Best Practices Advisory, llc
I can still remember the first time I put a set of headphones on to listen to a Sony Walkman, incredibly I was able to hear amazing music play while those around me in the room heard absolutely nothing. Today’s generation would have no idea of what I am talking about – but as a 10 year old at the time – who had only experienced "shared" music from a record player, a cassette tape, or live, it was unheard of that one could put on a pair of skimpy pair of headphones and suddenly be transferred into an independent world of sound.
Sony was a the company that not only brought us the Walkman, but also many other cool and innovative products including the solid state TVs, Trinitron television tube, video tape technology, camcorders, compact disks, and on and on. How is it that a market leading, innovator finds itself today losing billions. It has not made a profit in the past 4 years and continues to miss on it's targets and plans on an ongoing basis. The company continues to deliver $ billions in losses. The current management team is making some inroads on turning the business around yet I believe in a way too timid manner in a cut-throat global competitive marketplace.
I will not go into the details of the long, and slow and painful destruction of value at Sony. It is not just one problem, but the combination of hundreds of problems. My focus is on solutions.
Of course one needs to understand the problems to come up with the right set of solutions. Sony is not the first company to at one time been a leader of it's industry to later find itself in dire straits. From my experience living and working in Japan, as well as running numerous business through turn-around situations, I share with you the 5 things Sony needs to do now to not only survive but also to again, thrive as an innovative consumer electronics and market leader - a title it once held.
1. Make profit #1 priority.
Measure all plans/strategies and future development projects based on that one yardstick. Profit should be SONY's primary motive and there should be no apologies from management to customers, suppliers, or shareholders, when they say that their goal is to maximize earnings. In most large companies, value creation strategies and execution become weakened when the vision / priority / focus is not simple, clear, and non-negotiable. Sony's management, it's employees, and it's strategic partners should get up everyday - with the soul purpose and drive to maximize profit by building, creating, and bringing to market innovative solutions that customers are willing to pay a premium for. Throughout the entire organization – the marching orders need to be steadfast.
2. Re-deploy capital and investment in what Sony’s does best
Sony is a huge conglomerate with myriads of business units, divisions, and subsidiaries. Just like Carlos Ghosn, the executive who orchestrated the turnaround of Nissan Motors to save it from bankruptcy, it is time for Sony to simplify and sell ALL businesses that are not core to Sony’s strengths and value creating capabilities. Assets, or investments in businesses like Real Estate, or Financial Services, or strategic partners (as minority shareholdings) should be eliminated and not tolerated. Sony needs to regain focus. By eliminating work and effort in areas that are not core to it's mission - it get's everyone focused to deliver and succeed on the vital and critical few value drivers for Sony's future success. This includes eliminating the cozy and traditional keiretsu relationships and replacing them with a global transparent standard to strategic sourcing and supplier relationships that are driven to help Sony achieve superior results in price, quality, speed, and cost.
Use fact-based global standards and capabilities as the way to drive change and challenge employees, suppliers, and partners to come up with better, more cost effective, and market expected solutions. By using fact-based communication to drive change, challenge the status-quo and expect improvement. Success is defined as increasing profit, top line growth and market share. Suppliers will be expected to meet Sony standards. Sony employees and divisions will be expected to deliver on their commitments. Simplify and standardize and eliminate wasteful business practices and non-value added activities that reign supreme in the bureaucratic practices of the company. It just sucks the life out of growth and winning.
4. Build a performance-based culture that rewards delivering results.
If someone wants to advance their career and opportunities within the firm - it will be solely based on results and performance not on seniority. Tie everyone's job / role to the end customer and how they add / create / enhance value to Sony. Get compensation plans to deliver higher pay based on achieving results. If someone wants to have a job for life, then they better be sure to continually learn new skills and directly help Sony deliver excellence to it's customers and the marketplace. Only paying customers can guarantee work. How do today’s leading technology companies spend their time? Sony needs to take a hard look at today’s market realities and come up with a plan that carries it back to it’s former past. Bring back to life the values and objectives that made Sony great, and make Apple great today: innovation, customer and market-driven new product solutions, faster new product introductions, encourage working together between business divisions and customers.
5. Don’t hold onto the past – and expect miracles. Create a simple, actionable plan and execute.
Make the tough decisions sooner rather than later – even if it looks terrible and seems to be culturally "un-Japanese". It is common for change agents to be shunned, called criminals or heretic and that is par for the course for those that are recommending new and different ways to achieve success. To again use Carlos Ghosn of Nissan, who did succeed in not only turning around Nissan but bringing it back to it's leading global position, he launched a simple transparent plan that was easily understood by everyone. While at first it seemed shocking to the outside world, the strategy was clear - get Nissan back to profitability, growth and leadership. He succeeded and there is absolutely no reason why Sony could not create a similarly successful revitalization plan.
Will it be easy? No. Is it worth fixing? Absolutely! Just think of the Apple story. Steve Jobs starts Apple in his garage and eventually makes Apple a market leader with innovative and market first products and solutions. Then Apple flounders, loses it way and almost goes bankrupt and sold for pennies on the dollar of it’s previous market value. Fast forward to today, and Apple again reigns supreme as the top global company in technology with a market valuation of $600BN+. In comparision, Sony’s current market valuation is $30BN which is far less than it's $100BN valuation in 2000.
The time for change is NOW.