An awakening
Mar 1, 2007 12:00 PM, BY ANTHONY R. GARGANO
Radio Corporation of America, known more familiarly as simply RCA, has its roots in the Victor Talking Machine Company, which was headquartered in Camden, NJ. Most of the craftsmen at the Victor Talking Machine Company were skilled in carpentry and wood refinishing, and they produced an acoustic phonograph called the Victrola — the entertainment centerpiece of many early last century family parlors. As a result, the family parlor became the living room, and the entertainment centerpiece evolved into radio and eventually television. And, oh yes, the dominant skill sets of the company were transformed from carpentry and woodcraft to electrical engineering and electronic technicians.
RCA bites the dust
In its prime, RCA was a pacesetter in both the engineering development and the manufacturing of consumer televisions. It was also a leading developer of advanced video, audio, and RF technology and products for everything from the broadcast studio and transmitter site to the top of the transmission tower.
Joining RCA in the mid-70s, I missed that heyday period. Unfortunately, I arrived on the scene just in time to ride down a long, slippery slope that took the company from market dominance and ultimately out of the professional broadcast scene.
Just three months before RCA announced that it was shutting down its professional division, the company chose me to attend the Tuck Executive Program at Dartmouth College. The program was euphemistically referred to as “charm school” within the company.
Returning to New Jersey from “charm school,” I looked forward to applying my newly honed skills to growing a business. Instead, I was put to work shutting one down! Ultimately, it would be three years before the light switches were thrown for the last time and the doors locked.
Taking care of business
RCA had spent more than 60 years supplying professional studio and RF equipment to major broadcasters and production facilities around the world. An orderly shutdown of the business meant closing down engineering, phasing out manufacturing, laying off sales and support staff, and eventually selling the remaining physical assets. Most importantly though, it required RCA to provide customer support, which meant replacing parts and providing service for a minimum of 10 years.
Joining the RCA mafia
RCA spent a year fending off lawsuits, terminating its workforce and trying to assure disappointed customers that they would continue to receive support. This year was more time than anyone should have to spend in such a gloomy, negative environment.
At the end of that year, I received two offers. One option was to sign on for another year in the phaseout activity at RCA. The other was to join Sony. At the time, there were so many ex-employees of RCA working for Sony that, internally, they were affectionately referred to as Sony's “RCA mafia.” It was an easy decision to join the mafia.
Different strategies
Moving to Sony was quite a change and an eye-opener. Within a few weeks, I was on a plane to Tokyo for my Sony indoctrination. It didn't take long to understand why RCA was dethroned from its broadcast market leadership position. Where RCA had fewer than 20 VTR engineers, Sony had more than 200. RCA had perhaps 10 camera engineers; Sony had more than 100.
Even in its heyday, RCA used an ultraconservative shop order-based manufacturing process. If, for example, RCA needed to build studio cameras, a shop order was issued for a specific quantity, usually not more than 50. That meant 50 sets of parts were ordered, and a production line was reconfigured to handle the build. Sony, on the other hand, with virtually continuous production, had none of the cost inefficiencies associated with stop-start production and received significant quantity discount opportunities on large parts buys.
This contrast between ultraconservative and super-aggressive business practices can be seen in all industries. Naturally, Sony has become a dominant force in the broadcast, production and post industries. But cycles are inevitable. When the keys to market success transitioned to digital- and computer-based technology, new market leaders came to the fore, and so the cycle continues. But that's a story for another day.
Anthony R. Gargano is a consultant and former industry senior executive.
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