146. Refer to BP and Texas City. When asked about conditions at the plant, workers at the Texas City
refinery said their recommendations for repairs were ignored. As a result, they assumed management
knew a problem existed and so they stopped calling attention to it. This would be an example of:
Sony
Since becoming Sony’s CEO, you’ve spent 10 days a month in Tokyo, 10 days a month at Sony’s New
York City office, and 10 days a month at home in London. So after yet another long international
flight, you return exhausted to your Tokyo hotel room. When the travel wears you down, you
sometimes question why you took this job. You didn’t actively campaign for the position. However,
the board and the previous CEO picked you because they felt an “outsider” was needed to shake Sony
out of it funk. As head of Sony’s U.S. operations, you restored profitability by cutting $700 million in
costs and laying off one-third of the employees. More importantly, though, you were able to get
Sony’s entertainment, electronics, and games units to work together. So why are you an outsider if you
turned around a Sony Division? Well, it’s simple. Unlike Sony’s previous CEOs, you’re not Japanese
and you’re not an engineer.
Sony was in terrible shape when you took over, posting its first loss in more than a decade
after a series of embarrassing business mistakes, including Sony BMG’s music copy protection
software (which installed itself on computers when music was played and unintentionally made
computers vulnerable to hackers), and flawed laptop batteries (which overheated and occasionally
caught fire). The most visible and expensive mistake, though, was the long delay in introducing Sony’s
new PlayStation 3 videogame console. By the time the PlayStation 3 came out, Microsoft had already
sold 10 million of its competing Xbox 360 game stations, cutting significantly into Sony’s market
share. And, with the Xbox 360 priced at a relatively cheap $400, Sony’s $700 price for the PlayStation
3 will barely cover costs. So, not only was the PS3 late, it won’t be adding the $2 billion in annual
profits that it was supposed to deliver.
Some of Sony’s problems lie in its competitive corporate culture, which celebrates the success
of maverick innovators who did what was needed, including going around their bosses, to bring new,
innovative products to market. Consequently, working independently, not communicating, and not
collaborating became the norm. That worked when Sony was a smaller and primarily Japanese
company, but it no longer works given Sony’s size and global scale (just 25 percent of Sony’s
revenues come from Japan). With over 1,000 products, one manager put it best when he said, “Sony’s
gotten so big that things don’t connect any more.” One of your top executives explained the problem
this way: “I have 35 Sony devices at home. I have 35 battery chargers. That’s all you need to know.”
Other signs of the poor communication and collaboration included actively discouraging designers and
engineers from listening to customers; the Walkman and PC groups—without
consultation—simultaneously bringing new MP3 players to market; and the head of Sony’s
videogames division going over his budget by hundreds of millions of dollars without telling the then
CEO.
None of those problems are going to get solved unless you can convince your Japanese
managers and employees, who criticize you for spending too little time in Tokyo, to follow your lead.
Despite your success at Sony’s U.S. division, you’re seen as an outsider because you don’t speak
Japanese. You must get Sony’s different divisions to talk to each other and work together. Sony will
fail if these groups ignore each other. Finally, you need to change the culture of organizational silence
that encourages Sony’s independent managers and employees to not keep their bosses informed about
problems.