THE (TOUGH) JOB OF A CEO

 

Innovating out of Crisis 

Shigetaka Komori, Chairman and CEO of Fujifilm Holdings, has written a book entitled “Innovating Out of Crisis – How Fujifilm Survived (and Thrived) As Its Core Business Was Vanishing” (Stone Bridge Press 2015).

In 2000, photographic products made up sixty percent of Fujifilm’s sales and up to seventy percent of its profit.  Within ten years, the booming market for digital cameras had destroyed that business.

In 2012, the Eastman Kodak Company of Rochester, New York, long the world’s dominant film manufacturer, filed for bankruptcy.  Yet Japan-based Fujifilm, Kodak’s market rival for decades, has continued to grow and boast record profits.

In the book, Komori, the CEO who brought Fujifilm back from the brink, explains how he engineered transformative enterprise-wide innovation and product diversification by focusing on developing business fields such as LCD display materials, digital imaging, cosmetics, and medical equipment.

His acute observations into the dynamics of management and growth provide practical lessons for evolving corporations and corporate leaders everywhere.

We quote here a few lessons from the book that should inspire leaders on confronting crises and moving decisively.

Komori writes of his thoughts in 2003:  “The company had long contributed to society by producing high-quality products as a leader in the fields of photography and imaging.  But now, unless something was done, it would cease to exist. The technology and other business assets so carefully developed over the years would all come to nothing. Somehow, Fujifilm had to be kept alive as an enterprise that meant something to society. The lives of more than seventy thousand employees worldwide, and their families, were on the line.”

Note the thoughts about doing good for society and the concern over the lives of Fujifilm employees.

Komori continues:  “Fujifilm had, until then, been one of the leading companies in the photographic products industry and had continually produced big profits.  I wanted to make sure it stayed that way into and through the next century. Figuring out how to do it was my job as CEO.”

Note the thinking about finding a way to keep doing well for 100 years rather than just from quarter to quarter, and the clear recognition of the CEO’s job.

“My first task was to draw up a plan to make the reforms we needed. With Fujifilm’s core photographic film market crumbling, it was my job to determine our future direction, the type of company Fujifilm should be, and a practical program for achieving those ends – and finally to communicate all this to the company’s employees, whose motivation was essential in making the plan work.”

Note the emphasis on communication and employee motivation.

The plan Komori came up with was VISION 75 – a medium-term management plan in honour of Fujifilm’s 75th anniversary. It would extend to the fiscal year ending March 2010 – a blueprint for implementing fundamental reforms and changing the structure of the company, with the vision of ‘saving Fujifilm from disaster and ensuring its viability as a leading company with sales of 2 or 3 trillion yen a year.’

“The three policies incorporated in VISION 75 were ‘implementing structural reforms,’ ‘building new growth strategies,’ and ‘enhancing consolidated management.’  These objectives could only be realised by employees who were highly motivated and possessed superior skills.”

Note again the emphasis on employees. 

Komori says: “Along with announcing VISION 75, I rallied them with the reality of what it meant to do nothing.”

“When VISION 75 was announced in 2004, I was fully aware that fundamental structural reforms were needed, but I thought that if manufacturing were reorganized, sales reformed, and purchasing and procurement rethought, we would not have to cut back personnel…But what we could not account for in our projections was the speed of the digital onslaught.  The photographic film market had shrunk much faster than we expected, and about two years later we came to the realization that it wasn’t going to work out after all.  I knew we had to downsize. …

“Of course I didn’t want to fire anyone or cancel the licenses of special dealerships.  Nobody likes downsizing.  No one is going to simply say, ‘Sure, let’s just do it.’  Things aren’t that easy.

“But if the company went under, there would be nothing left – lives and careers and a business built by outstanding work all gone up in a puff of smoke.

“I just had to grit my teeth and make the decision.  A CEO – really any top-level manager – is responsible for thinking about the future, twenty or thirty years ahead, or even more, to ensure that the company survives and thrives.  What has to be done has to be done, with determination and resolution. That’s the job of a leader. 

Of course, it has to be done with care and consideration for employees and partners who’ve laboured valiantly for the company’s success.”

Note how Komori sees the job of the CEO and the leader!

 

Photo credit: http://cdn2.hubspot.net/hub/134521/hubfs/innovating-out-of-crisis_2.png?t=1464958046701&width=285

 

DON’T BE A DEAD DUCK!

jack-ma-chinas-economy-is-slowing-and-thats-a-good-thing

I had the opportunity recently to hear Mr Jack Ma, Executive Chairman of Alibaba Group, share the following story.

Mr Ma was in Beijing during winter, and he noticed a dead duck, frozen in a lake.  It was deep winter.  The duck could not have been the only creature around, but its companions in summer would all have flown south to avoid the cold winter.  The duck might have been playing too much and not moving on in good time to prepare for the coming season.

Mr Ma’s point was that entrepreneurs have to understand their situation in similar vein. Entrepreneurs must change in good time. They must adjust to the environment and evolving conditions. Failing to do so would see them end up as “dead ducks”.

Change should be seen as opportunity rather than threat. Being alert to changing situations is absolutely necessary for entrepreneurs who want to succeed. Similarly for leaders of organisations.

As mentioned on Page 155 of “The Leader, The Teacher & You”, leaders must seek all the time to make sure that their organisations are “in time for the future” by ensuring that the company has the strategic perspective, market awareness, equipment, technology, ambition, imagination, as well as the human capital to be sustainably successful moving into the future.

Failure to anticipate the future is the most frequent cause of failure. The more successful an organisation, the greater the chances its people will be so proud and comfortable they are surprised by events they have not prepared for.

Success today does not guarantee success tomorrow.  Keep moving and changing to be in time for the future…don’t be a dead duck!

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P.S.: You might also like to watch a video that Mr Jack Ma specially recorded for the Honour International Symposium, in which he shares his views about Honour and its importance for success in business: http://honourinternational.sg/videos

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Photo credit: http://static6.businessinsider.com/image/557b2b806bb3f7c5098b456e/jack-ma-chinas-economy-is-slowing-and-thats-a-good-thing.jpg