by Akio Morita
Also, I think it is worth pointing out that in Japan most advanced engineering and scientific research has been carried out by national universities, not private ones. These national universities tend to avoid influences from outside and jealously guard their independence, especially from the private business community. That is why cooperation between industries and universities is more difficult here than elsewhere. In the United States, exchanges of human and research resources are common between universities and the private sector.
The major burden of research is borne by private industry in Japan, which contradicts the notion that Japanese business and government cooperation is the key to Japanese commercial success. In fact, in 1984, 77.7 percent of the R&D in Japan was paid for by business enterprises, and only 22 percent by government. Some of us in business feel the government isn’t really helping, but is creating impediments to innovative change and developments with excessive intervention and obsolete regulations.
The highly educated work force of Japan continues to prove its value in the field of creative endeavor. In the recovery from the war, the low cost of this educated labor was an advantage for Japan’s growing low-technology industry. Now that the industrial demand is for high technology, Japan is fortunate to have a highly educated work force suited to the new challenge. And even though labor costs are high, the intelligence of the labor force is one factor that will continue to be an advantage for Japan’s industry.
There is growing discontent in Japan today with the current educational system, which forces students to spend much of their time learning how to pass examinations in order to get into good schools. This system does not leave them enough time for experimentation and original thinking. The system has served us well up to now, but ways are being explored to make the system more efficient and relevant to the new times we are living in. We have always demanded original thinking from our employees, and we have received a lot of it. From a management standpoint, it is very important to know how to unleash people’s inborn creativity. My concept is that anybody has creative ability, but very few people know how to use it.
My solution to the problem of unleashing creativity is always to set up a target. The best example of this was the Apollo project in the United States. When the Soviet Union launched the world’s first artificial satellite, Sputnik, and then sent the first human being into outer space, it was a shock to the United States. Many nations that had always looked to the U.S. as the great innovator and creator of so many good things could hardly believe that any other country could have the ability to be first in space. America began a program to catch up, but when President Kennedy set a very clear target—going to the moon within ten years— everything changed. The target was a clear challenge.
It meant an enormous leap forward would be needed. Nobody knew how to do it, all was theory. The studies had to start immediately. How much power would be necessary? What kind of navigation system would be needed? What kind of computer would have to be developed? And then there was need for new materials. Carbon fiber was invented; even such simple but useful things as Velcro came from that program. The inertial navigation system, a whole new concept, was invented and is in use in our airliners today.
In order to reach one target, many people became creative. Managers had to determine goals and go for them, encouraging workers to excel. In fact, the Zero Defects programs of NASA were a great influence on Japan’s quality control programs. We had had one bout with American high-quality standards during the Korean War (1950-53), when U.N. military procurement in Japan gave an enormous boost to Japanese industry and introduced military standards that required higher quality than was common for ordinary civilian products. We Japanese took the military standards and the Zero Defects programs to heart.
The “patron saint” of Japanese quality control, ironically, is an American named W. Edwards Deming, who was virtually unknown in his own country until his ideas of quality control began to make such a big impact on Japanese companies. Americans awoke to the message of this prophet but did not take it as seriously as the Japanese did. In fact, to win a Deming Award for quality is one of the highest distinctions a Japanese company can attain. We at Sony have always been fanatics about quality. Simply, the better the original quality of a product the fewer service problems that have to be faced. We were pleased and proud—and taken by surprise—to hear that a Sony cassette recorder was taken to the moon aboard the Apollo 11 spacecraft and used to play music back to the earth. Although NASA spent large amounts of money to develop zero gravity reliability assurance into every item used in the program, down to such things as mechanical pencils, the recorder the astronauts used was an off-the-shelf model, which had been tested and found to be acceptable without any need to refer back to us. We didn’t know about it in advance, and I jokingly chided our engineers after I heard about it, saying they had obviously overdesigned the tape recorder. “It doesn’t have to work in zero gravity,” I said. “It just has to work anywhere on earth.” When an engineer or a scientist is given a clear target, he will struggle to reach it. But without having a target—if your company or organization just gives him a lot of money and says, “Invent something”—you cannot expect success.
That is the trouble with Japanese government research institutes. Government believes that if you have a big laboratory with all the latest equipment and good funding it will automatically lead to creativity. It doesn’t work that way. When I was a student, one of Japan’s top electrical companies built a new laboratory in a lovely wooded campus in central Japan. It was beautifully designed and outfitted with the latest equipment, and the scientists had gorgeous workstations that were the envy of their peers. The company thought that if they threw money at these scientists they might get some results. Very little came from the lab, except that many of the researchers used their time to do research for their advanced academic degrees at company expense. The company made a lot of Ph.D.’s, but no products to speak of. The government has also followed the same path with about the same results. In industry, we must have the theoretical background, and we must have the pure research that precedes development of new things, but I have learned that only if we have a clear goal can we concentrate our efforts.
I do not mean to deny the value of pure or basic research. In fact, we are heavily engaged in it right now, and I believe that in the future Japanese industry must put more effort into this field, because this kind of research is essential for the creation of new technology. Japan’s spending for basic research is now increasing at a faster rate than spending for general research and development. But Japan should not be complacent. A report from Japan’s Science and Technology Agency in 1985 said that Japan’s involvement in fundamental research “cannot be said to be adequate.” And it pointed out that even though Japan’s R&D investment is higher than that of the three major European countries, the ratio of spending for basic research is lower and seems to be gradually decreasing in universities and government institutions, which means the load is increasingly falling on industry.
When we started our company and even before we took stock of our abilities, the number of people we had, and what their talents and expertise were, Ibuka said, “Let’s make a tape recorder.” This was even before we knew what the tape was made of or how it was coated—or even what it looked like. We set out to make special, innovative products, not to indulge in pure science. But as we grew we had to move more and more into this realm to make our products and their components, to devise our own proprietary items like transistors, semiconductors, integrated circuits, and charge-coupled devices. Gradually, the lines between different kinds of research tend to overlap. At no time did we look to the government for help. Our perhaps peculiarly Japanese reaction when we learn of some new development or come across a phenomenon, is invariably “How can I use this? What can I make with it? How can it be used to produce a useful product?”
When video recording was being used in the United States by the major broadcasti
ng stations, we thought people should have the same capability in their homes. The big TV machines that the stations used were cumbersome and very expensive. We started working toward our target to bring this machine into the home. As we devised each new model, it seemed more and more incredible to us that we could make it so small and so well. Yet it was not small enough for Ibuka. But nobody knew exactly where we were headed until he tossed that paperback book onto the conference table and said that was the target, a videocassette the size of the book that could hold at least one hour of color program. That focused all the development. It wasn’t just a matter of making a small cassette—a whole new concept of recording and reading the tape had to be devised.
Our brilliant researcher, Nobutoshi Kihara, came up with the system that did away with the blank spaces between the bands of recorded material on regular videotape. These empty bands (called guard bands) were placed there to avoid interference, or spillover, as each band of program material is recorded and played back. But this meant that half the tape was going unused except for providing separation between the bands of program. Kihara thought, why not record onto the empty spaces, greatly increasing capacity and avoiding interference by using two recording-reading heads and angling the heads about ninety degrees from each other so that each head could not read or interfere with the recorded track next to it. A new revolving head drum had to be designed and a different mechanism developed, but after many months of testing, his group produced a system that worked beautifully, and we had built a brand-new video system for home use, with the best picture yet attainable.
We were justifiably proud of Betamax. In Japanese the word pronounced “beta” refers to a brushstroke in painting or calligraphy that is rich and full, without skips or white spots. Kihara used it to refer to the use of all the tape without leaving space for the guard bands. The sound, beta, so resembled the Greek letter beta and its scientific overtones, that we coined the brand name, Betamax, from it.
Management of an industrial company must be giving targets to the engineers constantly; that may be the most important job management has in dealing with its engineers. If the target is wrong, R&D expenses are wasted, so there is a premium on management being right. And to my mind this means that people who are running a business ought to know their business very well. If the accountant had been in charge of our little company in 1946, our company would be a small operation making parts for the giants. Likewise, someone who is only a scientist is not always the best person to have at the helm.
The late Peter Goldmark was a remarkably creative man, a brilliant engineer. He invented the long-playing record and he eventually became the head of CBS Laboratories. He got the idea for a type of video recording that used black and white photographic film and electron-beam printing. He demonstrated his idea to the CBS board, and they were enthusiastic about it. Of course nobody else on the board, including Chairman Bill Paley, had a technical background. They were all novices at engineering technology, and so they had no way to judge the invention. Goldmark had a good record on inventions and was also a very capable salesman of his ideas, and perhaps nobody asked the right questions. In any case, the board decided to invest a lot of money in this system. Goldmark came to me to try to sell the idea, hoping to enlist us in using the same system, but we were already deeply involved in video recording using the much simpler magnetic system.
“Peter, we are experts on video recording,” I told him. “We have been working on magnetic video recording for a long time, and it works beautifully. We don’t think this is the way to go.” He was disappointed, but I told him I thought a photochemical method was just too complicated; too many things could go wrong with it. CBS went ahead with the system (they called it EVR) and spent a lot of money on it before they finally abandoned it. Although it was creative, it was not feasible as a business venture.
As another example, RCA went into the video disc business with a mechanical capacitance system, but in the end had to write off many millions because the system was a flop. Whether the design, the technology, the merchandising, or the promotion was bad, the failure was a failure of management. Managers who do not have the capability to judge from a technical standpoint whether a product is feasible or not are at a tremendous disadvantage. I have always felt that the idea that professional managers can move from one industry to another is dangerous. Even being in the business and being knowledgeable about it is no guarantee that all the possible opportunities will be exploited and that mistakes will not be made, but at least the odds are on your side.
Texas Instruments showed good foresight in making a radio frequency transistor at the same time we were also struggling with it. (They had also licensed the technology from Western Electric.) TI became a principal supplier of transistors to IBM and to other industrial companies as well as to many involved in U.S. defense contracting. They later invented the integrated circuit, a great achievement in the area of semiconductor technology. Texas Instruments also supported the Regency company, which put the first transistorized radio on the market a few months before ours. Yet TI did not make moves to develop and take advantage of the huge market they might have had in the consumer field. The Regency radio, as I mentioned earlier, was on the market for only a short time. We would have given them a good run for their money if they had stayed in, but there was never a fight because TI apparently saw no future in small radios. But we did.
It is possible to have a good idea, a fine invention, but still miss the boat, so product planning, which means deciding how to use technology in a given product, demands creativity. And once you have a good product it is important to use creativity in marketing it. Only with these three kinds of creativity—technology, product planning, and marketing—can the public receive the benefit of a new technology. And without an organization that can work together, sometimes over a very long period, it is difficult to see new projects to fruition.
It has been said that the creativity of the entrepreneur does not exist in Japan anymore because the nation has so many giant companies. But venture capital is available now as never before, and so we will see the results from new small, innovative companies. We promote entrepreneurship right within our own large company by the way we manage. We have a group system in which each group, such as TV, video, magnetic, audio, has its own management with total responsibility for what it does. Within each section, each chief has responsibility in his field. So when he or his staff comes up with an idea or a new invention, or a new technological means or process, he has the authority to present it to top management. If management, which has the ability to understand technology, sees the possibilities favorably, we give the authority to proceed. If we do not, there are sometimes options beyond just dropping the project.
One young Sony researcher recently came up with a system of plasma display that might one day be adaptable for computers and even flat TV monitors. But the idea seemed very far in the future to us, too far to invest a lot of time and money in at the moment. We supplied him with some capital, and he acquired some more and has set himself up in business. We were reluctant to let go of such a talented employee, but we felt that since his desire to become independent was so strong, he could apply his talents better in his own environment.
As an idea progresses through the Sony system, the original presenter continues to have the responsibility of selling his idea to technical, design, production, and marketing staffs and seeing it to its logical conclusion, whether it is an inside process or a new product that goes all the way to market. That way the family spirit continues to prevail and the group or those within the group can feel they are not only a part of the team but entrepreneurs as well, contributing profitably and creatively to the welfare of all of us in the family.
AMERICAN AND JAPANESE STYLES: The Difference
I
I once complained to an American friend that it was becoming difficult to find anything actually made in the United States these days, and he said, “Why don’t you take some
of our lawyers, a genuine Made-in-America product!” We both laughed over the joke, but it isn’t really funny.
The lawyer has become in my mind a major symbol both of the difference between American and Japanese business and management styles and of a weakness in the American system. I have spoken out quite frankly on the subject of lawyers in speeches in many places in the U.S., including the John F. Kennedy School of Government at Harvard University.
Americans know that legal problems are constantly involved in almost all of the relations between individual companies and between companies and the government and its agencies, such as the Securities and Exchange Commission and the Fair Trade Commission. Americans seem to take it in stride, but I can’t. These legal problems have a severe impact on how business is conducted and, worse, on how businessmen see their role in America. American businessmen seem to think it is natural always to be looking over their shoulders to see who is coming up behind them with a lawsuit. They must always be protecting themselves from attacks from behind instead of moving ahead and looking far into the future. The intrusion of lawyers and the legal mentality into so many facets of American business is in contrast to Japanese management style and philosophy, but as Japanese business has become more internationalized, we Japanese have had to become more aware of the legal profession. I hope we do not go the way of the Americans in this regard. I prefer the Japanese system, although I have learned a lot from the American system. I don’t believe all that we do in Japan is good, because it is not, but I believe a better understanding of the differences may clear up some misconceptions.