I was watching an online discussion between a Japanese company (a device maker) and a Taiwanese company (a component vendor). The Japanese team was demanding heavy customization and top-notch quality, while the Taiwanese company was clearly in trouble dealing with all the requirements. I could hear their inner voice: “The European companies do not demand this much…but the Japanese company’s order is in a different class compared to the Europeans. What are we going to do?”

It is the time-old scene of a business deal between a Japanese company and a foreign company. I have seen the same scenario over a dozen times in the last 20 years. Unlike the Sunday morning cable TV re-run of The Terminator that never gets tired, the Japanese negotiation (demand) was tired from the beginning, and it is still tired today. The same quality issue, the same customization. Yet this time, I finally witnessed a notable change. In that discussion, it was the European company who was outclassing the Japanese in terms of orders.

Therefore, the Taiwanese company’s internal debate was not the old “How can we challenge ourselves to improve our products, so we can comply with the Japanese clients’ demands?” but “How can the Japanese client challenge us to comply with their demands with such a low number of orders?” Taiwanese company was probably not sure if what they heard was correct, which was also the case in the past. It is just that they used to wonder if that insane quality requirement is the source of the Japanese miracle, but now they are wondering if the guys over the phone is living in the real word or in their crude fantasy.

The truth was, yes, the Japanese company was indeed burying their heads into the sand, not having any idea how realistic their demands were. The discussion immediately went south.

Strange it may sound, this case summarizes what is going on inside the once-mighty Japanese electronic industry. We have seen Sony, Panasonic, and Sharp disappearing from electronic outlets (do you still recognize their names?). Sony’s Walkman ceased to be a brand at all (does that name rings the bell?). People wonder what happened to Japanese electronic companies, and I have only one answer: they stopped living in reality. By “reality,” I mean the ability to get out of their office building and understand what customers really want (or how big/small they are, in the aforementioned Japanese company’s case).

I see decades of “keeping to themselves” are finally catching up on Japanese electronic (once) giants, slowly eradicating their ability to grasp the global trend, chiefly by not inviting “foreigners” into their small circle. What I hear from the survivors in those companies are old employees looking back the past glorious days and waiting until the retirement (while receiving hefty paychecks), and young workers increasingly leaving their positions due to minimal wage, long work hours, and lack of exciting projects.

Of course, those zombie electronic companies do realize that they are in imminent danger. They hold conferences. Create task forces. Ask everybody to work for 12 hours a day. They do anything to lift them up: except for seeing the reality. In their eyes, they are not doing anything wrong. They just do what they have been doing for the last 40 years, and probably doing more so these days since they aren’t making any money. “We have been doing great by cramming as many features into a small enclosure, and therefore we can rise again by keeping the tradition!”

The definition of insanity is doing the same thing over again and hoping for a different result. And yet, we always fall upon this trap especially in our (once-)successful fields. It is disheartening to see my home country degrading in such an un-glorified manner. Hopefully I can at least keep this story as a lesson for myself and my own circle. Am I living in reality?