Rebuilding under Hon Hai — Tai Jeng-wu remakes the cost structure (2016)

From consensus to speed — and the question left after

The heart of this rebuild lay less in plugging the financial hole than in remaking how decisions were made. What Sharp carried was not only the fact of its losses but a consensus-and-circulation process too slow to keep up with the speed of a crisis. When Tai, on his first day, cut the threshold requiring the president’s sign-off to less than a thirtieth of what it had been and pared the required seals down to three, it was also an attempt to swap the “everyone decides together” manner long assumed by Japan’s big companies for a “someone decides fast” one. Reward-and-punishment personnel moves and thoroughgoing cost cuts brought the numbers back, but it is this shift in decision-making that can be seen as the most fundamental change the foreign owner brought in.

That said, escaping a crisis through speed and centralization is a different question from being able to draw the next stage of growth. In the year ended March 2019, Sharp turned to its first fall in sales and operating profit since coming under Hon Hai, and the targets of its stated medium-term plan were revised downward. The foreign owner’s speed worked well to rebuild slackened costs and stalled decision-making. But the choice of what to invest in and which businesses to grow cannot be filled by speed alone. Hon Hai-owned Sharp’s rapid return to profit mirrors, within a single rebuild, both the power to remake Japanese-style decision-making and the challenge of growth that remains beyond it.