Asia’s disadvantaged companies

It seemed like deja vu all over again when I recently visited Japan. Some 25 years ago, I first entered the Asian high tech market there as a sales and later a marketing professional. This past month, I had a chance to talk and observe - and compare Japan with Korea in what is happening or failing to happen.

Asian electronic manufacturers have competed, and often dominated, world markets since the 1950s, when the Japanese burst on to the scene. Japanese, and later other Asian, companies have provided improved products that eventually became world class in terms of design and quality. Yet, in too many cases, these products have been flawed in software.

Even today, we see significant software problems. As a professional photographer, I pay particular attention to the firmware that comes in amazing Asian cameras. The hardware design and functionality can be mind blowing, but the menus and design of the software can be remarkably frustrating.

So much so, either by design or accident, serious photographers rarely jump ship from one major manufacturer, such as Nikon, to another, such as Canon. The obvious reason is the cost of having to buy new lenses. But the other less obvious, but actually just as compelling issue is having to learn a whole new firmware or operating system. The menus may seem to be straightforward at first glance, but actually they tend to be arcane as the user struggles to master his or her camera.

And this is where Western companies shine - be it software, firmware, smartphone apps, or whatever. Western companies design and construct total systems from the beginning with the goal of building truly integrated value. At the risk of stereotyping, Asian companies largely copy the first generation of a new of a technology and offer the market something similar at a lower price and/or improved quality and functionality. But Asian companies often build the required software on top of these copied platforms, rather than integrating both hardware and software from conception to delivery.

Having worked in both Japanese and Korean corporate settings, I can see how this happens. Despite all of the company slogans of everyone being part of one big happy team, almost all companies consist of competing silos (commonly called “departments”) of employees.

Just why this is so, varies somewhat between Japanese and Korean companies, but the overall behaviors are fairly similar. This was brought home when Lotus Notes, the first commonly used email system, was put on local area networks in Asia. We foreign employees immediately noticed a remarkable inefficiency within Asian companies’ internal communications.

For example, the notion of copying others outside of one’s department in one’s email is considered exceptionally risky in Asian companies. As a result, even mundane messages sent from one supervisor to another supervisor in a different department requires the message must be sent upwards to a senior manager who later must authorize the same to be sent to his counterpart in the targeted department, after which the message is forwarded down to the second department’s supervisor. In other words, internal email flow similarly to how paper memos once circulated.

If the software engineers and the hardware engineers work in different departments, it can be problematic for these two groups to work together. Eventually, they get problems hammered out, but often in a less than integrated way. Disparate groups are more likely to work smoothly when communication barriers are eliminated - albeit, something much easier said than done. One never entirely eliminates the political element in any organization. Often political concerns assure that information flows inefficiently through “proper channels,” no matter what the CEO and others proclaim.

On the other hand, if hardware and software engineers are working together, right from the inception of a new product, the user interface or software will be better integrated into the hardware functionality. Even if two engineering groups are separately located, unobstructed lateral communication across organizational divides is possible via email when cultural and political obstacles are removed.

Consequently, if this thesis is correct, it was only a matter of time before Samsung Electronics was going to hit its current dilemma of diminished sales. No change in managers or executives was going to save the company from itself. Even renegade Sony for almost a decade was in a similar predicament until it apparently rediscovered its radical (for Japan) roots and began once more churning out innovative, market-changing products, such as its current line of mirrorless cameras.

But even Sony could be placed in a difficult situation should someone like Apple decide to jump into the camera market, offering a software interface and a relatively open platform for apps to be user-added to its cameras like its smartphones.

I’m not suggesting that is the future of photography, but it could be - and most likely the overall winner in such a scenario could well be an American or European company, with Asian competitors forced to be competing at the lower tiers.

I have focused on cameras, but if you look around, you can see other examples of development silos doing more to protect internal politics than enabling a company to be competitive. This problem is not unique to Asia, but Asian companies seem more vulnerable to this pitfall than their offshore competitors. And overly competitive Korea often leads its neighbors in this regard.

*The author is a long-term resident of Korea and author of two books on doing business, including “Doing Business in Korea: An Expanded Guide.”

by Tom Coyner