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


Steering a New Course for Japanese Management

Furthermore, technology development performs the function of fighting off the challenge of companies playing catch-up and strengthens the position of top companies. This means developing "key components," essential technology that is not just a pale imitation of the competition's technology. Some examples of this are Sharp's liquid crystal technology and Canon's LBP semiconductor technology as well as technology introduced from copying machines that converts photosensitive cylinders into cartridges.

Adjusting to market needs. The final stage in the new paradigm of product development is adjusting a finished product to the needs of the market. This is a necessary step because, given the dormant nature of market needs, there's no guarantee that a finished product will fit the consumers' demands perfectly.

Products are the medium for communication between corporations and the market. Adjustment is the result of this communication.
In the past, it was very common for companies to conduct market surveys in order to grasp the needs of the market in advance and to make adjustments.

In the case of Quick Snap, Fuji Photo conducted an extensive survey of consumers after the first generation of disposable cameras hit the market. The results showed exactly the opposite of what had been predicted. Namely, although the company had designed the camera with the specific concept of being easy to operate for children and the elderly, by far the largest response to the survey was that the product "takes good pictures." Therefore, Fuji made improvements to the camera so that the second generation would take even better pictures.

In this way, through repeated communication with the market, the value of the product became clearer and clearer, and Fuji was able to increasingly expand its market share.


The close involvement of managers, rather than the former hands-off style, is indispensable if a corporation is to create epoch-making products and become a top market player.

In general, product/marketing strategy, as illustrated in Exhibit I, can be divided into existing business strategy, peripheral business strategy (in-use development, product proliferation) and new business strategy. For top corporations, the main focus is new business strategy, which has the highest actual risk.

As shown in Exhibit II, new business strategy can be illustrated as a cycle. Management leaders can quickly move through the cycle by taking small risks.

Paradigm shift leadership. The primary function of top management is to reinforce the process of discovering new ideas by bringing about a shift toward a new paradigm of product development. The core of that shift must be a transformation of organizational and personnel management.

Fundamentally, the strategic variable in the process of discovering new ideas is creativity. To be sure, even top managers cannot directly affect the creativity of individuals or teams. However, at the very least, it is essential that managers establish an environment in which creativity can be optimally expressed.

For example, companies can create mechanisms for discovering new product concepts, like Sharp's Lifestyle Software Planning Headquarters. These would consist of teams of personnel with varying backgrounds in science, the arts and other relevant disciplines. Such mechanisms ought to be flexible enough to allow the free flow of personnel from one team to another.

In addition, managers need to help speed up mechanisms for turning new ideas into actual products that can support viable enterprises. With this goal, Sharp's top management introduced a three-dimensional design system intended to actualize concurrent engineering. As a result, the design and production departments were able to share information about new products without having to create mock-ups, greatly increasing the speed of product development.

In this way, top corporations have moved their strategic variable away from the product quality and cost models of the catch-up era and toward value-creation/speed models. This is because the key to success for top corporations today is the value of their products and the size of their lead in market sales.

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