The Key to Building a Proactive, Self-Driven Team: Lessons from a CEO’s Failure that Sparked Transformation 

This article was originally published in Japanese by BizHint. You can view the original version here.

A Small Factory’s Big Turnaround

After the Lehman Shock, a small manufacturing factory that saw its sales cut in half made a remarkable turnaround. Under the leadership of President Hideitsu Yumoto, the third-generation head of Yumoto Electric Co., Ltd., the company implemented a bold internal reform starting in 2009, and went on to record 12 consecutive years of growth beginning in 2012.

Sales have grown from ¥250 million (approx. $1.6 million) when Yumoto joined, to ¥1.4 billion (approx. $9 million) today, and the workforce has transformed into a young, dynamic organization with an average age of just 34.

At the heart of this transformation is a unique approach: turning even the smallest internal initiatives into employee-led "projects." The company typically runs around ten cross-department projects at any given time, each proposed, led, and managed by employees themselves.

But, the road to this culture of proactiveness wasn’t easy. Yumoto shares how early failures became the foundation of a system that continues to drive the company’s evolution.

Hideitsu Yumoto returned to the family business in 2009 at age 30 and became president in 2019. He now leads a precision parts manufacturing company with 70 employees in Japan and 45 in Vietnam. After overcoming the management crisis that followed the Lehman Shock, the company has achieved 12 consecutive years of revenue growth since 2012. In addition to strengthening its core machining business, it has actively pursued new ventures, including entry into the space industry.

Interview with Hideitsu Yumoto, President of Yumoto Electric Co., Ltd.

Turning “Every Task into a Project”

[INTERVIEWER] In 2009, right after the Lehman Shock, your company’s monthly sales had dropped by half. Yet today, your revenue is 5.6 times higher, and your organization has shifted from one centered around employees in their 40s and 50s to a much younger team averaging 34 years old. What kind of internal reform did you carry out?

[YUMOTO] Starting in 2012, we began a company-wide initiative to turn everything into a “project.” Whether it was work-related or not, we called every initiative a project and formed small employee teams to carry them out.

Basically, the employees themselves took the lead in planning and launching these projects. Participation was open, and leadership positions were filled by volunteers. To keep the groups focused, each team had around four members. Today, we usually have about 10 cross-departmental projects running simultaneously. Participation in at least one project is also one of the conditions for promotion.

Our current projects include breaking into the aerospace industry, digital transformation, a new headquarters building, original B2C product development, PR and social media, talent management, U.S. expansion, and vacation rental operations, among others.

[INTERVIEWER] Why use this “project system” model?

[YUMOTO] If people simply repeat the same tasks every day, their ability to perform those tasks improves, but their overall growth stagnates. Real development comes from trying new things—thinking, deciding, and acting independently.

That’s why I believe that giving employees the experience of launching and managing projects themselves is essential for real human resource development. The “project model” fosters initiative and ownership, and that’s the kind of organization I wanted to build.

Learning from Early Failures

[INTERVIEWER] When you first introduced the “project system,” did employees immediately start showing initiative?

[YUMOTO] Not at all. At first, it was full of failures. I told everyone, “I want you to freely take on any kind of project, whether related to work or not,” thinking that having freedom would motivate them.

But in reality, I was still the one leading and setting up most projects myself. When not enough members joined, I would personally ask people to participate.

Now, employees proactively volunteer for projects, but in the beginning, that wasn’t how it was. It took a certain realization for me to see that the real problem lay in how I was approaching things. That realization became the key to developing employee autonomy.

[INTERVIEWER] What exactly was that realization?

[YUMOTO] It was understanding the importance of emphasizing that projects weren’t just “side work.”

For example, if we have 100 units of work hours, 80 is for core duties and 20 for projects. However, what I failed to clearly communicate was that projects should be treated as equally important work in and of themselves, rather than secondary work that is added onto the 80 units. 

I had always wanted employees to grow into people who could proudly list real accomplishments on their resumes. Not just “I worked in sales,” but “I achieved this through this project.” Supporting that kind of growth is my role as a leader.

I thought that simply creating opportunities for people to join these projects would naturally make that message clear. But I was wrong. From the employee’s point of view, the projects led to thoughts such as, “I’m already busy with my main job,” or “Does this mean I have to work more overtime?”

What ultimately changed everything was one particular project: the Company Brochure Project around 2013.

A few young employees worked together to create our new company brochure. One member showed it to his father, who was terminally ill with cancer. The father was deeply moved at what this member was able to accomplish, and asked to have the brochure placed in his coffin.

Seeing how much the project meant to him and his family reaffirmed for me that the “project system” could truly help employees grow, and that their growth could become a source of pride even beyond the workplace. That experience encouraged me to continue pushing forward. Employees, too, came to see that though it could be tough, it was worth doing.

Since then, more and more projects have taken shape—some succeed, others fail—but across the board, I’ve seen young employees express themselves more openly and take initiative. Compared to before, it feels like the company has been reborn.

That experience convinced me that treating even small projects as serious, core work leads directly to employee growth. From then on, I made a conscious effort to communicate that clearly.

Innovation Through New Ventures

[INTERVIEWER] Once you changed the way you framed the “project system,” how did the employees respond?

[YUMOTO] One example was our Metaverse Project.

At the time, “metaverse” was a buzzword, and I wanted to explore its potential for our company, such as displaying and selling our products in virtual space. At first it was just an idea I had, but luckily, we had several young employees who knew how to program and design using Illustrator, so we were able to do most of it in-house.

However, some employees outside the project raised concerns, wondering why the metaverse project team was working on things that seemed unrelated to their “main job.” I realized that to other people, it seemed as though they were just playing games during work hours.

Again, I had to carefully explain that there was no such thing as ‘main’ and ‘side’ work. All projects were legitimate parts of our business and seeds for the company’s future. Once that realization spread, the gaps in understanding disappeared.

The Metaverse Project ended up being a success. Today, the same young members from that team are leading our company’s broader digital transformation efforts.

We also saw significant change through our Space Industry Project.

Our company specializes in precision machining of plastic and metal parts, and we now manufacture some components for satellites and rockets.

People may have doubts about a small manufacturing facility working on aerospace parts, but our strength lies in custom, precision machining, which fits with aerospace manufacturing needs. I anticipate that the future of Japan’s aerospace industry will continue to grow, and as such, we launched a dedicated aerospace website and brand.

Now, five years after the project began, aerospace-related components account for about 5% of our total sales. We even obtained a trademark for “Stella Mechanics”, establishing a specialized division for work in this industry.

Although we mainly manufacture plastic and metal parts, I heard from one young employee that when a friend asked what kind of work he was doing, he proudly responded, “We’re making parts for satellites and rockets.” Hearing that made me incredibly happy.

Recently, we’ve also started a vacation rental project, which has been quite interesting. With employees from Vietnam, Myanmar, China, and other countries, we saw an opportunity to use that diversity to create vacation rental accommodations, similar to Airbnb. The idea originated from several employees who knew the area well, with the intent to revitalize and use the old houses remaining in the downtown area around our headquarters area.

[INTERVIEWER] How has the organization changed as a result?

[YUMOTO] Media coverage of our projects and our social media activity have helped us attract more young talent. Many applicants were drawn by the positive comments and expressions of enthusiasm from our current employees.

When I joined in 2009, we had only 15 employees, and only four of them were young. Now, we have 70 in Japan and 45 in Vietnam. The average age is 34, with 43% in their 20s–30s and 33% in their early 30s.

I also make it a point to drop in on project meetings. It helps me notice talents and personalities that might not show in regular work. That has led to more conversations and a livelier company atmosphere overall.

[INTERVIEWER] Could you share more about your company’s growth?

[YUMOTO] When I joined, our annual sales were about 250 million yen. This year, we expect to close at 1.4 billion yen. We’ve achieved revenue growth for 12 consecutive years, which we’re very proud of.

Project-based initiatives act as seeds for the future. As with the space business, those seeds have started to sprout into new industries, helping drive growth. Our performance clearly reflects the motivation and skills of our younger employees.

That said, growth hasn’t been linear—sometimes it accelerates, sometimes it slows. When I joined, we had 15 employees; now there are 70, so naturally, part of the growth comes from scale. We’ve tried increasing efficiency with the same number of people, but there is a limit to each person’s capacity.

We’ve consistently maintained an operating profit margin of around 10%, compared to the industry average of 3.4% (according to Japan’s Ministry of Internal Affairs and Communications, FY2024). That’s an excellent result for our industry.

Redefining the Modern Factory

[INTERVIEWER] In April 2023, your headquarters building was rebuilt. It doesn’t look like a typical small manufacturing factory. Was that intentional?

[YUMOTO] Yes. I wanted to completely change the image of what a “small factory” could be. Our old facility was dark, hot in summer, and cold in winter, with poor air conditioning, a typical traditional manufacturing factory.

Competition for talent is getting tougher, and even if we promote that we make parts for the aerospace industry, seeing an outdated and old factory building wouldn’t be appealing to younger people. So I focused on creating a building that didn’t look like a factory at all.

This area used to be filled with small factories, but it’s gradually becoming more residential. We must learn to coexist with our neighbors, so we’ve added greenery, reduced noise, and made the building reflect our philosophy and long-term investment in the future.

We’re also building a facility on the adjacent plot of land, which will serve as both a showroom and technical lab for visitors to see our inspection rooms and meeting spaces. People have started telling me, “You’ve become such a cool company,” and after the rebuild, the number and enthusiasm of applicants noticeably increased.

Looking Ahead

[INTERVIEWER] To close out, could you tell us about your outlook for the future of your company?

[YUMOTO] We’re continuing to challenge ourselves beyond the traditional boundaries of a small factory. The driving force behind that is our young employees’ willingness to take initiative and experiment.

I always tell them, “Create your own initiatives.” Each project—whether it’s space, digital, or new business development—is a piece of their creative output.

As our company motto says, “Helping our customers succeed in their manufacturing,” we’ll keep honing our technology and creating valuable products.

Step Up Your Project with Yumoto Electric

Yumoto Electric delivers high-quality components fast, worldwide. We provide precision machining for a wide range of metals and engineering plastics. We have experience with over 200 materials including metals such as aluminum alloys, stainless steel, molybdenum, and titanium, and engineering plastics including PEEK, PPS, MC Nylon, and POM.

If you’re unsure about material selection or machining methods, we offer complimentary consultations to help optimize your design and production. For any questions, please feel free to contact us.