Will Omron’s chairman be able to save deeply troubled Renesas? That’s the $64 billion question swirling around Tokyo.
The key to understand the background of this quandary is knowing two companies -- Kyocera and Omron.
First question: Kyocera and Omron -- what do they have in common?
You may not see very much affinity here, other than that they are both profitable Japanese component manufacturers.
But in Japanese business and political circles, each company is known for its uncharacteristically outspoken, strong-willed founder. Each company’s successful corporate history is also the stuff of legend in corporate Japan.
Second question: Where are they based?
The two companies are headquartered in Kyoto, located in Japan’s Kansai region. Kansai is known for its down-to-earth, no-nonsense people, renowned for a strong business acumen nurtured in Kansai’s merchant culture.
Third question: Why is Kyocera important in understanding the choice of Omron’s chairman as the Renesas CEO?
OK, recently, top management at both Kyocera and Omron has been separately tasked to pull off a mission impossible: Turn around deeply troubled Japanese companies.
Kazuo Inamori, founder of electronics firm Kyocera Corp, was brought in as chairman of then bankrupt Japan Airlines in 2010.
Omron Corp. chairman Hisao Sakuta was recently named CEO and chairman of ailing Renesas Electronics Corp. Sakuta is scheduled to head Renesas after he leaves Omron in June.
Inamori proved his chops and demonstrated his decisive management skills at JAL. The long-troubled national flag-carrier made a triumphant return last fall by relisting its stock in a $8.5 billion initial public offering, the world’s second-largest in 2012 after Facebook’s $16 billion IPO. It made JAL the first company ever to return to the main board of Tokyo's stock exchange after going through the Japanese equivalent of Chapter 11 bankruptcy.
While the restructured JAL embraced a much needed cost-conscious culture introduced by Inamori, the company made further investments in aircraft and service, which helped JAL succeed in going upmarket.
Inamori retired from JAL in April with his reputation and charisma intact.
How Omron’s Sakuta plans to lead Renesas, however, remains unknown.
I noticed the "" around the word "perfect". I'd like to bolster that with a recent experience:
Rather than spend any money on an audio amp I decided to try to fix an old lingering Pioneer receiver. Now I am not only an audio designer (or once was) I am an experienced electronics repairman/tinkerer and a skilled solderer. Couple that with the fact that this was a classic box of heralded Japanese quality and this was going to be a 45 minute job, tops. That's including the time it takes me to knock back a beer or two.
Or so I thought. Then I opened it up.
What an utter kludgy mess of a design the interior of this things is. I was aghast, and equally taken aback at the worst-practice manufacturing that must have gone into making it.
When I gathered myself my first thought how fooled we all were - us wide-eyed, gaped-mouthed, twenty-somthings ambling through isles of the local electronics stores of the 80's, staring longingly at all the shiny new LCD-laden faceplates, large dials, and perfect buttons which controlled the multitudinous features of the latest stuff from Japan. Gosh, if I'd have only known what was behind those faceplates I would not have felt so bad about lying to the eager sales guy about the $300.00 I didn't have in my pocket.
But teleporting back through my BSEE and 20+ years of experience my new powers of observation prompted me to wonder other things. Like how the heck did they make any money selling this stuff? Then, knowing that they obviously did make money – lots, it led me to think that this small, BOM-bloated and labor intensive snapshot of “Japan’s finest” could be perfectly emblematic of why Japan is struggling now.
Valid point! Connectivity and easier access to information than ever before has a lot to do with the ascension of other players. To stay on top, big corporations now a days need strategic product life cycle management where the innovation and ideation phase has to be actively nurtured. This is easier said than done!
How can you compare Microsoft with SONY or Renesas, or, for that matter, the entire Japanese electronics industry. Yes, many great companies do indeed fall victim to hubris and forget to innovate. The Japanese culture is infected with the samurai culture of obedience, precisely the opposite of innovation, especially game-changing innovation. It takes so long to get consensus and a decision from Japanese. And the culture of "perfect" quality, which propelled them to the forefront in the 80s, was replaced with "good enough" quality, and speed and cost became the new drivers. Japanese culture couldnt respond quickly enough.
Jim, I do not think is an issue with the Japanese companies. This is the challenge of any technology company. Can you say that Intel or Microsoft do great in the mobile space? How about Nokia or RIM? Or Yahoo and AOL? Organizations are hostages of their own success.
The real question is - Why are Japanese companies, once powerhouses in the technology industry, so uncompetitive in the current market. Unfortunately, I have yet to see a plan that I think will be successful in revitalizing any of the struggling Japanese tech companies, including Renesas.