Friday, November 1, 2013

The Borderless World by Kenichi Ohmae


If you were to watch a tennis match where wooden rackets are used, you will find it amusing , classical, slow, interesting and so on. But the basic concepts will be the same. I got a feeling similar to that when I read this classic. Basic concepts have remain unchanged – and it is without standard words like “internet” or “social media” etc – It was refreshing.
Author was a seasoned McKinsey consultant and was heading Japan geography. He was consulting with many leading companies and hence the breath of exposure is truly wide. Let me mention two interesting stories among many.

Five Finger Exercise: 
Yamaha became world leader in Pianos with about 40% market share. Alas, by that time, Piano market started declining at the rate of 10% annually. So, what do you do? What can you do? Piano hasn’t changed much since Mozart days. Making better pianos will not help and market for new pianos has a very limited absorbing capacity. Low end of the market is already taken up by South Korea.
Piano these days is more often an expensive piece of furniture that sits idle, collects dust and almost always un-tuned. Many don’t have time to learn piano. It takes a lot of effort and time to master it. Yamaha reasoned the only way to create value to the customer is to add value to the pianos that are already out there. There are already about 40 Million pianos in the field. Yamaha worked incredibly hard and developed an advanced product that can be added on to the current ones at a cost of $2500. It was a very sophisticated, advanced combination of optical and digital technologies that can distinguish between 92 different degrees of strength and speed of key touch from pianissimo to fortissimo. Since the recording is digital each key stroke can be reproduced and they can be stored in 3.5 inch floppy (remember it?).  With just one retrofit like this, you invite your friends and show case latest home entertainment. When Yamaha started selling it in 1989, sales rocketed.

Brewing Wisdom:
 One of the clients was trying to develop Coffee percolator. They started off bench marking against the current incumbent GE. Should it be larger, faster, Etc. Author urged them to ask “Why do people drink coffee at all?” Answer came: “Good taste!” Author would then pose a challenge asking what are the factors that drive good taste?Answers started pouring back - Beans Quality, Grain sizes, Water Quality and a host of other minor drivers. Among them water quality made the most difference and most of the designers assumed customers would use tap water. Hence, they went on to build an in-built de-chlorinating function which greatly added to the taste of Coffee.

This book deals with the then dominant markets, what author refers as triad – Western Europe, USA and Japan. Things have changed quite a bit since then. There are more additions to the triad. Author talks about globalization and other Forex aspects in detail  that make a nice read. When I read books that have extensive forecasts or some kind of “futuristic reports”, just for fun I try to track how much has happened. It turns out that, even the best & acclaimed folks have made forecast way off the mark. Author has studiously avoided any such strong forecasts.

Mark Twain once quipped, “A classic is something that everybody wants to have read and nobody wants to read”. I wanted to say it is a classic but since it risks not being read at all, I would say good old book that ought to be read. Before taking this book, I was wondering if I should pick such old one but I am glad I did.

Thanks for reading this far.


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