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 / Second Quarter 1997 / Issue 7(originally published by Booz & Company)


Steering a New Course for Japanese Management

For example, despite a price tag of several thousand dollars, sales of Sharp's Liquid Crystal ViewCam have been so brisk that production has not been able to keep up with demand. Since 1994, Sharp, though only one-quarter the size of Matsushita Electric, has recorded operating profits of roughly the same size as the larger company. Similarly, the Fuji Photo Film Company's Quick Snap disposable camera has shown continued growth since it was first put on the market in 1986, and it even took 10 full years before excessive competition forced the company to drop its price.

That such products appear from time to time is not a matter of luck, but rather due to the fact that some companies possess the right capabilities. These capabilities, without exception, are what produce industry leaders, or front-runners.

The fundamental challenge for managers from now on will be to build the capabilities to become front-runners, which essentially means perceiving the dormant needs of the market and developing new products before the competition does.


Despite this critical need to change, many Japanese business managers are finding it difficult to rid themselves of their catch-up mentality.

Until now, they have been trying to rally their troops to the battle cry of "Challenge and create!" But Japanese managers are studious types who read books and listen to lectures. While they may speak very eloquently, their words are lacking in substance.

For example, listen to this top manager: "From now on, our products must be backed up by cutting-edge technology. They must be multi-functional, more user-friendly and able to offer a vital service to the consumer." Is it likely that his employees would be moved to take innovative action?

The words sound very good, but to be perfectly blunt, this message is nothing more than fine talk. Another top manager says, "We have to make products using innovative technology that other companies can't imitate," but before the words are even out of his mouth, he adds, "It's very important to make our products distinctive through design and modeling."

In the catch-up era, it's safe to say that there was nothing that could be called an original Japanese product concept. However, the essence of corporate strategy for leading companies is the creation of such concepts.

For this reason, Kao established its Basic Research Center, whose sole purpose is to think up product concepts. "Research is where knowledge comes from," says Kaoru Tsujii, the head of the center. "Basic research is where new concepts come from."

Sharp also has what might be termed a concept-design center,
dubbed the Lifestyle Software Planning Headquarters.

Role of developing new technology. According to Prof. Fumio Kodama of the Tokyo Institute of Technology, "The age of technological breakthroughs is over; what we are in now is the age of 'technology fusion.' " To come up with epoch-making products, one must give substance to product concepts. When that happens, companies will not continue to worship technology, but instead will become concept-oriented, by combining existing technologies and developing available but incomplete technologies. Again, as Canon's Mr. Kitamura notes, "Technology development means stepping into the ring with new product concepts and making them a reality."

Kao's Mr. Tsujii adds, "The companies that will survive are those that can articulate a new product concept and incorporate the technology necessary to realize that concept."

John Mayo, former president of AT&T/Bell Labs, which turned out seven Nobel Prize winners, stresses the importance of product-actualizing technology: "I think American companies are ahead of Japanese companies in terms of technological innovation. But no matter how marvelous the discovery, if it can't be translated into a product, no one will benefit from it."

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