Sony's Chubachi Sets His Sights On Cost Cutting

[Ishiyoshi]

This is an article about Sony's new electronics chief and the right-hand man of newly appointed chief executive Howard Stringer - Mr. Chubachi will be responsible for fixing Sony's biggest problem: profitability at the struggling electronics business.

(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:

Sony's Chubachi Sets His Sights On Cost Cutting

Phred Dvorak. Wall Street Journal. (Eastern edition). New York, N.Y.: Mar 25, 2005. pg. B.1

EVEN INSIDE Sony Corp., incoming president Ryoji Chubachi is a man of mystery.

The 57-year-old Mr. Chubachi spent most of his 28-year career at the company in what he has jokingly called "Siberia," an out-of-the-way division that makes and sells videotapes, optical discs and other media that record data. At Sony's headquarters in Tokyo, many people have never even spoken to him.

Now, Mr. Chubachi is bursting into the spotlight. As Sony's new electronics chief and the right-hand man of newly appointed chief executive Howard Stringer, Mr. Chubachi will be responsible for fixing Sony's biggest problem: profitability at the struggling electronics business.

That will mean making some tough calls. In one of his first interviews after his appointment was announced earlier this month, Mr. Chubachi said Sony must be prepared to take a knife to costs, as well as move more people and engineering resources out of less profitable areas and into high-growth products and promising new businesses. But he declined to give specifics or targets until he announces his "action plan" later in the year.

He said Sony must try to bolster profitability by improving the collaboration between the divisions that plan, manufacture and sell products. And Mr. Chubachi wants to "reduce the layers" in the chain of command in Sony's electronics business -- a sentiment shared by Mr. Stringer.

People who have worked with Mr. Chubachi say he's experienced at cutting costs and strict about hitting goals. He saved Sony's struggling videotape business from the ax as prices for tapes plummeted in the mid-1990s, recalls longtime colleague Takashi Ichinose, convincing Sony chief executive Nobuyuki Idei to give him time to cut workers and factory space as well as boost sales. Now, says Mr. Ichinose, Sony's videotape business is still making money in an industry where many players are in the red.

But some insiders also say Mr. Chubachi may be handicapped by his lack of experience in Sony's mainstream consumer-electronics businesses: he has always been in charge of devices that go into Sony products -- components such as cassette tapes or batteries -- but never finished products. And he has had relatively little contact with his new boss, Mr. Stringer, with whom he'll have to work closely.

The challenges facing him are huge. Sony's electronics division still accounts for around 70% of revenue, but slightly more than a third of profits. And those profits will be hard to boost because a growing number of rivals in areas like televisions and music players means prices for products are plummeting.

Still, Mr. Chubachi's track record suggests he has some important strengths. He spent three years in a Sony unit in Alabama, and he speaks English well enough to communicate with Mr. Stringer without an interpreter.

Juan Rodriguez, chairman and chief technologist of Boulder, Colo.- based data-storage company Exabyte Corp., said Mr. Chubachi and his group, which made some of the products Exabyte designed, were more dependable and easier to work with than other parts of the company.

Mr. Chubachi's group "is a very different part of Sony," said Mr. Rodriguez. "They sure know how to deal with their customers. When they make commitments they meet them."

A career engineer who wrote his Ph.D. thesis on fluids that have magnetic properties, Mr. Chubachi is an avid observer with quirky tastes -- and someone who points to curiosity as his driving force. After moving to an old-fashioned Tokyo neighborhood in the early 1990s, he became engrossed in the life of the district -- going to nearby theaters to see traditional Japanese comic routines, and joining a club that photographed the guardian-dog statues often seen in front of Japanese shrines.

Mr. Chubachi said his leadership style is soft-spoken. "I'm a consensus-type leader. I'm not top-down," he said. "I believe the ability to communicate is the most important quality for a leader."

Engineers who've worked with Mr. Chubachi say he's good at spotting talent and motivating younger workers, something that could be important in helping to build morale in the electronics group. And he can battle fiercely for projects he believes in, said colleague Tatsuya Akashi, head of an online data-storage project Mr. Chubachi successfully championed -- in the face of opposition -- in 2000. "He's excellent at balancing business goals without killing creativity," said Mr. Akashi.

Mr. Chubachi also signaled he may depart, when necessary, from the proud Sony belief that the company should create demand, not research it. That attitude was symbolized by Sony's Walkman, with which the company single-handedly created a market for portable music players.

He said that although that Sony spirit is still important, in some ways the company has gone too far and isn't listening enough to customers. "We used to evangelize," said Mr. Chubachi. "We have to listen better."