Howard Stringer of Sony: The Corporate Britney Spears?
Overview
In being interviewed for a far-reaching story in yesterday’s Wall Street Journal, Sir Howard Stringer made it incredibly clear that he is coming apart at the seams. Not that the bloke hasn’t been under tremendous pressure and that a spate of problems have been his lot pretty much since becoming CEO a few years back, but his comments both reveal myriad mis-steps and frustrations to the point where I’m wondering: when are we going to see him on YouTube with a shaved head? And this painful saga being played out by such a high-profile manager, while difficult to watch, contains many interesting lessons for those interested in corporate culture, crisis management and leadership style. And it is this angle that I’d like to explore.
While there are innumerable lessons to be learned from Sony/Stringer case study, here are four that I think are pretty significant and indicative of the key issues:
- Have a plan, execute the plan - YOUR plan
- Understand, but don’t be paralyzed by, culture
- Respect Legacy, but not at the cost of performance
- Be confident and decisive in the face of crisis
Lesson #1: Have a plan, execute the plan - YOUR plan
Howard Stringer is annoyed. Since becoming Sony
Corp.’s first foreign chief executive almost two years ago, he has been
slammed by Japanese financial analysts and Sony employees for being
disconnected from the company’s daily operations, especially during two
big crises. Investors in the U.S., meanwhile, have put him under
constant pressure to fix Sony’s problems more quickly. And he was
hearing conflicting advice from both sides.“Look, in America, I was told to cut costs,” Mr. Stringer says. “In
Japan, I was told not to cut costs. Two different worlds. In this
country, you can’t lay people off very easily. In America, you can.”
I’m not sure I get this. Who is telling you what? And who cares? You’re a pro, Howard. I think you forgot your successful leadership approach when you took this job. Were you overwhelmed? Walking on eggshells? Whatever. You’ve got to have a plan; you know that. By letting others dictate your priorities - instead of letting cogent analysis of the facts (financial, strategic and cultural) guide your decisions - you let things spin out of control. This was a bad way to start. And what about your senior management team?
Mr. Stringer didn’t know much about electronics,
Sony’s core identity, when he took over. His careful approach, a
hallmark of his time in the U.S. as well, was evident from his first
days, notably when he decided to keep — and defer to — the Japanese
executive team chosen for him by his predecessor, Nobuyuki Idei. The
executives were electronics veterans familiar with Sony’s operations in
Japan.But soon after, Mr. Stringer was upset he couldn’t
unveil cuts in the company’s product line because his top executives
had not finalized their plans.The executives “were all put in place,” says Mr.
Stringer. “What was I supposed to do? Show up on Monday and say, ‘I
don’t like who you’ve given me?’”
Answer: yes, Sir Howard. Your should have said “I don’t like what you’ve given me. This is the detail, the data and the thought process I expect. Here is an example of the types of reports I need to lead, how frequently I need them and how I want communication to work. Are we clear?” Anyone sitting at the table that either couldn’t or didn’t want to handle this - goodbye. Otherwise, you are sending a terrible message to your management team and those down the ranks that old ways are ok, change will occur at a glacial pace and that you think things are better than they are. You have only one time to make a first impression, and my impression is that you squandered this opportunity - big time.
Lesson #2: Understand, but don’t be paralyzed by, culture
This is probably the hardest thing you’ve had to deal with during your tenure. It is a mixture of the little things and the big things that need to be weighted. The things that cost you little but are meaningful and those that cost you a lot but, dammit, just have to be done. For example:
He bristles at criticism, mostly from Japanese, that
he lives in a hotel when in Tokyo and spends too much time in New York
and London to run the company effectively.Says Mr. Stringer, sitting in a conference room in Sony’s Tokyo headquarters: “If I’m not running the company, who the hell is?”
It would have cost you little to do this, but you dug in your heels and got pissed off about it. Big mistake. You clearly made a bad trade here, and even in the face of feedback did nothing to address this point.
Mr. Stringer bristles at the idea that he isn’t
committed to Tokyo. “I have a home in England and I have a home in New
York — I’m already bloody cross-cultural — and I just didn’t want to
be in a lonely apartment somewhere in Tokyo even for symbolic reasons.”At the same time, Mr. Stringer says he should have
“faked it better — I mean that seriously.” He says Mr. Idei warned him
about what might happen if he didn’t establish a home here. “I
should’ve put the flag up the flagpole and said here’s my residence in
downtown Tokyo — I’m here! — even if it’s less practical than living
where I live, and much less comfortable and friendly.” He still lives
in a hotel.
The messaging in Sir Howard’s words is all wrong. He is defensive, angry, and clearly frustrated at being mis-understood. Should have “faked it better” - are you kidding me? You don’t say these things. How about just buying a little flat and calling it a day? Even after all the negative press around this issue you still couldn’t suck it up and “put up the flagpole,” as you say? I just don’t understand. There are clearly some deep-seated psychological issues going on here.
“I don’t want to change Sony’s culture to the point where it’s
unrecognizable from the founder’s vision,” he says. “That’s the
balancing act I’m doing.”
Dramatic change was needed when he came on as CEO. The world had changed, and Sony had to change with it - or else. This might cost you a lot upfront, but represent the best long-term investment you could ever make:
When he was named CEO, Sony was in a poor state, a company built on
hardware engineering that was floundering in the age of software. For
decades, Sony had produced the gold standard of consumer gadgets such
as televisions and tape players. Sony made products the old way, first
developing hardware, then, almost as an afterthought, adding software
to make it run. The Walkman, the epitome of the company’s success, was
a triumph of electronics engineering; ever since, Sony’s innovations
have focused largely on hardware design — making products smaller,
thinner and lighter.
Ok, Howard, you didn’t want to change Sony’s original “vision,” but what is that vision? Are you possibly mixing up vision and execution? Sony has always been a company known for its design excellence, technology leadership, high-quality manufacturing and willingness to release products for which an established market does not yet exist. This is a pretty good legacy. And a pretty good vision. Good for those involved in software development, hardware design and manufacturing. The Sony culture and model worked for a long time, but has clearly broken down. Getting multi-disciplinary product teams to break down historical silos among software/hardware/manufacturing, focusing like a laser beam on the user experience, on creating lighter, more flexible yet powerful applications and devices. From my perspective Sony’s problem is less an issue of vision than of execution and adaptation to the Consumer Era of Computing. Sir Howard, you’ve got it all wrong. You’re not challenging vision here, you are challenging the way of bringing that vision to fruition in a changing world. And you have to do this. Now. Without equivocation or ambiguity.
Lesson #3: Respect Legacy, but not at the cost of performance
Mr. Stringer, 65 years old, stuck with the executive
team he inherited. He tried gently persuading managers to cooperate
with one another and urged them to think about developing products in a
new way.The dangers of that approach quickly became clear. Two
big missteps — a delayed launch of the PlayStation 3 videogame console
and an embarrassing battery recall — tarnished Mr. Stringer’s first
years in charge. In both cases, managers tried handling problems in the
traditional Sony way: quietly and without informing top executives.
And check this out - as a new leader, this is one of those embedded cultural mores that absolutely has to change:
One of Mr. Stringer’s goals was to encourage Sony’s hardware engineers
to treat software seriously when developing products. But Sony’s
culture celebrates proud innovators who do what they want. Many still
quote an admonition by one Sony veteran: If you have the misfortune to
be under a clueless boss, don’t tell him about new ideas — just
execute them.
This isn’t an issue of whether or not to act “gently,” but to do the cold, hard calculus in your mind and arrive at a series of expected values for an array of complicated decisions. “So, if I remove this entrenched executive, what will the repurcussions be on morale? On the performance of others who worked for this individual? Might this send a good and strong message that there is a new sheriff in town with a new, fresh plan for executing the Company’s vision? Or will removing this executive rock the boat too much in the wake of other dramatic changes? Does keeping this executive in place weaken my opportunity to send the right message that aggressive changes are necessary to move the Company forward?” All I know is that the unacceptable and non-functional behaviors of many of the old-line managers he retained showed that many of Sir Howard’s decisions were wrong. While we can’t possibly know his complete thought-process my guess is that he was too focused on not being perceived as the “heavy-handed foreigner” and not enough on the swift and decisive decisions that needed to be made to fix deeply entrenched problems. And bringing this point home, Mr. Stringer’s handling of a Sony legend, Ken Kutaragi:
Another stumbling block was Mr. Kutaragi, the renegade
head of Sony’s videogames division who invented the PlayStation
videogame consoles, the company’s most successful marriage of
cutting-edge electronics technology and software. Mr. Stringer hoped
Mr. Kutaragi would come up with similar hit ideas for Sony’s other
products.Mr. Kutaragi was notorious within the company for his
reluctance to communicate with his bosses or other units. In 2005, Mr.
Kutaragi hosted an event at a big electronics conference in Las Vegas
to celebrate the U.S. launch of the PlayStation Portable handheld game
machine — one of the company’s biggest products that year. He didn’t
invite executives from Sony’s electronics division, which provided the
parts.In developing the PlayStation 3 console, the device’s
latest iteration, Mr. Kutaragi went over budget on development costs
without informing Mr. Stringer, according to a person familiar with the
situation. When Mr. Stringer urged Mr. Kutaragi to have dinner with the
heads of the electronics division, he did so just once a year, this
person said. A spokeswoman for Mr. Kutaragi declined to comment.********************
In September, Mr. Kutaragi announced Sony was halving
shipments of the new PlayStation to the U.S. and Japan and was pushing
back its European launch. At a news conference, Mr. Kutaragi blamed
Sony’s electronics group for failing to produce enough of a critical
component, exposing his tense relationship with the division.“If we’re asked whether Sony’s quality of manufacturing has declined, I would have to say ‘yes,’” Mr. Kutaragi told reporters.
********************
Last fall, Mr. Stringer put together an executive team more to his
liking. The reshuffle included moving an uncommunicative star
executive, Ken Kutaragi, from his position running Sony’s videogame
unit.
I don’t care how legendary or historically successful a manager might be - if they are unable or unwilling to adapt to the culture, the vision you, as leader, have clearly communicated, they have to go. But not two years later, after the corrosive effect of doing things “their way” has already sunk in. Having a senior manager blame other groups for his group’s woes? Raising concerns of investors, suppliers and customers alike? Unacceptable everywhere and at any time in any culture. Because it has sharply undermined your ability lead, Sir Howard. Your credibility has been shaken. This is no way to run a global technology and media colossus.
Lesson #4: Be Confident and decisive in the face of crisis
The laptop battery crisis was not a red-letter day in the history of Sony or its new leader, Mr. Stringer:
Mr. Stringer says he first heard about the magnitude
of the problem not from his own managers but from Dell founder Michael
Dell.The problem: In Sony’s typical independent fashion,
the battery subsidiary, Sony Energy Devices Corp., tried solving the
issue itself, says Mr. Stringer. Instead of treating the matter as a
public-relations challenge, the battery executives saw it as one of
engineering.Mr. Stringer says he erred by deferring to his
Japanese deputies’ suggestion that he avoid public comments about the
battery recall. The idea was to contain the problem in the components
division, but Mr. Stringer’s silence gave the impression among Japanese
press and employees that he wasn’t taking responsibility for one of
Sony’s worst public-relations disasters. The constant stream of reports
about battery fires was “a kind of Chinese water torture,” Mr. Stringer
recalls, and prevented the company from putting a lid on the matter.*********************
In another interview, conducted just after the
battery-recall crisis, Mr. Stringer’s forbearance was wearing thin.
“I’m going to do what I want to do now,” the chief executive said. “I’m
not going to be following everybody’s suggestions. I’ve got to be true
to myself in some ways.
“I’m going to do what I want to do now” - as opposed to what you did before, which was not doing what you wanted to be doing? “I’ve got to be true to myself in some ways” - how about in every way? These are things you just can’t sacrifice, Sir Howard. Is this leading with confidence? Mr. Stringer certainly understands and appreciates the importance of culture - but to let it dictate his decision-making in the wake of crisis when tried-and-true principles of crisis management already exist (see JNJ: Tylenol Scare) was an egregious error in judgment. One that is surely hard to recover from.
Conclusion
None of this is to say Sir Howard Stringer is a bad manager. Is he doing a great job at the helm of Sony? No. I just think he got into one of the hardest management jobs on the planet and strayed from his historically successful game plan. He probably has one more chance to make things right, but in order to make the most of this chance he HAS to internalize some of these lessons in order to move forward for the long-term good of Sony, its shareholders and his mind-set. He has taken a beating over the past two years and for good reason, but again, he is running a multi-billion dollar, multi-national, multi-cultural, multi-disciplinary company in the midst of disruptive change across all of its disciplines. I wish him the best of luck - because I neither want to see him on YouTube getting a large tatoo on the small of his back nor on the cover of one of Murdoch’s papers sporting a cue ball for a hairdo. After Britney, it would just be too much to take.
Some previous posts of interest
02/10/2007: From Inside EA: “Buy Xbox 360 and/or Wii, NOT PS3”
02/08/2007: EA Revisited: Catchning Up on the Wii, Waking Up to the Failure that is PS3
02/05/2007: Microsoft Revisited: Vista, Apple and the Sony/Nintendo Phenomenon
12/07/2006: Update on Sony, EA and Nintendo - The Internet Got it Right
11/21/2006: EA: “Why Didn’t Wii Focus on Nintendo?”
11/20/2006: Sony - “Wii are in Trouble”
