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| Stock price of Sony, Panasonic |
SONY, PANASONIC were the world top level electronics brand until 10 years ago. Then today their brand image, market share, stock price and profit are all deep in the bottom and looking up Samsung, LG and Chinese makers who used to be subcontractors for them. The employees in Sony, Panasonic and other major Japanese large makers are always very stoic and work very hard. But still they cannot make it.
Why this happened? Here is my observation as one of ex-employee of Japanese Giants.
BUSINESS MODEL
- "NOW THEY CANNOT SELL THE PRODUCTS AT THE PRICE THEY WANT"
Such a simple phrase tells everything. They always think about customers and market, and trying to create the best products for them.
Why they do such a hard-work but cannot get return? - "They spend their time to the area customer is not interested.They are always under pressure that they have to fully satisfy their customers. They believe customers always want the best quality, best design, great number of features. They show the excellent craftsmanship to build the excellent products by spending huge resource. Then cost goes up, and their profit never cover up the cost.
- "Market needs new value measurement"Yes there are some customers who wants the best quality, best design and best features. But it is not the majority of customer's voice any more.
What is new value? Here is the good example which they performed by themselves.
Sony launched Walkman at 1971. It does not have speaker. No recording function. Sound quality was just so so, not comparable to nice audio set in a living room. But it has got great value for young generation. It was the moment that music went out of home. - "Same device everywhere, anyone can make the same"
From the late 1990s, manufacturing process comes to component block assembly.
Device is standardized, subcontractors becomes competitors. Competitors make the market price lower, then it makes Sony, Panasonic less competitive. - What they need to do?
They should admit conventional electronic business model almost ended. In order to survive and get out from financial crisis, they cannot help but downsize the operations. They have to limit manufacturing facilities only for extra high value products.
Then they have to challenge and create totally different market value.
In such movement, they should not stick to only the high quality, many feature, good design. Like Transister radio, Walkman, Handycam, Trinitron TV, they have to believe their creativity is the only way to grow their business.
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| Sony HQ building, Tokyo |
- "DIRECT FINANCING WAS TOO SUCCESSFUL IN THE PAST"
- Sony is the first Asian company who brought their stock in overseas stock market (in 1970 at NY exchange market).
- Sony's stock was appreciated in the world, and it makes Sony much easier to finance at competitive rate.
- When the business goes well, it worked very much, but there is a side effect (fluctuation of market price) which suffers the company more when the business is not going well.
- "SAME AS ALL OTHER HUGE COMPANY BUT .."
- Too frequent organization change and management change.
It was Sony's culture from the founder's period. But nowadays, it's too much.
They changed 7 directors of TV business group in the last 10 years. - Managements are thinking in only monthly bases not even a year as the result of this frequent changes. Middle management also do the same.
- It makes all staffs unconcerned about top management message (since it changes frequently) and loose loyalty to company.
- By having many job cut, many 1st class people left from the company, and many of them becomes assets in competitors in Korea, China or other industries.
- Bureaucratic grows and makes all process slow, conservative.
TO BE A CHALLENGER
- Don't be afraid to loose anything. Actually you are already looser. Let's start from nothing.
Remember your founders also did the same thing.
No need to repeat what founders did, but do learn from the spirits and motivations.
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| Sony History Museum in Shinagawa, Tokyo |
