Todd Rytting CTO Panasonic NA

Building the New Panasonic

Oct. 31, 2014
As the 20th century tech giants flounder and fade under the demands of today's changing technology landscape, Panasonic has found its footing.

Just a decade ago, Panasonic (IW 1000/41) ruled the consumer electronics world. The brand was synonymous with top-quality TVs, cameras and appliances – all of the pre-connected entertainment devices that lined our walls and filled our homes.

It was a ubiquitous brand, seared permanently into the minds of consumers.

But while that impression has persisted through the years, it no longer really reflects the full scope of the company today. Not by a long shot.

Panasonic still makes those products, of course. It even packs a brand new range of smart devices, appliances and gigantic 4K TVs for consumers. But that only reflects a small portion of its offerings—just 15% of its total market, in fact.

The company's real game today is B2B—designing and manufacturing the components and technologies that drive some of the best products and brands on the market.

Today, Panasonic powers Tesla's electric cars, it provides top-to-bottom entertainment and information technologies on planes and on car dashboards, it builds entire smart communities and smart homes and Japan, and soon, it might even make self-driving cars a possibility.

It is, as Panasonic North America CTO, Todd Rytting explains, a brand new company, practically unrecognizable to its consumer-based roots.

Over the last few years, we have watched many of the 20th century giants flounder under the demands of the evolving technology markets.

But Panasonic offers what is turning into what might be considered a wild success story for one of those companies. It provides a case study for corporate transition, transforming a Japanese consumer products manufacturer into a global design and technology company, led in large part by its North American team.

Rytting recently sat down with IW in Panasonic North America's brand new corporate headquarters in Newark, NJ—a custom-designed 12-story office building decked out with solar panels, smart lighting and Panasonic's connected 21st building technologies at every turn—to explain how the company made this transition and how it is positioning itself for the future.

Q: We keep reading about Panasonic's new deals and your new markets. Your work with Tesla's new Gigafactory, for example, has been huge news for months. But even with all that, when I saw the Panasonic logo out front, I was still expecting to come in and talk about TVs.

So, I guess that might be the first challenge to discuss. What is the Panasonic brand today, exactly?

A: That is a big challenge for us today, I think. We really have to re-educate consumers about what it is that we do.

The biggest thing that we need to educate people on is that we're not just cameras and TVs.

Panasonic is still cameras and TVs, of course, and that's still a big part of our consumer business, but the biggest part of our revenue here in the U.S. is business-to-business sales—85% is B2B sale, in fact. That's the first thing that people are really surprised about.

Another thing that people are really surprised about is as we look at some of those industries that are B2B, it's stuff that you don't even know Panasonic is behind.

Of course, Panasonic's biggest success in the B2B market is its deal supplying batteries Tesla.

Q: That would make it difficult. Can you give me an example?

A: For one thing, we are the largest supplier of inflight entertainment in airlines.

You fly around, you watch a movie on a plane, it's probably us that is bringing the movie to you.

It's a fascinating story because, you know, people get the idea that the display they are looking at, that's a Panasonic product. That makes sense. But what people don't understand is that we not only supply that display, but the entire infrastructure that goes behind that.

That includes the cables, whether they're fiber optic or wired or wireless, that connect the server that is on the plane.

We design and build our own servers that are flight qualified.

We build the antennas that go on the domes of the planes that connect to the satellites.

We have 11 ground stations scattered around the world that are transmitting to the satellites so we can maintain continuous coverage all over the world.

We maintain a backbone that brings all of this information into our control center into California where we can track every plane real time that is flying our products in the world.

We will know if seat 34C has a problem in the air before the flight crew knows about it.

The reason for that is that the airlines can do everything right. They can have the planes on time, the equipment works, the food is great, the staff is courteous and polite, but if you can't watch a movie when you're travelling 12 hours, you're mad. You're upset. That's why the airlines care so much about inflight entertainment. And that's why they trust Panasonic to provide that for them.

So, basically the entire infrastructure, service and support that the airlines gets is from us, and that's why we're so prevalent.

But no one ever sees our name, unless you see it reboot. Which is a bad thing.

It's a really good example of how Panasonic provides products to a business customer, not the end consumer. We're out there really trying to please our customers' customer.

American Design

Q: Looking around your showcase here, I'm seeing construction technologies, information systems, sensors and security technologies. Expanding that full-infrastructure engineering example to all of these other systems seems like an extremely broad range of technologies to manage. What is your role in all of this?

A: Well, keep in mind that Panasonic is a global company. Traditionally of the products that you see have come from design and development teams in Japan.

They do absolutely amazing work—I've seen them turn sketches into fully functional cameras in three months. That's what they're really good at.

As we became more and more global, though, we need to become more and more sensitive to unique situations to each region that we're in.

North America is a unique area because we have a lot of innovation here and a lot of standards and regulations happen here.

So Panasonic North America has begun over the past several years to take a bigger rol

e in design, development and engineering tasks here for our own markets.

That started with the avionics and the automotive elements primarily. Most of the design and development for those products happened here in the United States.

What's happening at Panasonic in my particular role is more the D side of R&D—the development.

Basically, we take the Panasonic products, glue them together with software and create value on the information that we collect.

That's Panasonic's continual move into information driven products, rather than just manufactured products.

It's not leaving the other behind; it's just adding a complementary revenue stream and business model to it.

For example, the displays in the airlines. You can start with that core display, but everything else was something added to that.

My job is to oversee the development of these new business ventures.

Panasonic N.A.'s headquarters in Newark is a reflection of the company's new direction

Q:How do you manage all of that here?

A: If there is one thread that is continual for my career, it's that I've had the good fortune to manage some exception al people. Scientists and engineers.

If I were to say I am an expert at something, it's at building an environment where an exceptional engineers and scientists can thrive.

That's different than just managing average people.

My philosophy is that if I can get the very best people I can find and put them to work on a common vision, 90% of my job is done.

If you get the right people and get them an environment where they can do what they do best, magic happens.

That's my job.

About the Author

Travis M. Hessman | Editor-in-Chief

Travis Hessman is the editor-in-chief and senior content director for IndustryWeek and New Equipment Digest. He began his career as an intern at IndustryWeek in 2001 and later served as IW's technology and innovation editor. Today, he combines his experience as an educator, a writer, and a journalist to help address some of the most significant challenges in the manufacturing industry, with a particular focus on leadership, training, and the technologies of smart manufacturing.

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