The evolving state of the electronics industry is challenging brands to demonstrate a brave commitment to a bold vision; secure trust with new customers, markets, and verticals; and clarify which management tactics can help realize business transformation and growth.
Last year, we noted electronics’ shift from a consumer hardware industry, with brands evolving for the connected world through non-traditional partnerships and supply chain solutions for enterprise. This year, we see iconic electronics brands implement these evolved business models to secure planned revenues—and ultimately the unexpected challenges that come with transforming a 100+ year industry. For these iconic consumer hardware brands, evolution is turning out to be a gnarly task: demonstrating a compelling commitment to a clear vision; securing trust with new customer types, markets, and verticals; and clarifying the right management tactics to realize ambitious transformation and business growth.
This is not to imply a naïve category. In fact, this year marked the centennial of Panasonic with an anniversary event to celebrate the past century—taking rightful credit by boasting evolution from a ‘consumer home electronics manufacturer’. The business shared its vision of immersive entertainment experiences, sustainable energy, and integrated supply chain through an exhibit that demonstrated how drastic the industry is evolving. And while Panasonic’s courage to bring clarity to an uncertain future is admirable, the brand’s evolved identity and role in the world remains blurry from the outside—with no display of how its Kyoto philosophy to ‘go on’ will drive success in these new sectors.
Panasonic’s focus on immersive experiences, energy, and the supply chain does not represent a commonly shared future for Electronics. For Sony, future revenues bet on subscription content and gaming. For Canon: healthcare, security, and rockets. These are massive bets with massive return: Sony plans to generate $18B over the next three years to drive acquisitions (seen in a $2.3B USD acquisition of EMI Publishing and a $185M USD acquisition of a stake in DHX Media’s Peanuts), and Canon plans to capture share from new segments to represent a third of its global revenues by 2020. However, these iconic brands carry a legacy in traditional Electronics, and cannot depend on their established credibility to drive future success. As industry lines continue to blur with adjacent and new markets, the credibility and equity of these brands may not translate to new product categories. Prospective government and enterprise customers can skeptically ask: “Why should I trust a television manufacturer to build a safe rocket?” Electronics businesses today seem more certain about where new revenues may be than what marketplace strategy, competitive position, and brand perceptions are required to secure the growth.
Signaling commitment to new markets is a good first step—demonstrated this year by Canon simply renaming its 2016 acquisition of Toshiba Medical Systems to Canon Medical Systems. But the real key may be harnessing the workforce as a means to inspire perceptual change in the market. Canon’s global strategy conference this year opened with a statement from its CEO, Fujio Mitarai, reading: “Embrace the challenge of new growth through grand transformation.” While these words—in some form or other—are on most introductory slides of any corporate strategy presentation, Canon makes tangible investments in talent and events, understanding that its people are the ones on the ground actually driving change. For example, Canon trains its people to be “transformation experts,” and runs initiatives like the Think Big Leadership series, which hosts educational sessions that inspire businesses to adapt and thrive in uncertain times (which, these days, is all the time). Canon has established itself as a true innovator, capable to drive the industry forward. If credit is given where due, future hospital customers will be less likely to doubt the legacy camera maker with credibly building their radiography systems.
For businesses at this global scale with these rich histories, changing course requires key stakeholders’ bold commitment and courage to speak up. But this doesn’t always need to come from the CEO, and in fact could be seen as more authentic from lower levels of the business. At Panasonic, its Chief Counsel of Transactions and M&A, Elizabeth Sanders, has been a vocal advocate for transformation, stating to the press this year: “The way the world does things is changing. Panasonic is going to innovate. If you find it uncomfortable, get used to it.” Assessing Panasonic’s acquisitions this year, this isn’t just talk. Consider the €149.6M acquisition of the majority stake in Belgium’s Zetes, a provider of supply chain solutions—maybe an odd acquisition on the surface, but not in the context of Panasonic’s vision of the future. Gaining credibility through M&A is a proven strategy for stretching a brand into new verticals, however maximizing the value from an acquired entity will depend on the business’ ability to accurately determine which brand equities can complement or fully migrate into the Panasonic brand, as well as how to follow an integration plan that considers market, geography, and audience nuances. Without a brand acquisition integration plan in service of educating the market, an acquired brand may only introduce more confusion than clarity about where the business is heading and how it benefits the customer.
As the industry dates, blurs, and evolves, it’s increasingly clear the days of electronics as consumer hardware are long-gone. The future of electronics is about recurring revenues through streaming, space and rockets, and AI-powered hospital equipment. These electronics brands know where growth can come from, but are seemingly unclear how wide their iconic brands so deeply rooted in consumer hardware can flex to facilitate growth in wildly different markets. However, a strategic use of brand can support their success—from using M&A to signal credibility in new verticals (i.e. Panasonic and Zetes, Sony and EMI Publishing); using organizational behavior tactics to inspire on-the-ground change (i.e. Panasonic and Elizabeth Sanders, Canon’s transformation experts); and launching innovative initiatives that reinforce a brand’s pioneering position (i.e. Canon’s Think Big events, Panasonic’s Centennial).
It is every brand for itself, but the ones that judiciously navigate unchartered territory—using brand as a strategic tool—will be winners that become synonymous with the future definition of one of the most rewarding and wide-reaching industries.