Resuscitating Sony - WSJ Interview-Article Piece

[Ishiyoshi]

I just finished reading an interesting article/interview from the Wall Street Journal about the new man behind Sony – how he was selected, his relationship with Mr. Kutaragi and the challenges he faces. I thought most of you would find it interesting as well. Enjoy.

(Note to Mods: Could you please move this to the news section of the forum since the article is not specifically for HiMD. Thanks.)

Here's some excerpts from the interview:

Resuscitating Sony; As Struggling Giant's CEO, Stringer Aims to Streamline Operations, End Complacency

By Kate Kelly and Phred Dvorak. Wall Street Journal. (Eastern edition). New York, N.Y.: Mar 16, 2005. pg. B.1

HOWARD STRINGER has his work cut out for him.

As the newly named chairman and chief executive of Sony Corp., the 63-year-old Welsh-born American becomes the first non-Japanese to lead the famed electronics and entertainment company. He not only has to turn around the company's struggling electronics business -- he has to mend fences, soothe bruised egos and bolster morale while he's doing it.

Mr. Stringer got the nod to lead Sony last week, after current Chief Executive Nobuyuki Idei decided to step aside -- along with much of his executive team -- amid chronically sagging profit and a lack of hot products in key areas like televisions and music players. Looking for a hit, Sony soon will roll out in the U.S. the first portable version of its famous PlayStation game device, called PSP, which also shows movies and plays music and photos.

In all, Sony is working to get things moving in the right direction before "Transformation 60," a goal to revive operations by Sony's 60th anniversary next year.

Mr. Stringer has said he will work with Sony's newly appointed president, Ryoji Chubachi, and chief financial officer, Katsumi Ihara, to figure out the best way to trim fat and streamline the company's Japanese electronics operations -- just as he and his managers restructured Sony's U.S. electronics and entertainment companies over the past several years.

Born in Cardiff, Wales, Mr. Stringer became a U.S. citizen in 1985. He spent nearly three decades at the CBS television network, initially as a producer and ultimately as division head of news, sports, and entertainment. He joined Sony in America in 1997.

Morale at Sony has been pummeled by the company's seeming lack of ability in recent years to come out with the cool gadgets it's famous for -- a situation that insiders say has bred rising frustration and recrimination among everyone from the engineers to upper management.

Some signs of that frustration surfaced in an interview of Mr. Idei published Monday in a Japanese weekly, in which the chief executive reiterated a complaint that other employees -- including executives -- were not taking enough responsibility for the company's weak performance.

Mr. Stringer must also address the questions raised by the removal from Sony group operations of Ken Kutaragi, the creator of the PlayStation videogame machine and a man that many saw as Mr. Idei's successor.

In recent years, Mr. Kutaragi was key in driving Sony's semiconductor strategy, pushing a multibillion-dollar investment into an ultrafast processor chip dubbed "cell." He had also been entrusted with oversight over key electronics divisions like TV sets. Yet Mr. Idei decided to relieve Mr. Kutaragi of all his nonvideogame responsibilities, prompting speculation about whether Sony is going to change strategic direction -- or even whether Mr. Kutaragi might leave the company.

Mr. Kutaragi declined to comment, but a spokeswoman for Sony Computer Entertainment Inc., the videogame unit, said that he has no intention of leaving.

Mr. Stringer talked to The Wall Street Journal about how he was selected, his relationship with Mr. Kutaragi and the challenges he faces. Some excerpts:

WSJ: What events led to the management shake-up?

Mr. Stringer: I wasn't in Japan when much of it was going on. I know that Idei had been toying with new structures for a while and thinking about succession for a long time and we had discussions about it, though never involving me, over the last couple of months. The timing of it surprised me except that so much often gets done in the March/April time frame. There is seemingly a transition of job changes at this time, and the sense of that anniversary coming up, and the need to shake something up so that Transformation 60 was something to celebrate.

I felt that there was a groundswell within the CEO's office, the sense that decisions had to be made, I just didn't know what they were going to be. And I felt that the organization was beginning to viscerally react to the bad news around them.

WSJ: We're told that lots of different leadership scenarios were floated in the weeks before your promotion, including the idea of having co-CEOs.

Mr. Stringer: That's probably right. There were lots of conversations with board members, but I only ever spoke to one of them.

The board got into it after Idei raised the issue rather suddenly, and there were lots of discussions about various options and names got floated almost as if to see what feedback people were getting from within the organization. In a funny kind of way, it set up a democratic approach to it without doing it officially.

WSJ: What is Mr. Kutaragi's future at Sony? Is he disappointed about his change of duties?

Mr. Stringer: I have no indication that he doesn't intend to stay. Every company needs the sort of brilliance in residence that he represents . . . people whose mind leaps in imaginative vaults, to arrive at different conclusions. So I've gone out of my way to say he's very important. We've both discussed coming back to PlayStation and helping to bring Sony Entertainment into different parts of the electronics company. It's very important to find ways that these silos can work together . . . [silos] worked in the analog era, not in the digital one.

Ken has been very gracious with me, and in public. We have long had a very good relationship because we talk the same language. Obviously he's a brilliant engineer and I'm not, but we've talked about PlayStation and movies and games and so forth. We've put a free edition of Spider-Man 2 in with PSP as an incentive for people to buy it. I think of him as someone who can solve many of Sony's problems.

WSJ: Beyond your experience at Sony America, what past career lessons have you drawn from as you think about this new challenge?

Mr. Stringer: People tend to have forgotten Tele-TV [a mid-1990s interactive television venture headed by Mr. Stringer] because it was a failure. The interesting thing was that my owners, Verizon and a California telephone company, are leading the charge in developing video on telephone lines again. So that experience of dealing with that technology gave me an understanding of the value of digital delivery systems and ways of communicating with customers.

Understanding the customer really turned out to be a great advantage. In essence, the timing is almost shockingly full circle, and I find that rather amusing.

But before that, there were all the difficulties at CBS. I was there with a transition from a broadcasting world to a broadcasting and cable world. When I was a younger executive, I heard people say we don't need to worry about cable, because the audience is perfectly satisfied with three channels. And I thought to myself, not so fast -- they're only perfectly satisfied with three channels because that's all they've got! Cable is coming down the road, and CBS missed a moment there to get out front, precisely because it was very happy with the way things were. So it was a different world, and I absolutely, all the time, remember that complacency is the enemy of innovation.

WSJ: Can you effectively compete with the iPod, or do you have to cede that particular territory?

Mr. Stringer: You don't cede anything. In this business, one device can swiftly follow another. We just had a device that was on display in Germany -- the Sony Ericsson music phone and that had a better delivery, downloaded music more effectively than the iTunes equivalent.

We're not even remotely ceding territory.

WSJ: What about the cell chip? Is it still a centerpiece of your strategy?

Mr. Stringer: The alliance with IBM and Toshiba is very important to us, we're very committed, and it's another quantum leap in its field. There is no slowing that down because of all these management changes. We have a company that also needs to demonstrate to the world that we are committed to innovation.

WSJ: What about the expected board additions? Who might you be naming and when?

Mr. Stringer: The nominating committee is having those discussions, and I have not been in those discussions. I'll be going there toward the end of the month and that will be one of the discussion points. It's not very easy to get good people to be on boards in Japan. It requires a lot of travel, and that's not easy for most Westerners who are really gainfully employed. So even if I said I wanted to put in [candidates], I don't think I could find them.

WSJ: So how can your success with the U.S. divisions translate into success with the parent company?

Mr. Stringer: That is the critical question. Dick Komiyama [president of Sony's U.S. electronics business] was extremely important to this. I didn't impose my standards and demands on him, we got together and we decided what it is we needed to do and we had a shared belief in the efficiencies we were generating, the dynamic we were changing, and all our [decisions] were made in tandem. So for me he was a window onto the Japanese side in Tokyo. In part it was a blueprint, in part a mutual recognition that we couldn't continue doing things the same way.

The success in the U.S. is certainly music and entertainment, but it's also electronics. If we don't look at the whole situation and see if we can indeed make it more streamlined in doing the thing it's supposed to do -- which is design brilliant products -- then I won't succeed. And I'll get a better sense of what that means when I confer with Chubachi-san and Ihara-san and talk about what our ideal solutions will be. I don't pretend it's an easy task.

You can kill a company with kindness. It's all very well to understand the values and aspirations of a whole company, but if the company is in trouble the fact that you're nice to people isn't going to help it survive. All these [divisions], especially consumer electronics, they've got a fight on their hands! All these things are a fact of life, and my colleagues and I have to convince the employees that it is important that we liberate the next generation -- and change the dynamics of the company to making it fight for its life and challenge the competition.

[Artstar]

It's a very interesting article but it doesn't seem to cover anything in the way of what he's aiming to do in order to achieve those goals mentioned. So far, it's more a discussion of politics and how to shuffle people around rather than actually suggest which way technology should go, other than challenging their competitors rather than throwing in the towel.

What it really comes down to is how protective they become with their content. As said before and as noticed in his responses in this article, Stringer is still very content-oriented. If he can let go of his obsession with the content and simply implement logical ways of putting that content to use (by way of easing up on the DRM's, etc.) then I think Sony will already be on the road to recovery.

Add to that their latest range of products have been somewhat lacklustre compared to their efforts in previous decades where serious advancements were made and not only that but those advancements were worth having and the units were that well built that they left their competitors wondering wtf just hit them. I miss the days when Sony could make a decent MD head unit for my car, with the last of the dying breed being my MDX-C8900. They just don't make them like that any more and that's truly disappointing. And if they do make a nice unit, they're all stuck in friggin' Japan!!

There's definitely a lot of work to be done and hopefully this time, they'll take the time to listen to their customers and produce the kind of quality equipment they used to in addition to their cheaper (and generally rebadged) stuff to appease the consumer on a shoestring budget.