Recently an interesting JIP interview with Shinichi Inagaki, the Japan Industrial Partners executive in charge of the acquisition of the Olympus imaging business, was published by Toyo Keizai Online. I thought readers may like to see this interview so I have provided a link to the corresponding Photo Rumors article.

I would suggest that you take some time to read this interview as it contains some very interesting information. My observations about the content in this interview follow later in this article.

Unfortunately there is some strong anti-Olympus bias with some photography websites. This often manifests itself with a ‘glass is half empty’ perspective in articles, and with gear reviews. On occasion, some obvious hostility towards Olympus can be detected. The reasons for this escape me. Suffice to say that it is always good to consider potential biases when reading articles and gear reviews.

My personal bias is quite evident from the name of this website. No one visiting this website would logically expect any editorial that encourages the purchase and use of full frame cameras.

Without question the needs of some photographers are best met with this type of camera gear. On the other hand, it’s my belief that many people buy into the full frame mantra without fully understanding how they need to adapt their photographic technique to use larger sensor cameras effectively. Many do not consider the trade-offs when moving to full frame gear. Over the past number of years I’ve communicated with many photographers suffering from a significant case of full frame buyers remorse.

So, with my positive bias towards small sensor cameras clearly stated, let’s make some observations about the interview with Shinichi Inagaki of Japan Industrial Partners.

Strategic Orientation Of Purchase

The interview with Mr. Inagaki was both enlightening and encouraging as he is obviously taking a decidedly strategic perspective with the pending acquisition of the Olympus Imaging business.

The strategic decisions taken by JIP with VIAO are instructive. JIP took an unprofitable Sony division that was losing money in the consumer computer market, and transformed it into a profit generating company focused on the business-to-business (B2B) market within 2 years. And, has continued to grow its profitability.

Anyone who has worked in the business-to-business environment for any length of time can attest to how different business practices are when compared to operating in the consumer market.

Successfully moving the VIAO business from a consumer orientation to one focused on B2B markets is no small feat. It would have taken a well thought out strategic plan, supported by a very disciplined approach to its implementation. A high degree of business acumen would have been required for this transition.

It appears that JIP has no plans to divest itself of the Olympus imaging division a few years down the road. As noted in the interview, “Although the company will carry out structural reforms suited to the size of a medium-sized company, it will not simply restructure or sell off plants, but will aim to return the business to profitability in the first year. After that, the company will continue to seek a path to revitalization under JIP, rather than selling off its operations to outside firms.”

Given what JIP has accomplished strategically and operationally with the VIAO business, this should be reassuring to existing owners of Olympus camera gear.

Strategic Assessment Of Core Competencies

It is also interesting that JIP’s review of the core competencies of VIAO led to the creation of the EMS (Electronics Manufacturing Service) business as a B2B service.

The EMS part of VIAO provides for the design and engineering of custom circuit boards used by a variety of manufacturers, with some emphasis on manufacturing robotics. Robotic manufacturing has been, and continues to be, a fast growing area of global technology.

The creation of EMS is a very good example of strategic business planning that resulted in a product expansion strategy. And, of a company creating new products/services by understanding how to effectively leverage its core competencies and points of differentiation.

It is very clear to see how the expertise of the VIAO EMS service could be leveraged with the Olympus imaging division in terms of designing and engineering custom circuit boards for a wide range of camera related products. The obvious synergies that could be leveraged may also provides hints of broader strategic intent on the part of JIP.

Assessing the core competencies of the Olympus imaging business should enable JIP to take full advantage of the product differentiation currently available. It can also help identify where future product differentiation should be focused in terms of research and development.

JIP Ownership & Keiretsu Connections

It is interesting to note that a primary shareholder of Japan Industrial Partners is Mizuho Securities.  This appears to be a division of Mizuho Bank, one of the largest financial companies in Japan. So, while JIP may appear small on the surface there are powerful entities connected to it.

There is also a keiretsu connected to Mizuho. Some of the other companies associated with this keiretsu include Sony Corporation (which may explain why Sony invested in Olympus for a period of time), Sharp Corporation, Fuji Electric, and Pioneer Electric Corporation to name a few. Canon and Ricoh are also connected through their precision machinery businesses.

If we look at the strategic potential for some of the Olympus imaging technology to be used in the automotive industry (think about self-driving automobiles and the cameras/sensors needed for this technology) there are also some interesting Mizuho keiretsu connections. These companies include Toyota, Honda, Nissan, Suzuki, Daihatsu, Isuzu, Mitsubishi Fuso Truck, and Subaru.

It is important for us to remember that many acquisitions are not based solely on what a company is today. Often it is far more important to consider what a company has the potential to become in the future. Differentiation achieved through technological advantages and competencies are valuable assets and potential launching pads for future growth.

Strategic Intent With Olympus Imaging

Mr. Inagaki’s comments indicate that JIP will be taking this same type of strategic action with the Olympus Imaging division as it did with VIAO.

It is important to note that JIP recognized and valued the fact that Olympus “had its own unique characteristics and technology”. These factors point to the potential to effectively differentiate Olympus imaging products within its current photographic markets.

In Mr. Inagaki’s interview it is stated, “JIP expects that there are certain number of markets in Japan and overseas where the characteristics of Micro Four Thirds are highly regarded, and that the company will be able to establish a solid business foundation by digging into these markets where its core owners are located”.

This indicates a clear intention to pursue an overall  niche differentiation strategy, as well as use a Market Penetration approach to marketing. I was hoping that these specific strategies would be pursued.

He mentions a potential product expansion strategy by moving into the surveillance camera market. This has both consumer market and B2B market potential. The size of the global surveillance camera market would likely dwarf the existing photographic camera market on which Olympus Imaging is currently solely focused.

It is easy to imagine how some of the core competencies of Olympus Imaging (image stabilization and weatherproofing for example), could be leveraged into a number of other product categories in both consumer and B2B markets.

This type of thinking would take Olympus into other markets outside of its current focus which is centred on the design and manufacture of traditional interchangeable lens camera gear. It could also successfully position Olympus in the value/production chain of other business-to-business manufacturers… as noted by the keiretsu connections mentioned earlier.

Addressing a broader number of niche market camera opportunities where JIP could leverage specific Olympus technologies makes sound business sense from a strategic standpoint.

Strategic Orientation To Human Resource Management

Another indication of strategic intent is Mr. Inagaki’s comment and concern about acquiring some of the R&D personnel from Olympus that would be needed for future product expansion and market expansion strategies.  Human Resource Management is one of the four pillars of corporate strategy.

If the intent of JIP was simply to purchase Olympus Imaging, make it profitable in the short term, then spin it off, there would be no reason for Mr. Inagaki to even mention the importance of acquiring key R&D personnel.

One aspect of strategic planning that is often not visible to most people is human resource development and management. When strategic plans are formulated, considerable time and effort goes into assessing the human resource assets of an organization that would be needed to implement the strategy successfully. Without the right people, with the right skills, the implementation of corporate strategy will fail.

As more background on Japan Industrial Partners is surfacing, its strategic orientation with some of its acquisitions is becoming more visible. Its ownership and keiretsu connections are becoming better understood. These factors have further increased my confidence about the future of the Olympus imaging division.

‘Expert’ Opinion

Some of the comments by the so-called ‘camera market expert’  at the end of the interview article were of dubious value. Professional photographers do not buy camera gear simply based on sensor size. They buy the equipment that best meets their specific needs, and will help them be profitable with their businesses… regardless of sensor size.

That’s why a number of well-known, award winning nature photographers like Petr Bambousek, David Tipling and Andy Rouse have recently moved over to Olympus. Other professional photographers in other genres have also moved over… folks like Joe Edelman, Kelley L. Cox and Matt Suess to name a few. Most left their full frame gear behind.

No One Can Guarantee The Future

No one knows how JIP’s acquisition will ultimately play out. Just like no one can guarantee the future of any camera brand.

Based on the clear strategic orientation in Mr. Inagaki’s comments, I think we will see JIP leverage the core competencies and differentiation of Olympus products by focusing on specific niche photographic markets where they can be best positioned.

Nature/birding is an obvious market (note some of the pros mentioned earlier that have moved to Olympus). Travel and adventure photography is another (see the work of Chris Eyre-Walker in this regard). As the average age of camera owners continues to trend upward, we may see more small, and lightweight offerings from Olympus imaging under JIP ownership.

There are also good indications of the potential for Olympus imaging to be positioned in both the consumer and business-to-business markets. This will ultimately depend on the product expansion and market expansion strategies that JIP decides to pursue.

The interview with Mr. Inagaki has many strong indications of strategic intent. That’s what the Olympus Imaging division has needed to guide it forward and help ensure its survival and profitability into the future.

Positioning For The Future

Assessing all of the strategic implications in Mr. Inagaki’s interview led me to a simple conclusion. The future of the Olympus Imaging business was not to be found as a part of a medical and scientific products company.

It is much better placed as an important and integral part of a new camera company with the strategic intent to pursue a number of consumer and business-to-business niche camera markets.

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