Electronic tycoon Sony reincarnated after the dark ages

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2021-12-31 10:13:20

Sony used to be the most powerful brand in the consumer electronics market with a series of cult and quality products such as Trinitron color TV, Walkman player, PlayStation game console, Blue-ray, Vaio laptop, Xperia smartphone, etc. Bravia TV… However, like many other Japanese companies, Sony missed the digital revolution and was overwhelmed by Korean and Chinese electronics companies. Sony has continuously lost billions of dollars and lost its footing on all fronts, from smartphones, laptops to televisions. In the darkest of times, we can read countless articles, comments and reports about Sony dissecting a single topic: “Who killed Sony”.

Mr. Kazuo Hirai (left) and Mr. Kenichiro Yoshida

However, the light came to Sony in 2012, when CEO Howard Stringer nominated Mr. Kazuo Hirai to run the group, who he described as having “hard thinking and leadership skills”, ready to execute. change.

Kazuo Hirai, the outgoing and charismatic captain

Immediately after taking office, he announced the “One Sony” strategy to reform and revive Sony, with the highest priority placed on electronics, then accounting for about 60% of the entire business portfolio. Sony wants to be a leader in three areas: digital imaging, games and mobile-related products and services. He affirmed that he did not throw away the TV unit even though this was the 8th consecutive year of “red alert”. Five years later, Mr. Hirai’s Sony has achieved two of the three goals, which are digital imaging and games. He also directly sold the Vaio laptop business, restructured other divisions, and reduced 37,400 global employees to 125,300.

“We are a company that moves people,” said Mr. Hirai during a 2017 strategic briefing with analysts and investors. Get emotional with the products. Mr. Hirai is an avid follower of the Kando concept, emphasizing establishing an emotional connection with customers, creating loyalty.

According to him, Sony products need to be valuable both in terms of features and emotions. He applied Kando to every department and revived its faded glory. “Anyone can provide functionality, but emotion is something that has been part of Sony’s design philosophy, part of Sony’s DNA since the company was founded 71 years ago. We’ve lost it for a while and my job is to revive the pride in what we do to give emotional value,” he told The Guardian in early 2018.

At the heart of Mr. Hirai’s strategy is to create sustainable brands that greatly influence Sony’s design culture. He sat down with the director of each department and encouraged them to maintain the design if they believed it was a good design. That approach works especially well with high-end RX cameras and Sony headphones. However, the company is also shifting its focus to AI and robotics, image sensors, and PlayStation.

The “One Sony” strategy shows results after 5 years, but it does not mean that Mr. Hirai is complacent. He does not think this is the time for a victory parade, but Sony’s job is not to slip like in the past.

Kenichiro Yoshida, the quiet strategist

In 2018, Mr. Hirai stepped down as CEO of Sony and became Chairman of the Board of Directors, making way for Chief Financial Officer Kenichiro Yoshida. He sees this as “the ideal time to transfer power to the new leadership, for the future of Sony”. In March 2019, Mr. Hirai announced his departure from Sony after 35 years of working.

Mr. Yoshida is Mr. Hirai’s right-hand man and has been a Senior Director of Sony since 2005. According to Mr. Hirai, Mr. Yoshida possesses long experience and consistent leadership qualities required to manage the business segments. diversity at Sony, as well as being the ideal person to propel the company into the future.

Sony fans and investors may be in for a surprise. However, Mr. Yoshida is the strongest candidate for the CEO position and continues the journey to revive Sony that Mr. Hirai started 6 years earlier. The reason is because he is present in every step, every step when the Japanese electronics company cuts personnel, inefficient departments. The move is seen as risky for businesses in the country, where history and relationships are valued more than money.

Mr. Yoshida supported Mr. Hirai in implementing many parts of the “One Sony” strategy. One of these is to bring more transparency to each department. He is also in charge of selling underperforming components such as personal computers, ready to write down when needed. With his seniority since 1983, he understands Sony “from the inside out”.

Under Mr. Yoshida’s leadership, Sony continued to grow despite adversity. The Covid-19 epidemic came, causing a serious impact on the world economy. However, Sony still closed the year 2020 successfully. By the end of 2020, Sony accounted for 46% of the $15 billion smartphone image sensor market. In the same year, PlayStation was the world’s most popular game console with a market share of about 57.5%. In the TV market, Sony ranks third, behind Samsung and LG, with 8% market share. From April 2020 to March 2021, Sony recorded a 9% increase in annual revenue, reaching $83.3 billion, and a record annual net income of $10.8 billion. Profits of the movie, music and game divisions all increased.

The success of the image sensor division paid off Mr. Yoshida’s tough decision in the face of pressure from investors to sell. He sees a long-term future for Sony in areas such as life insurance, medical equipment, and loss compensation in electronics. “In the past, we diversified to survive. Now, I want diversity to be a strength,” he said.

According to Mr. Yoshida, a leader must “make the necessary decisions at the necessary time and take responsibility for the results”. The other two responsibilities are “to outline the direction for the company, including goals and directions” and “to decide who to assign which tasks, for how long”.

Sony’s recent business results make even the most demanding investors nod. According to analyst Masahiro Ono, Sony is the only Japanese electronics company to surpass profit before Lehman crisis. In 2019, Sony surprised when it cooperated with Microsoft in cloud gaming. With a talented strategist like Mr. Yoshida, shaking hands with competitors is the right thing to do if the future forecast of the whole industry is not positive.

Under the hands of the duo Hirai and Yoshida, Sony has miraculously recovered but is very different from before. Conversion is often a series of difficult choices, abandoning the traditional market. What you choose not to do is just as important as what you pursue. Not many companies were willing to pivot completely, but Sony did. Just like what Mr. Hirai confided in his retirement, “I’m confident everyone at Sony is well placed under Mr. Yoshida’s strong leadership and ready to build an even brighter future for Sony.“.

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