Four years ago Kazuhiro Tsuga embarked on one of Japan Inc.’s most radical overhauls. But he’s not done yet turning around the consumer-electronics giant.
WHEN YOU THINK OF PANASONIC, you probably think of televisions. After all, the TV set made Panasonic a household name from Singapore to San Francisco and built the Japanese electronics company into one of the industry’s global players. But for Panasonic President kazuhiro Tsuga, that was exactly the problem.
By the time he took the helm in 2012, Panasonic had seen its market presence wither, outmaneuvered by South korean rivals Samsung and LG. Worse yet, the company had bet on the wrong horse. It invested heavily in plasma flat-panel technology, which uses electrically charged gases to create images on a screen, but consumers preferred its lighter, durable rival, liquid crystal display TVs.
Panasonic’s executives refused to concede defeat. engineers in the TV business pointed out that plasma produced a higher-quality picture than LCD and remained stubborn champions of the technology. “Our TV guys really hated big-screen LCD TVs,” says Tsuga. Panasonic committed the cardinal sin of business: ignoring the verdict of the marketplace.
Tsuga knew it was time to repent—plasma had to go. He finally cracked the fierce internal resistance by telling the truth: Previous top executives had hid the severity of the TV operation’s problems from much of the staff, but he opened the books. “Only a few members of the management team knew how deep the loss was [at the TV operation],” he explains. “What I did was tell them, ‘This is the loss, a huge loss.’ I showed them the losses in detail at every stage. Once it’s visible to them, people don’t want to continue to make losses.”
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