Success Secrets from a 1,300 Year-Old Family Business

Posted by on Mar 20, 2018 in Customer Service, Engagement, Leadership | 2 comments

As a consultant having worked with several second generation businesses—and even a couple of third generation ones—I have a keen interest in figuring out the success secrets required to keep a business in the family and successful beyond the current leadership team.

But sadly, according to HBR, most family-owned businesses don’t last.

  • 70 percent of family-owned businesses fail before the second generation gets a chance to take over.
  • 10 percent of family-owned businesses remain active, privately-held companies for the third generation to lead.

Yet Fujiwara Mahito of Japan did more than beat the odds, when he passed down his family business: he set a new record according to Guinness World Records. The Nishiyama Onsen Keiunkan hotel, built on top of natural hot springs, opened in 705 AD, and it’s still in the family after 52 generations…a world record for succession! Additionally, Nishiyama Onsen Keiunkan is the second oldest company in the world.

Does your organization have what it takes to live beyond the average 10-year lifespan of most companies?

Here are 3 things I learned from the success of Nishiyama Onsen Keiunkan.

Success Secret #1: Measure time in generations, not quarters

The five oldest companies in the world have one thing in common: they are Japanese. Which begs the question: Why?

Hugh Whittaker of the Nissan Institute of Japanese Studies says that Japanese business owners value both continuation and innovation. But when those two values conflict, the culture chooses longevity and business continuity over short-term gains.

Can you imagine a business that values job security and living wages even if it means lower profits? Can you imagine what it would be like for a business to say NO to short-term gains via layoffs, outsourcing, and slashing benefits? Can you imagine a business owner caring more about the next generation (of workers AND owners AND customers) more than putting a multi-million-dollar bonus in his pocket?

Fujiwara Mahito did just that. And by thinking long-term, he left a legacy that’s still going 1,300 years later.

Want your business to last? Don’t confuse your quarterly results or some theoretical five-year plan with planning for the future.

Success Secret #2: Live your differentiator

Nishiyama Onsen Keiunkan has spent generations focusing on their strengths instead of trying to be all things to all people. And what they’re good at is providing unparalleled service excellence.

How do I know? Here are a few comments from guests:

  • “an amazing level of service”
  • “a great traditional old world charm that is difficult to describe”
  • “unparalleled excellence”
  • “extremely attentive”
  • “[felt] truly pampered”
  • “Language barrier is certainly NOT a barrier to acts of kindness & consideration”

No one wrote that it was “cheap.” It’s not. It’s about $450 for the least expensive room.

No one commented about its convenient location. It’s 3-4 hours from anything remotely interesting.

No one praised them for their fast, free internet. They don’t have it.

But for more than 1,300 years, the owners have instilled upon all staff one thing: “we will provide unparalleled service excellence.”

Want your business to last? Know your differentiator, hire those demonstrating a passion for your differentiator, instill your differentiator in all those working for you, and live your differentiator every day.

Success Secret #3: Invest in improvements

While Nishiyama Onsen Keiunkan features picture-postcard views and world-class natural hot springs that has been enjoyed by royalty, samurais, and adventurers, the owners don’t rest on their laurels. In the last 1,300 years, the owners have improved the property and expanded from a handful of simple rooms to 37 rooms today (some with open-air baths and moon-viewing platforms). In years past, they’ve added electricity, air conditioning, television, etc. They now have a restaurant serving locally-sourced beef—and even a karaoke bar.

The natural hot springs made the location of the hotel so desirable. Today, they are expanding those already incredible springs by drilling and adding a new one.

Being the first or best-in-class is a nice differentiator. But maintaining top-tier status isn’t easy. That’s why the owners continue to invest in the future of the hotel, the staff, and the next generation of owners without incurring debt in the process.

Want your business to last? Spend your free time thinking about your next innovation. And when you can afford it, invest in it before someone else does.

I’d love to hear from you if you own a business or work for a business that can last. What success secrets are you passing down to the next generation of leadership in your organization?

2 Comments

  1. Great insights into a business built to last many lifetimes!

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