Wednesday, July 15, 2015

Satoru Iwata on layoffs: "laying off a group of employees will not help to strengthen Nintendo's business"

I have clear childhood memories of this NES game, "Top Gun."
I am not a gamer, but I couldn't miss the news that Nintendo president Satoru Iwata died this week. Via Twitter, I saw his comment on "corporate restructuring" from 2013, which struck me (naturally) as being very wise: 
Nintendo global president Satoru Iwata believes that his company can get back into the black without firing any of its employees, through good ol' fashioned efficiency and cost-saving measures. 
"It is true that our business has its ups and downs every few years, and of course, our ideal situation is to make a profit even in the low periods, return these profits to investors and maintain a high share price," Iwata said during a recent shareholders meeting, in response to a question about "corporate restructuring" as a solution to Nintendo's problems. 
"If we reduce the number of employees for better short-term financial results," he continued, "employee morale will decrease, and I sincerely doubt employees who fear that they may be laid off will be able to develop software titles that could impress people around the world." Iwata also noted that global exchange rates have played a major part in Nintendo's financial situation, saying that "the influence of exchange rates is the main aspect of this matter," rather than Nintendo's headcount. 
"Employees make valuable contributions in their respective fields, so I believe that laying off a group of employees will not help to strengthen Nintendo's business in the long run," he said. "Our current policy is to achieve favorable results by continuously cutting unnecessary expenses and increasing business efficiency."
It's a shame that more pharmaceutical company executives don't think this way about their R&D scientists. 


  1. "Employees make valuable contributions in their respective fields"

    It's a tragic sign of our times that statements like this one have to be explicitly enunciated.


  2. Stating the obvious, but big pharma's far from the only place you run into that.

  3. Does anybody know whether Nintendo actually held to these statements? Because plenty of pharma/biotech execs have said similar things and then slashed entire divisions afterwards. I'm less interested in what Iwata said, I want to know what he actually did.

    1. Looks from a brief Google News search, there have not been significant layoffs at Nintendo, although they appear to have closed their European offices?

    2. Generally, Japanese companies are extremely reluctant to lay anyone off, ever, especially within Japan. On the downside, being laid off in Japan is often career ending as companies tend to only hire new grads. Also, for better or worse, you are usually forced out at age 60. If they allow you to stay, it will be at greatly reduced pay.

    3. I thought they tended to put the 'waiting for retirement' and duds by the windows?

    4. i.e. the so-called "窓際族"

  4. It seems to me that there are some valid and desirable characteristics of enterprises that are not readily quantifiable - e.g. continuity/transmission of practice, maintenance of institutional culture, and the mid-to-long term viability of the institution (I might have said sustainability, if that term had not been hijacked) - and that these arguably promote or reinforce the individual natures of said institutions, thereby contributing to the uniqueness of their various products. Considerations of these get blown out of the water by (largely financial) variables that are more heavily documented, more readily quantifiable, and easier to observe over the short-term, and which can be more obviously manipulated though discrete actions. Mid-to-long term these may not improve the health of institutions, nor the overall health of their environment, and may play to their own - and their broader framework's - disadvantage.

  5. The problem is that most U.S. CEOs know nothing about Walter A. Shewhart or W. Edwards Deming.

  6. It's the US concept of motivation...