News & Analysis
Yoshida in Japan: Sharp tripped by engineering ego
Junko Yoshida
11/2/2012 2:07 AM EDT
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."
Hello?
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.
Those days are over.
Next: Panasonic's PDP gambit
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iniewski
11/2/2012 4:10 PM EDT
"We lacked a sense of speed" - should he resigned after admitting that?
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junko.yoshida
11/2/2012 5:09 PM EDT
Well, Mr. Okuda just became Sharp's president earlier this year...
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Bert22306
11/3/2012 4:18 AM EDT
So, CRT displays are to Sony what plasma displays are to Panasonic? The eventual success of LCDs was almost inevitable, as far as I could tell. Too many advantages to pass up (power consumption, weight, bulk, pixel count, relative immunity from burn-in problem that plagued CRTs and PDPs).
But why tie the past and the future of Japan Inc. only to disply technologies? Apart from companies like Sony and Panasonic sticking doggedly to their original "favorite" display types, wasn't their slow adoption of digital personal electronics also a big factor? Like, the Walkman that never morphed into an iPod-like device?
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resistion
11/3/2012 5:54 AM EDT
Billion-dollar commitments to a single technology never succeed. If it takes so much investment, it's clearly not the simplest or most practical path at the moment. Especially with the irony of calling it the most "cost effective" choice. Unknown costs always linger somewhere along the way, and always exceeding initial revenues. But these technologies have so much irrationality behind their catchy 3-letter acronyms like PDP, EUV, PCM, it approaches addictive behavior.
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iniewski
11/3/2012 9:16 AM EDT
To @Bert22306, plasma display is technical superior in many ways, I remember the days that everyone wanted one so you can't blame them for pushing it...I was surprised myself when LCD beat it and too over the market, so much worse picture quality...but then OLED is going to kill LCD shortly so the story continues, you have to be nibble in this business and Japanesse corporation seem to be too slow in reacting to changing market conditions and users preferences...I suspect this is rooted in their culture...they do much better in automotive biz because cars have essentially not changed much in 50 years (they only piled lots of electronics into it)
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Bert22306
11/3/2012 6:06 PM EDT
Iniewski, I gotta tell you. I never wanted a plasma. Yes, in the early days, they had greater contrast than LCDs and they were bigger. But they were always power hogs (you could easily feel the heat emanating from them), they were for the longest time only ED quality, meaning 480 lines vertical, they suffered from burn-in, so that owners even obsessed over the station ID bugs, they weighed a lot, and they were thicker by far than LCDs.
So I happily waited for LCDs to grow and grow, and for their contrast ratio to increase, until I finally bought one of the earlier 26" ones, happily retiring my previous 25" CRT TV. And then moved up from there.
So, do I think that Panasonic couldn't have helped but believe in Plasmas exclusively? Uuuh, no. That's the thing. It shouldn't matter what people gush over today. What should matter is to see the trends of the technology.
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chanj
11/5/2012 1:06 PM EST
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.
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osm3000
11/3/2012 2:35 PM EDT
I really don't understand why they put every thing behind displays ?
Aren't there other products like mobiles, players, tablets,....etc to invest in ?
And besides, was it really hard for them to understand that plasma displays are slightly better than LCD displays? Why they needed all this time to realize that? The Panasonic new president simply tried it himself to judge !
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junko.yoshida
11/4/2012 12:03 PM EST
Certainly, they didn't have to put everything behind displays.
But the truth is, for many Japanese CE manufacturers, this was about "TV business" (not about "display" business).
You need to understand that TV division at many of these companies has been the main pillar of their business for decades. That means, their division had more sways in getting support and budget in investing further in its business.
Japanese CE vendors could have chosen to buy displays from someone else (which Sony eventually did, but that did not help them either), so that they didn't have to make HUGE investment in manufacturing displays on their own.
But again, remember, many engineers at Japanese CE vendors devoted their lives in developing and perfecting flat panel display technologies of their own. For them, this was personal. It was, in many ways, unthinkable for them to drop their R&D project and walk away from it.
Hence, the engineering ego becomes the issue, while much to be blamed, in my opinion, is the lack of management directions to navigate the changing market and business.
Japanese believed that controlling their own flat panel display technology development and production was to control their own fate in the TV business, which Samsung managed to do successfully.
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sprite0022
11/4/2012 10:29 PM EST
maybe this is just a normal round of business cycle for japan inc. same as kodak, xerox,
generally older folks ll get slower in respond time, can't blame em anyway.
just wait for younger gen to pop out.
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calvin_yp
11/4/2012 10:34 PM EST
There is really no right or wrong things to do. If you made it, everything you did must be right. If you lost it, people can find millions of things that you did wrong. Just considering Apple. Apple did it all the wrong ways. Others focus on either software or hardware; Apple wants both. Others go to open systems; Apple insisted its own closed system. On and on. Right or wrong? I don’t know. But it takes a genius to reverse the tide.
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tomeq
11/5/2012 8:50 AM EST
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.
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KenKrechmer
11/5/2012 3:12 PM EST
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.
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iniewski
11/5/2012 3:41 PM EST
I agree Ken...some companies, like some people, are at the right time and right place with their technologies...personally I don't think Steve Job was an exception
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marcos83
11/6/2012 7:48 AM EST
yep exactly. In the past 1960-2000, the Japanese copied successful products and made them better.
These days, high quality manufacture is available everywhere.
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MattK
11/5/2012 3:20 PM EST
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."
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moronda
11/6/2012 6:32 AM EST
MIPS just got bought by Imagination.
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marcos83
11/6/2012 7:15 AM EST
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.
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