The Organizations That Kept the Muda ムダを保ち続けた組織

Chapter 4 was a single, dense case — Ano Zenjo, eight hundred years ago, operating across all four dimensions of Muda until the regime that had depended on him moved to erase him. This chapter looks at the cases that did not get erased. The organizations alive today that have, by inheritance or by deliberate choice, kept the Muda intact long enough to outlast nearly every competitor in their domain.

The cases come in three rough categories. Some are very old and have preserved the four dimensions almost as a side effect of what the institution is for. Some are modern and have preserved the dimensions by explicit refusal — refusal to grow, refusal to optimize, refusal to take outside capital. And some have preserved the dimensions by making strategic bets that the consensus optimization frame could not justify, and that, on the longer horizon, turned out to be the configurations that survived.

None of these organizations would describe what they are doing in the language of this book. The language is my translation. What they are doing, in their own terms, is keeping faith with a way of operating that the dominant management discourse has trouble seeing. Each one offers a partial picture of what keeping Muda alive looks like in practice. Read together, they offer a composite — the modern equivalent, in distributed form, of what Zenjo did as a single person eight hundred years ago.

The Inheritance Survivors

Ise Grand Shrine: 1,300 Years of Deliberate Rebuilding

The Ise Grand Shrine in Mie Prefecture is, by most measures, the most sacred site in Shinto. Its main pavilions house the imperial regalia and are dedicated to Amaterasu, the sun goddess from whom the imperial line is traced. The site has been continuously active since the eighth century at the latest, and many of its institutional structures predate that.

Every twenty years, Ise rebuilds itself. The entire main shrine complex is dismantled and reconstructed on an adjacent plot, in the same form, using the same construction techniques, by craftsmen who have been trained for this work since childhood. The ceremony is called Shikinen Sengū (式年遷宮). It has been performed, on schedule, for over thirteen hundred years.

From the perspective of any optimization frame, the Shikinen Sengū is incomprehensible. The buildings are not falling down. The materials are not exhausted. The location does not need to change. The labor and material costs are enormous. The economic case is, on any quarterly or even decadal horizon, indefensible.

The institution does it anyway. It does it because the rebuilding is the practice through which the unmeasured substrate of the institution is renewed. The craft techniques are kept alive only because they are practiced every twenty years on the most important project the tradition knows. The intergenerational transfer of knowledge — master to apprentice, over the working life of three generations between each Sengū — is the protected apprenticeship of Chapter 2 made literal. The relationships between the shrine and its supporting community of craftsmen, suppliers, and donors are renewed in the same cycle. The long arc is built into the calendar.

If Ise had been optimized at any point in the last thirteen hundred years — if some efficiency-minded administration had decided that the rebuilding was waste and that the budget could be better spent on operational improvements — the institution would have, in a single century, lost the substrate it has been carrying for thirteen. The buildings would still be there, more or less. The thing that makes Ise Ise would be gone, irrecoverably, because the carriers of the practice would have moved on to other work.

The Sengū is, in the language of this book, Muda made institutional. It is the deliberate, costly, recurring practice that the institution has refused to let efficiency remove.

Kongō Gumi: Fourteen Centuries of Specialist Practice

Kongō Gumi is a construction firm in Osaka, founded in 578 CE. For nearly fifteen centuries, the firm built and maintained Buddhist temples in Japan, almost exclusively. The company was independent until 2006, when it was absorbed by a larger construction conglomerate as a wholly-owned subsidiary. The lineage continues under the new structure, but the long pure-form independence ended after one thousand four hundred and twenty-eight years.

What is striking about the firm's long history is the discipline of specialization. Kongō Gumi did one thing — Buddhist temple construction — and refused, for fifteen centuries, to do anything else. Other construction companies entered and left the temple market based on margin. Kongō Gumi remained in it because the lineage of master carpenters and their accumulated craft was, in their understanding, exactly what the firm was. To diversify into other construction would have diluted the substrate of the craft. To industrialize the production would have eliminated it.

The firm's eventual loss of independence in 2006 is itself instructive. The cause was not the loss of the craft. The cause was that the institutional environment around the firm — the temple economy, the rate of new temple construction, the willingness of clients to pay for craft-level work in a commoditizing market — had changed faster than the firm could adapt. The Muda was still intact inside the firm. The market that could afford that Muda had thinned.

This is a more painful version of the same story. The internal Muda was preserved. The external conditions that allowed the internal Muda to survive economically had shifted. The firm continues, in a different form, with the substrate partly preserved. But the lesson is that even an institution that does everything right internally can have the rug pulled by an environmental change. Muda is necessary. Muda is not sufficient.

Stora Enso: The Eight-Century Mining Company

The Finnish-Swedish forestry company Stora Enso traces its corporate lineage to Stora Kopparberg, the world's oldest documented stock corporation, formally chartered in 1288 in Falun, Sweden. The original business was copper mining. The mine ran for over six centuries before being exhausted. The company, however, did not close. It transformed. From copper to iron. From iron to forestry. From forestry to pulp and paper. From paper, in the current century, to renewable packaging and bio-materials.

The continuous corporate identity over more than seven centuries is, in modern terms, almost incomprehensible. Most modern public companies cycle through their entire identity in twenty years.

What Stora Enso has done, repeatedly, is execute the long-arc Muda from Chapter 1 — the capacity to make decisions whose payoff is not visible within any feasible measurement window. The 1888 decision to enter forestry, when copper was still profitable, looked premature. The mid-twentieth century pivot from raw materials to paper made the company's modern form. The current pivot from paper to renewable packaging is being made against a paper market that is, in some segments, still profitable.

Each pivot was, at the moment of decision, a bet against the optimization that the existing business would have justified. Each pivot, in retrospect, was the move that kept the corporate identity alive across centuries of changing technology. The firm has, repeatedly, refused to be the firm it was. The refusal is the practice.

The Refusal Survivors

The next category consists of modern organizations that have preserved Muda not through institutional inheritance but through explicit choice. These are the companies whose strategic decisions, when read in the language of conventional business strategy, look irrational. They are not irrational. They are protecting specific dimensions of Muda against the optimization pressure that would, if accepted, eliminate them.

Patagonia: "Don't Buy This Jacket"

In November 2011, Patagonia took out a full-page advertisement in the New York Times on Black Friday weekend. The advertisement showed one of the company's own fleece jackets and the headline "Don't Buy This Jacket." The body text walked the reader through the environmental cost of producing the garment and argued, in plain terms, that the reader probably did not need it.

On a conventional advertising frame, this is suicide. Telling customers not to buy your product on the heaviest shopping weekend of the year is the precise opposite of what the optimization logic of retail advertising recommends.

The advertisement worked. Patagonia's sales rose. The customer base that responded to the advertisement was, in a measurable way, the customer base the company had been cultivating: customers who understood that the company was not optimizing for short-term sales and that the products were being made by people who shared their values. The advertisement was a costly signal in the technical sense — an action that only a company actually committed to those values could afford to take.

The Muda dimension here is the long arc and the unmeasured. Patagonia has been refusing growth opportunities that would dilute its environmental commitments for decades. The refusals are not visible on any quarterly report. They are visible in the integrity of the brand and the loyalty of the customer base. By the time competitors realize what Patagonia has built, the substrate that produced it cannot be reproduced.

Costco: The $1.50 Hot Dog

Since 1985, Costco has sold a hot dog and soda combination, in its warehouse food courts, for $1.50. The price has not changed in forty years. Inflation alone would put the current cost-equivalent price at over four dollars. Internal financial pressure to raise the price has been continuous, and continuously refused.

The CEO, when asked about the practice, is reported to have told the team that if anyone tried to raise the hot dog price, he would kill them. This is, in the strict optimization frame, irrational management. The hot dog is not even a major revenue line. The economic case for the discipline is hard to make on any quarterly horizon.

What the hot dog does is hold a precise position in the customer's mind. The $1.50 hot dog is the visible signal of a company that does not optimize against its customers. Every other practice the company is known for — the limited margins, the bulk packaging, the deliberate inconvenience of the store layout — coheres around the same signal. The customer trusts Costco in a way that customers do not trust comparable retailers, and the trust translates, year after year, into membership renewals at a rate the industry cannot match.

The $1.50 hot dog is unmeasured Muda. It cannot be optimized into a profit center. Its function is to anchor a relationship to the customer that the optimization frame cannot see and therefore cannot match.

In-N-Out: Sixty Years of Refusing to Franchise

In-N-Out Burger has operated, since 1948, as a chain of physically integrated company-owned stores in California, with limited expansion into adjacent states. The company has refused, for over seventy years, to franchise. Its founders and successors have, repeatedly, declined acquisition offers that would have realized fortunes for the family.

The conventional case for franchising is overwhelming. Franchising would allow In-N-Out to expand nationally without putting the company's own capital at risk. Franchising would generate predictable royalty streams. Franchising would allow the brand to grow at the pace its market position justifies.

The refusal is principled. Franchised operations cannot maintain the operational standards In-N-Out's company-owned stores have. The relationships with suppliers, the freshness of the meat, the consistency of the kitchen practice, the wage and benefit structure for store-level employees — all of these would be diluted, by mechanism, in a franchised model. The family has chosen, repeatedly, to keep the substrate intact and refuse the growth that would compromise it.

The Muda dimension is relational. In-N-Out's relationship to its suppliers, its employees, and its customers has the density of a single family-run operation. The density does not survive franchising. The family has chosen the density over the scale.

Basecamp: Twenty Years Without Outside Capital

Basecamp, the project-management software firm founded by Jason Fried and David Heinemeier Hansson, has operated since 2004 without external investment. The company has been consistently profitable. Its co-founders have written, at length, about the strategic decision to refuse venture capital, and about the operational practices — the four-day summer week, the limited product scope, the deliberate refusal to add features that the customer base does not ask for — that follow from that decision.

The refusal of outside capital is a specific kind of Muda preservation. Outside capital, in the venture model, brings growth expectations. Growth expectations force standardization. Standardization erodes the relational density that small organizations have. The cycle is the overextension pattern of Chapter 2 in pure form. Basecamp has refused the first step of the cycle.

What this protects is the company's capacity to operate on its own time horizon. Decisions can be made on year-long or decade-long scales because no investor is demanding quarterly returns. The four-day summer week is not a productivity hack. It is a deliberate exercise of the slack — the structural Muda — that an organization not optimizing against external pressure can afford to keep.

The Strategic Survivors

The third category consists of organizations that made strategic bets the consensus optimization frame did not support, and that, on the longer horizon, turned out to be the configurations that survived.

Toyota's Hybrid Bet

When Toyota launched the Prius in 1997, the industry consensus was that the future of automotive propulsion was, in the long run, pure electric. The hybrid was a transitional technology — a compromise that, on the consensus view, would be obsoleted within a decade.

Toyota committed to hybrid technology anyway, and continued committing through the entire period when its competitors were placing larger and larger bets on pure EV. As recently as 2022, Toyota's commitment to hybrid and to hydrogen fuel cell development was being criticized in financial press as a strategic mistake.

The criticism began to soften in 2024 and 2025, as grid constraints, mineral supply problems, charging infrastructure gaps, and the technological maturation of hybrid systems became more visible. By 2026, the hybrid configuration is no longer a transitional compromise. It is, increasingly, one of the configurations that may dominate the next twenty years of personal mobility — alongside, possibly, hydrogen fuel cell for heavy-duty applications and pure EV for short-range urban use.

The strategic content of Toyota's bet was long-arc Muda. The company made a decision against a consensus that was extrapolating linearly from the visible trajectory. The decision held under decades of pressure that the consensus model could not have predicted. It is, at this point, the closest thing the auto industry has to a survival hedge against the as-yet-unnamed disruptions of the coming decades.

Nintendo Wii: Stepping Off the Performance Race

In 2006, Nintendo released the Wii. The console's hardware was, by the standards of the day, deliberately weak. The processor was slower than the contemporary PlayStation 3 and Xbox 360. The graphics were less impressive. The marketing strategy abandoned the technical specifications race that the industry had been running since the 1990s.

What the Wii offered instead was a motion controller and a set of games that opened the console market to demographics — older adults, families with young children, casual players — who had never bought a gaming console before. The bet was that the technical specifications race had reached the point of diminishing returns, and that the next growth axis was not better graphics but a different relationship to the customer.

The Wii became, for several years, the best-selling console in the world. It outsold both of its more powerful competitors. Nintendo's competitors, optimizing on the specifications axis, had no response, because their entire production stack was built for an axis Nintendo had stepped off.

The Muda dimension was relational, in a specific sense. Nintendo bet on customers the existing optimization frame could not see — because those customers were not in the existing customer base, and so were invisible to any model trained on it.

The Refuseniks of Kyoto

The last category I want to name is the smallest in number but the most pointed in its logic. It is the set of restaurants and craft producers in Kyoto and elsewhere in Japan that have refused recognition that would have multiplied their commercial value.

Some traditional restaurants in Kyoto have declined inclusion in the Michelin Guide. The reasoning is consistent across the cases. A Michelin star would bring customers seeking the star, not customers seeking what the restaurant actually offers. The character of the customer relationship would change. The dishes would have to be reproduced more consistently to satisfy star-driven expectations, which would change the cooking. The atmosphere of the small dining room would shift. The relationship to the regulars who had been coming for decades would dilute.

None of this is captured on any spreadsheet. From the conventional business perspective, refusing a star is irrational. The star is the most reliable marker of commercial value the industry has. To refuse it is to refuse free advertising.

The refusals are, on inspection, exact preservations of the Muda I have been describing. The relational density of the small establishment cannot survive star-driven volume. The judgments the chef makes night to night cannot survive standardization. The atmosphere that exists because the establishment is for a specific community cannot survive opening to a global audience.

The refusals are not provincial. They are strategic. The restaurants that refuse the star are choosing the substrate over the scale. They are paying the cost — the foregone revenue — that the substrate's preservation requires.

What They Share

Let me name what the cases share, because the common thread is the argument of this chapter.

One. Each of these organizations has refused something that the conventional optimization frame would have endorsed. Ise refuses the efficiency of leaving its buildings alone. Kongō Gumi refuses to diversify. Stora Enso refuses to be the firm it was a generation ago. Patagonia refuses sales it does not endorse. Costco refuses to raise the hot dog price. In-N-Out refuses to franchise. Basecamp refuses outside capital. Toyota refused the pure-EV consensus. Nintendo refused the specifications race. The Kyoto refuseniks refuse the star.

Two. In each case, the refusal protects a specific dimension of Muda. The dimension is different across cases, but the structure is the same. The institution names what it will not optimize away, and pays the visible cost — foregone growth, foregone revenue, foregone recognition — to keep the invisible substrate intact.

Three. In each case, the protected Muda is, on the longer horizon, what carries the institution through changes that the optimization frame could not have anticipated. Ise survives a century of accelerating modernization. Kongō Gumi survives the disappearance of Buddhism as a major institutional patron. Patagonia survives the commoditization of outdoor apparel. Costco survives multiple recessions. The Kyoto restaurants survive the global homogenization of fine dining.

Four. The refusal is the practice. It is not a one-time decision. It is a continuous discipline that has to be exercised, in fresh form, every time the optimization pressure renews itself. The pressure renews itself constantly. The discipline has to renew itself constantly.

The deepest common element is the fourth. None of these organizations is finished. None of them has solved the problem of keeping Muda alive. Each of them is, every quarter, every year, every generation, facing renewed pressure to be the conventionally-managed version of itself. The pressure does not go away because it has been refused before. The discipline of refusal is the institution's actual operating practice.

What This Chapter Establishes

By the end of this chapter, the reader should have three things.

First, a set of concrete cases in which Muda has been preserved in organizational form. The cases span thirteen centuries and multiple cultures. They are not exotic. They are studied across business literature, but rarely from the angle this book offers.

Second, a recognition that the preservation of Muda is, in practice, the recurring discipline of refusal. The institutions that have it have it because someone, repeatedly, refused the optimization that would have eliminated it.

Third, a frame for looking at your own organization. What is the optimization pressure currently being applied? What dimension of Muda would the optimization eliminate? What discipline of refusal has the institution actually practiced, and which has it lacked?

In Chapter 6 I turn to a meta-question. I have been writing this book as a translator. I am translating an eight-century-old methodology, originally developed in the religious-political world of Ano Zenjo, into the language of twenty-first-century management. The question of what it means to be a translator — rather than an heir, or an inventor, or a critic — needs to be made explicit. That is the work of the next chapter.