Top 9 business advice from Sony’s founder Akio Morita

May 3, 2010

Akio Morita’s “Made in Japan” is an excellent book which was recommended to me very highly by a friend of mine. Here’s top 9 advice from the book:

1) Positioning and finding the customers: When Sony came up with their first tape recorder which was the size of a suitcase, they were baffled by why nobody was rushing to buy them. Then, Morita-san, an engineer, forcefully realized: having a unique technology and being able to make unique products are not enough to keep a business going. You have to sell the products and to do that you have to show the potential buyer the real value of what you are selling. So, he knew that to sell their recorder they would have to identify the people and institutions that would be likely to recognize the value in the product.
They realized, at the time there was an acute shortage of stenographers, so they went to the Japan Supreme Court and they sold 20 machines almost instantly!

2) Adding value: It’s ok to license or use someone else’s technology if you add value on top of that. Sony licensed the first transistor technology from Bell Labs. It was ground-breaking at the time, but it was not enough. They came up with the ingenius idea of trying the negative-positive-negative configuration for the transistor, hence making the transistor faster since negative electrons move faster than positive ones. Along with trying and perfecting the “phosphorus doping” method which Bell Labs said was unusable, they came up with the first commercially-feasible transistor in their transistor radio.

3) Perseverance and vision: Texas Instruments was the first company to put out a transistor radio but TI gave up the product without putting much effort into marketing it. As the first in the field, they might have capitalized on their position and created a tremendous market for their product as Sony. But they apparently misjudged that there was no future in the business of small, portable radios and gave up.
4) Value of the perception of the company: Morita-san believed that a trademark is the life of an enterprise and that it must be protected boldly. A trademark and a company name are not just clever gimmicks-they carry responsibility and guarantee the quality of the product.

5) Marketing is almost everything: This advice is for the entrepreneurs coming from a technical background. Marketing is really a form of communication. It’s educating the customers to the uses of your products. Without this, the company will surely fail.
6) Innovation vs Market Research: This advice is a bit controversial. Sony’s plan from the beginning was to lead the public with new products rather than ask them what kind of products they want. Morita-san believes the public does not know what is possible. So instead of doing a lot of market research, Sony refined their thinking on a product and its use and tried to create a market for it by educating and communicating with the public. Examples: Walkman, Betamax, Consumer video cameras, etc. Morita-san asserts that no amount of market research could have come up with Sony Walkman idea or predicted that it would be so successful.
7) Trust your vision: When Sony came up with their first small pocket transistor radio, Morita-san came to New York to sell it to the American market. At the time they were desperate for cash and were barely making their payroll. The people at Bulova loved the product. They said “We definitely want some of these. We will take one hundred thousand units.” Morita-san was stunned, it was an incredible order, worth several times the total capital of Sony at the time. But they said there was one condition: Sony would have to put the Bulova name on the radios.
That stopped Morita-san. When he started Sony, he had vowed that they would not be Original Equipment Manufacturers(OEM) for other companies. So he refused the order despite everyone around him thinking he was crazy. Bulova told him nobody knew Sony’s name but with Bulova’s name on the radios, they would be sold like hotcakes. Morita-san said: “I am now taking the first step for the next fifty years of my company. Fifty years from now I promise you that our name will be just as famous as your company name is today”.

8 ) Management: Morita-san always looked for people who can be persuasive, can make people want to cooperate with them, for management positions, as management is not dictatorship. Also 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.
9) Employees: The business does not start out with the entrepreneur organizing his company around himself with the worker as a tool. The entrepreneur starts a company and then he hires personnel to realize his/her idea, but once he hires employees he must regard them as colleagues or helpers, not as tools for making profits. There has to be mutual respect and a sense that the company is the property of the employees and not of a few top people.


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