What is Amoeba Management?
Last updated: October 18, 2024 Read in fullscreen view
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Amoeba Management is a unique management method that Mr. Kazuo Inamori created while striving to uphold Kyocera's Management Rationale.
Kyocera Corporation is a Japanese multinational ceramics and electronics manufacturer headquartered in Kyoto, Japan. It was founded as Kyoto Ceramic Company, Limited in 1959 by Kazuo Inamori and renamed in 1982
What is Amoeba Management?
Amoeba Management begins with dividing an organization into smaller units called "amoebas." Each amoeba leader is responsible for drafting plans and goals for the unit. Amoebas achieve their goals through collaboration and the hard efforts of all their amoeba members. In this system, every employee plays a major role and voluntarily participates in managing the unit, achieving what is known as "Management by All."
The first objective of Amoeba Management is to establish a market-oriented divisional accounting system.
The fundamental truth of business management is to maximize revenues and minimize expenses. In Amoeba Management, the entire organization must be divided into small units or "amoebas." As independent profit-and-loss centers directly linked to their respective markets, each amoeba manages its own profitability, allowing it to respond promptly to market changes.
For this purpose, the following mechanisms are necessary:
- Each amoeba pursues profit by practicing the principle of "Maximize revenues and minimize expenses;"
- Each amoeba is an independent accounting unit that can buy and sell with other amoebas; and
- Each amoeba makes monthly plans and records results using the Hourly Efficiency report, which is meant to be as easy to understand as a household budget.
Develop Leaders with Managerial Awareness
The second objective of Amoeba Management is leadership development — what Kyocera calls "developing leaders with managerial awareness."
For this purpose, a large organization is divided into many smaller units called "amoebas," and a leader appointed within each one.
The overall management of the amoeba is then entrusted to this leader, who oversees business planning, management control, labor and purchasing. This system leads employees to develop managerial awareness.
Practice "Management by All"
The third objective of Amoeba Management allows all employees to participate in managing the company by taking an active role in the operation of their own amoebas. Employees take part in management by consolidating their skill sets and aligning their efforts toward shared goals. This builds a sense of purpose and achievement into the workplace.
To this end, every amoeba must:
- 1. Communicate its plan and goal in a vision that can be shared with all members;
- 2. Create a fiscal-year plan known as the "Master Plan," based on the strategies and goals of the entire company; and
- 3. Create monthly plans based on the Master Plan, and achieve the plan without fail.
Benefits of Amoeba model
- The number of members of an Amoeba is small, so the results appear immediately, thus it is easy to give personnel a sense of ownership.
- Develop Leaders with managerial awareness: It is easy to develop and identify leaders with management skills using the amoebas.
- Since the profitability metrics of an amoeba are unified, it is easy to weed out the competition between amoebas.
Limitations of Amoeba model
- Amoeba is too focused on its own profitability, thus making it easy to pursue the interests of the amoeba over those of the company as a whole.
- No labor cost for simplified accounting system.
- It takes time to calculate the "profit per hour." If not calculated fairly, this method cannot be used as an adequate evaluation of profitability, or as a comparison against other amoebas.
Recommended Book:
Amoeba Management: The Dynamic Management System for Rapid Market Response by Kazuo Inamori. Promotes decentralized management through small, self-supporting units called amoebas. Emphasizing human values and leadership potential, it enhances flexibility and responsiveness in competitive markets. Dr. Kazuo Inamori's book offers insights and tools for fostering a culture of accountability and achieving profitability.
- Website of Mr. Kazuo Inamori
- Wikpedia
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