Latest / The CEO Diary with Fexingo: Leadership Lessons, Executive Decisions, and Corner Office Stories / How Minimalist Design Saved Muji from Irrelevance
Transcript
- Lucas: In 2001, Muji was in serious trouble. The Japanese retailer, which had built its name on 'no brand' minimalism, had drifted. They were chasing trends, expanding product lines, trying to be everything to everyone. Sales had flatlined, profits were shrinking, and the company looked directionless. Luna: And this is the same Muji we know today for its clean notebooks, simple furniture, those little acrylic storage boxes, right? Lucas: Exactly the same company. But back then, Muji had ballooned to over ten thousand products. They had electronics, food, even a car. The original philosophy — 'this is enough' — had been diluted. Enter Tadamitsu Matsui, who became president in 2001 and made a radical call. Luna: What did he do? Cut the product line? Lucas: He cut it in half. From ten thousand products down to about five thousand. And he didn't just prune the weak sellers — he axed entire categories. No more electronics, no more cars. He said Muji had lost its soul by trying to compete on breadth. The comeback was about depth and clarity. Luna: That sounds terrifying. You're a retailer, your shelf space is fixed — you're basically saying no to half your revenue sources. How did the board react? Lucas: Matsui had to convince them that more was actually destroying value. He argued that every additional product diluted Muji's identity, confused customers, and added inventory costs. He used data showing that the top two thousand products generated eighty percent of profits. The rest were just noise. Luna: So he trimmed the tail. But how did he decide what stayed? Lucas: He went back to Muji's founding principle from 1980: products should be simple, functional, and stripped of unnecessary branding. Every product had to pass what he called the 'Muji test' — would this have made sense in the original store? If it needed a logo or a flashy feature to sell, it was out. Luna: That's a pretty subjective test. Was there any pushback from designers or category managers who had built their careers around those products? Lucas: Tons. And Matsui didn't just decree it — he held workshops where teams had to defend every product against the minimalist criteria. Some products, like a fancy electric rice cooker, failed because Muji's original rice cooker was a simple white box. The team redesigned it to match the ethos, and it became a bestseller. Luna: Interesting. So he didn't just kill — he also reformed. That must have taken a couple of years to roll out. Lucas: It took about three years. By 2004, Muji's operating margin had recovered from near zero to over six percent. Revenue stabilized and started growing again, but more importantly, same-store sales turned positive. Customers noticed. The stores felt more coherent. Luna: I remember reading that Muji's design philosophy extends even to their packaging. They use translucent plastic so you can see the product — minimal labeling. Was that part of the reset too? Lucas: Absolutely. Matsui pushed packaging simplification to reduce costs and reinforce the no-brand message. By stripping away cardboard boxes and glossy inserts, Muji saved on materials and shipping. That translated into lower prices for customers, which was another core principle: good quality at affordable prices. Luna: So the product reduction actually improved margins twice: lower inventory costs and lower packaging costs. And customers liked it because the prices dropped. Lucas: Exactly. Matsui called it 'the virtuous cycle of minimalism.' Less choice, but better curation. Customers trusted that if Muji sold it, it was thoughtfully made. That trust is incredibly hard to build, and Muji had squandered it. Luna: I want to push on something. Minimalism sounds great in a magazine feature, but can it really sustain growth over decades? Isn't there a risk that customers get bored? Or that competitors copy the aesthetic and Muji loses its edge? Lucas: That's a fair question, and Muji has faced that challenge in the 2010s and 2020s. But Matsui's insight was that minimalism isn't a static look — it's a discipline. He said 'minimalism means always questioning what is truly necessary.' So they innovate within constraints. For example, their horizontal shelving unit — it's just a board and two brackets. But they've refined the proportions and materials over decades. It doesn't look flashy, but it works perfectly. Luna: So it's less about aesthetic novelty and more about perfection of essentials. That's a very Japanese concept, isn't it? Like kaizen or wabi-sabi. Lucas: Exactly. Matsui explicitly drew on wabi-sabi — beauty in imperfection and transience. But he applied it to business processes, not just products. He told his team: 'Don't add features to sell more. Remove until the product is exactly enough.' Luna: I can see how that would work in Japan, where the market appreciates subtle design. But Muji has expanded globally — they have stores in Europe, the US, Asia. Does that philosophy travel? Lucas: It has, but not without adaptation. In Europe, Muji stores are often larger and include furniture and home goods, which sell well. In China, the brand has been positioned as aspirational — a symbol of modern, uncluttered living. The core product philosophy stays the same, but the assortment and marketing vary. Matsui was okay with that, as long as the products passed the Muji test. Luna: So the product reduction strategy wasn't just a one-time fix — it became a governing principle for all future decisions. Lucas: Right. And that's the real lesson for other CEOs. It's easy to say 'we should focus,' but it's excruciatingly hard to actually kill products or categories that are profitable on paper. Matsui had to override internal resistance and short-term revenue fears. He was willing to let sales drop in the short term to rebuild the brand's identity. Luna: There's a parallel here to what Alan Mulally did at Ford — he killed brands like Mercury and Volvo to focus on the core Ford and Lincoln. But Mulally was dealing with a company on the brink of bankruptcy. Muji wasn't that dire, was it? Lucas: Not bankruptcy, but definitely a crisis of relevance. Muji's profits had fallen for three straight years. The company was drifting. Matsui said later that the worst thing was not the financial trouble — it was that employees had lost pride in what they made. They were churning out products no one really believed in. Luna: That's a powerful motivator for change. If the people making the products don't believe in them, customers will sense it. Lucas: Exactly. And once the product line was cleaned up, employee morale improved. Designers felt proud again. Store staff could explain why each product existed. That cultural shift was probably more important than the financial turnaround. Luna: You know, this conversation has me thinking about something. We do this podcast ad-free — that's a choice. It means we have to focus on what's truly essential for the listener, like Muji trimming its product line. If the conversations here have moved your work or thinking forward in some small way, and you want to help keep this independent, no-ads format going, the best way is to support us at buy me a coffee dot com slash fexingo. It's a small gesture, but it makes a real difference. Lucas: Yeah, we don't run any ads, and that's deliberate. It keeps the show honest and focused on the content. So if you appreciate that approach, that link is buy me a coffee dot com slash fexingo. Now, back to Muji — one more aspect I find remarkable is how Matsui handled the external perception. Luna: What do you mean? Lucas: He didn't announce the product reduction as a big turnaround plan. He didn't hold a press conference or spin it as a transformation. He just started doing it. The message to the market was: 'We are returning to our roots.' And the market responded positively once the results showed up. That's a lesson in execution over narrative. Luna: So quiet competence over grand pronouncements. That's refreshingly understated. Lucas: It is. And it's very Muji. The company's name literally means 'no brand' — they don't put logos on products. So a loud turnaround campaign would have contradicted their identity. Matsui understood that the turnaround had to be consistent with the brand itself. Luna: That's a good final note. The CEO's strategy mirrored the company's philosophy. Align the change with who you are, not just what you want to become. Lucas: Exactly. And that's why Muji's story is still studied in business schools today. It's not about flashy innovation — it's about the courage to subtract.