Taught a lesson by Apple, Sony retrieved the "innovative" password by building a car?

Author | Pan Lei

Edit | Zi Yu

Image source | Sony VISION-S official website

Sony became yet another heavyweight electric vehicle player.

At CES2022, when Sony CEO Kenichiro Yoshida announced that he would establish "Sony Mobile" and promote the commercialization of the electric vehicle business, it meant that the consumer electronics giant officially joined the still rising electric vehicle track.

In Kenichiro Yoshida's plan, this is a strategic opportunity for Sony to become a "creative entertainment company" that redefines mobility.

Why did Sony, the consumer electronics giant that once built The Walkman and PS game consoles, always explore black tech products and turn ideas that seem unlikely to come to life?

For a long time, the self-revolutionary innovation of large companies has been considered one of the most difficult corporate management paradoxes, and some have even failed, such as Motorola and Nortel Networks, but there is also no shortage of success stories, such as Apple's continuous launch of innovative businesses, Microsoft can also find a new growth curve through cloud computing, and now It is Sony.

In fact, through continuous strategic adjustment, Sony has not only obtained a good ranking in the Fortune 500, but also reshaped its innovation strength.

Sony, regaining its role as an innovation giant

Sony is still a big company, even a big Mac.

Sony ranked 88th on the 2021 Fortune Global 500, the best ranking in the past five years, and its operating income has also increased from $77.1 billion five years ago to $84.89 billion.

In other words, at the key node of the global automotive industry entering the new energy era, Sony's situation is actually good.

Of course, behind this is the support of innovation factors.

In 2020, Sony returned to the List of the World's 50 Most Innovative Companies published by the Boston Consulting Group and ranked ninth. Sony continues to rank ninth on this list in 2021.

The TOP10 that can enter the list at the same time as Apple, Alphabet, Amazon, Microsoft, Tesla, Samsung, and Huawei shows that Sony is regaining its role as an innovation giant.

Specific to the car manufacturing business, Sony's biggest confidence lies in the technology accumulation in the field of sensors and the large number of fans accumulated as an entertainment giant over the years.

In addition to hardware, Sony is also similar to Apple, including movies and music, has its own user ecology, and is significantly stronger than Xiaomi, which announced the car earlier.

Although in the eyes of the outside world, car manufacturing is a "technology-intensive + capital-intensive" industry, Sony believes that it already has most of the conditions in the "new four modernizations" (intelligence, electrification, networking, and sharing) of the automotive industry.

At the same time, Sony's business is stable, so the funds are not too much of a problem.

And Sony has always attached great importance to the "entrance" nature of the mobile Internet era, in the most difficult period, Sony sold the display panel and personal computer business, but has been retaining the performance of the lack of performance of the smart phone business.

In Sony's view, the mobile phone is a key entrance, and now the electric car as a PLUS version of the mobile phone, is also a user entrance related to the future, and thus naturally become the focus of Sony's next stage.

In other words, it's a company that's always innovating – making cars is just the latest extension of that philosophy.

Sony relies on what is always innovative

Sony's first home appliance was a rice cooker.

But it failed – because the rice was either cooked or mushy.

This rice cooker is considered Sony's "Number One" failed product.

If innovation cost anything, this rice cooker was a blow to Sony at the time.

However, it is also from the beginning of failure that Sony made the world's first transistor TV, the world's first Walkman, the world's first stereo portable headphones, launched the robot dog "Aibao" in 1999, and established its own game supremacy through the PS game console.

The central question is – what did Sony do to accomplish these incredible innovations as a big company?

This has to do with Sony's philosophy.

"Through unique products, create new ways of entertainment for users". This is probably the answer to Sony's continued ability to make innovative products.

Under the guidance of this concept, Sony's product development is generally considered to be ahead of its time.

For example, the robot dog "Aibao".

If this product appears in the present, in the case of Boston Dynamics and Xiaomi robot dog "iron egg" brushing screen, it may not cause much waves, but in 1999, it is absolutely shocking.

And it all came from a mysterious institution, CSL, Sony's Computer Science Laboratories.

It belongs to Sony, but it is a relatively independent organization, and for many years, this top-secret laboratory has been promoting a variety of strange product projects, most of which seem to have little to do with Sony's main business.

In the few open days, people get a glimpse into CSL's list of projects — including automatic prosthetics, smart farming, and "music that can decorate spaces," among others.

It is not difficult to see from these projects that the purpose of CSL is to break the stereotype.

Based on this, its projects are 100% original projects, and there is no such thing as "borrowing", "imitating" or heard ideas from other places.

One thing CSL has never done is chase projects that make "quick money" — it studies products that people "might" use in 5-10 years.

The product may or may not have been successful.

Regardless of the outcome, CSL accepts it.

In addition to the robot dog, many people know that the "Sony Dream" project is also from CSL.

Sony was well aware of the add-on effect of this institution on its core competencies, so even when it was most difficult for it, it did not choose to close the lab.

This is equivalent to preserving Sony's "forever innovating" totem.

While CSL is full of legends, a real problem is that it doesn't solve the strategic problems of a large company.

And it is this that has caused Sony to suffer the biggest disaster in its 60 years of existence.

Sony, was taught a lesson by Apple

For a big Mac, the language related to "strategy" often seems to be some simple "big truth", but the complexity is that it is not a problem that can be put up for public discussion, and more often relies on the talent of a talented entrepreneur - first recognized by the executive team, and then promoted to the whole company to execute.

The same goes for Sony.

The company's Internet strategy formulated about 20 years ago does not seem to be outdated now - focusing on the electronic business, linking the game business, network and communication business, entertainment business such as film and television and music, and financial business, and improving the overall value of the group and enhancing the competitiveness of the company through cooperation and synergy between various business segments, which is known as the "integrated business model".

This is an ideal strategy.

But like that rice cooker, after the turn of the millennium, this strategy built on core hardware manufacturing suffered a major setback.

As we all know, Sony has made many god-like hardware products, so the obsession with core hardware is deeply rooted, which makes it still bet on its own hardware and manufacturing advantages in the face of the digital wave, which makes Sony more and more powerless in the face of homogeneous competition from opponents - after all, products that change people's lifestyles such as Walkman and PS game consoles do not appear frequently, and they are constantly imitated by opponents.

In other words, Sony has failed, whether it's technology, products, or operating models.

This is no longer the Sony that Steve Jobs once worshipped.

To be more specific, consumer electronics have become a product with a very fast update rate and a shorter product cycle, and Sony also uses the concept of durable consumer goods to manufacture, and the resulting high cost has made it unsustainable.

In contrast, Apple's digital trend is choosing a different path - through the software ecology and unique design, especially to create phenomenal products such as the iPod, ending Sony Walkman's 25-year domination in the field of personal players and becoming a new cultural symbol.

This heralded Sony's beginning to walk down the altar.

Bad things came one after another, and the LCD TV business began to lose money – the department itself had taken a technical detour.

This puts Sony's position as the consumer electronics overlord at stake.

In April 2003, Sony announced its 2002 financial annual report, recorded a huge loss of $1 billion, the giant image began to collapse, and triggered Sony Shock ( Sony Shock ) , Sony stock fell 25% for two consecutive days, the Nikkei also fell sharply.

When things got out of hand, Sony, aware of its strategic misdirection, appointed a foreign CEO for the first time to save the day – Howard Stringer was tasked with accepting this difficult challenge.

Incredibly, as the CEO of Sony USA at the time, he couldn't even speak Japanese.

This shocked the whole world, because Sony has always been considered a symbol of Japanese industry, a "national treasure".

According to Sony's ideas at the time, the decision to appoint Stringer was to look forward to creating Annie's "international" image, repositioning the company's operating model, and leading Sony out of the predicament.

Overall, after almost 60 years of brilliant concept of "never imitating others", Sony, which has entered the 21st century, has to once again go through a difficult transformation to prove to the world that it is still the "Sony of the world".

But Stringer is not Steve Jobs, and as a journalist-turned-manager, he can't lead Sony to make a shocking product and regain Sony's innovative dignity.

In other words, as Sony's CEO, he couldn't help Sony in terms of technology and product concepts, and more relied on native Sony executives like Kazuo Hirai (then president of Sony Electronic Entertainment) to put out fires everywhere.

In terms of strategy, the "content rescue technology" he proposed also did not reflect the huge opportunities brought by the mobile Internet, which led to Sony not finding new business growth points.

This strategy was even snubbed by Sony, where the engineer culture was strong.

In 2007, Apple launched the first generation of the iPhone, fully connected with the trend of the mobile Internet.

In addition, Apple's entire operating model is also unprecedented - through the commissioned OEM model, Apple is completely focused on innovation itself, thus maximizing its value in the industrial chain.

This is completely different from Sony, which focuses on manufacturing.

And Stringer had bad luck — the financial crisis was coming.

In fiscal 2008, the year after Apple launched its first iPhone, Sony exploded as much as 260 billion yen ($2.9 billion at the time), the worst loss ever.

At that time, Sony suffered a total rout in almost all important business lines - this is of course related to the financial crisis, but the internal reason is that Sony's judgment of the direction of the digital age industry is the result, and the tablet and smartphone businesses have missed the best opportunity.

So during his tenure (2005-2012), Sony's performance declined, its earnings report was ugly, it has been on the decline, and the idea of "content rescue technology" has failed.

If he had any contribution, it was the reuse of two people, Kazuo Hirai and Kenichiro Yoshida— two men who carried the banner of Sony's innovation and renaissance.

"One Sony"

One of the first things Hirai did after he became CEO of Sony was to implement a "shrink" strategy and revitalize the electronics business as the theme, thus establishing the three core businesses of mobile, digital imaging and gaming.

The process of "contraction" is brutal.

In Japan, which embraced lifelong employment, he laid off 10,000 people mercilessly.

In addition, he sold his headquarters building in Tokyo, Japan, and Manhattan, for $2.3 billion, the chemical products business for $730 million, and the 13 percent stake in DeNA, a Japanese mobile game company, for $440 million, among others.

He spun off Sony's non-core business with unprecedented determination.

But this can only solve the immediate financial crisis, and how to solve product innovation and regain competitiveness is the real problem for Hirai — and he is not an engineer, which is even his biggest hard wound when he first competed for the CEO position.

To this end, he proposed the "one Sony" strategy, breaking the rules and regulations between Sony's various businesses and promoting synergy between them.

As a CEO who rose from within Sony, he knew how serious the infighting between Sony's various divisions was.

In view of this, he did not want Sony to make a strategic mistake like missing the "iPod" product again - before the emergence of the iPod, Sony had enough research and development resources to launch a similar product, but in the end, for various inexplicable reasons, Sony missed the mp3 player.

He also managed to revive Sony's engineer culture, including trying out the product himself.

In addition, he also developed an expanded version of CSL - the establishment of the "Business Design and Innovation Lab", compared to the scale of CSL only a few dozen people, the scale of this laboratory has reached 100 people.

The task of these people is to turn imaginative ideas into feasible and innovative solutions.

But he still didn't think that wasn't enough, so he launched an innovation call for ideas within the company — allowing employees to come up with ideas and raise funds.

These measures have worked.

Under the leadership of Kazuo Hirai, the PS4 has once again become a blockbuster product, selling more than 40 million units in the three years of launch.

In terms of forward-looking layout, in the case of continuously cutting off businesses such as display panels to achieve "slimming", Hirai has increased investment in the sensor business, which not only makes Sony a giant with absolute advantages in the CMOS market, but also provides key hardware support for the current car-making business.

He also grasped the crucial point, that is, Sony's content , which allows Sony to rely on film, television, and music resources to form a competitive advantage.

By fiscal 2015, Sony had finally achieved a net profit reversal, which was about $1.3 billion that year.

From then until 2020, Sony has been in a lucrative state financially, despite slight ups and downs in the middle.

But "revolutionary" products have never appeared.

From this point of view, both Howard Stringer and Kazuo Hirai belong to the "transitional figures".

So now the banner of Sony's real revival has fallen into the hands of the new CEO Kenichiro Yoshida, who took office in 2018.

Judging only by Sony's prototype at CES2020, car building may be Kenichiro Yoshida's top priority – as official announcements at CES2022 have confirmed.

As An old partner of Kazuo Hirai, Kenichiro Yoshida is well aware that the former pulled Sony out of the quagmire and carved his name in the history of Sony's development, and when it is his turn, perhaps only the success of the car can allow Sony to reshape the image of the innovation giant, regain the share that was snatched by Apple, and create his own good history with this great company.

Therefore, building a car is a fate that Sony cannot avoid.