Japan is lagging behind the world where digitalization is spreading. As it is now, the reality is that even within Asia, we cannot catch up. The shortcut to survival is to promote digitalization and improve efficiency.
Home video, CD, LCD TV from Japan ...
The Japanese consumer electronics industry was once very good at creating new value ahead of the rest of the world. Home video, CDs, and LCD TV concepts are all born from Japanese manufacturers. They created technologically superior products that were accepted by consumers and led to high profits.
However, in this century, the Japanese consumer electronics industry will slow down. The background is the change in the competitive environment due to digitalization. In the analog era, craftsmanship was required when combining parts. However, in the digital world, basic performance has improved significantly, differences in technological progress have become difficult to see, and combinations have become easier, resulting in lower barriers to entry and easier for everyone to achieve high quality products. You can now make. A situation has arisen in which technology alone cannot survive.
The other is the diversification of values. In the past, it was a simple structure in which we invested in technology development, and as the technology grew, the functionality of the product improved, and the price and profits increased accordingly. However, the curve of technological growth always approaches the limit somewhere and becomes gentle. At that stage, consumers will not necessarily buy products due to differences in technology, and value other than function and performance will become important.
Shift toward seeking value other than technology
Under such circumstances, manufacturers that make a difference in areas other than technology have emerged. The symbolic existence is Apple. The iPhone has a simpler mechanism than conventional mobile phones, and the mechanical parts are simpler than those of foldable mobile phones. Battery performance and sound quality when listening to music are not the best. However, we succeeded in creating new value that appeals to sensibilities, such as usability and good design.
Another example is Dell, a US PC maker. I don't have my own technology or factory, but I'm still making money in the personal computer business, where all Japanese manufacturers have failed. In the case of the company, its unique supply chain is used as a strategic differentiation point to gain a competitive advantage in a more efficient business than other companies. In this way, both Apple and Dell have shifted to seeking value other than technology, as digitalization has made it impossible to make a difference with technology alone.
The key points here are "effect" and "efficiency". What Apple pursued is effect, and what Dell pursued is efficiency. These two directions are fundamentally incompatible and are in a trade-off relationship. When considering management strategies, like both companies, it is necessary to firmly determine whether what we should pursue now is effectiveness or efficiency.
Why is a wasteful factory better?
The pursuit of efficiency means that when the purpose is clear, we do nothing in vain to achieve it. Dell has made a profit by eliminating waste thoroughly for the clear purpose of offering higher performance PCs at lower prices.
However, when pursuing efficiency, there is a problem that things other than clear needs cannot be seen. The potential needs of the market, or new value that does not exist at all, do not come from the pursuit of efficiency.
The late Professor William Abernathy of Harvard Business School observes the factories of car makers and finds that wasteful factories tend to come up with new ideas, but less wasteful factories tend not to come up with new ideas. I realized that I called this the "productivity dilemma".
In order to generate new ideas, it is necessary to pursue effects. The effect is diversity. No new value will be created unless we repeat trial and error based on various ideas. There are always hits and misses in a product, so it is more effective to repeat it many times. However, there is always waste there. When you don't have a clear idea of your customer's needs, as it is today, it's important to tolerate waste and try new things.
Are you timid about try and error?
The reason why the Japanese consumer electronics industry stalled in the digital age was that the pursuit of effectiveness and efficiency was halfway.
Originally, Japanese home appliance makers have been better at effective development that creates the best from scratch than efficient development. Although we have invested in research and development as before, it was in the early 2000s that we entered a phase where we could not obtain the same profits as before. Therefore, the idea that came up to improve efficiency in order to improve profitability is "selection and concentration."
However, due to the traditional culture of trying and error, Japanese home appliance makers cannot easily steer to the point where they can concentrate on one thing and do nothing in vain.
If you want to be efficient, you need to mass-produce it like Samsung Electronics or Haier in China to hit the global market and pursue economies of scale. To do this, we need to develop low-priced products that are in the volume zone, but we will not try to enter there. It is often said that the reason for this is that it cannot match South Korea and China, where labor costs are low.