutor in charge later told reporters that when he saw my ramshackle house and the way I commuted by train, he said: “Oh, I had a gut feeling that this person was different.”

But I learned a new lesson in my twenty days in jail. “Life is full of unexpected pitfalls. You must separate the public and the private, always be neat and tidy, and live steadfastly.⁸”

In the end, it was confirmed that Toshio had nothing to do with the scandal, and he was released without being indicted. The anecdote – that the prosecutor in charge of the case was impressed by Toshio’s “integrity and honesty” when he learned that his house in Tsurumi, Yokohama, was modest and that he commuted by bus and train instead of using a company car – is very impressive. Toshio gleaned a lesson from this unfortunate experience and further refined his “integrity and honesty.”

Under the leadership of President Toshio Doko, the restructuring of IHI progressed. In getting the company back on track, the development and introduction of new technologies played important roles; he recalled:

Behind the scenes of such breakthroughs, Ishikawajima made continual efforts, first in its own technological development, and second in the introduction of foreign technologies.

First, in the year 26 [Showa 26 or 1951] the company formed a technical partnership with ETNA Japan in ironmaking machinery, and in Showa 27, it formed a partnership with U.S. Foster Wheeler for land and marine boilers, paving the way for high-temperature, high-pressure boilers. The company also launched a joint venture with U.S. Calling Co., and established “Ishikawajima Calling,” introducing construction machinery technology. In addition, the company incorporated pneu-matic machinery technology from the U.S.-based Joy Corporation.

In Showa 31, the company introduced gas turbines for aircraft in partnership with GE, followed by marine turbines and land-based turbine auxiliaries. At this time, the company had introduced about 80 technologies. I can’t tell you how many times I traveled back and forth between Japan and Europe and the U.S. to sign these partnership agreements.

However, although the main purpose behind the enthusiasm and willingness in introducing these technologies to Japan was to eliminate the technological gap after the war, technological adoption was made possible by the excellence of the Japanese technical staff.. . . It was possible first and foremost because [the U.S. and European counterparts] had confidence in their technical standards.⁹

As these words indicate, Toshio was never satisfied with simply importing a new technology, but aimed to connect it with his own company’s technological development to produce technological innovation. He was aiming to recreate the experience of his youth prior to the war, when he learned from the technology from Escher Wyss, and eventually achieved the domestic production of a large turbine. With technological innovation serving as a driver, IHI set upon a growth path.

This growth was symbolized by the company’s entry into the Brazilian market. In January 1958, President Doko signed an agreement with the Brazilian government, and by the end of the same year, Ishikawajima Brazil Shipyard (commonly known as “Ishi-Bras”) was born. Although executives at IHI’s main bank Dai-Ichi Bank were opposed to the company’s Brazilian foray, Toshio established Ishi-Bras because he believed that expansion overseas was the only way for Japan’s shipbuilding industry to continue growing. He made painstaking preparations for entering the Brazilian market. International travel was far less convenient than today, but Doko made more than a dozen trips to Brazil. In 1960, the Brazilian government awarded him the Order of the Southern Cross as a token of appreciation for his decision to enter the country’s market not long after the war’s end – the first time that a Japanese national received this honor.

In December 1960, IHI and Harima Shipbuilding & Engineering merged to form the new company Ishikawajima-Harima Heavy Industries (new IHI). It was a complementary merger between IHI which had a strong land-based division and a weak shipbuilding division, and Harima Shipbuilding & Engineering which had a strong shipbuilding division and a weak land-based division. It became a great success. Toshio Doko, President of IHI, attending the merger’s press conference together with Harima President Shuzo Mutsuoka, said in a plain-spoken manner: “This is a merger of land and sea. It is not a merger in which one and one are combined to make two, but nuclear fusion in which one plus one becomes three or four.¹⁰” Ishikawajima-Harima Heavy Industries became a familiar name to the public through the abbreviation IHI, with the company growing steadily. Upon the establishment of IHI, Toshio was appointed president of the company, with Mutsuoka serving as chairman.

Toshio Doko at the time of the merger of Ishikawajima Heavy Industries and Harima Shipbuilding & Engineering (1960) (Provided by Asahi Shimbun/Jiji Press Photo)

Rebuilding Toshiba’s Management

Toshio Doko became chairman of the merged IHI in 1964. The following year, the Japanese economy experienced the so-called 1965 Recession, dubbed the “biggest postwar recession.” During this recession, Tokyo Shibaura Electric Company (Toshiba), one of Japan’s leading general electronics manufacturers, also struggled and fell into crisis. Toshiba was created in 1939 when Shibaura Seisakusho, which along with Ishikawajima Shipyard was the parent company of Ishikawajima Shibaura Turbine, merged with Tokyo Denki. Taizo Ishizaka, chairman of Toshiba, attempted to rebuild the company by appointing Toshio Doko as president in May 1965. Ishizaka had been called the “prime minister of the business world” since he became the second chairman of Japan Federation of Economic Organizations (Keidanren) in 1956, and Toshio Doko had long held him in deep respect. Also, after having served as president of Ishikawajima Shibaura Turbine, Toshio was no stranger to Toshiba’s crisis.

When Toshio Doko became president of Toshiba, he first introduced himself to the labor union. After seeing this respectful attitude from Toshio, the union did not feel the same distrust as it did toward previous presidents. His approach gradually gained acceptance among union members as he proclaimed, “Due to these circumstances, I cannot pay you as much as other companies at this time. But if you work hard and make a profit, I will make sure that compensations are competitive with others. Even when we earn a profit, it doesn’t mean it will go straight to my own pocket, so I will distribute it fairly¹¹”.

President Toshio Doko’s “Toshiba Revolution” focused above all on changing employees’ attitudes. He repeatedly said, “General employees should think three times harder than before, executives work ten times harder, and I myself work even harder than that,¹²” and he led by example. He continued to commute to work early in the morning by train, including on Sundays (Japan then had a 6-day work week), and remodeled the president’s office that used to have its own bathroom, toilet, and kitchen, into a simple one. He also substantially delegated authority to the heads of business divisions¹³ and further spearheaded sales activities himself, calling them “President’s Sales.”

In 1965, with the recession deepening, Toshio, as Toshiba President, formulated a medium-term management plan that covered a two-year period from fiscal 1966 to fundamentally strengthen the company’s structure. Its five priority items were: (1) improving asset efficiency; (2) establishing production systems; (3) improving business management systems; (4) strengthening the development of technology; and (5) enhancing sales systems.

Of these, Toshiba focused on strengthening its technological capabilities with new products and technologies and fields that would boost sales and profits. It is noteworthy here that “For the promotion of R&D, and moreover, for the company’s continuous development, even during periods of poor performance due to the economic downturn, 3–4% of sales were set aside for R&D, in anticipation of a dramatic advancement in its capacity to develop technologies. In order to strengthen the capacity to develop technologies across the company, they needed to enhance the management of technology comprehensively. For this purpose, in July of Showa 41 [1966], a newly established engineering headquarters directly reported to the president.¹⁴” Thus, the essence of Toshio’s corporate restructuring measures featured radical measures that would enable long-term development rather than short-term, symptomatic treatments.

Under Toshio Doko’s leadership, Toshiba revived phoenix-like by successfully rebuilding Ishikawajima Shibaura Turbine, Ishikawajima Heavy Industries, and Toshiba. Over time, Toshio became known as “the fine physician of the business world” because he adhered to a management philosophy that consisted of the following three elements:

• 1. Rationalizing thoroughly

• 2. Presenting a long-term vision

• 3. Exercising vitality

From Keidanren Chairman to “Mr. Administrative Reform”

Toshio Doko became the chairman of Toshiba in 1972. Two years later, in May 1974, he was elected the fourth chairman of Keidanren. The “fine physician of the business world” finally transformed himself from being a fine doctor restoring the health of individual companies to one who restored the entire business community of Japan.

When Toshio became chairman of Keidanren, Japan was experiencing severe price hikes brought on by the first oil crisis. It was also the time when the Lockheed bribery scandals came to light and the collusion between the political and business worlds drew sharp criticism from the public. Looking back, he noted:

The recession triggered by the oil shock was somehow overcome through the efforts of each company, but other problems continued to crop up one after another, sometimes simultaneously.

First, in August of year 49 [Showa 49; 1974] commotion followed my statement that “Keidanren does not act as a collection agent for political donations. In the first place, “donations should be made on an individual level.” Some people said, “Doko is blackmailing the Liberal Democratic Party with the money of the business community behind him,” or “He is clueless about politics.” Without a thought for personal gain, I presented what I considered a sound argument only because I wanted the conservative party [LDP] to stay on the straight path. There was a lot of wrangling, but the issue was eventually settled by the reorganization of contact points.¹⁵

The appointment of the “clean and fair” Doko as chairman of Keidanren did much to restore public trust in that business organization.

After serving three terms as president of Keidanren over six years, Toshio Doko went on to serve as chairman of the Ad Hoc Administrative Research Council (Rincho) starting in March 1981 and as chairman of the Ad Hoc Administrative Reform Promotion Council (Gyokakushin) starting in July 1983. Rincho is an advisory body directly under the Prime Minister. Rincho vigorously issued numerous recommendations on issues such as reducing the public’s burden, simplifying administrative procedures, reviewing the nation’s institutions, systems, and policies, and methods of pressing ahead with future administrative reform. Rincho had been established earlier, in 1961 (the First Ad Hoc Administrative Research Council), and was technically the Second Ad Hoc Administrative Research Council (the Second Rincho) over which Toshio assumed chairmanship. The Gyokakushin, on the other hand, was a temporary body established in the Prime Minister’s Office to monitor implementation of Rincho’s recommendations.

Despite his advanced age, Toshio, who came to be known as a “selfless man” and a “man of conviction” through his rebuilding of individual companies and reform of Keidanren, was uniquely qualified to serve as chairman of Rincho and Gyokakushin. He devoted his later years to administrative reform, and the Japanese public came to refer to him as “Mr. Gyokaku (Mr. Administrative Reform)” with awe. A well-known episode occurred one week before the release of the Third Report by the Second Rincho. On July 23, 1982, NHK Special (a special program by the NHK Japan Broadcasting Corporation) program entitled “An 85-year-old’s perseverance: The face of the administrative reform, Toshio Doko” was broadcast on television and caused a huge sensation.

The dinner menu of Mr. and Mrs. Doko shown on TV consisted only of mezashi (dried fish), some greens, miso soup, and brown rice. The frugal lifestyle of a top figure in the business world took many people by surprise and reminded them of the importance of frugality. At the same time, they were also deeply moved by the consistency and seriousness of his stance toward administrative reform aimed at eliminating wasteful spending. This broadcast instantly popularized the image of “Mezashi no Doko-san” (Mr. Dried Fish Doko), was proof that even in the last years of his life, Toshio remained committed to “thorough diligence” and “leading by example.”

A Sense of Crisis Harbored by Doko

Toshio Doko’s strong desire for administrative reform was triggered by the article “Suicide by Japan,” co-authored by “Group 1984,” and appearing in the February 1975 issue of the Bungeishunju magazine. The article warned that the decline of ancient Greece and the Roman Empire bore a striking resemblance to the situation in Japan. Doko summarized the contents as follows:

The situation is so similar that the story of Rome [the Roman Empire] and [ancient] Greece could be taken word for word as the story of Japan without any contradiction, and if the country name Japan replaced Rome and Greece, the story would still be the same.

The research group ([“Group 1984” that wrote the article] found that the results exceeded their expectations, saying, “The more we entered the world of the fall of Greece and Rome through these fragments of historical documents, the more we grew acutely aware of the magnitude of the crisis of Japan’s political, economic, social, and cultural downfall.”

Then the authors went on to warn that “…should Japan decline in the future, the historians of the future may compare Japan to Rome and may call it a ‘second Roman Empire’.” Finally, they quoted Cyprian [Bishop of Carthage] as they warned readers:

“Herein you must in the first place learn that the world is now reaching its old age, that it stands no longer in its pristine strength, no longer keeps its indwelling vigor and force. This though we ourselves should speak it not… still the world itself declares it, and attests its own ruin in the tottering estate of things.”

(“The Treatises of S. Caecilius Cyprian, Bishop of Carthage, and Martyr” Translated by Members of the English Church. Oxford: James Parker & Co. and Rivingtons. 1876, pp. 200–201).¹⁶

Toshio felt that this article “Suicide by Japan,” “should be read by as many people as possible, so with the publisher’s approval I made tens of thousands of copies and distributed to people in the business community.¹⁷” He indeed shared with “Group 1984” a strong sense of crisis about the future of Japan.

Toshio Doko passed away in August 1988, in the midst of Japan’s economic bubble. Unfortunately, the sense of crisis he held in his later years turned into reality. Japan’s society and economy made a darker turn after reaching its peak in 1989, the year the Japanese calendar changed the name of the era from Showa to Heisei. The 1990s were dubbed the “Lost Decade,” and Japan’s economic slump became a prolonged affair thereafter. For Japan today, still struggling to emerge from the crisis, Toshio Doko’s ideas and his way of life can still be a “guiding star.¹⁸”