The Toshiba Lesson As It Gets Delisted After 74 Years

On Wednesday, Toshiba, one of Japan’s most prominent companies, was delisted from  the Tokyo exchange, after 74 years. Three things dislocated Toshiba: accounting malpractices, corporate governance and bad luck. Yet, when I look at Toshiba, I look at GE.

When GE sold GE Capital, I wrote that it was a very strategic mistake because GE Capital was a double play which powered the whole group, and by selling the financing arm, GE imperiled the capacity of its one oasis to return value to the business: “The summary here is that GE did not know that GE Capital was its double play for shipping those hardware solutions. Even if it was not making money via GE Capital, GE Capital was critical for most monies GE Power, GE Healthcare and other units were making. “ 

For Toshiba, it was the bankruptcy of Westinghouse Electric when the planned construction of a nuclear power plant vaporized. To remain in business after that episode, Toshiba sold off its multi-play businesses like mobile phones, medical systems, large appliances and broad white goods.

But with the plays gone, where do you expect the profits? No place. And over time, Toshiba faded.  Nonetheless, it may not be over for Toshiba: “Earlier this year, the company confirmed it would be taken over by a group of Japanese investors led by state-backed Japan Investment Corp (JIC) for $14bn. It’s not clear how the new owners plan to turn around Toshiba but its outgoing chairman has said high-margin digital services will be a focus.”

From Nokia to Toshiba and everything, markets do not respect brands blindly. Only great products or services do customers respect. If you do not deliver them despite any prior heritage, you will struggle. That is what has happened here. And if we go back to GE, it is back to that old heritage, helping customers buy its products, and it is doing better again. And you will wonder: why did it even leave what was working? Leadership! It defines everything in companies and nations – and we must learn from it.

Now, it seems GE is coming back to that root: help customers buy things by making solutions more affordable. Yes, Access Bank and GE are partnering to help institutions acquire GE Healthcare solutions in Nigeria: “Access Bank and GE Healthcare  are to provide sustainable healthcare equipment financing to private healthcare providers”. GE must have negotiated better interest rates for these customers which none could have gotten directly with Access Bank.

The summary: we must innovate if we hope to thrive in markets, and as that innovation happens, we must measure to know what works, and does not work, so that we do not in the name of restructuring kill the heart of our business.

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