Omron - success with a unique philosophy

Founded in 1933 by Dr. Kazuma Tateisi, Omron has grown to be the largest industrial automation company in Japan. It is about 3 times the size of Yokogawa, the other Japanese automation major.

The unusual thing about Omron is this: alone among any multi-billion corporations, it devotes a significant amount of attention to its ethical, social and philosophical position. This unusual ethos can be traced to the founder, Dr. Kazuma Tateisi, now deceased. His innovative yet practical entrepreneurial philosophy continues in the corporate culture of this significant company.

These are extracts from eNews.

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Omron sustains unique mission with profitable growth in 2004

Omron's total revenue in 2004 was $5.5B, with growth of about 10% and profit of about 5%, very healthy for a Japanese company. Omron has been consistently profitable over the years, recovered from a loss in 2002, with essentially break-even in 2003.

Omron's largest business segment (39%) is industrial automation at $2.2B. The company has a very broad range of products - PLCs, I/O, networks, sensors, vision systems, operator interface, temperature and process controls, printed-circuit-board inspection equipment, timers, counters, panel meters, power supplies, servo drives, motors and inverters; the list of products is almost overwhelming. Omron's supports this broad range with strong local engineering capability.

Omron's automation business has grown consistently over several years. About 50% of automation revenue is in Japan, with N. America contributing 8%, Europe 26%, Asia 4% and China 8%.

Other Omron businesses include Electronic Components (15%), Automotive Electronics (10%), Social Systems (traffic and financial services - 23%) and Healthcare (8%) - you'll find Omron blood-pressure monitors and thermometers in many US department stores.

In this new age, in a new century, Omron is indeed a remarkable business leader. The company combines philosophical ideals with strong and effective business management. We wish them continued growth and success!

Click Omron website

Omron - The Philosophical Leader -
No. 10 on the list of Automation Majors

With 23,000 employees and annual revenue of $4.5 billion (year ended March 31, 2003) Omron ranks No. 10 on the list of automation majors, just behind Danaher and ahead of Rockwell Automation. Founded in 1933 by Dr. Kazuma Tateisi, Omron has grown to be the largest industrial automation company in Japan. It is about 3 times the size of Yokogawa, the only Japanese instrumentation company that was included on my list.

For the 9 months ended December 2003, Omron revenue increased 10%, with operating income up 75%. Projected revenue for 2004 is $4.85 bn, up about 10%.

Omron has 5 major divisions:

  • Industrial Automation: Components, products and systems for factory automation. Sales $1.7 bn
  • Electronics & Automotive: Components, relays, sensors, and switches for household appliances, automobiles, office equipment, mobile devices. Sales $1.2 bn
  • Social Systems: ATMs, automatic fare collection systems and modules used in financial, public transportation, and traffic control. Sales $950 m
  • Healthcare: Blood pressure monitors, electronic thermometers, and other healthcare and fitness products. Sales $350 m
  • Others: PC peripherals, card readers, RFID and a variety of other systems. Sales $300m
The unusual thing about Omron is this: alone among any multi-billion corporations, it devotes a significant amount of attention to its ethical, social and philosophical position, and a long-term future plan termed Grand Design 2010. This unusual ethos can be traced to the founder, Dr. Kazuma Tateisi who died in 1991. The innovative yet practical entrepreneurial philosophy he developed and practiced continues in the corporate culture of this significant company.

I met Dr. Tateisi in Japan some 15 years ago, and he gave me a copy of his book, "The Eternal Venture Spirit", the encapsulation of a practical and successful approach to business and society. The book was successful, and has been even been published in China. Peter Drucker wrote the preface for the English version, published in the US. You can still buy a copy on Amazon (see weblink below).

I will be writing more on Dr. Tateisi and Omron in a forthcoming article which will be on my website - I'll let you know when it is published. In the meantime, please take time to study this unusual company through the plethora of information it provides on its website.

I'll be updating the rankings of Automation Majors, and will certainly include Omron on the 2004 list!

Click Dr. Kazuma Tateisi's book - The Eternal Venture Spirit
Some new and used copies are available on

An American view of the Omron culture

Extract from eNews May. 21, 2004.

The management structure of Omron is no different than of any other Japanese company. Each of the major Omron companies outside Japan has a Japanese "watchdog" to oversee activities, as a primary Japanese link with Japan HQ. Omron is divided into 5 geographic regions: Japan, The Americas, Europe, South East Asia and China. Countries within a region (e.g.: Canada, France, England, Australia, etc.) are typically managed by locals, though each of the regions has a Japanese executive responsible for that region.

The normal term for the Regional Japanese executive is 5 years. Some are more active in the business operations than others, depending upon the individual. Omron always gives the local management a lot of freedom in operating the business. This includes business plan development, personnel, marketing, sales, promotion, etc. No one is expected to do something simply because it was being done in Japan. However, local managers try to coordinate some activities which make sense globally.

There is no real difference from an operating division of an American company. Managers are expected to achieve specific local targets and corporate goals such as sales growth, profit ratios, etc. It seems that Omron understands that other countries are different from Japan, and to market products and manage a local organization successfully in these other regions requires local management.

In Omron Japan, 99% of the staff joined Omron directly out of University. Many are engineers, and begin their careers in sales or engineering to gain that experience. Then, depending upon their skills, they are assigned to areas in which their strengths can be best utilized. Though the process of advancement into management is changing slowly, age and seniority continue to be recognized as important criteria at Omron. In addition, positive manager evaluations and management tests are required for advancement. Many of those designated to be on the fast track are sent to an overseas operation to gain global experience. It is interesting to note that most of the present executive management of Omron have worked in the US earlier in their careers, and English is their second language.

An important change which has taken place in the past few years at Omron Japan is the implementation of a Management by Objectives (MBO) system. The amount of a bonus earned is based upon MBO achievement, and not seniority (which was the previous criterion).

In the past, Omron was similar to most Japanese companies whereas lifetime employment was a given. Last year Omron Japan implemented early retirement programs and reduced employment in Japan by 1500 employees to reduce overhead costs. Japanese employees are being urged to think more on an individual basis in decision making rather than the traditional group thinking. In other words, Omron is becoming more Westernized in its management thinking.

Like many Japanese companies, failed Japanese managers at Omron are shifted to another position or put "by the window" until retirement. In very rare exceptions they may be let go. This is not true for non-Japanese management, who are given every chance to improve performance, failing which they are terminated.

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