Posted by: seanmalstrom | September 16, 2015

The NEW! President of Nintendo

REDMOND, Wash., April 24, 2013 – Nintendo Co., Ltd. (NCL) today announced a planned promotion for Tatsumi Kimishima, current chairman and CEO of Nintendo of America (NOA) and a director of its parent Nintendo Co., Ltd. Subject to shareholder approval, he will become NCL managing director, and transfer from NOA in Redmond, Wash., to NCL headquarters in Kyoto, Japan. In his new position, he will assume the roles of general manager of Corporate Analysis and Administration, and general manager of the General Affairs Division. These titles are currently held by Yoshihiro Mori and Masaharu Matsumoto respectively, both of whom are retiring. Kimishima will assume his new duties in Kyoto later this summer.

There’s some general shaking up of things. Miyamoto is now ‘Creative Fellow’. Takeda is now ‘Technology Fellow’.

The two things to crystallize what is going on and why it is going on is…

…To know why Yamauchi chose Iwata to succeed him…

…and why Iwata’s death was such a disruption (and not of the good kind)…

Nintendo was effectively singularly owned by one family: Yamauchi. When Yamauchi retired, he picked Iwata to succeed him. While much has been made of Iwata’s developer/businessman hybrid abilities, the more important reason was that Iwata was young. Iwata was 42ish when he became Nintendo President. Do you people realize that? Do you hear anyone saying that?

Now, reader, answer me this: why is it important for the young CEO to be young?

Again, two reasons. One is for stability as the young CEO will be around for a long while. Young CEOs become old CEOs. Yamauchi became president of Nintendo at an extremely young age. In Japanese context, they think of their business strategies as well beyond the usual quarters. The second reason for a younger person was, as Yamauchi said, to have the stamina to go back and forth from Japan to the United States on a regular basis.

The CEO of Nintendo has to deal with America and, of course, the world. Iwata was young enough to globe trot. Yamauchi relied heavily on the input of his son-in-law (who founded Nintendo of America).

Now why did Iwata’s passing create such a disturbance for Nintendo? It is not unlike the issue of a popular TV show having risk that the lead actor could walk in front of a bus, and it’d be the end of the show. Yamauchi made an error in putting too much emphasis on one person. After all, it worked for Yamauchi, why not for Iwata? But what if Iwata walked in front of a bus one day? Sadly, a health issue took away Iwata far too soon. Even if they replaced Iwata with a NEW! Iwata or a NEW! Yamauchi, they too pose the risk of walking in front of a bus.

Here were the problems Nintendo had to address for their new CEO…

-Had to be able to deal with business outside of Japan (e.g. Nintendo of America)

-Had to be young.

-Have to create a collective leadership that was ‘future proof’ (this means more than one person, and this means having a pool of different generations to pull leadership talent from so everything is not at risk if a CEO or a ‘generation of leadership’ walks in front of a bus)

Kimishima does not qualify for solving these problems. Kimishima qualifies for some. Kimishima has run Nintendo of America and is well understood in how things go in the North America continent. Kimishima is not young. He is 65.

Nintendo already has a roadmap in place for Generation 9. They will follow that. But Kiminishima’s task, as is Nintendo’s task, is to create a multi-generational leadership pool. Miyamoto and Takeda will retire one day. People grow old and step down. It is the natural course of things. But where is the next generation of Miyamotos and Takedas? Where is the next generation of Iwatas? It is this which Nintendo will seek to cultivate throughout Generation Nine.

I think Nintendo would have kept kicking the CEO can down the road had it not been the critical holiday season approaching. Some say Kimishima is a ‘transitional’ CEO. In other words, once everything is put in place, they can choose the ‘right’ person since they need more time. I don’t believe that is what is going on. It is not about choosing the right person but establishing the right process.

Let me use an example. In the 1980s, there was an oil bust and many oil companies did not hire petroleum engineers during that time. As time went on, they discovered, to their horror, they had a generational gap. The young talent that would have been grown and guided into experienced engineers was missing for that time period. To this day, oil companies now know they need to ‘future proof their talent’. They can’t have everyone retire at once! That’d be ridiculous! The generational issue is a big one in the oil industry where computers took away many technical savvy people resulting in crew full of graying hair. Big money, big prizes, are thrown at new hires because the aim is to turn them into experienced workers. Schools are cultivated in order to obtain new talent.

While I am not sure what Nintendo’s approach is to game development talent, it is clear through their actions with Kimishima’s pick that they are seriously tackling the leadership generational gaps.

Kimishima was not Iwata’s choice.

“But Malstrom, why didn’t they pick Miyamoto or Takeda or someone else?” I recall reading that Miyamoto did want to become president prior to Iwata being chosen. But Iwata said, “Your biggest contribution to Nintendo is your creativity.” I don’t know what their board meetings are about. They certainly don’t let me listen in on them. They probably felt Kimishima could contribute better as president than other options at the board. Or, rather, Kimishima is useless as a creative person and useless as a technology person. So they chose the most talent-less guy as president! Now, that may be harsh, but not altogether inaccurate. Being president is doing a bunch of crap you don’t want to do. Kimishima may be better suited to do that crap and face whiny shareholders.

The NEW! Nintendo President doesn’t tell us anything about Nintendo’s Generation 9 direction aside that it is not changing. What will tell us about Generation 9 will be seeing what the NX is all about.

“What is NX, Malstrom? OMG!”

Oh yes, I’ve been playing the NX on my desk here all day… WTF is wrong with you, reader? Nintendo is not going to give me a NX. I haven’t a clue where they are headed. I don’t even know if they are going to be stubborn and keep going the Wii U route.

“But they changed after the Gamecube failure…” But they didn’t change after the 3d Mario failure, did they? They didn’t change after the failure of the Pikmin franchise, did they?

I will tell you one indication. Prior to the Wii release, Iwata and others talked about expanding the number of gamers. They no longer do this. Instead, they talk about ‘getting Nintendo profits again’. Well, wouldn’t making more Nintendo gamers create more Nintendo profits like during the DS and Wii (or NES and Gameboy)? I am scared that Nintendo will multiply the Amiibo route and target the idiotic hardcore gamer with endless DLC, stickers, collector’s editions, and all that rot for ‘high profits’.

You know what we call companies that target the highest profit user? The soon-to-be disrupted.


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