NEW YORK -- Call me naive, but a quote in a Dow Jones report this week from Sharp President Takashi Okuda left me speechless.
When asked Thursday (Nov. 1) how the company reacted to changing market conditions, Okuda (below) reportedly said: "We lacked a sense of speed. . . The situation could have been different if we took steps more quickly."
How many years did it take for Sharp’s top management to come to that conclusion?
For that matter, how long will it take the CEOs of Japan’s large electronics companies to acknowledge their inaction, get off their backsides and do something?
The utter lack of any sense of urgency among the Japanese is precisely what is killing the country's electronics industry.
That’s why Japan will eventually cede its technological leadership to China and its aggressive entrepreneurs.
We needn't belabor the fact that Japanese executives simply cannot make decisions – dithering while hiding behind the nation’s “consensus building corporate culture.” It’s a well known syndrome.
The larger problem is that many Japanese still believe there's still time to turn things around. They don’t understand that time is running out. I ascribe this to two factors.
First, Japan values "long-term" thinking. Second, it maintains an almost blind faith in engineering executives making engineering decisions. These two handicaps are tightly intertwined.
Historically, many Japanese electronics companies have been run by engineering executives. They know their products and technologies inside and out, and they understand how to make those products. They are hands-on engineers, and there's certainly nothing wrong with that.
What trips them up, though, is their engineering ego.
Neither LCD nor plasma display technologies would have been perfected and scaled if not for the stubbornness of countless Japanese engineers at companies like Sharp or Panasonic. These companies were at the leading edge of display technology for decades, and found ways to reduce manufacturing costs that made these display technologies ubiquitous.
These engineering executives succeeded precisely because of their long-term vision. They were able to advance these technologies and nurture product development largely because they could see far beyond the next hill.
By the 1980s, Japan's patience and determination made it the leader in the global electronics industry.
In the boom that followed, Japanese corporations were able to finance new R&D projects. Some panned out, others were duds. "Long-term" planning was always the watch word. This calculated approach occasionally yielded unexpected market successes.
Japanese CE companies flourished, and could afford to drill the occasional dry well. The myth of management based on their “long-term” vision grew.
As I had a pleasure to work together with guys and gals from other Japanese giant - Toshiba Electronics I noticed one thing: problem with marketing communication. Who the heck did know that Toshiba had the best quality NAND Flash components? Only geeks, so 90% of people decided to buy TLC components from Samsung, cause they offered higher capacity at better price. The same story with plasma TV - the quality was and still is faaaaaaar much better than LCD or LED. But people didn't know it and decided to buy LCD, even though their quality wasn't as good as plasmas. And last but not least - have you ever tried to watched Sharp's LCDs? Who knew that they invented 4th colour for displaying? You can feel the difference after few minutes or hours of watching it. It's so obvious, that both Panasonic and Sharp offer still excellent products, but they didn't know how to communicate it. Maybe it's because I'm the PR guy and electronics geek, but it really hurts when you look at these excellent companies with excellent products in the situation and comments where they are right now.
I think most consumers are sensitive to price. The cost of building plasma has never been able to compete with that of building LCD for various reasons. When price and quality are being evaluated together, consumers are willing to sacrifice a bit of quality to a way better price. Lately, I have visited Sony shop and saw a TV with noticeable better picture quality with price of close to $3,000 of a 55" screen.
Product management and development is a bet. You bet that consumers are willing to spend the dollars to own these features and the quality of the product given an economic situation.
It appears to me that countries, companies and managers are sometimes, mostly by chance, at the right place and time with a technology. In such cases they may be very successful. Such success indicates their operational skills not their long term technology forecasting "skills." Long term technology forecasting does not appear to be correlated to the countries, companies or managers (Steve Jobs is an exception). Considering long term technology forecasting a "skill" (i.e. learnable) seems unrealistic.
Japan Inc. doesn't get software. User interface defines success in the market today with great technology BEHIND it. Motorola's fate was partially to blame because of this. As I say about the Japanese companies which whom I am engaged with at this moment, "Process over Profit."
The Japanese way of working is: copy a product or invention from the West. Then make it smaller, cheaper and more profitable.
That worked OK in the 20th century. These days, the world is too competitive.
It's not that these Japanese companies are too slow to change, it's that they cannot change. They never had the creation aspect.