Shigenobu Nagamori, a work-obsessed Japanese billionaire who jokes that he plans to live to 120, had already sidelined three successors when he wooed Jun Seki to join his $37 billion company.

It was November 2019. Nagamori, then 75, invited the younger man to dinner at Ryokuyouso, an exclusive traditional kaiseki restaurant that he owns in Kyoto. There, he made his offer: Seki would join Nidec and become chief operating officer of the world’s biggest manufacturer of electric motors. He would build up its business supplying motors for electric cars, and if that went well, the CEO role would be his.

The timing was no coincidence. A month before, Seki had lost out on the top job at Nissan. The executive, who was 58 at the time, thought the opportunity to run one of Japan’s iconic companies was too good to pass up.

Despite Nagamori’s history of casting aside handpicked replacements, Seki left Nissan, relocated from Tokyo and began to work 16-hour days at Nidec’s Kyoto headquarters. So captivated was he by the charismatic entrepreneur — who famously started the electronics giant in a shack beside his mother’s farmhouse half a century ago — that he agreed to work for less than half the compensation that he earned at the carmaker.

After 18 months, earlier than the two men had discussed, Seki was promoted to CEO. But less than a year later, Nagamori demoted him in a humiliating reversal. The billionaire had lost faith in his latest successor. In September, Seki resigned.

This account of Seki’s rise and fall is based on multiple interviews with people familiar with developments in the upper echelons of Nidec, documents seen by Bloomberg News and past and recent interviews with Nagamori himself. The people asked not to be identified discussing sensitive matters.

It’s a cautionary tale of the risks of taking over from a self-made titan who finds it near-impossible to pass the reins. Nidec’s turmoil epitomizes the headaches many companies face in the world’s fastest-aging economy, where almost two-thirds of entrepreneurs haven’t lined up a successor. SoftBank Group founder Masayoshi Son and Fast Retailing chief Tadashi Yanai, billionaires with whom Nagamori would often meet at a Japanese-style izakaya pub in Tokyo’s Kanda neighborhood before the pandemic, face the same dilemma.

"When you’re the founder of a top Japanese company and in charge for so long, it’s hard to give up control, especially for those three,” said Yoshihito Takahashi, professor of corporate strategy at Senshu University in Tokyo. "It’s really difficult for them. It’s part of their character.”

Nagamori’s succession struggles are also a lesson for stock pickers the world over who back founder CEOs because they have what Warren Buffett calls "skin in the game.” The strategy, favored by the value investing school pioneered by Benjamin Graham, works well in good times, but it can quickly sour when those entrepreneurs get older and fail to find a steward for their life’s work.

"The past 2½ years marks my biggest failure,” Nagamori said in an interview earlier this month about Seki’s time at Nidec. "My choice of successor was a huge mistake.”

Seki declined to comment for this story.

It couldn’t have started better for Seki at Nidec. Nagamori had built the company into a powerhouse creating electric motors for everything from refrigerators to power plants. He’d captured 85% of the global market for hard-disk drive motors, and wanted to replicate that success in electric vehicles, which are projected to be a $6.7 trillion industry by 2030.

Seki had deep experience in car manufacturing. He was made Nissan’s No. 3 executive when he missed out on the top job after failing to win the backing of top shareholder Renault. He’d previously run Nissan’s business in China and drafted the carmaker’s recovery plan after the exit of Carlos Ghosn, who was arrested in 2018 on charges of underreporting income. In the world of negotiations between automakers and parts suppliers, Seki was right at home.

In Seki’s first year at Nidec, the EV motor business began to take shape. One of the founder’s many ambitious goals was to reach ¥10 trillion in annual sales by fiscal 2030. The manufacturer’s stock price — an obsession for Nagamori — surged 73% that year on anticipation that Nidec was poised to become a top supplier in a new industry. In the fiscal year that ended March 2021, Nidec posted revenue of ¥1.6 trillion ($11.4 billion).

Nagamori started telling people Seki was Nidec’s future. The following month, the billionaire made a surprise announcement at the company’s annual results briefing: He was handing over the leadership. Nagamori, who commands a fortune of $5.1 billion according to the Bloomberg Billionaires Index, mostly from Nidec stock, would remain as chairman.

Seki is "a worthy successor,” Nagamori told reporters. "His management style is very similar to mine.”

The first warning sign came a day later, when Nidec’s shares dropped more than 5%. This was partly because the company’s annual operating profit forecast missed analysts’ estimates, yet there may also have been another dynamic at play. Nagamori was seen as intrinsic to the company’s success. His savvy deal-making had built Nidec into a global juggernaut. The company’s shares had soared thirtythreefold over three decades, giving it a valuation that eclipsed household names such as Panasonic Holdings. Analysts and investors said the stock traded with a "Nagamori premium.” The implication was that it would disappear if he left.

Nagamori’s eccentricity is well-documented. In an interview with Bloomberg News in 2016, he described himself as "a strange man, an odd man.” An intense character, he’s known for wearing luminous green ties and pocket squares and speaking his mind. His business ways, while not that unusual in Japan, seem distinctive to Western eyes. Staff will never be fired for lacking ability, but loyalty to the company is non-negotiable. That means working long hours, taking few holidays and having meetings on weekends or when regular tasks are done. He’s happy to ignore shareholders if they’re doing things that he considers stupid, such as asking a business built on acquisitions to pay dividends.

For all his quirks, Nagamori’s devotion to Nidec isn’t in doubt, and finding someone to replace him was never going to be easy. Nor was he going to settle if the replacement didn’t meet his standards. Before Seki, Hiroyuki Yoshimoto, another Nissan manager brought in by the founder as heir apparent, was eventually demoted and sent to the U.S. before he resigned. Two others preceded him.

Soon after Seki’s promotion to CEO, Nagamori began to have second thoughts. He was spooked about missed internal profit goals and the company’s languishing stock price. In September 2021, he admonished senior managers for not doing enough to boost business performance and the shares.

Although he didn’t identify Seki by name, the implications were clear. Even though Seki was only three months into the CEO job, he wasn’t pushing employees hard enough to satisfy Nagamori. The billionaire grumbled that bringing in an outsider may have been a mistake.

Rising materials prices, chip shortages and COVID-19-induced supply chain snarls were hammering the global manufacturing industry. Yet Nagamori opposed lowering profit targets. He warned that faith in management would crumble if it failed to reach its goals.

Instead, a month later, Nagamori pushed Seki to drive people harder and increase the company’s annual profit and sales forecasts.

By that point, Seki had decided the only way to secure a lead in EV motors was to make big investments in technology and production capacity. He had set his sights on Tesla, betting that Elon Musk’s goal of making 20 million EVs a year by 2030 would be impossible without an outside supplier like Nidec. He wanted to win a game-changing traction-motor contract with the U.S. company.

But Nagamori, who had pledged billions of dollars to the EV-motor effort, was becoming impatient. The division would have to show profits every quarter even as it invested for the future, the founder told Seki. No excuses were allowed.

By the end of 2021, Nagamori started telling people he’d been naive in his choice of successor. He even sent Seki to Germany to handle a minor customer dispute.

In a tirade to senior management, Nagamori ordered them to reread 1,000 times The Challenging Road, a booklet that explains his business philosophy.

A Bloomberg News report in January revealed Nagamori had sidelined Seki.

The day after the report, Nagamori denied there were fissures. "Absolutely not,” he said at a post-results news conference. Seki said he respected Nagamori "100%” and there was no friction.

The damage was done. The stock fell 25% that month. Investors asked Nagamori for an explanation. Some of Nagamori’s closest lieutenants urged him to clear the air with Seki.

The two men talked. Nagamori was adamant he had to take back the CEO title. Seki said he would quit. Nagamori implored him to stay as president and COO. The two finally agreed to a reset. Nagamori wanted three years to turn Nidec around, and Seki would prove his worth during that time.

In a news conference in April announcing his successor’s demotion, Nagamori stressed it would be temporary.

"As founder, I’ll take command in the short term,” he told reporters.

The decision was "tough to accept,” Seki said, adding he understood.

Back as CEO, Nagamori’s micromanagement intensified. He insisted on approving all expenditures, even fees to renew forklift licenses. This is at a company with annual operating expenses of about $1.6 billion.

The shares kept falling. By July, they were down 32%. In an interview that month, Nagamori told Bloomberg News he was "in agony” about the decline.

He also said he no longer believed one individual could fill his shoes. "It needs to be managed by a group,” he said.

Nidec was founded by Shigenobu Nagamori half a century ago in a shack beside his mother’s farmhouse. | Reuters
Nidec was founded by Shigenobu Nagamori half a century ago in a shack beside his mother’s farmhouse. | Reuters

Relations between Nagamori and Seki continued to worsen. Nagamori had sought to demote the younger man again in June, pushing to strip him of the COO title and make him vice president. He asked Seki to give up his salary for a year. When Seki refused, Nagamori demanded he resign.

In late August, Bloomberg News reported Nidec would promote 73-year-old Hiroshi Kobe to COO to replace Seki. A consummate insider, Kobe had been at Nagamori’s side since the company was founded.

In September, Seki resigned. In an unusually terse statement, Nidec said the deposed successor had quit "to take responsibility for the worsening business performance.”

The turmoil has done damage to Nagamori’s favorite metric. Nidec’s shares are down 36% this year, even as the company posted record sales and profit for five straight quarters.

"People aren’t willing to pay up when there’s so much uncertainty about succession,” said Zuhair Khan, who manages a Japan corporate governance-focused long-short fund at Union Bancaire Privee. For Khan, Nidec’s governance must be stronger, with a board that questions Nagamori’s decisions. Nidec recently established a nomination committee, which includes both Nagamori and Kobe.

"If Nagamori gets hit by a bus, the stock price is going to collapse,” Khan warned.

Nagamori, however, insists that won't be an issue.

"I don’t smoke, I don’t drink and I don’t play golf,” he said this month, adding that he does an hour of exercise at 5 a.m. every day.

He said his error wasn’t sidelining Seki: It was hiring him in the first place.

"He never reached his goals,” Nagamori said. "And instead of saying 'we didn't try hard enough,' he said the targets were too high. It's like saying that the hurdles at the Olympics are too tall when you can't clear them.”

Whatever the case, the billionaire is once again left without a replacement, like so many other aging founders in Japan. In the past, the entrepreneurs’ children would have taken over, but these days they often don’t want — or aren’t able — to do so. (Nagamori’s two sons have had success in business outside Nidec, but he has never suggested that they will replace him.) The succession problem has become so acute that some businesses see it as one of their biggest opportunities. One of private equity’s most common strategies in Japan is to pitch buyouts to entrepreneurs without succession plans. Matchmaking firms have sprung up to help the transition by identifying potential successors.

The country does have successful examples of passing companies on. Postwar corporate titans Sony Group, Honda and Panasonic were all led for decades by charismatic entrepreneurs, and all survived and thrived after their departure.

And in the end, even Nagamori will have to let go, but there’s no indication that he will do so anytime soon. He’s known for telling people that everyone in his immediate family has lived past 90. Nidec is "like part of my body,” he said in July, and its failure would be like a "wound.”

No surprise, then, that he's sticking to his assessment of his departed successor, regardless of whether it tells the whole story.

"I thought he had a lot of potential,” Nagamori said. "There are still a lot of problems that he left behind.”