WEBVTT - Panasonic to Today 0:00:04.400 --> 0:00:07.760 Welcome to tex Stuff, a production from I Heart Radio. 0:00:12.240 --> 0:00:15.520 Hey there, and welcome to tech Stuff. I'm your host, 0:00:15.720 --> 0:00:19.400 Jonathan Strickland. I'm an executive producer with I Heart Radio 0:00:19.440 --> 0:00:22.599 and I love all things tech. And welcome to the 0:00:22.760 --> 0:00:27.240 third and and final, at least for now episode in 0:00:27.280 --> 0:00:30.920 our series about the history of Pana Sonic a k a. 0:00:31.360 --> 0:00:36.400 The Mattsushida Electrical Industrial Company. At the end of our 0:00:36.479 --> 0:00:41.120 last episode, I talked about how Konosuke Matsushida, who founded 0:00:41.159 --> 0:00:45.879 the company in nineteen eighteen, retired as chairman of the 0:00:45.920 --> 0:00:49.560 company in nineteen seventy three. He stepped into a more 0:00:49.680 --> 0:00:54.920 informal executive advisory role at that time. Now, I say that, 0:00:55.600 --> 0:01:00.320 but executive advisors in Japan can exert and any formous 0:01:00.360 --> 0:01:04.080 amount of control over companies even after they have officially 0:01:04.160 --> 0:01:07.399 stepped out of leadership roles. More on that as we 0:01:07.440 --> 0:01:11.360 go on. We also heard about allegations that Panasonic, along 0:01:11.400 --> 0:01:15.759 with several other major electronics companies in Japan, had practiced 0:01:15.959 --> 0:01:20.520 price fixing, both in Japan domestically, where the companies would 0:01:20.520 --> 0:01:24.040 sell products at a premium, and in the US market, 0:01:24.319 --> 0:01:27.760 where these same companies would sell products at a loss 0:01:27.959 --> 0:01:31.319 in order to undercut American electronics companies and kind of 0:01:31.880 --> 0:01:35.400 gain the market in the US. So while the company 0:01:35.440 --> 0:01:37.600 history has a lot of positive elements, there are at 0:01:37.640 --> 0:01:41.280 least a few smudges that warrant investigation. We'll talk about 0:01:41.280 --> 0:01:44.160 a few more of those in this episode, but we 0:01:44.280 --> 0:01:49.920 pick up in ninety three. Masaharu Matsushida, Kanasuke's son in law, 0:01:50.720 --> 0:01:52.760 is still the president of the company at that time, 0:01:52.880 --> 0:01:57.880 and uh Arataro Takahashi is chairman. Takahashi had played an 0:01:57.880 --> 0:02:02.560 important role in establishing matsushi It's relationship with the Dutch 0:02:02.600 --> 0:02:08.080 electronics company Phillips, and Phillips had really helped the Japanese 0:02:08.160 --> 0:02:11.840 company get up to speed on the consumer electronics industry. Essentially, 0:02:12.080 --> 0:02:17.960 Phillips was providing the technical know how and Matsushida was 0:02:18.320 --> 0:02:21.040 providing the access to the Japanese market, and it was 0:02:21.080 --> 0:02:26.639 a beneficial relationship. Phillips had retained a nearly thirty five 0:02:26.680 --> 0:02:31.399 percent stake in the company as a result. Uh and 0:02:31.600 --> 0:02:36.480 Takahashi was instrumental in getting that to happen. It's interesting 0:02:36.520 --> 0:02:41.280 to see that he became the chairman while Masaharu remained president, 0:02:41.480 --> 0:02:44.919 because typically it wouldn't work that way. So we need 0:02:44.919 --> 0:02:49.640 to consider how Japanese businesses typically handle succession, and this 0:02:49.720 --> 0:02:52.320 will become even more important as we go on in 0:02:52.360 --> 0:02:56.320 this episode. Now, it's not that different from the way 0:02:56.560 --> 0:03:00.400 many other companies handle succession, particularly those that tend to 0:03:00.440 --> 0:03:03.400 look within the company itself as opposed to bringing in 0:03:03.440 --> 0:03:07.440 a leader from some other company. In Japanese companies, it's 0:03:07.480 --> 0:03:10.600 typical for a president to move to a chairman position 0:03:10.720 --> 0:03:14.560 when the previous chairman retires, and it's not unusual for 0:03:14.600 --> 0:03:17.320 a chairman to take on one of those informal executive 0:03:17.320 --> 0:03:20.640 advisor roles on the board, so even when they're gone, 0:03:21.040 --> 0:03:24.079 they aren't really gone, or as Red Letter Media likes 0:03:24.120 --> 0:03:29.240 to say, nobody has ever really gone. Normally, one of 0:03:29.240 --> 0:03:32.680 the most senior level executive vice presidents of the company 0:03:32.720 --> 0:03:36.520 will then assume the role of president, and so seniority 0:03:36.600 --> 0:03:42.240 plays a massively important part in succession in Japanese businesses, 0:03:42.520 --> 0:03:45.960 as well as in wages. Typically, though, we learned there's 0:03:45.960 --> 0:03:48.520 also a tendency for control of a company to remain 0:03:48.640 --> 0:03:51.640 within a family, which could be another way that an 0:03:51.640 --> 0:03:55.360 outgoing executive keeps one hand on the steering wheel even 0:03:55.400 --> 0:03:59.840 after they've officially retired. Takahashi certainly had been around a 0:04:00.040 --> 0:04:02.520 long time. He had worked at the company since the 0:04:02.600 --> 0:04:05.680 nineteen thirties, and he played such an important role in 0:04:05.720 --> 0:04:09.040 getting that relationship with Phillips established, But in this case 0:04:09.280 --> 0:04:12.840 he sort of leap frogg massa Haru. I couldn't find 0:04:12.920 --> 0:04:16.120 much information on what was going on at the executive 0:04:16.200 --> 0:04:20.640 level at this time, but my assumption is that Konasuke 0:04:20.800 --> 0:04:24.000 felt that Massaharu was best left in the president position 0:04:24.480 --> 0:04:27.960 for a little while longer, and that he would move 0:04:28.040 --> 0:04:30.839 up to chairman in the future. And perhaps there wasn't 0:04:31.080 --> 0:04:34.120 someone that impressed Konosuke enough to step into the role 0:04:34.240 --> 0:04:39.359 of president, so he won Masaharu to remain there. Because again, 0:04:39.400 --> 0:04:42.599 while he was officially retired, Konosuke was still very much 0:04:42.600 --> 0:04:45.080 involved with the operations of the company that he had 0:04:45.080 --> 0:04:49.440 founded way back in nineteen eighteen. One of Kanasuke's directives 0:04:49.800 --> 0:04:53.760 was having a profound impact upon the company and really 0:04:53.800 --> 0:04:56.920 on the electronics industry in Japan in general, and that 0:04:57.040 --> 0:05:00.160 was his goal of getting wages in Japan close sor 0:05:00.240 --> 0:05:04.040 to what US companies paid their employees over here. And 0:05:04.080 --> 0:05:08.279 this wasn't just an altruistic desire to reward employees, but 0:05:08.360 --> 0:05:12.360 to encourage productivity and to be more competitive for skilled 0:05:12.400 --> 0:05:16.839 and educated workers in an increasingly competitive industry. But it 0:05:16.880 --> 0:05:20.520 also meant things had to change. From a production standpoint. 0:05:21.200 --> 0:05:24.920 Raising wages would mean increasing the cost of doing business, 0:05:25.200 --> 0:05:28.599 which would impact profits. So one of the things the 0:05:28.640 --> 0:05:32.600 company focused on was streamlining processes as much as possible, 0:05:32.880 --> 0:05:37.240 making them more efficient and economic. This included automating processes 0:05:37.279 --> 0:05:39.600 whenever it made sense to do so, and the end 0:05:39.640 --> 0:05:43.760 result was that by the nineteen seventies, Matsushido was one of, 0:05:43.880 --> 0:05:47.280 if not the most efficient large company in Japan, even 0:05:47.320 --> 0:05:51.560 over companies like Toyota. By nineteen seventy one, wages at 0:05:51.560 --> 0:05:55.919 Matsushida were comparable to those in West Germany, and you know, 0:05:55.960 --> 0:05:58.600 if you're young, you might not know that there used 0:05:58.640 --> 0:06:02.120 to be an East and a West Germany. By nineteen 0:06:02.160 --> 0:06:06.720 seventy two, just before Kanasuke would retire, the wages were 0:06:06.720 --> 0:06:10.040 actually pretty close to what employees were doing in comparable 0:06:10.160 --> 0:06:13.520 jobs in the United States. While this was happening, an 0:06:13.520 --> 0:06:17.200 external crisis made things more complicated for the company. In 0:06:17.240 --> 0:06:20.760 the autumn of nineteen seventy three, when a coalition of 0:06:20.800 --> 0:06:25.320 Arabic forces launched a surprise attack on Israeli forces. It 0:06:25.640 --> 0:06:29.480 created the yam Kapoor War. It took place during Yom Kippur, 0:06:29.520 --> 0:06:33.479 a Jewish holiday, and sometimes it's called the yam Kappur War. 0:06:33.640 --> 0:06:36.800 Sometimes it's called the Ramadan War. It was also coinciding 0:06:36.800 --> 0:06:39.960 with the Muslim holy month of Ramadan. And this war 0:06:40.080 --> 0:06:43.320 only lasted a few weeks, but the world was drawn 0:06:43.320 --> 0:06:47.440 into it because of various alliances, including the Soviet Union 0:06:47.920 --> 0:06:50.239 on one side in the United States on the other side. 0:06:50.400 --> 0:06:53.520 And the complexities of that conflict are well beyond the 0:06:53.560 --> 0:06:56.600 scope of this show, but the effects on industry are 0:06:56.680 --> 0:06:59.039 what I hope to focus on. It does play a 0:06:59.120 --> 0:07:01.880 part in techno oology. At the end of the war, 0:07:02.080 --> 0:07:06.479 a coalition of Arab countries decided upon an oil embargo 0:07:06.520 --> 0:07:09.800 against the US and other nations, and this led to 0:07:09.880 --> 0:07:14.640 a global energy crisis. As oil production slowed down. Japan 0:07:14.800 --> 0:07:17.360 was not immune to this crisis. The cost of raw 0:07:17.440 --> 0:07:20.840 materials increased, as did the cost of shipping stuff from 0:07:20.920 --> 0:07:24.240 one place to another. I mean that oil embargo was 0:07:24.280 --> 0:07:26.880 going to have an impact on fuel prices, which would 0:07:26.920 --> 0:07:29.200 make it more expensive to ship things, which meant that 0:07:29.240 --> 0:07:31.360 you had to charge more for your products, and you 0:07:31.400 --> 0:07:36.760 see how this becomes a ripple effect, and Mattsushida was 0:07:36.880 --> 0:07:39.080 trying to be as strategic as it could be to 0:07:39.200 --> 0:07:41.920 limit the effect that the crisis would have on sales figures. 0:07:42.160 --> 0:07:45.120 But even so, the company posted a decrease in profits 0:07:45.160 --> 0:07:49.960 in nineteen seventy four compared to nineteen seventy three. It 0:07:50.200 --> 0:07:53.760 also had more sales during that time, but it wasn't 0:07:54.080 --> 0:07:56.880 profiting as much. Even though it was selling more, it 0:07:57.000 --> 0:08:01.000 was making less money, and both sales and profit would 0:08:01.000 --> 0:08:04.640 be on the decline in nineteen seventy five. One product 0:08:04.720 --> 0:08:08.680 the company introduced in nineteen would fail to get traction 0:08:08.720 --> 0:08:11.440 in the market at all. So in the nineteen seventies 0:08:11.480 --> 0:08:13.880 a few companies were battling it out to create the 0:08:13.960 --> 0:08:18.800 definitive home entertainment media playback device, and this took a 0:08:18.800 --> 0:08:21.320 lot of different forms, all of which were in some 0:08:21.440 --> 0:08:24.200 level of competition against each other. Some of them were 0:08:24.240 --> 0:08:27.120 playback only devices, like you would have to go out 0:08:27.160 --> 0:08:30.520 and purchase a movie or TV show or rent one 0:08:30.960 --> 0:08:34.320 and play it on a device. So the Capacitance Electronic disc, 0:08:34.400 --> 0:08:36.720 which was made by our c A, was one of 0:08:36.720 --> 0:08:38.920 those types of devices. I actually have one of those 0:08:39.200 --> 0:08:42.520 literally at my feet right now, an old CD player, 0:08:42.840 --> 0:08:46.079 the laser disc player from m C. A Disco vision 0:08:46.120 --> 0:08:49.000 would also be another one, But I want to talk 0:08:49.040 --> 0:08:53.760 about VCRs. So VCRs, or video cassette recorders, are one 0:08:53.760 --> 0:08:56.800 of those technologies that had a huge impact on how 0:08:56.840 --> 0:08:59.839 we consume entertainment, and I might do an episode of 0:09:00.000 --> 0:09:02.959 out that in the near future about how the development 0:09:03.040 --> 0:09:06.760 of the VCR changed entertainment itself. And there were a 0:09:06.760 --> 0:09:10.320 few formats that all did the same general thing, but 0:09:10.440 --> 0:09:15.240 with different approaches. Generally speaking, these machines used magnetic storage, 0:09:15.520 --> 0:09:18.760 much as audio tape had. In order to store video 0:09:18.840 --> 0:09:22.520 and audio information, a VCR has at the very least 0:09:22.559 --> 0:09:25.440 an electro magnet that acts as a reading head, and 0:09:25.520 --> 0:09:29.760 as tape moves below this reading head, the tape induces 0:09:29.800 --> 0:09:32.439 a current to flow through that electro magnet because of 0:09:32.480 --> 0:09:35.040 the magnetic particles that are in the tape, and that 0:09:35.080 --> 0:09:37.959 flows through the VCR, and that current is a signal 0:09:38.080 --> 0:09:42.600 it's meaningful, it can be decoded, and that decoded information 0:09:42.640 --> 0:09:45.960 can be sent to a television and potentially an additional 0:09:45.960 --> 0:09:49.040 sound system as well, and that will play the media 0:09:49.240 --> 0:09:52.160 that is stored on the tape. Most VCRs also had 0:09:52.200 --> 0:09:55.880 the capability to write to a blank tape or record 0:09:55.960 --> 0:09:59.240 over an unprotected tape, and that meant this whole process 0:09:59.280 --> 0:10:02.240 could be reversed and the electro magnet would generate a 0:10:02.240 --> 0:10:05.559 magnetic field, and the magnetic field would be recorded onto 0:10:05.640 --> 0:10:08.960 the plastic tape that passes by during the recording process. 0:10:09.559 --> 0:10:12.280 I'm sure most of you have heard about the format 0:10:12.280 --> 0:10:16.199 war that raged between Sony's Beta max format and j 0:10:16.400 --> 0:10:20.040 v C S VHS format. But while those two would 0:10:20.040 --> 0:10:23.520 be the primary candidates for home theater systems, there were 0:10:23.559 --> 0:10:27.440 other formats that entered the fray, including one from Matt 0:10:27.480 --> 0:10:32.520 Sushida slash Pana Sonic, and that format was called v X. 0:10:33.120 --> 0:10:37.719 Matt Sushida only introduced a couple of models of VCR 0:10:37.800 --> 0:10:41.320 that used the v X format. The version released in 0:10:41.320 --> 0:10:45.679 North America was called the Quasar VR one thousand, also 0:10:45.760 --> 0:10:50.240 known as the Great Time Machine. The v X format 0:10:50.600 --> 0:10:53.920 used tapes that were kind of in a cassette form factor. 0:10:54.280 --> 0:10:57.559 They were larger than VHS tapes twice as thick really, 0:10:58.120 --> 0:11:02.960 and they would slide into the player lenkwise rather than widthwise, 0:11:03.000 --> 0:11:05.880 the way a typical VCR works, and it was marketed 0:11:05.880 --> 0:11:07.760 as the great time machine because you could set a 0:11:07.840 --> 0:11:11.079 timer on the VCR and tape content off the television 0:11:11.080 --> 0:11:13.559 and then watch it whenever you wanted to. So this 0:11:13.600 --> 0:11:17.760 is an early example of time shifting. I've watched videos 0:11:17.800 --> 0:11:21.320 of this technology and action, and it's pretty clunky stuff. 0:11:21.559 --> 0:11:24.960 The tapes take up a lot of space. Uh. And 0:11:25.080 --> 0:11:27.920 ultimately the format just didn't take off, and Matt Sushida 0:11:28.000 --> 0:11:31.680 slash Panasonic discontinued the players a couple of years later. 0:11:31.960 --> 0:11:34.840 It was clear that either Beta Max or VHS was 0:11:34.840 --> 0:11:37.520 going to win out in that war. Now here's a 0:11:37.600 --> 0:11:40.600 kind of crazy part of this story. I mean, sure, 0:11:40.640 --> 0:11:44.000 a company introduces a new format and it doesn't pan out. 0:11:44.120 --> 0:11:47.240 That's not unusual. We've seen it in other formats like 0:11:47.520 --> 0:11:52.000 HD DVD versus Blu Ray. But what is unusual in 0:11:52.000 --> 0:11:55.440 this case is that Matt Soshida slash Pana Sonic had 0:11:55.520 --> 0:11:59.720 a majority stake in the Victor Company of Japan also 0:11:59.760 --> 0:12:03.320 known as j v C, also known as the company 0:12:03.360 --> 0:12:07.120 behind the VHS format, which actually won the format war. 0:12:07.679 --> 0:12:11.080 So JVC started off as a Japanese subsidiary to the 0:12:11.240 --> 0:12:14.800 Victor Talking Machine company that was a US based company 0:12:14.800 --> 0:12:18.920 that manufactured phonographs and later became a record label. For 0:12:18.960 --> 0:12:21.880 a while, j v C was actually part of our 0:12:21.960 --> 0:12:26.360 c A, which had purchased Victor and that came along 0:12:26.400 --> 0:12:29.319 with it. But during World War Two, the Japanese part 0:12:29.320 --> 0:12:31.600 of the company split away from the rest of Victor 0:12:32.000 --> 0:12:35.240 and it became its own entity. In nineteen fifty three, 0:12:35.559 --> 0:12:39.160 Matt Sushida purchased a majority stake in that company, and 0:12:39.200 --> 0:12:43.680 so JVC was effectively a subsidiary of Matt Sushida. Now 0:12:43.720 --> 0:12:47.640 this means that the parent company, Matt Sushida, was putting 0:12:47.679 --> 0:12:51.480 forward a competing product against one from a company that 0:12:51.520 --> 0:12:55.720 Matt Sushida also owned, and also that format lost because 0:12:55.800 --> 0:12:59.960 ultimately the VHS format would win over VX and more 0:13:00.080 --> 0:13:04.160 noteworthy opponents like Sony's Betamax. JVC would remain part of 0:13:04.200 --> 0:13:09.480 the Matsushida slash Panasonic empire until the two thousand's. As 0:13:09.520 --> 0:13:13.480 for the VHS style of VCR, Panasonic would develop and 0:13:13.520 --> 0:13:17.120 sell those to great effect. The VX system not so much, 0:13:17.160 --> 0:13:20.880 but VHS that one worked like a treat. In nineteen 0:13:20.920 --> 0:13:24.560 seventy seven, the company released a brand of VCRs called 0:13:24.760 --> 0:13:29.160 mac Lord Masaharu Matsushida, who had traveled to the US 0:13:29.240 --> 0:13:34.040 and form agreements with various consumer electronics companies for VCR components. 0:13:34.120 --> 0:13:36.839 And this was the dawn of the home theater era, 0:13:37.120 --> 0:13:39.640 and so many things would change because of that, including 0:13:39.679 --> 0:13:43.920 the entertainment industry and the rise of the video rental business. 0:13:43.960 --> 0:13:47.440 But more than a format failure, the tumultuous events and 0:13:47.480 --> 0:13:51.160 the global consequences were likely a big burden for the 0:13:51.200 --> 0:13:54.679 executive team at Matsoshida. So perhaps it's not a huge 0:13:54.679 --> 0:13:58.240 surprise that in nineteen seventy seven, just four years after 0:13:58.320 --> 0:14:02.120 becoming chairman, Takaha she announced his retirement. And this is 0:14:02.120 --> 0:14:06.800 where we get another exception to the typical Japanese success plan. Konosuke, 0:14:07.200 --> 0:14:10.360 in his eighties and technically retired but still very much 0:14:10.440 --> 0:14:13.560 calling high level shots, decided that his son in law 0:14:13.600 --> 0:14:17.160 would become the new chairman, but an unlikely candidate would 0:14:17.200 --> 0:14:21.480 become the next president of the company. That candidate was 0:14:21.720 --> 0:14:27.520 Toshihiko Yamashita. He had been part of Matsushida's air conditioning division, 0:14:27.880 --> 0:14:31.960 so he was a cool guy, I'm sorry before he 0:14:32.160 --> 0:14:35.760 came into that role. The division, the air conditioning division 0:14:36.000 --> 0:14:39.360 was struggling, but under Yamashita, it turned around and it 0:14:39.400 --> 0:14:43.240 became the number one brand in the market in Japan. Now, 0:14:43.280 --> 0:14:47.240 out of the twenty six director level executives at Matt 0:14:47.240 --> 0:14:51.040 Sushida at the time, he was number twenty five in seniority. 0:14:51.080 --> 0:14:54.040 There was only one other director who was more junior 0:14:54.080 --> 0:14:57.960 than he. In other words, while he showed initiative and leadership, 0:14:58.080 --> 0:15:00.760 typically you would not expect him to be a candidate 0:15:00.840 --> 0:15:04.000 for the president of the company. That role would usually 0:15:04.000 --> 0:15:07.600 go to someone who had much more seniority than he did. 0:15:08.000 --> 0:15:13.080 But on January tenth, nineteen seventy seven, Konosuke Matsushita called 0:15:13.200 --> 0:15:16.560 Yamashita into his office. Kona Suke was eighty two years 0:15:16.600 --> 0:15:19.400 old at this point and he had been retired from 0:15:19.440 --> 0:15:22.680 Matt Sushida for four years, but he was clearly still 0:15:23.040 --> 0:15:25.840 calling or at least influencing, the shots at the company. 0:15:26.160 --> 0:15:29.240 Yamashita wrote in his autobiography that he had no idea 0:15:29.320 --> 0:15:30.880 what the meeting was going to be about. He was 0:15:30.880 --> 0:15:33.400 actually really nervous about it, and he says that when 0:15:33.480 --> 0:15:37.080 Kona Suke offered him the position of president, no one 0:15:37.280 --> 0:15:41.560 was more surprised than Yamashita himself. But is that true. 0:15:42.080 --> 0:15:45.520 We'll find out when we come back after these brief messages. 0:15:53.320 --> 0:15:56.120 So that last bit that I mentioned before the break, 0:15:56.160 --> 0:15:59.120 that Yamashita was the most surprised when it came to 0:15:59.240 --> 0:16:01.600 the fact that Kona Suke had decided to offer him 0:16:01.640 --> 0:16:04.840 the position of president of the company, that's actually debatable. 0:16:05.320 --> 0:16:08.920 When news broke that Yamashita would become president and Masa 0:16:09.080 --> 0:16:13.200 Haru would become the next chairman, the press pounced on 0:16:13.400 --> 0:16:16.760 this and they called it the Yamashita Leap, which was 0:16:16.840 --> 0:16:21.240 a sly reference to a different Yamashita. Haru Hiu Yamashita. 0:16:21.280 --> 0:16:23.400 He was a gymnast who won a gold medal in 0:16:23.480 --> 0:16:27.560 the nineteen sixty four Olympics. More than a few analysts 0:16:27.720 --> 0:16:30.640 predicted that this would turn out to be a bad move, 0:16:30.760 --> 0:16:34.400 that Yamashita was not senior level enough to really be 0:16:34.600 --> 0:16:37.960 the proper leader. As Barakona Suke, he saw that the 0:16:38.000 --> 0:16:42.600 company he founded had grown into a really enormous organization, 0:16:43.080 --> 0:16:46.000 and he had also seen that other companies that went 0:16:46.080 --> 0:16:49.760 through this process often struggled or they would even collapse 0:16:49.920 --> 0:16:52.760 under their own weight. Even companies in the United States 0:16:52.960 --> 0:16:56.200 where he had been so impressed during his tours, he 0:16:56.320 --> 0:16:58.800 wanted to learn from the mistakes of others and avoid 0:16:58.840 --> 0:17:02.560 the problems that often come along with explosive growth. Together, 0:17:02.880 --> 0:17:05.440 he and Yamasheeta identified that the company had really just 0:17:05.640 --> 0:17:09.359 grown too complacent. That while the electronics market in Japan 0:17:09.720 --> 0:17:13.280 was different than years past, the lagging sales could not 0:17:13.560 --> 0:17:19.360 all be blamed on market saturation or maturity, or economic recession. Rather, 0:17:19.440 --> 0:17:22.880 they concluded that the company itself just wasn't innovating enough 0:17:23.040 --> 0:17:26.560 or listening to customers as much as it should. Yamasheeta 0:17:26.760 --> 0:17:30.760 definitely shook things up. He felt that the managerial levels 0:17:30.800 --> 0:17:33.159 in the company were overlapping too much, and so he 0:17:33.200 --> 0:17:38.680 actually eliminated an entire management level in order to remove redundancy. 0:17:39.119 --> 0:17:42.720 He also encouraged employees who felt stagnant to switch to 0:17:42.840 --> 0:17:46.560 a different division and thus bring new perspectives and approaches 0:17:46.640 --> 0:17:50.320 to their new coworkers. He also gained a reputation for 0:17:50.400 --> 0:17:54.320 trusting the divisional business decisions to the executive management teams 0:17:54.440 --> 0:17:57.719 at the head of each division. He would only occasionally 0:17:57.840 --> 0:18:01.040 step in himself and direct things, and when you did 0:18:01.160 --> 0:18:04.520 step in, it could be more than a little disruptive. So, 0:18:04.600 --> 0:18:08.560 for example, there was a time when Yamashita essentially made 0:18:08.600 --> 0:18:11.480 a promise to our c A that Panasonic would create 0:18:11.600 --> 0:18:15.359 a four hour long VHS tape, and at the time, 0:18:15.520 --> 0:18:19.040 the internal teams at Matsushida had not yet even made 0:18:19.160 --> 0:18:22.240 a two hour tape. But a promise is a promise, 0:18:22.440 --> 0:18:26.280 and so their teams got to work feverishly tackling engineering 0:18:26.400 --> 0:18:29.639 challenges and ultimately producing the four hour tape, and that 0:18:29.720 --> 0:18:31.800 would go on to be one of the big successes 0:18:31.880 --> 0:18:35.359 for the company at this time because customers loved having 0:18:35.440 --> 0:18:38.840 that much tape to be able to record stuff. While 0:18:38.880 --> 0:18:42.320 matt Sushida slash Panasonic was briefly in the business of 0:18:42.400 --> 0:18:46.720 designing mainframe computers in the nineteen sixties, that environment was 0:18:46.800 --> 0:18:49.399 a little too competitive and Kona Suke had decided to 0:18:49.520 --> 0:18:53.480 withdraw from the computer industry. Yamasheeda took another look at 0:18:53.480 --> 0:18:55.879 the field and decided that the main frame business was 0:18:55.960 --> 0:18:58.760 still too competitive and it was also starting to peter out. 0:18:58.800 --> 0:19:02.000 There was a transition moving toward many computers and then 0:19:02.080 --> 0:19:05.520 micro computers, and so he decided that the company should 0:19:05.600 --> 0:19:08.720 still be in the business, but not in mainframes. He 0:19:08.760 --> 0:19:12.480 wanted to get into the semiconductor business. One of the 0:19:12.560 --> 0:19:16.760 big procedural changes that happened under Yamashida's leadership was in 0:19:16.840 --> 0:19:20.360 the way that the company would lay out its plans. 0:19:21.200 --> 0:19:25.280 Had been creating year long plans for the company, but 0:19:25.560 --> 0:19:28.760 they were finding that the volatility and markets, and the 0:19:28.920 --> 0:19:33.239 various challenges and trade agreements for international trade, as well 0:19:33.320 --> 0:19:38.240 as the fluctuations and currency value often meant that a 0:19:38.359 --> 0:19:42.800 year long plan could easily be disruptive by a few changes. 0:19:43.040 --> 0:19:45.680 It just was too hard to stay on track. He 0:19:45.720 --> 0:19:49.560 gets sidetracked too quickly. So instead, Yamashida and his team 0:19:49.960 --> 0:19:53.119 laid out a three year plan, and that gave them 0:19:53.240 --> 0:19:56.159 enough room to allow for some volatility. Things could go 0:19:56.200 --> 0:19:59.600 a little you know, Las Vegas crazy style for a while. 0:20:00.160 --> 0:20:02.800 Then they could settle down. And if you have three 0:20:02.960 --> 0:20:05.720 years to achieve a goal, even if it's a more 0:20:05.760 --> 0:20:09.480 ambitious goal than a year long goal, and it gave 0:20:09.560 --> 0:20:12.200 you more of a chance for success. This was all 0:20:12.359 --> 0:20:16.119 in an attempt to be more proactive rather than reactive. 0:20:16.520 --> 0:20:18.359 And the reason I bring this up is that we 0:20:18.440 --> 0:20:23.399 often see tech companies, and honestly companies in all industries 0:20:23.920 --> 0:20:29.560 give a fanatical dedication toward short term gains, and sometimes 0:20:29.800 --> 0:20:33.280 that's at the cost of long term success. You could argue, 0:20:33.640 --> 0:20:36.760 and I certainly have argued, that this is kind of 0:20:36.880 --> 0:20:40.280 tied with the business strategy of catering all your decisions 0:20:40.320 --> 0:20:44.680 in some way around returning value to shareholders, which is 0:20:44.720 --> 0:20:47.480 a strategy I'm not terribly fond of because it frequently 0:20:48.000 --> 0:20:51.280 isn't great for anyone in the long term, and it 0:20:51.400 --> 0:20:55.480 really feeds into stuff like speculation, which is not generally 0:20:55.520 --> 0:20:59.399 a good thing. In two, Panasonic was one of the 0:20:59.600 --> 0:21:03.159 first companies to develop a compact disc player. Now, the 0:21:03.280 --> 0:21:05.520 history of the CD actually dates all the way back 0:21:05.520 --> 0:21:08.560 to the nineteen sixties, and mostly in the nineteen seventies. 0:21:09.000 --> 0:21:13.080 Sony and Phillips were both independently developing this technology in 0:21:13.240 --> 0:21:17.240 the seventies, but then ultimately they would join forces Vultron 0:21:17.440 --> 0:21:20.600 style in order to further refine the technology and to 0:21:20.800 --> 0:21:23.920 establish standards. That would be important as it would help 0:21:24.000 --> 0:21:28.359 sidestep the issue of competing and incompatible formats on the market. 0:21:28.840 --> 0:21:31.680 That's something that tends to be a great frustration to 0:21:31.760 --> 0:21:35.160 consumers because there's nothing like going out and buying something 0:21:35.280 --> 0:21:37.760 that's going to run on some form of media player 0:21:38.280 --> 0:21:40.920 and find out that, oh, the media player you have 0:21:41.560 --> 0:21:45.040 isn't compatible with the media you bought. That's a terrible 0:21:45.160 --> 0:21:48.040 feeling and it does happen, so they wanted to get 0:21:48.080 --> 0:21:51.520 around that. So once again, Panasonic did not have a 0:21:51.680 --> 0:21:55.080 leadership role in the development of this technology, but the 0:21:55.160 --> 0:21:58.000 company was able to build out a CD player and 0:21:58.119 --> 0:22:01.120 launch it in two when player has first started hitting 0:22:01.160 --> 0:22:05.040 the market. However, this does mean I should probably talk 0:22:05.200 --> 0:22:08.440 a bit about how compact discs work, since I've done 0:22:08.480 --> 0:22:11.639 that for magnetic storage in this series. And if you 0:22:11.760 --> 0:22:16.760 look at a standard one sided compact disc, you'll likely 0:22:16.880 --> 0:22:19.920 see some sort of label on one side and the 0:22:20.000 --> 0:22:22.800 other side will be really shiny, almost like a mirror, 0:22:23.440 --> 0:22:25.760 and you put the disc in a player label side 0:22:25.840 --> 0:22:29.280 up or a CD drive and then the magic happens. 0:22:29.359 --> 0:22:32.800 But how is the data actually stored on the disk. Well, 0:22:32.840 --> 0:22:36.040 in this case, this is not a magnetic system. It's 0:22:36.040 --> 0:22:39.320 an optical system. That means that this is a system 0:22:39.359 --> 0:22:42.960 that uses light and optics like mirrors and lenses to 0:22:43.280 --> 0:22:48.240 encode and decode information. It's also a digital format, not 0:22:48.560 --> 0:22:52.359 an analog format. So let's start by talking about a 0:22:52.400 --> 0:22:56.280 blank CD as nothing stored on that glossy side. When 0:22:56.320 --> 0:22:59.680 a machine writes to c D, it uses a powerful 0:22:59.760 --> 0:23:04.000 lazy or to carve out tiny indentations in a spiral 0:23:04.359 --> 0:23:07.600 on that c D. The spiral actually starts near the 0:23:07.760 --> 0:23:09.840 center of the c D, So this is kind of 0:23:10.000 --> 0:23:12.800 the opposite of how a vinyl record works, where you 0:23:12.840 --> 0:23:15.639 would set a needle toward the outer edge of the 0:23:15.720 --> 0:23:19.400 record and the needle would spiral inward. So what you're 0:23:19.480 --> 0:23:22.119 left with are if you were to look at this 0:23:22.240 --> 0:23:26.840 under a microscope, you'd see a series of reflective surfaces 0:23:27.040 --> 0:23:30.960 on that CD as well as some little bumps, and 0:23:31.640 --> 0:23:35.680 those represent ones and zeros, respectively. A reflective segment is 0:23:35.720 --> 0:23:39.200 called a land that would be a one, and a 0:23:39.359 --> 0:23:42.040 bump is called a pit that would be a zero. 0:23:42.119 --> 0:23:43.960 So why is a bump called a pit? Well, it 0:23:44.000 --> 0:23:45.720 all depends on how you're looking at the c D. 0:23:46.280 --> 0:23:48.879 You look at the CD one way, you're looking at bumps. 0:23:49.240 --> 0:23:51.119 You turn the c D and you look at it 0:23:51.160 --> 0:23:55.119 a different way. You're looking at pits. And this is 0:23:55.240 --> 0:24:00.400 binary information ones and zeros, So that's a binary unit. 0:24:01.000 --> 0:24:03.680 You can think of this like a series of light switches, 0:24:03.760 --> 0:24:06.399 where one is a switch in the on position. And 0:24:06.600 --> 0:24:10.399 zeros in the switch in an off position. Using lots 0:24:10.480 --> 0:24:13.639 of bits, like millions of them, you can describe all 0:24:13.680 --> 0:24:17.159 sorts of stuff, including audio. So this brings us to 0:24:17.359 --> 0:24:21.720 digital versus analog, and analog recording is a record of 0:24:21.800 --> 0:24:26.000 a continuous input signal, but a digital recording is more 0:24:26.119 --> 0:24:30.320 like a very detailed description of an original input. So 0:24:30.440 --> 0:24:32.440 in a way, we can think of an analogy in 0:24:32.520 --> 0:24:36.680 which an analog signal is a script from a play. 0:24:36.960 --> 0:24:40.080 It's got all the stage directions in it, character and descriptions, 0:24:40.160 --> 0:24:43.879 it's got all the dialogue in it. Everything's in the script, 0:24:44.480 --> 0:24:48.399