Evolutionary cycles

I yesterday went shopping for an LCD television for a friend of mine. I went to Richer sounds (a splendid and rather uncharacteristic British retailer known for selling high quality electronic merchandise at low prices from relatively unfashionable locations where the rent is low, providing fine customer service and treating employees well), and I ended up buying a Sharp TV. Interesting company, Sharp. People sometimes think the name is a little odd. For what it is worth, the company originally made mechanical pencils for engineering purposes, and they wanted to make it clear that they were very sharp. (True story).

Japanese companies seem to divide into two kinds. There were pre-WWII monoliths - the so called zaibatsus. American policy after the war was that these were far too powerful and that they were to be broken up into smaller companies. This American policy failed. They zaibatsus were theoretically broken up into smaller units, but they retained a complex arrangement of holding companies and cross shareholdings in which management control largely remained in place even though the companies had theoretically been split up. They evolved into post war industrial groupings known as keiretsus. These companies remained politically well connected, and when Japan attempted to grow its exports through government directed industrial policy, these were the benificiaries of it. These keiretsus included Mitsui/Toshiba, Mitsubishi, Hitachi, Matsushita (Panasonic), and others.

As I said, these well connected companies were recipients of government largesse, and those who would wish to praise government industrial policy would tend to construct a story that this led to Japan's industrial success in the 1970s and the 1980s.

But of course, the story is more complex than this, There is a really good book about this, We Were Burning : Japanese Entrepreneurs and the Forging of the Electronic Age by my compatriot Bob Johnstone. The interesting part of the story is that although the keiretsus did benefit from the growth of the Japanese electronic industry, they were not where its innovation came from. The companies that were the heroes in this regard were small, non-existent or unfashionable in 1945, or were disgarded or disdained pieces of broken zaibatsus, In particular, we are talking companies like Seiko-Epson, Canon, Yamaha, or even Sanyo or Honda or Suzuki. (The Japanese government tried to micromanage the car industry, but the motorcycle industry was seen as less interesting, and so that is where the interesting companies ended up coming from).

In electronics, in the 1970s, Sharp's research was led by Sasaki Tadashi, whose enthusiasm earned him the truly glorious nickame of "Dr Rocket" - personally I would almost kill for such. In that era Sharp pretty much invented the electronic calculator and the LCD display. Sharp remains a leader in LCD display technology to this day.

To the extent, that in this day of LCD television, Sharp is the only Japanese company worth mentioning in this market. Sony - a company that rode a totally unique route between the keiretsu and the post war upstart, but which in the end did a better job of selling itself as a brand than an innovator - was the undoubted leader in the era of CRT televisions, but (perhaps as a consequence) totally missed the transition to flat screens. A lot of fancy televisions are sold today under the Sony brandname, but these were generally actually made by Samsung, or (in certain high end cases) by Sharp. The only Japanese company that actually makes televisions today is Sharp. The company that always was the great innovator: the company that Sony pretended to be.

Which is why I was happy to buy such a set for my friend.