Consolidated management and self-reliance (1995)

A strength built in-house cannot be surpassed by staying in-house

The core of this decision was not a financial crisis but a pre-emptive move against a blind spot in the midst of peak performance. The “fall into a company with little sense of growth” that Nikkei Business had forecast in 1990, Mitarai set as his own task the moment he took office. From management that summed up each division’s profitability to management that used consolidated profit and cash flow as its measure; holding both technology and sales channels in-house, and tightening inventory with cell production. In the Japan of the 1990s, where many companies competed on unconsolidated sales scale, looking first at the consolidated figure, at profit and at cash is what prepared the high earnings of the 2000s.

Yet self-reliance has a turning point. A design that encloses everything in-house, from elemental technologies to sales channels, generates thick profits so long as the core business is growing. But once the markets for office machines and cameras structurally shrink, the assets grown in-house alone cannot reach the next pillar. Beginning with the 2010 acquisition of Océ, Mitarai went on to take down, through large M&A, the very banner of self-reliance he had raised. The strength built in-house could not be surpassed by staying in-house — this decision leaves the question of how carrying a successful model through to the end eventually binds the next transformation.