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January 18, 2013 6:04 pm
This month, my family is obsessed with small, white, beautifully designed plastic gadgets. The reason? A few weeks ago, my oldest daughter received an iPod Touch in her Christmas stocking, while her sister got a docking station for her iPod. They are now so besotted with these presents that they are already campaigning for Santa to bring them iPhones or iPads next Christmas (which I am resisting).
But as the tussle continues, the one thing that is crystal clear is that it is Apple which rules their “want” list. Never mind the fact that I am chronically uninterested in electronic gadgets myself or that there are dozens of non-Apple devices on the market.
Somehow that little Apple icon has already captured the hearts of my kids in an extraordinarily powerful and irritating way. The only comparable thing I have seen in my own life was the obsession I temporarily felt for the Sony Walkman as a teenager 30 years ago. But these days, the name “Sony” barely elicits a grunt from young kids.
Why? Part of the story lies with the genius of Steve Jobs and the other top management at Apple in recent years. But the other, less-known, side of the equation sits with Sony. For while millions of kids have been falling in love with Apple in recent years, the once-mighty Japanese giant has quietly suffered a striking decline: not only has it posted poor results but it has also lost much of its reputation for being “cool”.
Some of this decline reflects strategic missteps, and issues such as a strong yen or the 2011 tsunami. But there is another aspect to this tale, which carries a potent moral that extends well beyond the world of electronic gadgets. For one of Sony’s biggest problems in the last two decades, its executives say, is that the group has been beset with a curse that I have sometimes written about before in this column: a “silo” mentality. And that “stovepipe” pattern has made it hard to keep innovating – turning it into a victim of its own past success.
It is an illuminating saga. Seven long decades ago, when Masaru Ibuka and Akio Morita created Sony in Japan, the electronic group had a relatively entrepreneurial, pioneering culture. Japanese corporate culture is often rigid and hierarchical, but in the chaos after the second world war, small start-up groups were able to operate with a freewheeling, creative spirit. Thus in its early years Sony did plenty of non-traditional things, such as recruit engineers from other groups, experiment with product ideas and promote people at an unusually young age.
This helped to deliver a stream of innovation. Hence the fact that by the end of the 1970s, Sony televisions and Walkmans were dominating Christmas present “wish lists” around the world. But then the rot began: as Sony swelled in size and moved into endless new fields (including media), a silo mentality set in. Most notably, each separate department became increasingly determined to protect its own success, as a mini-fiefdom, reluctant to share its ideas in a creative manner.
The Walkman was a case in point. By the 1990s, it was clear to Sony executives that its successor would be a mobile digital music device. Sony seemed brilliantly placed to develop this since it had a music division and consumer electronics department. But the different departments would not collaborate; on the contrary, there was such rivalry that in 1999, at a consumer electronics fair, they actually launched competing products. These cannibalised each other – and created space for Apple to launch the iPod, which soon swept the market.
. . .
By 2005 the decline was so marked that a Briton, Sir Howard Stringer, was appointed as chief executive. To his credit, he tried to tackle the curse of silos (or “sairo”, as the Japanese say.) He ordered departments to co-operate with each other, moved staff around, rearranged the offices and even flashed up pictures of grain silos at internal meetings to reinforce his point. But he faced a near-impossible task: the corporate fiefdoms were so deeply ingrained that it was painfully difficult to get executives at the PlayStation division, say, to collaborate with anyone else. And when Stringer tried to launch an “ebook” reader – long before Amazon developed the Kindle device – he faced resistance because Sony staff did not understand the advantage of producing revenues for two, not one, departments.
Could Sony ever bounce back? Some optimists hope it might. After all, the company still has plenty of brilliant engineers, pockets of excellence and a formidable media business. But, as the Japanese giant continues to grapple with its silo curse (now without Sir Howard in the role of CEO), the really interesting question to ask is what this means for Apple. These days, the new generation of tech giants, such as Amazon, Apple or Facebook, all say they are determined to avoid Sony’s mistakes: they have internal programmes to spark creativity and avoid being trapped by silos. I wish them luck. But whenever I catch a glance of all those iPod Touches and iPods – or my long-discarded Walkman – I cannot help smiling at the twists of history. Perhaps Apple will buck the trend, and remain “cool” for the next 20 years; but sustaining that success depends as much on subtle internal cultural issues as engineering, no matter how beautiful those little white gadgets look.
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