Chapter 17 Chapter 16 The Theory of Tap Water: Emerging as a Business Model

Matsushita Electric Appliance Manufacturing Co., Ltd. was founded on March 7, 1918, but Konosuke Matsushita set the company's founding anniversary on May 5, 1932.There is only one reason, that is, on this day he proposed the famous "tap water philosophy". In the view of Konosuke Matsushita, the importance of entrepreneurial spirit is far greater than the shape of the enterprise.Although Matsushita Electric has been in operation for more than ten years, it was just an ordinary manufacturer like other companies before the birth of the "tap water philosophy".Until this day, the question that Konosuke Matsushita has been circling and pondering for a long time in his mind - what is the mission of the enterprise?Finally, we have the answer: high-quality, low-cost and unlimited supply are the common goals pursued by the business community.

On a hot summer day, Konosuke Matsushita was walking on a street near Tennoji in Osaka.People in that area have shared running water in front of their houses.At this time, a man pulling a truck came over. After sitting and smoking a cigarette, he turned on the tap, took a sip to rinse his mouth, and then drank tap water to quench his thirst.Tap water is not free. The natural river water can only become drinking water after being processed by the water plant, so you have to pay the water fee.But now this man drinks something of value without everyone's consent, and no one stops him and no one reproaches him or says he has stolen from others.Why?Any kind of product, when the mass production is almost unlimited, this kind of thing seems to be free of money.

Konosuke Matsushita believes that if the refrigerators, electric fans and washing machines produced by my factory are supplied in large quantities like tap water and at low prices, it will undoubtedly be a blessing to people.If it wasn't for my company, all the food, clothing and other necessities of people's livelihood produced by all enterprises would be like running water, and there would be no poverty, hunger or cold in society. Although it is not easy to keep prices low, it is a common goal pursued by the industry.It's just that Japan can't just rely on Japan to implement this matter. It must rely on the common strength of the whole world to reduce prices and then turn it into a rich world-the mission of production is here.In fact, isn't tap water already so common and cheap?This is the tap water philosophy of Konosuke Matsushita.

The so-called "tap water philosophy" is a metaphor for the corporate mission of Konosuke Matsushita.For this mission, the simplest expression is to eliminate world poverty and make mankind prosperous and rich.Konosuke Matsushita said: "What is the mission of the enterprise? I have been thinking about this question for several days until late at night, and finally I have the answer. Simply put, it is to eliminate world poverty. For example, the water in the pipe has its value, but You don’t have to pay for drinking tap water on the side of the road and you won’t be blamed, because water resources are relatively abundant. Isn’t it the responsibility of enterprises to make the world rich in materials and eliminate all inconveniences?” “The ultimate goal of business is not profit, but will be entrusted to us The hope of the public on our shoulders is expressed through numbers to fulfill our obligations to the society. The responsibility of the enterprise is to make the things that the public need as cheap as tap water." In the words of Konosuke Matsushita, business is to start from "nothing". Manufacture "being" and bring everyone a rich and abundant life through production activities.

In essence, the "tap water philosophy" is to use industrial production methods to turn a luxury that can only be enjoyed by a few people into a cheap product that ordinary people can enjoy.The eyes of business operators should focus on people's desire to pursue life progress, not on customers' pocketbooks.The market is created by high-quality and low-cost products, not by calculating rebates and discounts to dealers, let alone by cheating and deceiving customers to sell them.As a result, the basic policy of Panasonic Electric Co., Ltd. has been established: quality must be prioritized, prices must be low, and services must be thoughtful.It is this kind of business policy that has enabled Matsushita Electric to gain the trust of customers, overcome difficulties one after another, and gradually embark on the road to growth.

The birth of "tap water philosophy" itself is the accumulation and sublimation of Panasonic's previous operating experience.As early as 1927, Konosuke Matsushita established the electric heating department for the first time, planning to produce electric irons.At that time, the annual sales volume of electric irons in Japan did not exceed 100,000, and the price of each iron was 4 to 5 yen.Konosuke Matsushita believes: "Such a convenient thing, but because of the high price, many people who want to use it can't afford it. Therefore, as long as the price is lowered, many people will buy it. If many people want to buy it, at first glance 10,000 seems to be too much, but in fact it can be sold; the prerequisite is to lower the price so that everyone can afford it." So he decided to reduce the price by mass production, producing 10,000 per month, The sale price was 3.2 yen, and it turned out to be a great success.This case is almost a Japanese replica of the American Ford Model T.Therefore, American media reports compared Konosuke Matsushita with Henry Ford.In this regard, Konosuke Matsushita concluded by himself: "When producing popular products, not only should we introduce better quality, but the price should also be at least 30% cheaper."

The philosophy of tap water had great power in the age of Konosuke Matsushita, and it was bound to bring Matsushita to the road of large-scale operation.The rapid popularization of home appliances in Japan and the world is largely due to Panasonic.The poor in the United States can also drive a car, thanks to Ford; today's beggars can also watch TV, thanks to Konosuke Matsushita. This philosophy of tap water makes Panasonic's operations particularly focus on customer orientation and public needs.Panasonic mainly focuses on imitation in product development, taking a short, flat and fast route.Once a promising new product is discovered, it will be taken over to make a "new product" with higher quality and lower price than others or even the original inventor. "Innovation in imitation" has enabled Panasonic to achieve operational success.Its products generally have the four characteristics of large batch, low cost, high quality and good service, and can win a high market share.However, it is slightly inferior in terms of real originality.Original innovations leading the industry will be limited by the philosophy of tap water.

The example of Panasonic's development of computers is a good illustration.When computers were just emerging, Panasonic was also committed to computer research and development.By 1964, Panasonic Corporation had invested more than one billion yuan in the computer industry. Seven computer companies including Panasonic invested 200 million yuan to establish the Japan Electronics Industry Promotion Association to jointly develop computers.However, the vice president of the Chase Manhattan Bank in the United States said in a chat with Konosuke Matsushita that computer manufacturers in all countries in the world are not doing well, and only IBM in the United States is continuing. Even GE (General Electric Company of the United States) cannot do what it wants. Are there too many manufacturers?Konosuke Matsushita decisively decided to give up the computer against the pressure of public opinion.In the eyes of Konosuke Matsushita, decisively abandoning projects with high costs is a wise move for business.However, this abandonment risks giving up the prospect of the future.After entering the 21st century, the various problems that Panasonic has encountered in its operations, and it has not even been able to take off the hat of "imitation king", are closely related to this philosophy of tap water.

However, it seems premature to say that the philosophy of tap water has become obsolete.Although the current Panasonic Corporation has changed the business strategy of Konosuke Matsushita to a limited extent, the service idea, customer first concept, and desire to promote the prosperity and prosperity of the society contained in the tap water philosophy are not outdated.There is no contradiction between inheriting the philosophy of Konosuke Matsushita when it was founded and changing the strategy of Konosuke Matsushita in the past.What we have to think about is precisely the relationship between ideas and strategies.The deep value of the tap water philosophy lies in the ultimate positioning of the corporate mission on social responsibility.