An Interview with Mr. HideakiDonIwatani, Chairman and CEO of by cut16095


									An Interview with Mr. Hideaki "Don" Iwatani,
Chairman and CEO of Matsushita Electric
Corporation of America (MECA)
Interviewed by: Joseph Lee (National Leader, Risk & Advisory Services, Japanese Practice, Los Angeles Office)
                                                                                                                               must be able to compete. Today, we form
Don Iwatani has been successfully leading Panasonic's consumer, business-to-business and
                                                                                                                               partnerships (with countries like China)
industrial sales and R&D operations, and overseeing manufacturing operations, and is now                                       and find the best production location for
spearheading Matsushita's broad reforms in North America. Joseph Lee, the National Leader                                      our products, thereby reducing costs. This
for Risk & Advisory Services in KPMG's Japanese Practice, met with Mr. Iwatani at MECA                                         allows us to compete in an ever-changing
                                                                                                                               global marketplace.
headquarters in Secaucus in May 2002 to discuss the direction and future of Matsushita, today's
                                                                                                                               Lee: Developing strategic alliances has
economic environment, as well as leadership styles. (The interview was conducted in English.)
                                                                                                                               become increasingly important to
Lee: Thank you, Mr. Iwatani, for your time.                          for us to do this. An example of a                        successful business operations.
I'd like to start by asking about your                               successful branding investment is our                     Iwatani: In today's business environment, it
company, Matsushita Electric Corporation                             "Panasonic Astrovision" giant video                       is difficult to provide all products through
of America (MECA), which is generally                                display located in Times Square. Not only                 one company. This is why forming
known as Panasonic in the United States.                             do we get daily national exposure, but I                  strategic alliances with other companies is
  Do you view it just as a subsidiary of a                           read an article stating that more than 50                 an important part of a successful business.
Japanese company or is it a major part of a                          percent of the visitors in New York City's                In Japanese, we refer to making these
large global company?                                                Times Square are foreigners. So it is                     alliances as "KUMU." This term is often
Iwatani: MECA was formed in the United                               people from all over the world who watch                  used by a former Matsushita Electric board
States about 45 years ago as a distributor                           the New Year's Eve countdown from our                     member. "KUMU" means "to tie up." I
of a variety of Matsushita products. In the                          "Astrovision" screen.                                     feel that it holds much more meaning than
beginning we sold radios, stereos,                                   Lee: When we met in April at Claremont                    frequently used terms, like "alliance" or
televisions, and tape recorders, followed                            University, I was impressed with your                     "partnership." This philosophy can help
by color televisions, video products,                                speech. In this era of change, can you                    companies excel in the 21st century.
kitchen equipment, small appliances, etc.                            elaborate on your philosophy of "evolve or                Those that implement "KUMU" in their
  As the United States leads in digital                              die."                                                     business strategy will survive in today's
technology, our mission at MECA has                                  Iwatani: I am very proud of Konosuke                      demanding economic environment.
changed and now we emphasize not only                                Matsushita, our founder, and his "tap                     Lee: One of the challenges that many
selling, but also developing products in the                         water" philosophy by which he meant that                  Japanese companies face is that they began
United States. R&D in the United States                              we should "produce goods at a low cost so                 reorganizing vertically only a few years
has become a very important part of keeping                          that the products can be as accessible as                 ago. At the same time, Matsushita Electric
our technology leadership in the world.                              tap water to everyone everywhere."                        in Japan decided to integrate major
  Another strategy we implement is                                   However, consumer values have changed                     subsidiaries into one entity. How has this
enhancing our Panasonic brand name -                                 dramatically over the past 30 to 40 years.                integration affected your business efforts
and the United States is the perfect place                           Companies must "evolve or die." We                                              Continued on Page 2

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here in the United States? Has it made a       and I discussed this dilemma. What is            training program which is a bit different
positive or negative impact?                   your opinion on this?                            from the programs offered at schools like
Iwatani: The integration has definitely        Iwatani: This is a very difficult subject that   Stanford and Harvard. I started working at
shown positive results. Developing             I often struggle with. Our founder               a warehouse in the Chicago sales region.
products through one company made              Konosuke Matsushita clearly states that          There I learned a great deal about
things easier because it streamlined           the customer always comes first. He felt         American life and how they operate in
business efforts. In addition, when            that when a company achieves its goals,          business. That experience made me very
necessary, worldwide KUMU-type activity        the stockholders will naturally come to          comfortable talking to a variety of
has proven to be useful.                       support it. However, in today's market, we       American colleagues, at all levels. I can
Lee: Matsushita suffered great losses last     must consider re-prioritizing. If the            identify with any problem, in any division
year. The president, Kunio Nakamura,           stockholders abandon the company, the            - from the warehouse, to the order desk,
established a value creation initiative and    company will suffer. In a similar way,           to the credit department. In that sense, I
is expecting a V-shape recovery. How has       major mass media, for example, The Wall          am different from the typical Japanese
this impacted your people and company          Street Journal or Nikkei, have great             manager.
culture?                                       influence on the economy and on                  Lee: Mr. Iwatani, as the Chairman of
Iwatani: Obviously there is a great deal of    shareholder behavior. The power of the           Matsushita Electric Corp. of America,
pressure to meet expectations and strongly     media can shift opinions and drive the           what keeps you up at night? What worries
recover in a V-shape, however, I realize       market. If WSJ reports Matsushita did a          you the most about the company?
that this is the only way we can recover.      great job, all of a sudden the stock price       Iwatani: I am troubled and cannot sleep if
In the past, the business environment was      would go up. I try to balance both sides -       my employees don't feel comfortable
not as competitive as it is today. As a        the customer and the stockholder -               working with me or working for
result, we need to evolve more quickly to      because both are intrinsic to a successful       Matsushita. I apply this not only to my US
compete in today's marketplace. We             business.                                        employees, but also those in the support
realize that we must change quickly and a      Lee: Speaking of topics in the news, what        group in Japan. Our parent company
V-shape recovery is the best plan of action.   are your thoughts on the Enron situation?        chairman, Yoichi Morishita, and president,
  The internal changes have been difficult     Iwatani: I feel that a high standard of          Kunio Nakamura, as a management team
for people not only in Japan but in            corporate ethics is very important for all       support us from Japan. I believe they are
America as well. Traditionally in Japanese     levels of management, across all                 pleased with what I am doing in the United
companies, loyalty was strong and people       generations. I doubt that managers like          States. If my managers, colleagues, and
worked for one company until retirement.       Soichiro Honda or Thomas Watson (IBM)            employees in the support group,
Today, the work environment is different       had to define moral codes and ethics in the      production group and factory are happy
and some people may drop out along the         business place - rather, for their               working with me, then I am very happy. I
way. Employees realize that business           generation, honesty was something that           try to provide the best opportunities to my
ethics have changed and they must adjust.      came naturally. Konosuke Matsushita              employees and colleagues. I want to
Unfortunately, that is an example of my        embodied the same high standards and he          ensure that Japanese employees working
statement earlier, "evolve or die."            passed them on to his employees.                 here in the United States appreciate their
Lee: Many companies have grappled with         Lee: We have met with many Japanese              experience here and come to like America
the question, "Who should we prioritize,       managers and, generally, they are hesitant       before returning to Japan. For the American
the customer or the shareholder?" At           to speak in public. Tell me about your           employees, I want to provide a happy and
Claremont, Professor Sakakibara, from          training and background.                         fulfilling corporate culture as well.
UCLA's Anderson School of Management,          Iwatani: Our company has an overseas                                   Continued on Page 3

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  Of course I am concerned about legal        develop, not just cut them out and say           30 percent of the market share. If not,
issues, sales, profit, meeting financial      "good-bye." So while restructuring, if           stop." It is a very simple message, but in
obligations, bankruptcy, etc., but business   there is a job to be done within our             reality you cannot stop. I understand his
matters do not effect me as much as people    company, we will utilize our existing            philosophy and feel many of his business
problems. If an employee said to me, "I       workforce.                                       decisions were wise, but I think the way he
am very disappointed with your vision and     Lee: You mentioned earlier that Matsushita       executed on those decisions is extremely
your philosophy," I would be very             is similar to GE. Have you exchanged             difficult for managers in other business
concerned. Right now, I am very happy         information and/or ideas with Jack Welch?        cultures to emulate.
with my working relationships because I       Iwatani: I attended one of his lectures, but I   Lee: I read in the Continental article that
feel they are comfortable working with me.    did not ask him for any management               you try to keep a balanced work and
That is my way, my management style.          advice. I became good friends with Stan          family life. As the head of a major
Lee: OK, you are clearly a people-oriented    Shih, founder of Acer in Taiwan and              Japanese company, it must be extremely
manager.                                      outside board member of GE Asia. Stan            difficult for you to allot time for both.
  Who thought of your closing comment in      and I met a few times and we exchanged           How do you do it?
the presentation, "Speed, Alliance,           opinions. We both agree Jack is very well        Iwatani: I found that the best approach is to
Network, Quality - SAN Q"? That is            respected and has made great management          share work matters with my family,
called DAJARE in Japanese. I think this       decisions for today's business                   however I realize this is not typical of
pun was very well received. You might         environment.                                     Japanese businessmen. In particular, I
want to copyright it in case people use it.   Lee: In my interview with Chairman Ito, of       often ask their opinions about products.
Iwatani: That is what I mean when I said I    Ito Yokado, he commented that Jack               That kind of feedback is very important.
have so many good colleagues that work        Welch has tough philosophies when                Of course, I enjoy many social activities
with me - they know my style, and can         dealing with employees. Welch felt that          with my wife. I also have three daughters
make that kind of joke. That is very          sometimes it is best to let employees go; if     who are working and can understand -
important.                                    you treat performers and non-performers          the eldest is a journalist, the second is a
Lee: What is your leadership style? You       equally, it will result in losing talent.        social worker, and the youngest works in
mentioned that you are very connected to      Chairman Ito stated that this philosophy         an advertising agency. I can share my
your people and open in your                  doesn't fit with the Japanese style of doing     problems with all of them; however,
communications with them. For example,        business. What is your feeling on this?          sometimes I have to be careful with the
you encourage employees to e-mail you         Iwatani: I agree 100 percent with Chairman       journalist daughter (laughter). My
directly.                                     Ito. I think that Jack Welch's philosophy        daughters can be critical at times. Once I
Iwatani: I embody a traditional               was successful for GE. It could work for         was practicing a presentation, when one of
management style within Matsushita. I         Japanese companies and probably for most         them told me, "Your pronunciation is
was very impressed by and learned from        management teams across the world.               completely wrong. Americans will only
Konosuke Matsushita's philosophy. For         However, his approach is so tough that           understand 70 percent of what you say."
my employees, I try to support their needs,   many cultures could not deal with the            That was very tough criticism from her,
identify their capabilities, and train them   same execution. I read many of Welch's           but I welcome it.
so they can adjust in today's economy. As     books and tried to learn from him. Welch         Lee: Tough family!
a manager I try to help people flourish and   said, "Your product should take more than          I appreciate your time. Thank you. J

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