LAS VEGAS – Kazuhiro Tsuga, president of Panasonic, is expecting another 10 billion yen net loss for the second straight year. Now he faces the huge challenge of bringing Japan’s largest consumer electronics company back to profitability.
In his keynote speech Tuesday (Jan. 8) at Consumer Electronics Show, Tsuga (left) pitched Panasonic's green tech strategy spanning the company’s sprawling businesses, including automotive, avionics and home appliances. While admirable, this new ambition might only make Tsuga’s job more herculean than it already is.
In a brief interview after his keynote speech here, I asked: “At a time when so-called green technology – whether solar panels or battery development – isn’t exactly a big profit-generating business, isn’t it a little too risky to bet the company’s future on a sustainable technology strategy?”
Replied Tsuga: "I am not talking about 'eco-business' as a single product/technology category to bet our company on.” Rather, he explained, "eco-related" technology, when applied across different product divisions, can be an effective strategy.
“Take a look at a new air conditioning system Panasonic developed for hybrid and electric cars,” Tsuga stressed. The company developed a power management system that improves the efficiency of EV batteries, and a heat management system designed to reduce air conditioning's big power drain on EV systems. Panasonic wouldn’t have been able to accomplish this, however, had it never designed home air conditioning systems, Tsuga added.
Hence, Panasonic’s eco-business strategy can only be effective when it’s threaded in different product divisions that find synergies. “We think this is a strategy worth trying,” Tsuga declared.
While Tsuga’s reasoning is logical, his strategy might seem counterintuitive to some in the West.
If Panasonic was a U.S. company, putting the company’s revenue back on track might be as simple as drastically culling Panasonic’s faltering business divisions. To an outsider, many of Panasonic’s parts seem to bear little relation to one another.
It has already cut 17,000 jobs. That probably won’t be enough. Nurturing profitable divisions should be Tusga’s top priority, rather than propping up troubled business units and trying to find synergy among them. Of course, cutting one’s losses is easier said than done. This is especially true in Japan, where sustaining the existing work force is viewed as a corporate virtue.
I think this is a valid strategy in a company as diverse as Panasonic. Tsuga is making lemonade out of lemons. Air conditioners are now a commodity item. Taking their experience and applying it the EVs makes sense as there is still profit in that and even standard cars would want to integrate an air conditioning system that used less energy and thus improves gas mileage.
I really don't think the majority of the consumer population cares whether their TV is green or not. (I define care as willing to pay 10% more). Call me a cynic. But when the law mandates, the manufacturers must follow.
No doubt. However, that doesn't take away from the claims being a marketing strategy.
Much like claims of "organic food." (The only inorganic food people can ingest in quantity is salt, but why quibble.)
Actually, I agree with Tsuga. If I understand what he's saying, he wants Panasonic to market its various products as eco-friendly. It's a valid marketing strategy.
Say a car company is developing a new model. They will look around for air conditioning vendors. If Panasonic markets auto A/C systems as "green products," designed for greater efficiency than previous ones, that might be enough for the auto company to choose Panasonic.
The trick is to keep manufacturing costs in check while still being able to legitimately make "green" claims. I don't think this is impossible. We see this in new products every day.
Panasonic could learn a lesson on usability from Apple. My home (wired) phone is from Panasonic; I have lost the instruction manual after less than a year and I cannot figure out how to add a number to the phonebook - it is reminescent of mobile phones in the days before the iPhone.
Green is good for your body and our planet...but rarely good for business...unless government provides financial incentives...where I live (Vancouver, BC) most people think we are the green city, but the hard truth is most jobs are related to dirty resources we dig out and transport (we also cut lots of trees which is kind of green in reverse)...so the moral of the story for Panasonic is that if the government pays for it the green strategy is a sound one
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