A famous concept states that people who work inside the business don’t (and cannot) know what the real issues are, because they are so formatted by the business as usual setting they find themselves in, and because otherwise, they would have fixed them by now. That is perfectly normal and is not a criticism. Only external eyes can therefore correctly discern potential problems a firm might be facing. I agree with this theory.
The Japanese console sector as a whole has the wrong strategy. A new strategy is needed for Japan, and it is far from a product quality only strategy as it has been the case up until now. The new strategy needs to be long-term and needs to bet everything on marketing, and the consumer. The very first question Japanese publishers need to ask themselves is: “what is our winning aspiration?”[1] This question is fundamental to the success of any strategy and any long-term success a company can have. Without a valid answer to this question, there is no point in continuing in business.
Now, why is the word “winning” part of the question, and why is it relevant? The reason is, when you do not try to “win”, somebody else is inevitably going to. Win against what you might ask… or against whom? Well, against all your competitors that are in the same field as you are. Because if you are not trying to win, whatever you do will not be sustainable, since somebody else will be doing what you ought to have done, better, faster, and more effectively than you.
People might say that winning is already implied in the purpose of a company’s existence, but you might be surprised at how many corporations do not have real goals and a defined strategy. And when they do, it is misplaced, too vague, and sometimes plain wrong. For example, a common strategy is for organizations to say they want to become better than what they currently are. Why is this particular aspiration not a very good one? Because improving yourself without a very clear and precise goal in mind is not very helpful. Let’s take the example that Roger Martin[2] gives in a lecture he did on the subject.
Back in 2006, General Motors hired him as a consultant to help with the release of the 2008 Malibu. Senior management’s winning aspiration at the time was for the new Malibu to be better in every way than the older model. Although in this case it is a clear and precise goal, it is nevertheless an underwhelming aspiration. Certainly not deserving the $2 billion investment it got. They were hoping to simply double the 60,000 units sold of the previous model. Much like Japanese companies today who wish their new game to perform slightly better than their previous one. In fact, even doubling sales is can be seen as too optimistic for most Japanese corporations. But why is this a bad strategy?
Going back to our example, it’s because they did not take into account the competition. In that same year, the Toyota Camry sold 560,000 units and Honda’s Accord sold 440,000. So, the aspiration for the Malibu was simply to do 120,000 sales. Roger told them this was not a good enough aspiration and they agreed to change the strategy to build a car that would be “as good or better than the Camry.”
Sure enough, after 7 months of hard work and $300 million invested in a specialized team that was there only to overcome the nine aspects that made them worse than the Camry, they launched the Malibu and it approached the Camry in monthly sales with reviewers saying that for the first time in a decade, GM had launched a car that was equal to or better than the direct competition.
I do not doubt that some Japanese managers really want to win, but the focus is wrong. The goal should never be to simply do better than the previous iteration of your franchise but instead to beat the competition at all costs and sell as many copies as your closest western competitor.
Choose to become a fierce competitor. Decide to win more of the business that is out there. It is possible to leapfrog the larger competitors in your line of business; not by spending more, but instead by shrewd opportunism. Take a good look around, if your competitors have cut back on their marketing or gone dormant, you might have an unprecedented chance to overtake them. Make every marketing and business move as strategic and calculated as possible.
Japanese publishers do not necessarily need to obliterate the competition (they would struggle to achieve that in the short-term). To effectively shave off some of the market share from western publishers, they only need to become competitive once again; something they haven’t been for a while.
To put it simply, if Japan does not invent the next DotA, somebody else will. If Japan does not come up with the next monetization system that revolutionizes the industry, somebody else will. If Japan does not make the next Overwatch, the West will. And if Japan does not come up with more effective marketing and communication strategies, somebody else will.
[1] Playing to Win: How Strategy Really Works by A.G. Lafley and Roger L. Martin
[2] Roger Martin CM was the Dean of the Rotman School of Management at the University of Toronto from 1998 to 2013 and an author of several business books.