How Matsushita Electric and

Sony Manage Global R&D

Irena, LaRoi, Bree

Overview

• R&D abroad – challenging management issue: how to• R&D abroad – challenging management issue: how tosuccessfully operate R&D labs dispersed around the world.

• New management systems and practices are introducedbased on human relationships among a small number oftop R&D managers, drastically changing company’sorganizational structures.

• It appears that both companies have already realized someof the anticipated benefits.

Approaches

There are 3 basic approaches to R&D management:

• Top-down

• Bottom-up• Bottom-up

• Mixed

Advantages & Disadvantages

Both Matsushita Electric (better known by its leadingbrand – Panasonic) and Sony have long histories ofbrand – Panasonic) and Sony have long histories ofdoing R&D overseas and they have learned to adapt tocompetitive conditions effectively.

As this article shows, both companies have moved frombottom-up and top-down organizational structure to amixed approach.

Matsushita and Sony have arrived at this structurethough different paths.

“Technology for the

Matsushita Electric’s R&D Vision

“Technology for thebenefit of mankind”

• Products marketed in over 160 countries

Matsushita Electric Industrial Co.

• Products marketed in over 160 countries

• 328,645 employees

– 40% of employees outside Japan

• 1976 - first lab in the USA

• 1997 - 18 major labs around the world employing300 R&D personnel

1970’S - Early 1980’s“TOP-DOWN APPROACH”

• Parent lab took the initiative to establish overseas labs

• Parent lab took authority and responsibility for managing it• Parent lab took authority and responsibility for managing it

– Recruiting local researchers/ engineers

– Provided expenses for overseas labs

– Japanese managers sent overseas to support & manage activities

– Decided objectives and projects & assigned them to overseas labs

– Delegated total authority & responsibility for planning & control totop managers at overseas labs

– Gave final approval for projects & evaluated progress

• Organizational structure maintained

Late 1980’s“BOTTOM-UP APPROACH”

• Organizational structure maintained

• Two features added:

– International R&D center (1988)

• Services for the Establishment & Managementof overseas Labs

– R&D Management subsidiary in USA (1987)

• Panasonic Technologies

• New Management Position Created

1995 Moving forward

• New Management Position Created

– Executive Officers Of Overseas Labs

– Overseas R&D office established to supportthe new executive

• Organizational Change

– Exec. Officer & office took over authority ofparent labs to manage overseas labs

“To create new business and develop andmarket new products which satisfy both global

1997 Mission Statement

market new products which satisfy both globalbusiness needs and local market conditions

by utilizing the resources of an optimizedresearch environment”

&

“Autonomous Responsible Management &Solidarity through Global Collaboration”

• “Autonomy”– Delegated authority to overseas labs

New Goals“Mixed Approach”

– Delegated authority to overseas labs

• Planning projects

• Managing human resources

• Financing & use of expenses

• “Solidarity”– Prompt global collaboration among all Matsushita’s labs

• Annual meetings in Japan & overseas

• Presidents/VPs/Directors exchange information & buildhuman relationships

Mixed Approach

Matsushita’s R&D Evolution

“Thinking & Producing with a

Sony R&D Division

“Thinking & Producing with aglobal perspective, and making efforts

to export its products”

• Founded in 1946

• 1977 – establishes its first R&D Company in

Sony Overview

• 1977 – establishes its first R&D Company inSan Jose, California

• By 1996, company employs 151,000 employeesworldwide, with 57% of their workers outsideof Japan

• Have grown to have 11 R&D labs aroundthe world

• Foreign subsidiaries establish their own labs.

Late 1970’s“BOTTOM-UP APPROACH”

• Top management positions plan & researchR&D activities.

• Most employees were employed from local labor market

• The parent divisions paid little attention to controllingoverseas R&D activities.

• Sony Top management eventually realizes thatthe bottom up approach was not always beneficialto the company.

• Reinforcing divisional organization system. They

Early 1980’s“TOP-DOWN APPROACH”

• Reinforcing divisional organization system. Theyestablish a global “Zone Management System”.

• The same concepts were applied to their labs; theyreorganized their labs into a new Cooperate researchlab consisting of 6 sub-laboratories.

• This new lab was then given 3 missions; in which thenew labs set 6 goals in order to accomplish thesemissions.

Missions

• Set Sony’s Technologicalfoundation

Goals

• Clear vision & policy

• Clear target and discrimination

Missions & Goals

foundation

• Contribute in Technology &Science

• Train talented individualresearchers & engineers

• Clear target and discriminationof strategy

• Strategic selection & sharpfocusing of R&D themes

• Excellent researchers, engineers,managers

• Mobility of technology and humanresources inside worldwide Sony

• Reinforcing R&D to existing labsoverseas

• Sony Establishes regional R&D head offices in the US &Europe

Early 1990’s“Mixed Approach” – CTO Zone Management

Europe– US: Research Laboratories

– Europe: Stuttgart Technology Center

• Sony appoints Chief Technology Officer to each Division.

• CTO Japan has a responsibility for managing thecompany’s worldwide R&D activities and formulating theglobal strategy.

• CTO US & Europe are responsible for coordinatingtheir own regional R&D activities and formulating the

CTO Zone Management

their own regional R&D activities and formulating theglobal strategy based on the cooperate strategy.

• CTO’s meet twice a year to make sure that the regionalstrategies are consistent with the global strategies.

• They decide what to do in each region, how tocollaborate among the regions, how to allocateexpenses regionally.

CTO Zone Management

• Global synergy.

Benefits

• Reducing coordination cost and gaining flexibility.

• Labs, don’t use autonomy; each lab is givenauthority and responsibility for planning & controllingit’s own projects. Sony encourages it in order toimplement projects suitable for local market needs.