Management lessons through story telling-Sony’s transistor radio

Understanding vision

Sony’s first transistor radio of 1955 was small and practical – Morita saw the United States as a natural market; business was booming, employment was high, the people were progressive and eager for new things, and international travel was becoming easier.

Morita took his little $29.95 radio to New York and made the rounds of possible retailers. Many of them were unimpressed. They said, “Why are you making such a tiny radio? Everybody in America wants big radios. We have big houses, plenty of room. Who needs these tiny things?”

The fidelity was not as good as a large unit, but it was excellent for its size. Many people saw the logic of this argument, and Morita was happy to be offered some tempting deals.

The following is Morita’s narrative:
“The people at Bulova liked the radio very much and their purchasing officer said very casually, “We definitely want some of these. We will take one hundred thousand units.” One hundred thousand units! I was stunned. It was an incredible order, worth several times the total capital of our company. We began to talk details, my mind working very fast, when he told me that there was one condition: we would have to put the Bulova name on the radios.

That stopped me. I had vowed that we would not be an original equipment maker for other companies. We wanted to make a name for our company on the strength of our own products. I told him I would check with my company, and in fact I did send a message back to Tokyo outlining the deal. The reply was, “Take the order.” I didn’t like the idea, and I didn’t like the reply. After thinking it over and over, I decided I had to say no, we would not produce radios under another name. When I returned to call on the man from Bulova he didn’t seem to take me seriously at first. How could I turn down such an order? He was convinced I would accept. When I would not budge, he got short with me.

“Our company name is a famous brand name that has taken over fifty years to establish,” he said. “Nobody has ever heard of your brand name. Why not take advantage of ours?”

I understood what he was saying, but I had my own view. “Fifty years ago,” I said, “your brand name must have been just as unknown as our name is today. I am here with a new product, and I am now taking the first step for the next fifty years of my company. Fifty years from now I promise you that our name will be just as famous as your company name is today.”

Adapted from “Made in Japan,” by Akio Morita