Search button in the site


Chapter25 Regeneration Through Team Spirit

Regeneration Through Team Spirit

In his first speech as President, Nobuyuki Idei called on all Sony employees to see the company's 50th anniversary as both the end of a cycle and a time of new beginnings. "It is a chance to collaborate with team spirit -- not as individuals, but as a team," he said. Idei explained that his goal was to create a charismatic Sony.

"To ensure that Sony remains an excellent company over its next fifty years, I have set forth 'regeneration' as a new management theme. This is a concept that preserves the original founding spirit by renewing ourselves and aiming for even greater heights," he said. Idei established a comprehensive management vision and company-wide guidelines based on this idea.

Idei further contemplated how he would like to change Sony and what types of products he wanted Sony to develop in the future. The transition from analog to digital has drastically changed both the AV industry and people's lifestyles. Idei coined the phrase "Digital Dream Kids" to reflect Sony's commitment to realizing dreams through new digital technologies. "Living in the digital age is very exciting for people of all ages. Young and old alike are truly mesmerized by digital technology. These digital dream kids, are our future customers. And at all levels of Sony, we must ourselves become dream kids to continue creating new products that will meet our future customers' expectations," he added.
Regeneration and Digital Dream Kids incorporate new and fresh aspirations. Idei felt that these keywords were the perfect vehicles to convey the image of Sony as it reaches out to the next generation. As leader of Digital Dream Kids, Idei insisted that information technology and a company-wide computer culture be developed within Sony as soon as possible. In the 1980s, Idei had experienced firsthand the difficulties of promoting Sony's computer business as head of the Microcomputer and Office Automation business divisions. Sony had always perceived itself as the leading company in AV, so its previous withdrawal from the computer market was not thought to reflect on Sony's core electronics businesses. This was due mainly to the perception that computers and AV were distinct fields.

However, at the beginning of the 1990s, microprocessors and OS (operating system) technologies were rapidly improving, and the leading companies in these fields began to wield a considerable amount of influence over the electronics industry. The telecommunications industry had also come to influence Sony's business.

The IT industry, centered in the U.S. with personal computers at its core, was rapidly expanding based on Microsoft and Intel architecture. Everything was being computerized and networked. Corporate mainframe computer users were rapidly migrating to desktop terminals, and PCs were increasingly finding their way into homes. Idei strongly felt that the time had come for Sony to recognize the far-reaching impact of digital technologies and computers on the market. Not only were analog products and systems being digitized, but digital technology was breaking down the border between IT and AV. Idei commented, "What can Sony contribute to the new digital age? What distinctive Sony products and technologies can we introduce?"
Sony Strength

Sony Strength

Idei delivering a keynote speech at the National
Academy of Television Arts and Sciences in New York.
(November 1995)

Sony has learnt much from previous unsuccessful products. The Sony MSX home computer, for example, did not attain a satisfactory level of success. But it did teach Sony development engineers valuable know-how that would be applied in later years. In effect, these engineers became living resources, representing latent power within Sony that did not exist in other AV companies. These young engineers who developed Sony's information processing technology in the past were eventually scattered throughout the Sony Group and active in many different areas thanks to their strong familiarity with computers.

The Sony Group gained outstanding software production capabilities from an early stage. Sony's music business had developed rapidly and toward the end of the 1980s was complemented by its newly acquired motion pictures business. Then with the launch of PlayStation in 1994, Sony Computer Entertainment Inc. enjoyed explosive sales worldwide.

Sony had other strengths too, such as its superior AV technology incorporated into computer peripherals. The company had created a wide range of media for computers, including the 3.5-inch microfloppy, WO and MO disks, as well as the CD-ROM. Sony had developed these products by combining magnetic and optical technologies. Moreover, the spread of computers meant increased use of high-resolution Trinitron displays, and this also strengthened Sony's position.

Well aware of Sony's considerable strengths and its forward-looking attitude, Idei developed a clear path for Sony. He aimed to make a computer integrating AV and IT technologies that drew on Sony's technological assets -- a computer unique to Sony. The computer would offer basic functions common to all computers, but add personal entertainment value as a key feature. Ohga remarked that, "Only Sony could possibly hope to make a system integrating computer, communications and AV technology with entertainment content."

In November 1995, Sony announced the establishment of a long-term technology agreement with Intel Corp., the largest manufacturer of microprocessors for computers in the United States. Intel had an established track record in semiconductor and computer technology, while Sony's strengths were in AV hardware and software. By integrating their respective strengths, the two companies would create a new home-use computer. The dream of developing a market for AV products that complemented computer technology was at hand. An agreement was reached between Intel president Andrew Grove and Idei as the plan to launch the personal computer for home-use was announced. The PC would be introduced in the U.S. in autumn 1996, followed thereafter in Japan and Europe.

Sony's objective in establishing this collaborative agreement was not simply to enter the PC market. If Sony was going to sell computers, it was also going to have to restructure its AV business while establishing new marketing and customer service systems to stimulate and improve employee awareness. The catchphrase "Digital Dream Kids" was primarily designed to increase employee awareness of this new corporate direction.

On November 20, 1995, Idei received resounding applause after delivering a keynote speech entitled "Sony's Dreams are Sony's Challenges," at the National Academy of Television Arts and Sciences in New York. Idei's speech described Sony's future business strategy to an audience composed of people in the television and communications industries throughout the world.

A New Foundation

In 1996 Sony celebrated its 50th anniversary and marked the start of another fifty years. As part of this new beginning, Idei re-evaluated the strategies he planned to follow with key management such as Minoru Morio, Chief Technology Officer (CTO) and Tamotsu Iba, Chief Financial Officer (CFO). Effective April 1, these strategies would include widespread reform to regenerate Sony's operations and strengthen the functions of Sony's divisional company system and headquarters.

The growth of IT and the shift from analog to digital technology have been continuous. With rapid progress in the digitization of images, and the advent of digital satellite broadcasting and cable television, Sony's 50th anniversary was earmarked as the start of a new digital age. Also, in dealing with the rapid change in the distribution process for products and services, Sony reorganized its management structure to enhance its divisional company system. This system had originally been introduced in 1994 to enable Sony to respond more rapidly to market change and create a structure that facilitated the development of new businesses. By enhancing the divisional company system in 1996, Idei aimed to increase employee awareness of new business direction and culture.

In mid-January 1996, Idei announced the reorganization to both an internal and external audience. Firstly, the company system would be restructured. To speed up decision-making and market responsiveness, the eight divisional companies were reorganized into ten. Ten divisional presidents were appointed, including some from a younger age group, and they were given autonomy to develop their respective companies as they saw fit. These ten companies were grouped into five units, each to be overseen by a chairman and co-chairman drawing on their experiences to offer support and advice to their presidents. Subsequently, the divisional company system has further evolved under this advisory mandate to foster management for the next generation.

If the sum total of Sony Corporation's operations were likened to a computer, the headquarters would be analogous to the computer's operating system. A strategy to strengthen the role of the headquarters was also developed with the aim of making Sony a healthier and more efficient company. To implement this strategy, an Executive Board chaired by Idei was established that included nine executives and senior managing directors. Six of these nine members were also chief officers responsible for overseeing one of the following areas: technology, finance, personnel, production, marketing and communications. In this way, Sony had created a stronger top management team.

The Challenge of the Digital Dream Kids

On May 7, 1996, Ohga and Idei greet Sony
employees at the "Digital Dream Kids Day" at Tokyo

Since its founding, Sony has grown steadily with the Japanese economy. With its free wheeling spirit at the company's center, Sony began its fifty-year history with the development of audio and video technologies. As a leading manufacturer in the areas of communications and computer peripherals, Sony has entered an age in which digital technology is becoming widespread in a variety of industries worldwide. Sony's uniqueness lies in its ability to integrate traditional hardware expertise with software content. This continues to lead the company in new areas of business and growth.

On May 7, 1996, Sony celebrated its 50th anniversary. Company employees based in the Tokyo metropolitan area and their families, approximately 20,000 people in total, gathered at Tokyo Disneyland to celebrate the occasion -- known as the "Digital Dream Kids Day." During the 1996 Sony Management Conference held on May 24, at the New Takanawa Prince Hotel in Tokyo, Ohga and Idei expressed their heartfelt appreciation to the founders of Sony Corporation for their great ideals and leadership. At this conference, Ohga and Idei proceeded to set forth a clear vision of Sony's future direction.

Ohga and Idei presented three challenges: first, in Sony's principal business area of Electronics, to further strengthen Sony's leading position in AV while developing IT business; second, in the Entertainment business, to foster a deeper understanding among company management and employees of the entertainment industry so that Sony could secure a firm foothold; and third, to integrate the Electronics and Entertainment businesses to create totally new business opportunities. By tackling these challenges, Sony continues to evolve into a truly global, total entertainment company.

In addition, to further heighten Sony's greatest asset, the Sony brand name, four key words were outlined in the company management philosophy for all companies in the Sony Group. These words were: "unique," to ensure that Sony would always be an innovative company; "quality," reflecting emphasis on product quality; "speed," in the form of a framework that would enable the company to respond quickly and decisively to new market conditions; and "cost," reflecting the importance of competitive pricing once the other three conditions were fully met. For Sony, quality has always been an extremely important element of its business philosophy. And Sony continues to place increasing emphasis on quality issues throughout the Group.

At the 1996 Management Conference, Idei stressed that Sony would not only continue to offer innovative, high quality products, but also increase its role as a good corporate citizen throughout the world. As a result, he predicted that consumer trust in the Sony brand would continue to increase. Idei closed his speech by saying, "If all employees take a positive outlook, together we can make Sony's next fifty years very bright."

As it enters the 21st century, Sony welcomes the next fifty years of its history. No matter the era, Sony will be a company that offers new lifestyles to people through exciting hardware products and entertainment software.