Made In Japan

by Akio Morita

  On the twenty-fifth anniversary of Sony America, Yoshiko and I flew to the U.S. where we had a picnic or a meal with all the employees. We arranged it so that we could have a picnic with our New York staff and could sit down to a meal with the three shifts at our Dothan, Alabama, tape plant and also at our San Diego factory. We dined and danced with employees in Chicago and Los Angeles. It was a very satisfying thing for me, and I think they were pleased to see me and my wife. It was not just part of my job; I like those people. They are family.

  II

  A company will get nowhere if all of the thinking is left to management. Everybody in the company must contribute, and for the lower-level employees their contribution must be more than just manual labor. We insist that all of our employees contribute their minds. Today we get an average of eight suggestions a year from each of our employees, and most of the suggestions have to do with making their own jobs easier or their work more reliable or a process more efficient. Some people in the West scoff at the suggestion process, saying that it forces people to repeat the obvious, or that it indicates a lack of leadership by management. This attitude shows a lack of understanding. We don’t force suggestions, and we take them seriously and implement the best ones. And since the majority of them are directly concerned with a person’s work, we find them relevant and useful. After all, who could tell us better how to structure the work than the people who are doing it?

  I am reminded of my argument with Chairman Tajima on differences of opinion and conflicting ideas. There is no possibility of the world progressing if we do exactly the same things as our superiors have done. I always tell employees that they should not worry too much about what their superiors tell them. I say, “Go ahead without waiting for instructions.” To the managers I say this is an important element in bringing out the ability and creativity of those below them. Young people have flexible and creative minds, so a manager should not try to cram preconceived ideas into them, because it may smother their originality before it gets a chance to bloom.

  In Japan, workers who spend a lot of time together develop an atmosphere of self-motivation, and it is the young employees who give the real impetus to this. Management officers, knowing that the company’s ordinary business is being done by energetic and enthusiastic younger employees, can devote their time and effort to planning the future of the company. With this in mind, we think it is unwise and unnecessary to define individual responsibility too clearly, because everyone is taught to act like a family member ready to do what is necessary. If something goes wrong it is considered bad taste for management to inquire who made the mistake. That may seem dangerous, if not silly, but it makes sense to us. The important thing in my view is not to pin the blame for a mistake on somebody, but rather to find out what caused the mistake.

  The American director of a joint venture company in Tokyo complained to me that he was not able to pin down responsibility for an accident at his company, and he asked me why it seemed impossible to discover the name of the culprit no matter how hard he tried. I explained to him that the merit in his company lies precisely in the fact that everybody recognizes responsibility for the accident and that to find one guilty party might destroy the morale of all. We can all expect to make mistakes. Ibuka and I have made them. We lost money on the Chromatron system, and we failed with the L-cassette, a large-size audio cassette using wide tape that gave better fidelity than was available then on quarter-inch tape in the standard compact cassettes. And we should have worked harder to get more companies together in a “family” to support the Betamax format. Our rival in the VHS format did that and ended up with more companies making that format than ours, even though we get better quality. (Since then we have got major companies in Japan and overseas to agree on standards for our new eight-millimeter video, and for our high-density 3.5-inch floppy disk for minicomputers.) And, as I have said, getting out of the calculator business may have slowed us down in developing our own digital technology.

  But the point is that these mistakes or miscalculations are human and normal, and viewed in the long run they have not damaged the company. I do not mind taking responsibility for every managerial decision I have made. But if a person who makes a mistake is branded and kicked off the seniority promotion escalator, he could lose his motivation for the rest of his business life and deprive the company of whatever good things he may have to offer later. If, on the other hand, the causes of the mistake are clarified and made public, the person who made the mistake will not forget it and others will not make the same mistake. I tell our people, “Go ahead and do what you think is right. If you make a mistake, you will learn from it. Just don’t make the same mistake twice.”

  Besides, even if you find the person responsible for the mistake, I told my American friend, it is likely that he has been with the company for a while, and even if a replacement is put in his job, it won’t necessarily make up for the loss of his knowledge and experience. And if he is new to your company, I said, well, a child’s mistake does not have to be dealt with by disowning him. It is more important to try to get to the cause so that you can avoid the problem in the future. And if it is made clear that the cause is being pursued not to cause damage to an individual’s future but to help all employees learn, the result will be a valuable lesson rather than a loss. In all my years in business I can recall very few people I have wanted to fire for making mistakes.

  Right after we formed our American company, we needed a lot of people in a hurry to establish our sales organization because business got very good very fast. Some of our new employees were good and some, we realized later, we shouldn’t have hired. We had trouble with one man and I was exasperated and constantly worried about him. Finally, I discussed his case with my American colleagues. “What can we do with this guy?” I asked one day. They all looked at me as though I was slow-witted. “Why, fire him, of course,” they said. I was stunned by the idea. I had never fired anybody, and even in this case it had never crossed my mind. But to solve a problem by firing the man was the American system. It seemed so clear and straightforward and logical. I began to think America is a manager’s paradise; you can do anything you want to do. Then a few months later I saw the other side of the coin.

  We had a district sales manager who looked very promising, so promising, in fact, that I sent him to Tokyo on an extended trip to meet everybody at the home office and get acquainted with the philosophy and spirit of our organization. He did beautifully, impressing everybody in Tokyo. He came back to the States and went to work and continued to please us until one day, without any warning, he came into my office and said, “Mr. Morita, thanks for everything but I’m quitting.” I couldn’t believe my ears. But it was no joke. A competitor had offered to double or triple his salary, and he thought he couldn’t refuse it. This is the American way, I realized. I was very embarrassed and embittered by this episode, and, frankly, I didn’t really know how to handle it. Months later, I went to an electronics show and there at the booth of one of our competitors was this traitor. I thought we should avoid each other, but instead of hiding from me, he rushed over to me full of greetings and conversation, as though there was nothing to be ashamed about. He introduced me around enthusiastically and demonstrated his new product, just as if there had been no breach of faith between us. Then I realized that for him, and in the American system, there had been nothing wrong with his departure with all of our marketing information and our corporate secrets. Apparently, this sort of thing happened every day, and that is a far cry from managerial paradise. I vowed that my company would do its best to avoid adopting this aspect of American managerial technique.

  I also discovered soon that in Western countries, management lays off workers when a recession sets in. That was also a shock because in Japan we just do not do that unless we have been brought to the direst point. In the wake of the oil embargo, Japan suffered heavily because of our total dependence on foreign sources for oil. We experienced a one-year inflation rate of over
25 percent in 1973-74, and some companies simply couldn’t keep their shops running, so they had to send people home. But it was impossible for those people to sit around at home when their company was in trouble, so there were cases where employees started drifting back to the company, cleaning up, mowing lawns, offering to do any odd jobs. One electrical appliance company sent employees to local electrical shops to help the retailers, who were also suffering, by becoming unpaid salesmen. This was not something that came from the management side. It came from the workers themselves, who see their jobs in the context of a shared fate with the company. I have heard of a case where a laid-off worker in Osaka who came back to his plant confided to a reporter that he was shamed by his wife, who said, “How can you sit here at home all day doing nothing while your company is in such trouble?”

  * * *

  Reunited after the war in September 1945, the family is at home in Kosugaya, the three brothers in uniform for the last time. First row, left to right: Yuki (Kyuzaemon’s sister), Kyuzaemon, and Shuko. Back row, left to right: Kazuaki, Akio. Kikuko, and Masaaki.

  In 1947, Tokyo Tsushin Kogyo moved from a bombed department store to a barrack in Gotenyama, the same site Sony headquarters now occupies. From left to right: Akira Higuchi, Kazuo Iwama, Masuru Ibuka, Akio Morita.

  A Sony family photograph, 1951, with the company’s 483 employees. Ibuka and Morita stand front row center, and Iwama is directly behind Morita.

  The first factory and headquarters built by Sony. The “T” stands for Tokyo Tsushin Kogyo.

  The first magnetic recording tape and tape recorder marketed in Japan, 1950.

  An electric rice cooker—a product that never worked properly.

  On September 17, 1970, Sony became the first Japanese firm to be listed on the New York Stock Exchange. From left to right: Robert Haack, president of NYSE, Akio Morita, and Albert Fried, NYSE specialist for Sony.

  Sony’s first transistor radio, 1955.

  The world’s first videocassette system.

  The Morita family at home on New Year’s Day, 1974. Left to right: Naoko, Hideo, Yoshiko, Akio, and Masao.

  Longtime friend Leonard Bernstein relaxes at the Morita residence in Tokyo.

  With Deng Xiaoping in China, September 1979.

  The Princess of Wales at the opening of the expanded Sony Bridgend plant in Wales.

  Meeting with President Reagan at the White House during the Keidanren mission to the United States in June 1984.

  * * *

  It was not always like this, of course. In Meiji times, when the zaibatsu were the economic rulers of the country, any attempt at labor-organizing was branded radical, or worse, Communist, which was outlawed. There was no real democracy before the war. Coal miners, mill workers, and factory laborers were exploited. Lifetime employment was a one-way street in those days. That is, workers were required to stay loyal with a spirit of “serve but one master.” But the employer could fire anybody at any time. People could be fired on the spot. The apprentice system was also notorious, something very few of our youngsters realize today. When an apprentice took service with an employer, he was forced to work a few years without any payment at all. This was called “courtesy service.” They worked ten or twelve hours a day, and the average apprentice was given only one or two days off a month. Right after the war, when the new, liberal labor laws were enacted, many businessmen feared the laws would lead to the collapse of Japanese industry. So, even though this system of being unable to fire anybody might have seemed dangerous, the Japanese businessmen went through a rough period of trying to turn the situation to their advantage. They did it by promoting the familial concept, and in making the best of what they thought was a bad thing, they created something new and durable. Management transformed itself at the same time. Now that the zaibatsu were gone and family fortunes were virtually wiped out, everybody became a worker.

  We were fortunate, despite everything, to have the new labor concepts forced on us after the war, concepts that the Western countries had learned not all that many years earlier after decades of labor exploitation and strife.

  Not all businessmen were exploiters during the bad old days, but there is a difference between old-fashioned paternalism and the shared-fate and egalitarian system that exists today. I cannot understand why there is anything good in laying off people. If management takes the risk and responsibility of hiring personnel, then it is management’s ongoing responsibility to keep them employed. The employee does not have the prime responsibility in this decision, so when a recession comes, why should the employee have to suffer for the management decision to hire him? Therefore, in times of boom we are very careful about increasing our personnel. Once we have hired people, we try to make them understand our concept of a fate-sharing body and how if a recession comes the company is willing to sacrifice profit to keep them in the company. Their wage increases or bonuses might also have to be sacrificed, because we all must share this difficulty. They know that management does not lavish bonuses on itself—only workers get bonuses under our system— and, as I have mentioned before, there are no “golden parachutes” for managers except a simple lifetime parachute of guaranteed employment and a life of constructive work. And when a company is in trouble, it is the top managers who take salary cuts before the lower-level employees.

  I do not like to have my managers think they are a special breed of people elected by God to lead stupid people to do miraculous things. The world of business has some peculiarities. For instance, in the world of the arts, nobody will recognize a person as an artist unless he is outstanding, excellent, a virtuoso. Nobody would pay to hear Horowitz and Kempff and Serkin play the piano unless those men were outstanding performers. It is no exaggeration to say that a circus tightrope walker or an aerialist is the same. They all have excellence of technique, which they perfected only after long and hard training. And most important, they know that any little mistake they make will be obvious to the audience immediately. It could destroy their whole career, and for the circus performer it could be fatal.

  But the remarkable thing about management is that a manager can go on for years making mistakes that nobody is aware of, which means that management can be a kind of con-job. This is because management, despite the work of the Harvard Business School and others, and the increasing number of holders of advanced degrees in business administration, is an elusive thing that cannot always be judged by next quarter’s bottom line. Managers can look good on the bottom line but at the same time may be destroying the company by failing to invest in the future. To my mind, the performance of a manager is measured by how well that manager can organize a large number of people and how effectively he or she can get the highest performance from each of the individuals and blend them into a coordinated performance. That is what management is. It does not start at the bottom line of the balance sheet, which can be black one day and red the next, no matter what you do. I told my managers recently, “What you are showing to your employees is not that you are an artist who performs by himself on the high wire, but you are showing them how you are attempting to attract a large number of people to follow you willingly and with enthusiasm to contribute to the success of the company.” If you can do that, the bottom line will take care of itself.

  There are many styles of management, and some work fine in their own context but not in others. For example, Sony America was under the direction of Harvey Schein from 1972 to 1978, and our U.S. business really flourished with him at the controls. His approach was not Japanese, but based on pure, hard, straight, and clear logic. I guess that is what I found attractive about him during my negotiations with him for the CBS-Sony joint venture. The problem with the logic game, however, is that it leaves little room for the human factor.

  Our old-style familial company was unusual or rare in the United States, although Tom Watson, Sr., built IBM into an industrial giant by using some of the same people-oriented policies we use. There were a few others among the smaller concerns i
n the U.S. But Schein did not believe that this kind of management would help the expansion of Sony America. We talked a lot about this, and he got my authority to streamline the company. I thought it was an interesting and reasonable experiment. He Americanized the company totally and did a very fine job of it. He recruited a new group of top executives and fired some of the previous group, and he installed a budgeting system that kept tight financial control of everything. He even flew economy class himself when he traveled on domestic flights. He considered cost in everything, and as far as making a profit was concerned, there was no match for him.