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Tom Sumner, president, Yamaha Corporation of America.

Q&A
With Tom Sumner

Yamaha Corporation of America’s first “local” president discusses untapped market opportunities, how his company is adapting, and why most forecasts are wide of the mark.

TOM SUMNER was named president of Yamaha Corporation of America last April, the first American to hold the post since the distribution subsidiary was formed nearly six decades ago. The promotion caps a 30-year career at Yamaha where he held sales, marketing, and managerial posts in virtually every division of the company—consumer electronics, pro-audio, and combo products.

An avid guitarist, Sumner’s first job after college was as a buyer for the Macy’s department store chain. That experience brought him to Yamaha, which was in the process of building out a consumer division that was selling portable keyboards and other electronic products through mass distribution channels. Upper management quickly recognized his talent and began tapping him for posts of increasing responsibility. Reflecting on his 30 years with Yamaha, Sumner says dealing with different products and distribution channels appealed to his “natural sense of curiosity” and has made for “an incredibly interesting job experience.”

In the following interview, Sumner discusses the significance of being the first “local” president of Yamaha Corporation of America, identifies some untapped growth opportunities for the industry, and explains why “it’s not enough to have a plan A and plan B. You need plan C and D as well.”

What’s the significance of being the first American to head Yamaha Corporation of America? Your appointment appears to be a departure from the previous approach of rotating Japanese execs into the job for a two- to four-year stint. Thoughts or comments?

There was shock and surprise among the team when we made the announcement, as Yamaha Corporation of America had only had Japanese presidents. There are a couple of things that are significant about my appointment. Japanese companies are known for their long-term vision. The previous presidents would serve for four to five years, and that limited their time horizon. Having what you’d call a local or U.S.-born president gives the team the ability to look farther ahead and plan for changes over a longer time frame.

After a couple of weeks on the job, I realized that I didn’t have the same learning curve. With the past four presidents, I had been in on the ground floor with them. They all had a steep learning curve because they were coming from another place. They were all really strong managers, but they still had to learn the U.S. market and the U.S. culture, which took time. Every market is different, whether its Europe, Japan, or China. To be successful, you have to appreciate the local culture.

“It’s not enough to have
a plan ‘A’ and ‘B.’ You need a plan
‘C’ and ‘D’ as well.”

Japanese companies have occasionally been criticized for being too insular. Is your appointment an effort to have a more diverse leadership team?

I’m not the first “local president.” Thomas Shipka has been the managing director of Yamaha Europe for some time. But I think the trend is to have local presidents, for the reasons I stated: being able to do the right things for the market over the longer term, and softening the learning curve.

Your career trajectory at Yamaha placed you in a number of different roles in the consumer electronics, pro audio, and m.i. divisions. Can you talk about any specific events or accomplishments that helped prepare you for your current role?

I am naturally curious and it’s been a lot of fun to have different jobs and responsibilities. One of the foundational roles for me was when we went into the computer peripheral business in the late 1990s. The multimedia PC was the exciting new thing back then: using computers for sound and videos instead of just word processing and spreadsheets. We were already doing small computer speakers and CD recorders, but there was a decided lack of interest among the folks at YCA, with the exception of me, to actually pursue the peripherals market. So here was a product that we were not marketing at all in the U.S. We had a great name with Yamaha, but how would we ensure that this new product range is successful? It fell to me to set up customer service and support, packaging, marketing, distribution, and build a team. It was a great role that let me see the big picture, how all the pieces work together. After that, whenever there was a new business or a challenge, they would say to me, “Do you want to do this?” And I’d say “sure.”

As a follow-up, were there any setbacks or adversity that provided useful, if perhaps uncomfortable, learning experiences?

The biggest one was the Lehman Brothers shock of 2008. Rick Young and I had just been promoted to senior vice president, and immediately there was a crisis. The sales spigot just turned off. We had been pretty confident in forecasting that our business would grow by mid-single-digit percentages and all of a sudden we had a 20% sales decline.

Even though you don’t want to be timid, it taught me you have to be more careful in the pace of hiring so you don’t have to lay people off in a recession. It also made me realize that it’s not enough to have a plan “A” and “B.” You need a plan “C” and “D” as well.

Any other thoughts about that recession?

It was a challenge because it wasn’t just Yamaha orders that were down. There were just fewer people buying stuff. We were concerned about the health of the distribution network and how our dealers would survive, and we did everything we could to help support them.

“We don’t have 100% of our
production in China,
which insulates us.
But we’re taking a wait-and-see
approach on the tariff issue.”

Based on these experiences, what career advice would you offer someone starting out today?

The main thing is do what you love. Every day when I get up I look forward to going to work. I just attended my 40-year high school reunion, and there were a number of former classmates who couldn’t wait for retirement, hated what they did, and dreaded going to the office. I felt sorry for them. I feel good every day about selling guitars, drums, keyboards, and getting people involved in music. It’s good for society, and I’m glad I don’t have to apologize for anything. It’s a job, but it’s something I enjoy doing.

How did you get interested in music, and what’s your involvement been?

My dad had purchased a guitar, and I was totally entranced with it. When he wasn’t looking, I borrowed it and started learning to play. After a while, when I was better than he was, he bought me my own guitar. I played in bands through junior high, high school, college, and even post-college. I loved songwriting as well. I picked up a little bit of piano and keyboard in the 1990s because you didn’t have to be very good to cover Cars tunes.

When I came to Yamaha, I had plenty of access to great musical products, but I also have had a travel schedule, so I haven’t had the chance to pursue music as much as I’d like. I still have lots of guitars and keyboards at home.

For most of the past six decades, Yamaha has essentially been a one-brand company. With the acquisition of Bösendorfer, Line 6, Ampeg, Steinberg, and Nexo, it appears to have evolved into a multi-brand enterprise. Does this transition reflect a changing view of the marketplace or a different corporate strategy? Has it required a different management structure?

We acquired Sequential Circuits years ago and didn’t really do anything with it. Since then, we’ve gotten to the point where we appreciate the value of brands and we’ve become good brand stewards. We let the acquired companies be who they are and keep their secret sauce. But we look at the quality of the product, how we introduce innovation, what we produce, and basic operations.

Ampeg is a great example. It’s the legendary bass amp. If Yamaha wanted to build a great bass amp from scratch, it could take decades to build up the reputation that Ampeg already has. When it became available, we saw it as an opportunity that was too good to pass up. We’re not tampering with the character of the product; we’re going to focus on improving all the behind-the-scenes functions.

When we make these acquisitions, I look at the comments on social media. I was pleased to see a lot of Ampeg players say “we’re glad Yamaha has acquired it. We know that they will keep the Ampeg flame burning brightly, but they’ll also bring quality and innovation.”

You have a unique overview of the music products industry, given that Yamaha participates in just about every product category. Where do you see growth opportunities, and where do you see challenges?

We have two sayings that define our mission at Yamaha. One is to create more music makers. The other is to make people love music more. They both frame where the opportunities are. The good news is that there’s only about 5% or 6% of the population that plays music on a somewhat regular basis. This gives us upside. There’s also opportunity to get lapsed players—people who once played but aren’t playing anymore—to get more involved. NAMM research has shown that 85% of the population would love to play. Ask anyone on the street, “if you could wave a magic wand and play a musical instrument, would you do it?” The answer is universally “yes.”

We’re addressing both these issues with a product like the Clavinova CFP. There are some people who buy it because they want to learn to play. We describe it as “gamifying” the learning process, because it uses some of the technology that’s familiar to anyone who’s touched a video game. The CFP is based around teaching people to play by learning songs, not practicing scales. This technology also really helps with the people who are lapsed players. It gets them back into playing their favorite songs without having to make a major commitment to lessons.

The biggest challenge is societal. There are so many things to do today, it’s easy to get distracted and not focus on anything, going down the endless rabbit holes on the internet. With all the focus on instant gratification, people are not necessarily focused on making music. The good news is that you can make music pretty easily these days with loops and that kind of stuff. But it does take time, effort, and dedication to learn a musical instrument.

Asking you about the different divisions at Yamaha is a bit like asking a parent which is their favorite child. But are there any products, strategies, or opportunities in the company that you’re particularly excited about?

The technologies we have that make playing more enjoyable and bring joy to musicians. Transacoustic technology is the perfect example. It’s an actuator we install on the soundboard of a guitar or a piano that allows the player to add effects or additional voices, like strings. The best part of it is watching people play it for the first time and see their jaws drop.

Do you worry that the advancing technology that is driving prices down makes it more difficult to grow your revenues?

That’s definitely the case. But the hope is that by “democratizing” music, we get more people involved in music. When I was growing up, every synth was $5,000 in 1986 money—maybe the equivalent of $10,000 or $15,000 today. Today, you get way more for $1,000. But our hope is that we’re reaching a much wider audience with the improved value.

“If you get people constantly asking
how things affect the customer,
it helps you avoid becoming too insular.”

How do you define your role, presiding over five or six discrete divisions that each face very different market and operating challenges? What tasks occupy most of your time?

One of the key things is working with our team and making sure that we have the best people in the right positions. Making sure the quarterbacks are throwing the ball downfield to the wide receivers. Although we have a number of different divisions, they actually have a lot more similarities than differences. Our brand should stand for the same thing, whether we’re selling home theater components, acoustic pianos, or a $300 acoustic guitar.

It should stand for quality. Whether you talk to a piano technician who says “I love working on your pianos because they hold a tune so well and they’re so well regulated” or a home theater installer who says, “I only spec Yamaha components because I know when I install them, I’ll never have to go back and deal with an unhappy customer.” That quality crosses over and is important to every buyer.

The service component is also important. We don’t outsource our support to India. If someone calls us up and asks us, “How do I make my MODX synth work with Cubase 10.0 software?” there’s a technician who picks up a phone, walks over to a keyboard and a computer, and walks the customer through the problem. That’s one of our hallmarks, and we apply it to every division of the company.

It sounds like you consider this service and quality emphasis as the “unique selling proposition” that differentiates Yamaha in a crowded marketplace.

Quality and service, definitely. There’s also the fact that we’re patient. We’re not looking for a quick buck; we’re willing to invest a lot of time in a product. With things like the wind instrument business, you can’t just jump in and do a great job on day one. You have get the instrument right, you have to have the right dealers representing it, you have to build relationships with the educators and influential players. It takes a long time to do that correctly, and we’re not afraid of spending a few decades building out a product line.

Yamaha Japan recently formed a separate Guitar Division with a U.S. presence. Could you explain the significance of this, and what it means for the company’s strategy?

If we look at a lot of product categories we serve, we have a significant market share. Almost anything with black and white keys, our market share is substantial. We work hard on keeping that going and improving it. With guitars, our market share is strong in acoustic guitars and acoustic electric guitars, but overall it’s not huge. We don’t have much of a presence with electric guitars. The guitar segment is a big segment of the market, and we see it as an opportunity. The U.S. market is the biggest opportunity, which is why our guitar division is based in the U.S. We have a shop in Calabasas where we’re working on prototypes and some innovative new products.

The distribution network is in flux. Any thoughts on how you see it evolving?

We have a lot of different distribution channels because of our broad product line. Acoustic piano dealers and the school service dealers have pretty unique business models. The commercial audio channel is also somewhat unique. We look at the end-user and ask, are we getting them the right information and are they happy with the way the sales are being transacted? It will continue to change, but we base our strategies on giving the end-user a great experience.

When competitors discuss Yamaha and its strengths, they usually mention manufacturing prowess, excellent R&D, global reach, etc.. What doesn’t get mentioned, but from my vantage point seems equally significant, is a cohesive and collegial team, or “corporate culture.” Could you comment on this Yamaha “culture,” what it means, how it was built, and how you work to sustain it?

The culture is hard to describe. We spend in the hiring process. We interview a lot of people who have the right skills for the job, but we know that they’re not going to fit in with the culture. We look for people who are focused and helpful. From the people entering orders to the senior management, we want people who will work well with others and do what it takes to make sure that dealer or the end-user is satisfied.

There are some corporate cultures that are pretty edgy. I started working at Macy’s on the West Coast, and we always thought the people from New York were too edgy. We’re more even tempered, even when something goes wrong. There’s no yelling; we just ask how we fix the problem. That’s something we’ve developed. The key to keep it going is to make sure we hire the right people.

I’ve been with Yamaha for 30 years, which is hard for me to believe. There are also a lot of people who have been here ten, 15, or 20 years. When we get the right fit, it creates a great culture.

On one hand, having long-term employees provides continuity and a lot of valuable tribal knowledge about products, practices, and customers. On the other hand, long-term employees can become insular and resistant to change. How do you address this?

If you get people constantly asking how things affect the customer, it helps you avoid becoming too insular. A few years ago, we were at a consumer show and we had set up an assortment of Yamaha instruments, kind of a “petting zoo.” A group of three or four friends would sit down and play, then they’d get up and rotate clockwise: the guy on drums would switch to keyboard, the keyboard guy would pick up a guitar, and the guitarist would play the drums. After the third time that happened, we realized that they were identifying as “creators,” not guitarists, or drummers, or keyboardists. Watching customers in the wild like that helps you change the way you talk to them.

Every month, I write a message about a customer experience for our internal team. One month it will be about a front of house engineer at a Broadway show, the next month about a guitar buyer at Jim’s Music. Or maybe there will be a story about a customer service complaint and how we addressed it. These stories really help keep people focused on the customer.

Yamaha Corporation of America depends on a complex supply chain, offering products coming from numerous production sites around the world. Could you comment on the impact of the current tariff policies and discuss how Yamaha is adapting?

We have Yamaha-run factories in Malaysia, Japan, Indonesia, and China. With our other brands, we have factories in Austria and France. That insulates us a bit because we don’t have 100% of our production in China. We’re taking a wait-and-see approach on the China tariff issue. After the G-20 meeting in Argentina, we got a 90-day reprieve on the China tariff. We just don’t know how it will play out, and 100% of what we make isn’t facing a brand-new 25% tariff.

There is some concern in the distribution channel on the impact these tariffs will have on consumer behavior.

We don’t use any OEM suppliers, and that makes it more difficult for us to just say we’re going to relocate production to another country. We’re currently building a factory in India, and it takes time to get it going. Because we’re so concerned with the quality, it takes about a year after the building is complete to get the factory up and running, and another year or two to get it to full capacity.

Any thoughts on what to expect in 2019?

Don’t ask me to give you any economic forecasts, although things are looking reasonable. We’re forecasting growth. We were up high single digits in 2018, and we’re forecasting the same for the coming year. We’re launching 59 new products at NAMM.

 

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