Great Figures of the World Series | Episode 19: Ichizo Kobayashi, Founder of the Hankyu Group, the Man Who Changed Japanese Life Through Railway-Line Business

The man who transformed Japanese private railway management
from a mere "train operator"
into an "urban development business."
He was a:

・Railway King
・Real Estate King
・Department Store King
・Advertising King
・Entertainment King

Moreover, what made him truly remarkable
was not that he "ran trains."

It was that he "designed the very way people live."
He had already perfected what we now call

・Railway-line development
・Lifestyle proposals

・Commercial facility strategy
・Transit advertising
・IP business
・Urban planning
over 100 years ago.
It is no exaggeration to say that the current business model of Japanese railway companies

was almost entirely created by him.

Ichizo Kobayashi
The man who perfected the Japanese-style private railway business
with the philosophy that "if you create a flow of people, cities will change."
1873-1957 | Founder of Hankyu Corporation, Hankyu Department Store, and the Takarazuka Revue.

【The End of the Samurai Era】

Born in 1873 in what is now Nirasaki City, Yamanashi Prefecture.
His family was of the former samurai class.
However, the era was the Meiji Restoration.
The era of the samurai was ending.

He was of the generation that experienced in his childhood

an era where "what was true until yesterday
no longer applies today."

This is extremely important.
Later in life, he would possess the flexible mindset that
"if the times change,

you must change the business itself."
This was largely due to his experience witnessing the collapse of the samurai class.

【Learning the "Power of the Private Sector" at Keio Gijuku】

Kobayashi went on to study at Keio Gijuku.
He was strongly influenced by the philosophy of Yukichi Fukuzawa.
In particular, what he learned were the ideas of:

・Emphasis on practical science
・Private-sector leadership
・The belief that commerce is what enriches society

From the beginning, his mindset was not
"the government will do something about it,"

but rather "the private sector will change society."

【Observing the "Flow of Money" at Mitsui Bank】

After graduating, Kobayashi joined Mitsui Bank.
Here, he learned more than just banking operations.
It was the reality that

"money gathers where you create a flow."

The reason the later Hankyu management was exceptionally strong
was that it was not just a railway company.
He viewed

・Railways
・Housing
・Commerce
・Entertainment
・Advertising

as a single cycle.
Behind that was his understanding of "capital circulation"
which he learned at the bank.

【A Railway Company No One Expected】

In 1907,
he moved to the financially struggling Minoo Arima Electric Tramway
(the future Hankyu Corporation).
At the time, the planned route was in the "empty suburbs."
People around him laughed,

asking, "Who is going to ride a train if you lay tracks in a place like that?"

Ordinary railway companies
lay tracks where people already are.

But Kobayashi was different.

He did the opposite.
"If you create a place where people want to live,

passengers will ride the train."
He had the idea of building the town first.

This was Japan's first full-scale railway-line development.

【Selling the Residential Area Itself】

At the time, the culture of living in the suburbs was still thin.
So he implemented:

・Installment payments
・Low-price sales
・Construction of model homes
・Formation of beautiful streetscapes

Moreover, it was not just land sales.
He sold the very lifestyle of

"living culturally in the suburbs."

This is the prototype for current
new town development

and suburban brand strategies.

【The Reason He Built a Department Store at the Station】

But there was a problem.
People go from the suburbs to Osaka in the morning.
But if they just go home at night,
railway revenue is weak.
So Kobayashi thought,

"I should just make the station itself a commercial area."

This is how the Hankyu Department Store was born.
And what is important is
that he placed the department store at the "terminal."
He integrated
Station

↓
Shopping
↓
Dining
↓
Entertainment
This is the prototype for current

station buildings,
in-station shops,

and terminal commercial facilities.

【Placing "Life" at Every Station】

Furthermore, Kobayashi
began placing supermarkets and shops around the stations.
He increased the very

"reasons to ride the train."

・Commuting

・Shopping
・Playing
・Dining out
・Entertainment
He connected everything to the railway.

The reason current Japanese railway companies own
・Real estate

・Department stores
・Supermarkets
・Hotels
・Leisure facilities
can be said to be almost entirely the Ichizo Kobayashi model.

【Inventing Transit Advertising】

Furthermore, he
turned the railway space itself into an advertising medium.

He developed
・In-car advertisements
・Station advertisements

・Hanging advertisements
and grew an advertising revenue model.
This is taken for granted today,
but it was quite new at the time.
He realized that

"travel time itself has value."

It was not just a transport business,
but a company that possessed a "flow of people."

【Creating the Takarazuka Revue】

He was also worried about attracting customers to the Takarazuka hot springs.
Normally, one would increase the number of inns.
But Kobayashi was different.

"Let's create a 'story' to attract people."

That is how the Takarazuka Revue was born.
At first, it was close to entertainment for the hot spring facility.
However, he
cultivated an unprecedented worldview of

an all-female revue theater.

He was ahead of his time in what we call today
IP business

and worldview business.

[The 'Elegance' of the Hankyu Brand]

Kobayashi placed great importance on dignity.

・Dislike of vulgarity
・Emphasis on courtesy
・Emphasis on education
・Emphasis on cleanliness

Because of this, the entire Hankyu Group established a brand image of being:

・Elegant
・Polite
・Cultured
・Clean

The 'elegance' of the Hankyu railway lines is the founder's philosophy itself.

[It Didn't Go Well at First]

Naturally, he struggled at the beginning.
Houses wouldn't sell.
Trains were carrying nothing but air.
Funds were tight.
Under normal circumstances, one would withdraw.

However, Kobayashi continued to believe that:

'The flow of people can be designed.'

This tenacity built the Hankyu Kingdom that followed.

[The Opponents He Was Fighting]

The opponents Ichizo Kobayashi was fighting were not just other railway companies.
What he was truly fighting were:
・Urban concentration

・Neglect of the suburbs
・Standalone railway management
・The idea of transportation alone
・The common sense that 'trains are just for transport'
That is why he:

・Laid tracks,
・Built houses,

・Built department stores,
・Placed supermarkets,
・Sold advertisements,
・And nurtured a theater troupe.
What Hankyu created was not merely a railway company.
It was an 'economic sphere of daily life' itself.

[Was This a Strategy?]

Looking only at the results, it is a success story of the Hankyu Group.
However, within it, there is a very strong model.

・Designing the flow of people first
・Building the town first
・Controlling the flow of daily life itself
・Turning movement into consumption
・Turning stations into commercial districts
・Identifying advertising value
・Branding through a worldview
・Internalizing even culture

It is extremely structural.

Moreover, what is interesting is that he was not just a railway manager.
Normally, one aims for:
Railway

↓
Fare revenue
↓
Profit maximization
But Kobayashi was different.

He looked at the flow of:
Housing (new town development)
↓

Movement (railway)
↓
Advertising (transit advertising)
↓
Shopping (department stores/station-attached supermarkets)
↓
Entertainment
↓
Culture
↓
Railway line brand
He was designing 'how people live' itself.
What is even more characteristic is that he did not try to make a profit from the railway alone.

・Placing department stores at stations
・Placing supermarkets at each station

・Selling in-train advertisements

・Building theaters
・Nurturing the railway line brand
In other words, he created a cycle of:

Movement
↓
Consumption
↓
Culture

↓

Settlement
↓
Movement again
This was the very model of the current Japanese private railway.

[Summary]

Ichizo Kobayashi was not just a railway king.
Rather, he was a person who designed 'how people want to live'.

That is why he did not look only at the tracks.

・Housing
・Department stores

・Supermarkets
・Advertising
・Entertainment
・Culture
He connected everything into one.
The fact that Japanese railway companies today possess:

・Real estate
・Commercial facilities

・Advertising
・Hotels
・Leisure
is almost entirely an extension of the Kobayashi model.
Moreover, he was trying to create not just profit, but also a 'life with dignity'.

That is why a unique sense of culture still remains along the Hankyu lines.
What Kobayashi created was not a railway company.
It was 'urban life itself'.

Next Episode Preview

Great Figures of the World Series | Episode 20: Keita Goto
Founder of the Tokyu Group

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