In April 1997, I took another step forward towards realizing a true associates system. This was exactly the tenth year since I became president, and this step serves as a marker of the anniversary. The concept implemented consists of the following:

1. The smallest units of the organization, the sections and sales offices, shall enter contractual relationships with the company.
2. Each organization shall submit income and profit forecasts, and conclude contracts with the company.
3. The company will provide the necessary funds, facilities and offices based on these contracts.

  I strove for a clearer and simpler contractual organizational theory than the business department system, company system or self-reporting system. In essence, the company and each company member should have an equal relationship that is connected via a contract
  Earlier, I said, "A company is a virtual world in which the management, including the president, and company members are in an equal square and the company is a single stage of one's life." This is the idea that a company is not a "tangible existence" like a castle that is surrounded by rock walls and interior and exterior moats. I said that if people gather in a group and create noise, they develop a perception that they are a part of a community but that this is no more than a mirage. I also clarified that the information absent from these walls, with which we can share our futures, is the contract we conclude with company members and link awareness. This creates the strong nuance of joint ownership, "association."
  However, it is impossible to suddenly proceed to a contractual relationship between the company and individual company members. With this knowledge, I decided to incorporate my concept in steps, with the first step primarily being contracts with

1. sections within factories divided by product area.
2. the ten sales offices located nationwide.

  The issue then becomes "What to do with the management divisions that are not directly working on the frontline like production and sales (i.e., the indirect office divisions that are known as 'dark continents')?" However, the work in these divisions can also be measured by converting tasks into monetary value. This is because the amount of money paid when outsourcing work to a subcontracted party becomes an index. In other words, indirect divisions can be independent by contracting with an outside body to do the work.

  In addition, (as will be discussed in the next section), in the preceding year of 1996, the authority for making personnel evaluations was transferred in entirety to the sectional manager level. This decision was made to give each section a feeling of independence unlike anything they had had before. Simple criteria that were easy for company members to understand were established as the calculation methods for the incomes and expenditures of each section and branch office. The foundation of this first phase was to clarify the positions of individuals.
  Parallel to the introduction of this small group-type associates system in sections, our first venture corporation, the Strawberry Corporation, was founded in July 1996. This corporation will be discussed in detail later on.
  There is one other situation that was introduced, a contractual relationship with individual company members. In this case, company members that conclude individual contracts with the company are able to keep income that they have earned for themselves after paying a set amount for using factories, offices and other corporate assets.

  The work style choices being pursued by the Kato Spring Group consist of the four styles indicated in the above table. However, this does not mean that everything should become venture and merit systems.
  Companies have the important task of supporting continuity and stability. Naturally, not all company members desire to create venture firms. Katoites desiring stability can maintain their positions as a part of the organization. In other words, rather than transferring to a venture-type subsidiary, some choose to remain at Kato Spring and enter a contractual relationship as a section or group. In such areas, there is a need to introduce benefits that have elements similar to a seniority system added.
  If only a high-risk, high-return approach is taken because the global trend is the merit system, a "Win-Win" relationship cannot be established with all company members.
  I would like to confirm with all Katoites that, even if it takes time, the contract concept of Kato Spring contains a broad image of the "Win-Win" relationship.

  I am sure that some will say, "This isn't simple, it is even more complex." As for me, I only perceive this complaint to be a unilateral perception of the organization when seen from the company side. To a company member, the relationship between the company member and the company is important.
  Human relationships within the company cannot be understood unless people have been at the company many years, and personnel decisions are often affected as a result. These explanations are often heard at any company, and it is true that only desktop theory assumes such troubles will disappear. However, at the very least, in relationships where the stage has been established as a contract, the strange ambiguities ordinarily present disappear.
  On the other hand, the company side is also freed of administrative work by transferring authority to a position closer to the actual work site. The inviolable rule of the associates system is to make the organization as simple as possible so that company members can work in a relaxed manner.
  "Simple is beautiful"
  I believe this is so. This is because the concept of "simple" contains something that always conveys new power and ideas.