Nintendo’s former president Hiroshi Yamauchi divided all of the products in the world in two ways, which he emphasized to the leaders of the company:

The first way was what he called a “hardware orientation.” These products were valuable because they were useful. If you’re making appliances like refrigerators, cars, or dishwashers, you’d be best suited to approach with a hardware orientation. Products that offered better performance and lower prices would be at an advantage.

The second way was what he called a “software orientation.” These products were valuable because they filled up people’s free time. If you’re making amusement products like video games, television shows, and events, you would be best suited for by approaching it with a software orientation. Products that offered more fun, surprise, or more memorable experiences, would be at an advantage.

While Nintendo’s video games all involve hardware by necessity, the company makes sure all of its leaders lead with a software orientation. So while its competitors allocate huge budgets into making more powerful consoles, and games with incredibly realistic graphics, Nintendo focuses on making games that are more different and more fun. Gunpei Yokoi, the designer of the Game Boy, described this thinking as “Lateral Thinking with Withered Technology.” Nintendo Magic author Osamu Inoue writes:

To [Nintendo executive Satoru Iwata’s] way of thinking, amusement companies are subject to an intense pressure that appliance companies never feel. “For a long time,” he explains, “we’ve made things that are fundamentally useless. People won’t endure inconvenience that they don’t have to endure. They won’t read your instruction manual. If something is hard to understand, it’s entirely the maker’s fault. If they can’t figure out a videogame in five minutes, then in their mind it’s a ‘crappy game’ and that’s the end of it.”

While the words are technology-oriented, the big idea isn’t. Are you making appliances, where you need to compete based on performance and price? Or are you making toys, where you need to compete based on fun and play? Is it a mix of both? 

Two questions worth thinking about:

Which orientation are you and your team most well-suited for? 

Does it match the orientation that your customers and business strategy need from you?