Making a Japanese giant

Press, 24 April 1987, Page 19

Making a Japanese giant

Made in Japan: Akio Morita and Sony. By Akio Morita, with Edwin M. Reingoid and Mitauko Shimomura. CoMna, 1987. 309 pp. $35. (Reviewed by Netti Birss) In 1945 Akio Morita was one of the three principals of a small electronics company struggling to manufacture in the bomb ruins of Tokyo. The young Morita, a physicist, borrowed from his father, a sake brewer, to keep the firm alive. Barred from his job as a university lecturer because of his permanent commission in the Japanese Navy during World War n (he was at a research station), Morita sought a new career.

A naval comrade and research engineer, Masaru Ibuka, had set up the Tokyo Telecommunications Research Laboratories in 1945. The tiny firm was barely surviving from a room in the burned-out remains of a department store. Morita and Ibuka's father-in-law, Tamon Maeda, Japan’s Minister of Education, joined the company, and the Morita family’s sake business pumped finance into it The entrepreneurs began by making shortwave adapters for radios, and by reconditioning old record players. The first new consumer product was a tape recorder that was built as in many other Japanese advances, on German technology. Among the early customers were the Japanese courts. By 1952, Ibuka came back from a sales trip to the United States with his tape recorders. He had something far more valuable than orders: the idea of developing products using the newly invented transistor. He launched an application for a licensing agreement and a year later this was concluded by Morita with Western Electric, the patent-holder for A. T. and T.’s Bell Laboratories.

The Japanese company changed its name to Sony, inspired by sonus, the Latin for sound, and by 1955 had made its first transistorised radio. It was beaten on to the market by Regency of the United States, supported by Texas Instruments, but

Sony raced ahead and by 1957 had the first pocket radio on the market Sony has been a pioneer in scores of consumer electronics products since then — from transistorised television sets to Walkman radios and compact disc players — and is regarded as the most innovative of the Japanese electronics giants. In 40 years it has grown into a great multinational with factories around the world. Much of what he writes echoes the lessons that have been hammered out in .the succession of books on Japanese industry. Most readers will already know that the Japanese concentrate on market share and long-term growth, while Western companies often spin like a dog chasing its tail for immediate profits. Annual profits are now interspersed with half-yearly and even quarterly results. In Japan engineers are held in high esteem as they used to be in America, where their status, Morita says, has slipped to that of engineers in many European countries with a historic disdain for practical work. In contrast, Japan has only a handful of practising lawyers, while the United States seems to swarm with them. He finds the business climate there perilously litigious. The bonds between employees, employers, and company are so much greater in Japan than in the West, Morita reminds us. In his country, luxurious offices are disdained, and seniority counts heavily. Company uniforms help minimise the distance between managers and workers. In science, he writes, the Japanese concentrate on applied science, while many Western countries concentrate on pure science. “We have taken many basic ideas and turned them into practical objects, in many cases products not even thought of by the originators of the basic technology.” The Japanese have a healthy respect for the intuitive in decisionmaking. Morita describes this as a special sense, generated by knowledge

and experience — “a feel for. the business that goes beyond facts and figures.” Morita believes the mobility of Western executives (their moving from company to company) hinders the building of an intuitive feel for the business. Such executives, he believes, being unsure of themselves, will hesitate to take risks. “Made in Japan” has enough views to confirm some prejudices of every business reader, and has some topical comments on free-market philosophy from the economic coal face. The international economic problem, Morita suggests, is floating exchange rates. The implication seems to be that these have eroded manufacturing values leading to a climate of take-overs and other sideline play at the expense of the real business: winning in the product marketplace. “It worries me that today some industrialists have begun to take part in the money trading game. Since they cannot forecast the return on potential' investments, many industrialists have stopped investing in their own companies and are investing a lot of energy, time, and money in acquisitions and mergers. Companies have become a commodity to be traded, bought, and sold. This is not the natural and rightful role of industry, which is to better existing products, and create new ones. Looking at the situation as a Japanese, I cannot believe the employees of such companies have much desire to work.” Such “games” and the movement of manufacturing to low-wage countries in Asia have led to the "hollowing out” of American manufacturing, Morita says. Not least because some of our companies, including two in Christchurch, are manufacturing in Asia, many New Zealanders will find Morita’s opinions interesting enough to contribute to Japan’s balance-of-payments hoard by buying this book.