In May of 2013, Takuya “Tak” Nakata succeeded Mitsuru Umemura as president and representative director of Yamaha Corporation, Japan. Since 2010 Nakata had held the reigns of Yamaha Corporation of America (YCA) and was a driving force behind a period considerable growth for the organization – this despite what could be described as having been (at best) a “challenging” financial climate in the U.S.
MMR recently sat down with Mr. Nakata to discuss his evolution within Yamaha, his designs for the future of the company, the recent acquisition of Line 6, and much more…
MMR: Let’s briefly discuss your own recent history with Yamaha. What adjustments and challenges came with transitioning from president of YCA to that of president of Yamaha Corporation?
Tayuka Nakata: Working as the president of a sales company in such a giant market as America was a profound and extremely exciting experience, but considerably different than my current position. As president of Yamaha, it is my job to set the course of Yamaha as a whole, which has required me to expand my view from sales to an overall view of all aspects of the business, including development and production.
However, every job is about considering what we need to do for our customers now and in the future. I feel that all jobs are essentially the same in this respect. If my position changes, I simply work hard to adapt. It doesn’t mean that I myself have done anything special.
What’s your long-term, “grand vision” for Yamaha within the MI industry?
My aim is being an industry leader that continually creates innovative new products that will excite our customers. I want this company to be one that has dreams not only for our customers but also for our employees, too.
How has the recent volatility in exchange rates been impacting both Yamaha and its business partners?
With an increasing proportion of production and sales being conducted in countries other than Japan, the fluctuations in the exchange rates are not affecting our business as greatly as before. But some fluctuations, mainly in the Euro, have affected our profits.
At present, fluctuations in the Euro-yen exchange rate are affecting our profits by \370 million, while the rate of the US dollar has an effect of around \60 million.
The predicted exchange rate for the third quarter onward is around \95 to the US dollar and \130 to the Euro. Euro exchange reserve contracts have been made for the next three months. If the current exchange rate standard continues, our business is expected to improve.
Could you provide a better understanding of the most recent changes Yamaha has made to its business structure, the reasons for these changes, and the benefits they will generate for music dealers and end-user customers?
On August 1 of last year, we reorganized our six business divisions related to musical instruments and audio products into three groups according to function: production, development, and sales and marketing.
This business structure was created to handle current issues that we have become aware of. In the harsh management environment from the Lehman Brothers crisis onward, Yamaha management has, over these years, been forced into the defensive, but I recognize that the time to sow the seeds of growth has finally come. But what is needed to produce those buds of new growth?
I believe there is an urgent need to create new customer value by leveraging Yamaha’s diverse technologies, which are its primary strength, not only independently, but also in combination.
Both the product business division organization and the functional organization have their strong and weak points. But to create an ongoing series of products that have new value, like the hybrid piano, which amalgamated acoustics and electronics, it is better to have an organization along functional lines to enable each function to create synergies among our three business groups.
This will also allow us to harness Yamaha’s full potential in sales, technology and manufacturing. We aim to meet dealers’ and customers’ expectations by providing revolutionary new products that meet users’ needs at a reasonable price.
Could you give me an update on the effect of the recent strike in Indonesia?
Yamaha understands that this strike has caused problems for our dealers, and for consumers who wanted to purchase Yamaha guitars. We are sorry for this lack of supply. Now, Operations at the factory have resumed since [mid-February]. We expect to recover the production, having the target to reach the pre-strike period level at the end of March.
[The impact of the strike on the performance of Yamaha in this fiscal year is now under review and will be included in the announcement of the Q3 result. – Ed.]
What challenges come with leading an organization that fields product in such a wide variety of categories – B&O, guitars, sound reinforcement, pianos, et cetera?
I think Yamaha overcomes the challenges inherent in designing and crafting a wide variety of instruments because Yamaha has an environment in which our employees can use their specialist expertise. Delegating each product to an excellent employee allows one general instrument manufacturer to produce a large number of cutting-edge specialist products in a variety of domains.
My job is to find outstanding human resources and entrust work to them. I also take measures such as placing all of our products together several times a year and taking a look at them with my own eyes. When checking the quality of our instruments, the main thing I ask myself is “Who are the customers for this instrument?” The strengths and weaknesses of an instrument become clear to me when I think about who the customers are and look at the product through their eyes.
The concept of “going green” and operating in an environmentally conscious/friendly manner has been a hot-button topic for the past few years. What is Yamaha currently doing to be more “green” and what will the company be doing in the future to continue to be more environmentally friendly?
The Yamaha Group has various group-wide environmental policies. We have been working to reduce CO2 emissions, lessen our environmental load through measures such as recycling materials, and reduce risks through measures such as accident prevention.
In our main manufacturing bases in Japan, China, and Indonesia, we have built an environmental management system and obtained ISO14001 accreditation to further our environmental efforts. We are also working to prevent pollution, with Head Office employees conducting environmental risk audits to prevent environmentally destructive accidents.
Environmental efforts are the social responsibility of businesses, and have played a major role in helping the Yamaha brand to shine. It is important to view all of our work from an environmental perspective. For example, as a company that manufactures products made from wood, we need to be aware of how we are procuring our wood resources. We are currently involved in tree planting efforts in countries such as Indonesia and Japan to preserve local environments, as it is extremely important to actively further forest preservation in order to maintain our business of manufacturing musical instruments.
As an inhabitant of this planet and as a person, I believe that if we approach our work with the aim of passing on the planet to the next generation in a better condition than it is now, this is sure to make a positive difference not only to the planet but also to our own business, and lead to the creation of better products. I make sure to convey this message to all of our employees.
Yamaha purchased Line 6 in January of this year. What were the events leading up to the move?
One of the core business strategies in the Yamaha Management Plan 2016, the medium-term management plan that we announced last April, is to develop new businesses to promote rapid growth of the Yamaha Group. As a part of this, we set an M&A investment framework of 30 billion Japanese Yen over three years. Line 6 is a company that has created various innovations from the viewpoint of musicians, and we had already felt that many aspects of their corporate culture would mesh well with ours. We were confident that Line 6 would be an ideal partner to create new value for customers as we devise growth strategies that will benefit the next generation. My own personal dreams also played a part in this decision – as a guitarist myself, I was full of hope for the new possibilities that this acquisition might bring.
What are the company’s plans with respect to integrating Line 6 into Yamaha?
We purchased Line 6, Inc. with the aim of strengthening our business in the guitar-related sector, so I believe that the expansion of our product portfolio will contribute to faster growth. At the same time, we aim for the amalgamation of both companies’ brands, technical strength, and global market and customer knowledge to be a driving force for innovations for the next generation.
The Yamaha Group intends to respect the independence of Line 6 and the business culture it has created, and provide support so that the Line 6 brand can continue to grow. Line 6’s management team will remain as it is, and we hope that they will make even more of their strengths as a member of the Yamaha Group. At the same time, we are considering the creation of a system to promote mutual idea sharing and innovative discussion on measures from product development to sales strategies to capitalize on the strengths of both the Line 6 brand and the Yamaha brand.
We have purchased several overseas companies in the past, including Steinberg (Germany), Bösendorfer (Austria), and Nexo (France), and learned a lot from those experiences. I firmly believe that our latest addition to the Yamaha Group will help the Yamaha Group provide even more unique value for even greater customer satisfaction.
What are your expectations for the MI market in the coming year?
Another of the core business strategies in YMP2016, our medium-term management plan, is to accelerate growth in China and other emerging countries, but from looking at the last few months of last year, I feel that we can expect greater recovery from mature markets like the USA. I do not think that rapid growth can be expected, of course, but it is clear that these markets are on the road to recovery, and we see them as attractive markets in which we can expect strong sales. As for markets in China and other emerging countries, while the state of the market varies depending on the region and the overall growth rate is sluggish, we can still expect growth in the medium term, particularly in China. Incomes are increasing rapidly, and the standard of living is improving as quickly as the transformation that Japan saw. I would like for us to continue focusing on this region so that we are not left behind by the speed of these economic advances. I am hopeful that by quickly supplying products that suit the needs of each region, including from a pricing perspective, we can steadily create new demand worldwide.
Any final thoughts related to the musical instrument sector?
I was very happy with the energetic feel of this year’s NAMM show. Dealers were excited by our new products and were generally in a very good mood. I think that dealers’ positive energy will translate to consumers, and make 2014 a great year for music and sound products.
