How did Nobuyuki Idei push Sony into the abyss of decline?

Undoubtedly, Sony has declined, or it can be said that the current Sony is no longer the Japanese brand that perfectly combines inspiration and technology like Nintendo.

When discussing the various reasons for Sony's decline, I think I have to mention Nobuyuki Idei. As American sociologist John Nathan said:

"In preparing Sony for the future, Nobuyuki Idei caused it to take its first hiatus in its 50-year history."

The discontinuity that Nathan mentioned includes strategic discontinuity, cultural discontinuity, management discontinuity, and then discontinuity of brand connotation. In his early years, Nobuyuki Idei was deeply influenced by the French New Wave master, Jean-Luc Godard. Godard has always expressed himself with revolutionary lens language. Nobuyuki Idei once expressed his love for Godard: "We are all revolutionary people."

Izumi

Like most Japanese of his age, Nobuyuki Idei has served only one company throughout his life. Born into a scholarly family, he joined Sony Corporation, which was still a small company at the time, at the age of 23. He had no technical background and his early career was mainly related to overseas sales. In the 1960s, Idei was sent to Switzerland twice to work and participated in the establishment of Sony's French branch in 1968.

In 1990, Idei began to be in charge of the company's global advertising and marketing business. It was not until 1994 that the 57-year-old Idei became the managing director of Sony Corporation. A year later, his predecessor Norio Ohga unexpectedly chose this "pagan" as his successor, and Idei became president in April 1995. Regarding Idei's promotion this time, some people said that Akio Morita secretly instructed Norio Ohga because Idei had taken care of his family in Europe.

In 1997, when Sony decided to truly look global, Idei was already a fully-fledged multinational operator, shuttling around the world to consolidate the image of the Sony brand. Andy Grove, CEO of Intel, once said:

"Idei is one of Japan's most modern business-minded managers. The way he conducts marketing, makes decisions and treats American partners combines the best of Japanese and American management, which is very consistent with Sony's international nature."

De-Sony

One of Nobuyuki Idei's surprising moves was to break the lifetime employment system that was considered sacred and inviolable in Japan. Idei launched the "Transformation 60" project to make Sony lighter, that is, to achieve reconstruction on the 60th anniversary of Sony's establishment. The "Transformation 60" plan cut 90% of the types of consumer electronic product accessories, closed 15 affiliated factories worldwide, and laid off 17,000 workers, striving to achieve a reduction of 330 billion yen in fixed costs. In the face of public pressure, Idei explained: everything is for the sake of becoming a leader.

In order to enable Sony to produce middle-aged leaders like Microsoft and other American companies, Deji used the "network center" to select a new generation of management. He abandoned the hierarchy of traditional business departments and instead established three major business regions: the United States, Europe, and Asia Pacific, and handed regional power to younger managers.

In order to make Sony truly international, Idei believed that the most important thing was to give the company an international brain, that is, to reorganize the board of directors. In Japanese companies, the board of directors is often a decoration and does not have the same real significance as in American companies. Idei first transferred 30 senior directors off the board of directors, with the aim of drawing a clear line between the board's specialized functions, the company's decision-making and supervision, and the executive director, so that the board of directors can function relatively independently. He insisted that there should be one or two Japanese directors who are familiar with Japanese and global business and a global business leader like Welch on the board of directors. Idei humorously used an analogy for his reorganization of the board of directors:

"If we want Welch to work for us, we must first put in place a board that he will be happy with."

In an interview with a Chinese media outlet, he said:

"30% of Sony's business is in Japan, and 70% is overseas. There are many non-Japanese employees, about 1/3 Japanese employees and 2/3 non-Japanese employees. We believe that exchanges between different cultures are very important. From this perspective, Sony is different from other Japanese companies. We are committed to building a global company. Chinese entrepreneurs usually think about their homeland. For Sony, the key is global thinking, local characteristics, and not forgetting Japan. This forms a triangular relationship."

The right direction: Chujing’s digital dream

In Idei's eyes, an excellent enterprise should be one that can touch the pulse of the times. After seeing the combination of Time-Warner in the United States, he determined that the era of the integration of real and virtual enterprises brought about by the Internet has arrived. He believes that Sony already has the "real" part of this era, and what enterprises need to do in the future is to create a "virtual" part, and then use Sony's huge brand appeal to combine the two. In Idei's own words, the future Sony will be described by "the word 'ubiquitous', which means that computer systems are within reach at any time and any place."

Soon, Ide and his senior management team established a new business unit, the "Network Application and Content Services" department, or "Nacs". Subsequently, Sony announced the nationwide implementation of the network strategy. In order to create an ideal management model in the Internet era, Sony defined the group headquarters as the e-headquarters and established the e-management committee, whose purpose is to determine and implement Sony's Internet strategy.

In the past, Sony implemented a top-down unified management system for manufacturing companies. Any action had to be approved by the company's highest decision-making level, which obviously could not adapt to the requirements of the new economic era. Idei believes that the new era requires companies to build a new relationship between the headquarters and various organizations that is adapted to the Internet era. While dispersing power to various departments, companies must also strengthen the cohesion of the head office. After the reorganization of Sony, each branch company enjoys a certain degree of decision-making power, while avoiding the alienation and duplication of development of various departments within the company caused by the spatial separation of the Internet. This is the "unified/decentralized" management method advocated by Idei in the Internet era.

In 2000, Idei proposed to build the "Sony Dream Kingdom" in the broadband era. In 2001, he planned to transform Sony into a personalized channel network solution company. In 2002, he proposed that Sony should become a "media + technology company". Under the leadership of Nobuyuki Idei, Sony gradually focused on the development of the game and entertainment markets. At this time, Idei had realized that the battlefield of consumer electronics products began to shift to the "living room".

To convince those who doubted his dream, Deji gave the example of clapping.

“When you clap, you can’t tell which hand is making the sound. In the same way, I think users will no longer differentiate between software and hardware,” he said. “We have to produce unique hardware and software in a fundamentally changed environment - we have proven this in the music and film industries.”

Idei's digital dream is clear: using Sony products to provide integrated services to home users, from terminals to content, Sony will cover everything. If you look at it horizontally, you will find that in the process of realizing his dream, Idei will face the most powerful competitor, Apple from the United States.

Reality is very bleak

In March 2005, Sony underwent the largest personnel reshuffle in its history. Idei, who proposed Sony's digital dream, stepped down in disgrace, and his senior management team also left with him.

In the announcement of the CEO replacement, Sony's board of directors gave the following evaluation of Nobuyuki Idei:

"The current management team he led has made great contributions to the effective allocation of the group's operating resources and the promotion of internal cooperation within the group: strengthening the entertainment business, establishing the foundation of the mobile phone business, advancing the development of next-generation semiconductors, and integrating the financial business."

The polite note did not mention Sony's performance in the electronics business, reflecting the board's dissatisfaction with Nobuyuki Idei.

Obviously, Idei's advanced strategy of pursuing the digital dream did not contribute much to Sony's overall profits. In Idei's view, combining consumer electronics and high-tech with the Internet will open up a completely different world from the past and bring high added value. In this sense, Idei Nobuyuki is the first CEO among Sony leaders to raise the importance of content to an equal or even higher status than technology. But the problem is that such an advanced positioning did not bring enough profits to Sony.

The direct reason for his resignation was Sony's backwardness in its traditional advantage areas. When flat-panel TVs were industrialized, Sony did not master their core technologies, and was caught off guard. The technological regression forced Sony, which had always been on the high-end route, to engage in a price war with its competitors . As a result, by 2004, Sony's profits had fallen to the lowest point in a decade. Sony, which was once regarded as a "role model" by countless Chinese home appliance companies, handed over the throne of the consumer electronics industry to Samsung.

In 2003, Sony's financial report showed that its profits fell by 98%, and the profit margin of electronic products fell to about 1%. After implementing a series of cost-cutting measures, Sony's operating profit in 2005 still did not improve, and it was far from the goal proposed by Idei himself to return the operating profit margin to 10% before the company's 60th anniversary in 2006.

Sowing the seeds of disaster

It is understandable to see Nobuyuki Idei's transformation from a perspective other than Sony. Foresight, strategy, and international thinking were the qualities that Norio Ohga valued most. Nobuyuki Idei also had a very accurate view of the integration of future technology trends and industries. The integration of hardware and software, and content-driven success are the mainstream trends in the current digital industry. The problem is that in the process of realizing his vision, Idei's actions, like his thinking, were too abstract.

Nobuyuki Idei once commented on the two generations of Sony leaders, Akio Morita and Norio Ohga, saying that they had no ability to abstract.

"Mr. Morita was concerned with the location and proper function of switches or start buttons on Sony products and suchlike. ... Mr. Ohga was an artist, with an artist's arrogance and jealousy ... If he was moved by something, he was moved completely and purely, and therefore felt no need to explore its theoretical significance, or even its general significance."

Therefore, Dejing prefers to explore theoretical significance and look to the future.

Some of Nobuyuki Idei's philosophical views are indeed very powerful, but they are also full of Masaryk-like impracticality. Tomás Masaryk was the founder and first president of the Czechoslovak Republic. Under the guidance of nationalist philosophy, he dismembered the Austro-Hungarian Empire and caused instability on the European continent. National purity is almost impossible to exist in reality, because there are linguistic or ethnic minorities in any region, and Masaryk's philosophy itself is biased. Corresponding to Nobuyuki Idei's vision of the future, perhaps we can say that he adheres to a kind of "digitalism." Nobuyuki Idei once said:

"There is a certain logic to the business: if we can boil down our business to numbers like bankers, then we don't have to worry about the psychology and emotions behind the numbers all day long. We don't ignore the existence of cultural differences. On the contrary, we must find a mechanism that does not affect the control of the company due to cultural differences. In a strategic holding company, you don't need cultural factors to be involved at all."

It is this abstract logic of de-culturalization that has led to a huge gap in Sony's innovation. The innovative characteristics of Japanese companies represented by Sony are based on personal relationships, which can enable people in the organization to devote themselves to innovation without being petty . At the same time, personal emotions are an excellent catalyst for activating innovative inspiration. When Nobuyuki Idei comprehensively transformed Sony's management culture, he was only concerned with realizing his grand layout in the future digital world, which destroyed Sony's innovative genes.

The facts have proven whether Sony is truly adapted to performance-based management.

In order to allow Sony to continue its rapid progress on the road of de-Japanization, Nobuyuki Idei chose Stringer, who did not speak Japanese, as his successor. As it turned out, Sony officially entered a period of decline after Stringer took office. Sony's electronics business, which once made it famous, was gradually declining, and with the outbreak of the financial crisis, Stringer stepped down in disgrace.

John Nathan believes that Nobuyuki Idei's rise to power is a watershed in Sony's development history. On the left is the innovative spirit that was once brought about by the advocacy of emotional factors, while on the right is unknown. In fact, Nobuyuki Idei's transformation of Sony is a nearly perfect teaching case, that is, how to strike a balance between cultural transformation and strategic change.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.