Lesson #5: Create the Market Where There Is None

In 1950, the Tokyo Telecommunications Engineering Corporation had a problem on their hands. Morita and Ibuka had finally conceived and designed Japan’s first tape recorder by grinding up magnets and sticking the powder to strips of paper that they had covered with rice paste. The product worked, and they believed it had great potential, but as of yet, there was no demand.

Few Japanese were interested in this little device that seemed to have no practical use, that is, until a group of teachers discovered the product and realized that it had possible use in their classrooms. Not one to miss out on the opportunity, Morita and Ibuka began producing educational radio programs on tapes that met the needs of the teachers’ curriculums. The duo also began traveling to schools across the country, introducing their new gadget to teachers and demonstrating how it could be beneficial to their schools.

What was once an innovative product with no market quickly became an innovative product that was in high demand throughout Japan. Sales of the device were flying off the shelves so fast that the company could barely keep up with the demand. Morita had not only improved his profits, but he had also learned a valuable lesson. He did not need to simply make products to meet a market need; he could, in fact, create the market himself. And, that was a lesson he would keep close in mind over his years at Sony.

As golden as his intuition might have been, Morita was not perfect. He did get behind a number of Sony products that were, in the end, unable to generate a profit. For instance, Sony had come out with the beta max tape, a product with superior technology to anything that was on the market at the time. Its image quality was unmatched. However, when one of its competitors released the VHS, Morita’s product floundered. VHS’s longer recording capacity proved popular with customers.

The stubborn businessman that he was, Morita refused to integrate any of VHS’s technology into his beta max, or to change his product in any way. As a result, Sony incurred heavy losses. But, that did not stop Morita from sticking to his intuition. He knew that where the product was the most innovative on the market, he could sell it.

It was for this willingness to take risks that in 1972, Morita was awarded the fist ever Emmy by the National Academy of Television Arts and Sciences for a product – the Trinitron. Four years later, he received a second Emmy Award for his U-Matic video tape recording system. Over the years, the Emmys would keep on coming.

Morita knew that his market was a highly competitive one, and the only way to stand out was to find his niche. That niche was with innovative and top quality consumer electronic products. And, Morita understood that the very concept of innovation rested on the idea that he was presenting to people something they had never seen before. Thus, where there was no market, he knew he would have to create one, and that is exactly what he did at Sony.



Lesson #5: Create the Market Where There Is None

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