Business thinker

Konosuke Matsushita's dam management and collective wisdom

Updated 4 November 2026

Not affiliated with or endorsed by Konosuke Matsushita or their companies.

Konosuke Matsushita, the founder of Panasonic, left two well-known management ideas. Dam management means holding a planned reserve not only in cash but in equipment, people, stock, technology and product development. Management by everyone with collective wisdom means gathering the knowledge of the people who do the work, because one person's wisdom has limits. This page explains both from Panasonic's and the PHP Institute's own material and Kazuo Inamori's account, and shows how to apply them.

Dam management: a planned reserve in every area

The PHP Institute's site 松下幸之助.com explains that a dam holds back a river so it can supply a steady amount of water whatever the season or weather. In the same way, a business should keep an appropriate reserve, based on a sound outlook, in every area: equipment, funds, people, inventory, technology, and planning and product development. The reserve can look like waste, the summary says, but it is the insurance premium that keeps the business growing steadily.

The point that is easy to miss is that cash is only one of six areas. A coffee roaster with two and a half months of fixed costs in the bank, one roasting machine and one person who can run the roast profiles will stop selling after a breakdown or a sick day long before a downturn drains its cash. Applying the idea means asking, area by area, how much reserve there is and whether anyone chose that level.

The dam talk Kazuo Inamori heard

Kazuo Inamori writes in his book on the Twelve Management Principles that, soon after founding Kyocera, he stood at the back of a talk where Matsushita described dam-style management: store the profits of good years so the business is ready for bad ones. An older person in the audience then asked how someone with no slack could do that. Inamori recalls that Matsushita paused and answered, roughly, "well, you have to think so" (そう思わんといけまへんなあ). Inamori took the lesson that thinking so comes first. Our reading: a reserve is built in the good months.

Don't forget disorder in times of peace

Another entry on the same site is about a saying Matsushita stressed at every opportunity, 治にいて乱を忘れず: good times and bad times both come, and people who have enjoyed a long run of good times forget the hard ones and panic when the wind turns, so keep ready for trouble in times of peace. Dam management can be read as that readiness, put into numbers for each area.

Collective wisdom: one person's wisdom has limits

Panasonic's history series describes the "management by everyone with collective wisdom" (衆知を集めた全員経営) that Matsushita practised throughout his life. However able a person is, their wisdom has limits, and relying on one person's judgment invites mistakes; so the knowledge each employee builds in their own work is gathered and used in management. A suggestion scheme was introduced in 1954 to do that.

Later he named the open mind (素直な心) as essential to gathering collective wisdom. The PHP Institute describes it as a mind free of fixed views: the humility to listen to anyone and learn from everything, and to see things as they are.

To apply it before a decision, list who knows more about it than the decider: the people who do the task, take the complaint, or talk to the supplier. Ask them for facts from their work ("What goes wrong on Friday deliveries?") rather than votes, and tell them afterwards which input changed the decision.

How to apply it to your own company

1. For funds, equipment, people, inventory, technology, and plans and products, write down the reserve you hold today.
2. Express each as cover (months, weeks, or "is there a second one?") and mark whether it was planned.
3. Walk your worst past season through each area and find what runs out first.
4. Decide, while things are going well, which reserve to build, by how much, and how.
5. Before a big decision, list the people whose work gives them knowledge you lack, and ask them for facts.
6. Write your own view down first, then listen; afterwards, say which input changed the decision.

What the sources say, and what they don't

The descriptions of dam management and of 治にいて乱を忘れず come from the PHP Institute's summaries; the talk is Kazuo Inamori's recollection; collective wisdom and the suggestion scheme come from Panasonic's own history series. None of them says how large a reserve should be. That depends on the business and its seasons, so the skills below size it from your own numbers.