How the U.S. beat Japan in Semiconductors

Summary : The source of Japan’s failure to move forward is mostly about the failure of their Theory Z management style and an unwillingness to change. Back in the eighties, I did a lot of strategic work in how to turn the tide against Japan. The essential tactical approaches I developed in the eighties which I now know were effective are …

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August 17, 2012 – Maxims applied: Are Japan’s former electronics giants failing because they don’t have the right products?

This week’s Wall Street Journal had a good, if shallow, series on Japan’s electronics giants. It made the point that these companies lost to Apple and Samsung because they did not get the right products to market on time. Certainly true, but really the result of violating two critical Maxims: It’s always about management and the need to minimize decision cycle times. The latter of course is the result of bad management. Importantly, Japan’s problems extend far beyond her electronics giants, so the source of the problems has to be about management.

The source of Japan’s failure to move forward is mostly about the failure of their Theory Z management style and an unwillingness to change. Theory Z was killing western competitors with regularity in the seventies and eighties. Its focus on consensus versus the western adversarial politicized methods of day meant they worked much better as teams and got products to market far faster.  The strength of it was that once consensus was reached, they could move with no internal friction. But the West and then Korea and Taiwan adapted.

Back in the eighties, I did a lot of strategic work in how to turn the tide against Japan. The essential tactical approaches I developed in the eighties which I now know were effective are …

  • First, fix your quality problems
  • Turn their cost advantage against them by growing a more competitive supply chain in Asia, where costs were lower. Specifically, Korea and Taiwan
  • Turn their consensus decision making process against them by making markets more dynamic and less predictable
  • Turn their marketing method of shot-gunning in Akihabara and then pushing the successful products into international markets against them by rifle shooting customer needs in the international markets before the Japanese could get to them.
  • Turn their excellence at planning by shortening decision cycle times and being faster at reacting and adapting.
  • If they hammer down their propped-up nails, make sure you protect yours. It’s the propped-up nails that are the most innovative … Steve Jobs and Andy Grove are excellent examples of propped-up nails.

I wasn’t the only one who came up with these approaches, because I’ve seen them applied in far more places than I dealt with. But the result was the same: Japan began to systematically lose where they had been systematically winning. The surprise to me is that it has been almost thirty years since these tactical approaches were first developed and Japan has yet to adapt.

A WWII veteran once told me that the Japanese never changed how they protected landing zones on beaches until Iwo Jima. So it got systematically easier to beat them with each landing. Iwo Jima was a blood bath. Like the commander at Iwo Jima, there are Japanese business leaders who did adapt over the last thirty years. I can think of three: Toshio Maruyama of Advantest, Terry Higashi of TEL, Tom Tsuneishi of TEL. These three men know more about making a Japanese company competitive than anyone I know. Just ask their competitors.

From my perspective what makes them unique in tactical approach is that:

  • They know how to protect their propped-up nails without disturbing the consensus.
  • They developed an organizational ability to develop products outside Japan (when they didn’t they often failed).
  • They didn’t cave in on quality over cost, like some Japanese companies.
  • They compete on value, not price.
  • They systematically drive decision-cycle times down, though never as much as they would like to.
  • They systematically drive autonomous decision making throughout their organization, though never as much as they would like to.

Maxim: “an expression of a general principle.”  – Webster’s Dictionary

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By G Dan Hutcheson       

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