Dear Jim, Here's another one for your "too hard" basket: Your contributor Vasconcellos makes his thesis in this issue by citing the example of Yamaha which (he says) broadened its vision beyond the motorcycle to leisure products including pianos and the like, thereby presumably demonstrating some kind of superiority when compared with the more narrowly focused Honda which he uses as a contrast.
Leave aside the issue that Honda is more profitable than Yamaha and has been probably for decades. Leave aside the fact that the strongly specialised companies such as GE have been successful for over a century already, while other generalised conglomerates have gone by the wayside. Leave aside the fact that many a CE today is trying to refocus his organisation on "core business."
Rather, let's focus on the minutiae and let the big picture go unnoticed: The very example Vasconcellos uses is counterfactual, as surely everyone knows. Yamaha started by making pianos and other musical instruments way back in the 19th century, and only somehow got into motorbikes in the 1950s, presumably responding to the severe transport shortage in Japan. What on earth does he think the Yamaha brand symbol is? - Crossed snow skis? Crossed conrods out of a Puch split single or a Chrysler hemi?
I'm not sure I found your contributor's argument convincing!. Regards and keep up the good work.
-- John Reid
Dear John: Thank you for your e-mail and interest. I am afraid however that many of your points stem from attributing to the article statements and thesis that it does not contain. I’ll go step by step.
To start with, in no part of the article is it said that the way Yamaha defines its need (leisure) is better than/superior (?) to the way Honda does (power motion/engines for the world). Only that they are obviously different and that thus, they have different consequences in terms of opportunities, competition, success factors, and marketing. And the proof is that although they both manufacture motorcycles, Honda also makes products such as automobiles, trucks engines and electric generators, etc., while Yamaha by contrast, produces musical instruments, ski equipment, tennis rackets, and recreational vehicles such as golf cars.
Which is better? The article does not address that issue, which would require that we evaluate first, the (level of) synergy among the products; second, the attractiveness of each (unit margin; growth rate; and sales volume); and third, the strength of competition also manufacturing each type of the products.
Neither does the article say that Honda’s portfolio (of products) is less or more narrow than Yamaha’s (?). Yamaha makes pools, Honda produces jet engines. Yamaha makes water slide systems, Honda manufactures scooters; and so on. The diversity in both product lines is an issue (important and that can be measured), but that was not addressed, at all, in the article.
Also, neither the article, nor certainly your e-mail (?) would suggest that a single variable (such as including the need served in defining a company’s business) would by itself determine company’s performance over time. As you know, business administration is much more complex than that. Performance depends not only on having a better need in the business mission (plus a superior product, plus client, plus location, too); but then performance also depends naturally on dozens of other business variables, which go much beyond a mission statement: a good organization chart, the control systems, staffing, everything which is going on in the manufacturing department, as well as in marketing, finance, and strategy, and so on. An organization should strive to be doing all better.
So, to sum up, what does the article say (and which I am afraid you missed in your e-mail)? First: that to define a company’s mission has several advantages; focus; etc.; second: that that should be done both at divisional and corporate level; third: that a mission statement must be selected carefully because small changes imply great differences in terms of 1) opportunity paths, 2) competition, 3) success factors and 4) marketing; and finally fourth: that the way to go about at divisional level is to include in a business definition, four elements: 1) the product; 2) the client; 3) the need; and 4) the location.
I hope that this answer addresses the concerns you raised in your e-mail (although I am afraid they have nothing to do with the article). If you take the time to read the other examples included in the article (on packaging, information technology, beer, etc.) I am sure that you will come to the same conclusion. Again, thank you very much for your interest and best wishes
-- Jorge A. Vasconcellos e Sá
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