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Duane Benson
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re: Yoshida in Japan: ‘Quality’ quest without balance
Duane Benson   2/18/2013 6:34:23 PM
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re: "overbuild over-specified, high-quality [chips and systems] in the costly and time-consuming pursuit of perfection" That's an interesting thought. Contrast that to the US. There's probably more variation than consistency in the US, but if I were to try and come up with a cultural theme for manufacturers here, it would be something along the lines of: "the relentless pursuit of just good enough." That can be summed up with the quote by John Glenn: "As I hurtled through space, one thought kept crossing my mind - every part of this rocket was supplied by the lowest bidder." That theme has sometimes served us well and sometimes not but it's also infectious. By and large, we don't want to buy from someone that spends the extra time and money on perfection. We'd rather buy from a company that gives a good price with just barely enough quality to get by. When American consumption has a big influence on the world market, those companies that focus on quality will do well only if there isn't a lower cost alternative with "just good enough" quality standards.

DrQuine
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CEO
re: Yoshida in Japan: ‘Quality’ quest without balance
DrQuine   2/18/2013 3:53:51 AM
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The "Armchair analysts often zero in on macro factors" list ought to be a required topic for any business course. We could learn a lot by taking to heart these issues and addressing them in our domestic businesses. [The only change would be to substitute "Japan’s stubborn lack of fluency in English" with "America’s stubborn lack of fluency in Japanese / Chinese / Portuguese / Russian / Spanish / ..."]

DrQuine
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CEO
re: Yoshida in Japan: ‘Quality’ quest without balance
DrQuine   2/18/2013 3:45:13 AM
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It seems to me the problem boils down to "a lack of innovation in a saturated market". While Apple keeps making "must have" products (as Sony used to) and the Toyota Prius sets the standard for hybrid cars, the sea of Korean, Chinese and Japanese TVs (and other electronics) at a "Best Buy" are virtually indistinguishable. They all look the same and perform the same functions with subtle differences in features. If 90% of the models and 3/4 of the vendors disappeared nobody would notice or care. The "Innovator's Dilemma" is alive and well; when intuitive breakthrough products are produced, the market will respond.

DMcCunney
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CEO
re: Yoshida in Japan: ‘Quality’ quest without balance
DMcCunney   2/14/2013 2:37:56 AM
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I don't see it as advocating "poor quality" at all. I think the applicable phrase is "Best is the enemy of good enough". With the increasingly short product cycles cycles chanj mentioned, the question might be "How much quality do I *need*?" I have been making parts with quality standards intended to enforce a 5 year Mean Time Between Failures, but for a new product line I'm designing, I assume the buyer will replace it in three years or less. Does it still make sense to incur the time and expense of my previous quality standards, when my product *doesn't* have to last at least 5 years? Maybe it doesn't. My quality doesn't have to be perfect, it just has to be good enough. My challenge is deciding what good enough is.

junko.yoshida
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re: Yoshida in Japan: ‘Quality’ quest without balance
junko.yoshida   2/13/2013 4:08:01 PM
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chanj, thanks for your kind words. I don't think anybody is advocating for poor quality for any products, but I think it's paramount to achieve "efficiency," as you point out, while producing products whose quality meets the market needs.

junko.yoshida
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Blogger
re: Yoshida in Japan: ‘Quality’ quest without balance
junko.yoshida   2/13/2013 3:37:16 PM
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DMcCunney, I wholeheartedly agree with you on the long process you laid out here, often required different sets of stakeholders on the Japanese side to buy into the idea, in a JV setting. And that's also true with a JV among Japanese companies (i.e. Hitachi-Mitsubishi to create Renesas Technology, originally; then adding NEC to it later to build Renesas Electronics) That long arduous process, indeed, pretty much killed Renesas in my humble opinion.

DMcCunney
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CEO
re: Yoshida in Japan: ‘Quality’ quest without balance
DMcCunney   2/12/2013 9:40:10 PM
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@Junko: Last, consider the notion of "face", which applies to individuals and organizations. Preserving face is paramount. A US CEO whose performance doesn't meet the board's requirements can be removed. The common public announcement is "Resigned to pursue other interests", but everyone knows that means "Didn't measure up and was fired." I think you'll find a lot more circumspection in Japan, and the last thing anyone will do is say "He was fired because he wasn't good enough", even if that was the actual cause for the executive's departure. And face applies to companies and by extension to Japan itself. I think part of the problem faced by Sharp, Panasonic, Sony and the Japanese government is that confronting the underlying problems requires admitting that they made decisions with poor long-term consequences, and damage of reputation has occured for the companies and Japan as a result. While the excuses you mention given by Japanese companies are all valid, I don't believe they are enough to explain Japan's problems, and I think Japan would still be facing these problems if those events never happened. I think Bert22306 was exactly right when he said "Japan might have to reinvent itself, like Germany, as the producer of what the popular culture will accept as being luxury items." It can't make money selling commodities because it can't get production costs low enough. It needs to focus on higher end products with better margins. And it needs to accept that various Japanese firms will have to shrink to be sized for the markets they can address, and that large numbers of Japanese workers will be displaced in the process. Japan is undergoing the same changes as the US, for the same reasons.

chanj0
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Manager
re: Yoshida in Japan: ‘Quality’ quest without balance
chanj0   2/12/2013 9:26:59 PM
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Every time I see "Yoshida in .." in the title. I'm just so looking forward to reading it. This time, I find it more fascinating. I just can't help agreeing most if not all. By following Yoshida's article, a picture started forming in my head. Japanese's value of quality was building her name in the 80's and 90's. Which brands of car that will last at much as 250k miles with only regular maintenance. They are "Made in Japan". Japanese electronics and appliances last at least 10 years. The quality of Japanese product is no doubt one of the best. Nothing comes w/o a price. Just like Yoshida said, a good quality means more process. More process means high cost. In addition to long QA process, I'm pretty sure there is a long design process and decision process. I was luck enough to work as an intern in one of the major Japanese electronic brands in my senior year. The meeting to decide a go of a product takes weeks of multiple meeting in a smoky conference room. Imagine what it takes for the design, validation and improvement. Every detail, e.g. whether glue should be used and what size of screw should be, are examined. That's the recipe for success. Nowadays, the world has changed. Efficiency is everything. The regular product life cycle, taking smartphone as an example, is 2-3 years. Consumer starts asking why I need a product lasts 5+ years. In addition, a lot of people, engineers included, believe anything can be upgraded. A conversation carried the other day, "In the future, I will receive an email from Tesla saying they will upgrade the firmware of my car tonight. I will get 50 more horsepower after the upgrade." When upgrade is possible, bug can be fixed later. Well! I guess the world is changing.

DMcCunney
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CEO
re: Yoshida in Japan: ‘Quality’ quest without balance
DMcCunney   2/12/2013 9:23:05 PM
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@Junko: Next, consider Japanese culture. Japanese management style is consensual. US companies doing business with Japanese partners have been known to complain about the time involved to get a joint venture up and running. That's because Japanese management style tends to be bottom up. In a US company with a top-down style, top management will decide on a course of action and expect compliance. There will be friction because everyone won't agree on the action, and some will see their interests adversely affected. There will be speed bumps on the road to making it happen. When a decision is made to do a joint venture, the Japanese side undergoes an extensive process of selling it internally. There may be several waves of Japanese coming to visit the US partner, each of whom will need to have it all explained to them. They represent different sets of stakeholders on the Japanese side, who must buy in to the idea. Once the buy-in has occurred, the Japanese partner can *implement* with blinding speed, because everyone on their side understands what the company wants to do and what their part is in making it happen. But the difference in style makes it harder for Japanese companies to react quickly to changing market conditions, to stop doing existing things, and to start doing new things. Getting the agreement that those changes need to happen can be laborious, and may not happen.

DMcCunney
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CEO
re: Yoshida in Japan: ‘Quality’ quest without balance
DMcCunney   2/12/2013 8:49:32 PM
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@Junko: I'd add a couple of other factors: the nature of the marketplace and the intersection with Japanese culture. Consumer electronics are a textbook capital intensive business. The biggest portion of the cost of the device you make is an allocated share of the debt you took on to build that factory to produce it. So you are encouraged to target high volume markets, because the more devices you make and sell, the smaller the allocated overhead slice on each will be and the cheaper you can price the product. Consumer electronics also follow a standard business cycle. Consider the once ubiquitious PDA. The original Palm Pilot created a market, and a PDA became everyone's must have accessory. Palm couldn't make them fast enough, and Handspring (formed by ex-Palm execs) Sony and others jumped in. The market rapidly became saturated. The PDA went from high-margin must-have to commodity with commodity pricing and razor thin margins. Sony exited the business because while it was profitable, it wasn't profitable *enough*, and they could make a better return placing corporate funds elsewhere. Palm no longer exists. The PDA simply recapitulated, and order of magnitude faster, what had already happened in the PC market. The ballyhooed problems of Sharp, Sony, and Panasonic in big-screen TVs are simply one more example - they became commodities where the lowest cost producer wins, and Japan *can't* be the lowest cost producer. There is too much overhead from simply being located in Japan, in the same way that being in the US makes various business uneconomic for US companies. It simply costs too much to be in the US, and they can't recoup the costs in their pricing. Sharp, Panasonic, and Sony failed to foresee the inevitable, and continued in the big-screen TV market well after it was possible to make money at it. They should have anticipated the issue and had a plan to exit the TV business before that point.

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