Panasonic pins hopes on outsider 'catalysts'
Focus on corporate clients and AI could restore growth, but change won't be easy
Jun Iiyama, Nikkei staff writer
TOKYO -- Consumer electronics maker Panasonic has been bringing in fresh blood to shake up the company's management and turn the struggling company's fortunes around.
Among the outsiders tasked with the job is Yasuyuki Higuchi, a former chairman of Microsoft Japan, who in April returned to his old employer as a senior managing executive officer. "I want to trigger change," he said.
Panasonic has also brought in specialists in artificial intelligence and other areas. While it appears to have overcome its earnings crisis of a few years ago, the venerable Japanese company has not fully revived. It is hoping the new leaders can spark fresh growth.
"In the short term, I will pay attention to building up our basic business structures and changing the corporate culture, rather than seeking immediate growth," Higuchi said in a recent interview with The Nikkei.
On April 1, Higuchi was named president of Connected Solutions, a new unit that offers systems to corporate customers. Panasonic has made business-to-business opportunities a priority. After its shareholders meeting in late June, Panasonic will cut the number of representative directors from 11 to four, one of whom will be Higuchi.
"I've come full circle," said Higuchi, describing his career. He joined Panasonic as an engineer, then left "in the folly of youth" to work for U.S. gadget maker Apple. He was later president of Japanese supermarket chain Daiei and Microsoft Japan. "I wanted to give something back," Higuchi said of his original employer.
Panasonic's failed effort in plasma TVs and other problems triggered net losses of over 1.5 trillion yen ($13.7 billion) for the two years through March 2013. President Kazuhiro Tsuga stanched the red ink with a big restructuring, but sales for the year ended March were 7.35 trillion yen, down 20% from their peak a decade ago.
Another key leader is Wataru Baba, deputy head of Panasonic's Business Innovation Headquarters. "I want to bring my Silicon Valley viewpoint," Baba said at an April 19 conference introducing the organization to the media.
Baba joined Panasonic on April 1, quitting his job as vice president of the Japanese unit of German business software company SAP. He will double as vice president of Panasonic's U.S. subsidiary in Silicon Valley, seeking opportunities in promising areas such as the internet of things, where the U.S. is a leader.
Panasonic has also brought in Tadahiro Taniguchi, a professor at Ritsumeikan University who specializes is artificial intelligence. He will work for the company while maintaining his academic post.
In January 2016, Panasonic hired Eiichi Katayama, who previously headed the research division of Merrill Lynch Japan Securities, to take charge of the company's acquisition strategy.
Because many of Panasonic's employees "have been living in the same biosphere," said Higuchi, referring to home appliances, the company needed outside help to shore up weak areas like business-to-business and AI.
Restoring growth will not be easy. Many electronics companies in Japan, including Hitachi, are focused on the corporate market, as are its Western competitors. Higuchi's Connected Solutions will try to maximize earnings with its aircraft entertainment systems business.
But Panasonic faces a new challenge: U.S. authorities are investigating bribery allegations at another Panasonic subsidiary.
The Business Innovation Headquarters will be in the spotlight as Panasonic celebrates its centennial in 2018. "Outside catalysts interact trigger chemical reactions," said Higuchi of his role.
The performance of the newcomers may help set the tone for the company's second century and the Japanese electronics industry as a whole.