A great article titled “The Ghosts of Sony” and authored by Jake Adelstein and Nathalie-Kyoko Stucky, came to me via a tweet by my good colleague Robert Swinney. (That’s one of the reasons I love Twitter!) It surely is worth a read as it prodded a few thoughts:
- History repeats itself: In our Operations Strategy class, we teach two cases that prominently feature Japanese companies both in the same scenario: they attack the incumbent (a Swiss and an American company, respectively) “from below” and gradually move up the food chain. This follows the typical innovation dynamics that Clay Christensen has promulgated. After Sony did the same, it became the incumbent and is now under attack by South Korean Samsung Electronic Co.
- Are management professionals good CEOs of tech companies? We need to see more than a few data-points but Sculley didn’t perform well at Apple either, nor did this work at Sony:
Former Sony executives and current employees blame the fall of the firm on the loss of brainpower and good employees during the reign of Nobuyuki Idei, from 1999 to 2005. Idei was the first Sony CEO to rise up entirely from a management background and in the “Who-killed Sony?” genre of books and articles; he is regularly the prime suspect.
- Success and innovation comes from your people, don’t send them to your rivals! One should be very careful with early retirement options because you will lose your best people first (after all, those still have market value!):
“Idei decided to streamline the company and do massive restructuring. When we say, ‘restructure’ in Japanese—we really mean get rid of people. He put together an early retirement plan and strongly encouraged people to use it. Well, that didn’t generate a lot of good feelings. When a company starts promoting early retirement, most people take that as a sign to get out while they still can. And many did. Maybe the idea was that by getting rid of the middle aged and older employees they’d encourage innovation and bring in some young blood. The effect was more like shooting yourself in the foot.”
According to the Sony veteran, the middle-aged engineers and technicians that left were the same ones that brought Sony to greatness. They left behind a younger generation that was insecure, afraid of failure, and only willing to work with technology already in place—not build from the ground up.
“What was even worse is that during this period, Korea and Taiwan immediately welcome the exiting Sony techies with open arms. It was better than industrial espionage—Samsung could openly ‘buy’ the technology that Sony had developed simply by rehiring their best and brightest.”
- “Made in X” still matters. “Made in Japan” matters some Japanese Sony customers, or is this a generational thing? Swatch still benefits from “Made in Swiss”…
- Focus, focus; one of the most important ideas in strategy and operations for success!
Mr. Tateishi sees part of Sony’s problem in its diversity. It’s no longer clear what Sony really is all about. For Japan, Sony is a consumer electronic company, but in America, according to Mr. Stringer, Sony, represented by the face of Spider Man, is seen as an entertainment company, and for others, it can be seen as a game company—the people that make the Playstation.
“Sony has too many different faces,” he said, “for me, the biggest problem is that it has so many faces, it has become increasingly unclear what kind of company Sony is.”
“If Mr. Hirai decides to maintain the group, then he needs to shift into a portfolio style management. Or if he wants to survive as an electronics company, then all the non core businesses should be unloaded, and the firm should focus on the high quality products only, in such a way as it could compete with companies such as Apple.”
- The role of temperature/climate on innovation and quality. I love this quotation the most (as it agrees with some superficial theories I can conjure up about progress, but the advent of air conditioning and heating surely can change this drastically):
The problem now is that Sony does not invest in engineers,” he added, “nowadays, also, it is hard to produce technological products in countries, where the weather is too hot.”