Nikon Brief: How Companies Can Use Investors to Their Advantage

From the Harvard Business Review:

by Shigeki Ichii
 
He [Masashi Oka, CFO] asked one former major investor for a reaction to the company’s prediction (accompanying poor quarterly results): “that the [current] market contraction will bottom out soon and our profits will improve.” The reply he got was like a cold shower: “Management is delusional about their long-term prospects,” said the investor, adding, “Every time we meet … it truly shocks me how far behind it is and how slow they have been to grasp the trends of the industry.”
...
 
The company took note and duly committed to reducing costs at a rate exceeding market contraction. Six months later, with Nikon’s prospects looking much brighter, it was time to check in with investors. Their responses, like Nikon’s fortunes, had reversed course. The very same former major investor who had previously described Nikon’s management as “delusional” had now changed its tune. “I am very impressed with the bold actions you have taken thus far, and I look forward to monitoring your progress from here. It sounds like Nikon will be a very different company five years from now—at a minimum a much more profitable one.” The new attitude was reflected in the company’s share price: One year into its transformation, Nikon’s stock price had risen by 35%.

Read the entire article on the Harvard Business Review.

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