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.