"It’s like trying to repair an airplane while you’re flying it.” – Nintendo President Satoru Iwata, on the challenges of being CEO of a company that needs to change.
The quote, given over a year ago, hints at the challenges of getting long-term support from investors for long-term strategic changes.
"If a CEO were to say, ‘It’s time for a revolution, so give me five years. Until then we’ll be in the red,’ he’d be fired,” said Iwata. “Instead, he has to try and change things each year while maintaining a standard level of profit. “It’s like trying to repair an airplane while you’re flying it.”
The discussion is especially relevant to Nintendo today, facing stagnant Wii U sales and a successful 3DS still challenged by the threat of mobile devices. Nintendo’s investors demand profit every fiscal period, which creates a constant short-term goal that has to be managed against building a long-term vision for the company.
By focusing on pleasing investors for quarterly earnings reports, CEOs risk deemphasizing long-term opportunities, such as investing heavily in technology that may not succeed and may take years to pan out, or selling consoles at low prices to attract customers early and maximize long-term value.
Nintendo has consistently used long-term plans as a defense for not bringing Nintendo games to smartphones.
"If I was only concerned about managing Nintendo for this year and next year - and not about what the company would be like in 10 or 20 years - then I'd probably say that my point of view is nonsense,” said Iwata. “But if we think 20 years down the line, we may look back at the decision not to supply Nintendo games to smartphones and think that is the reason why the company is still here."
The first quote in this article comes from an interview on the site Hobo Nikkan Itoi Shinbun, operated by Shigesato Itoi, the creator of the Earthbound series. The translated quote can be found in a 2013 daily planner created by Itoi.
The author, Bryan Cashman, blogs about business issues in the video game industry at CONSULGAMER. This article represents Bryan's personal opinion only.