Nakamura Kunio’s “destruction and creation”: dismantling the division system and taking five group firms fully in-house (2001)

What it means to break the founder’s legacy

The weight of the Nakamura reform lies in the fact that what he cut was not an unprofitable business but the very organizational philosophy Matsushita Konosuke had left behind. Autonomy through spun-off subsidiaries was at once the source of Matsushita’s strength and a hotbed of duplication and silos. Knowing that ambivalence, Nakamura put his hand to the sanctuary. To move a company that had grown complacent in financial soundness and forgotten how to grow, there was no choice but to break it together with its success story — this reading, consistent from just after he took office, can be seen to have led to the recovery of the mid-2000s.

Yet the sharpness of destruction did not guarantee the sureness of creation. The very reformer who had pressed the company to discard its success story gathered resources, in television, onto a single technology — plasma — and tried to build a new success story there. This concentrated investment, which failed to read the shift toward LCD, would rebound years later as a massive loss. What to break, and what to bet on — the Nakamura reform left Matsushita — Panasonic with the difficulty less of breaking than of what to choose after breaking.