The full exit from consumer-electronics exports (1974)

The weight of a choice to discard the breadwinner

The heart of this decision was not the defensive tidying-up of a loss-making line but letting go, in advance, of a business still earning 60% of sales, because its decline was judged structural. Had they wanted to protect near-term sales, they could have propped up exports and chased better margins. Kubo and Kotaka did not, because they saw that consumer-electronics exports did not suit the company’s constitution and offered no way out of a war of attrition with the giants. The pain of discarding the breadwinner extended to a change of management — the resignation of the managing director who fought it hardest — and was anything but a smooth decision.

Turning the resources freed by the retreat toward IC-production equipment, measured against a clear yardstick of seven selection criteria, became the blueprint for the high-margin character of later years. The pattern — take a high share of a narrow market and raise value through technical service — was put into words at the moment of this decision. Rather than chase sheer scale, the question was how to concentrate resources on the businesses where its own strengths tell. Tokyo Electron’s first step in shedding the trading house for the manufacturer can be seen in this decision to let the breadwinner go.