I can’t help be impressed by the many ways in which Panasonic’s President Kazuhiro Tsuga has ripped up the kaisha (Japanese company) rulebook. In the latest interview with Tsuga in the Nikkei Business magazine, he does not mince his words when describing the past three years where he has had to explain to shareholders why the “V-shaped” recovery promised by his predecessor Fumio Ohtsubo did not happen and instead Tsuga had to explain record breaking losses two years running. “We are in the losing group when it comes to digital home appliances. We have been in a cycle for the past 20 years of low growth, low profit, where even when we restructure, it only brings a temporary improvement… I have to recognise that we are not a normal company, as our starting point.”
Fortunately 2014 brought better results but not after Tsuga faced complaints from shareholders and also internally, as he restructured the company into 4 divisions (Automotive & Industrial Systems, Eco Solutions, Appliances and AVC Networks), selling off non-core businesses, removing around 60,000 people from the consolidated employee total, skipped paying a dividend for the first time in 64 years and shrinking the honsha (HQ) staff from 7000 to 120. “Ohtsubo was also responsible [for the losses], but the HQ was not to be depended on. I shrank the honsha down to a select few so I would not be fooled by it.”
Perhaps his own background in the company has helped him be more ruthless about disowning his predecessors’ strategies and restructuring legacy core businesses like TVs, mobile phones and semi-conductors. He is comparatively young (55) and spent the first part of his career in the R&D lab, has a masters in computer science from the University of California Santa Barbara and then headed up the (then non-core) automotive vehicle components internal business unit.
As the Nikkei comments, his tough words and actions cannot but be seen as a rejection of his three predecessors, Morishita, Nakamura and Ohtsubo. However Tsuga is careful to reference the granddaddy of them all, Konosuke Matsushita himself. “Matsushita said many very rational things.” “I want our company to serve society by the time of our 2018 centenary, whereby we are able to employ more people again.” But as Matsushita himself says “when it rains, you should put up an umbrella.”
There’s no mention of business outside of Japan in his Nikkei interview, but Tsuga’s restructuring is beginning to take effect – with the announcement this October of the finalization of the new Panasonic Automotive & Industrial Systems Company Europe (PAISEU), headed by Dr Wilhelm Steger, bringing together several companies into a business with more than 1250 employees in Germany and several thousands in Europe.
For more content like this, subscribe to the free Rudlin Consulting Newsletter.