Innovation Audit Sony


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Innovation Audit, Porter's Generic Strategy, Innovative Processes, Blue ocean Strategy, Lock-in Strategy, Kolb's Learning Cycle on Sony Playstation models.

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  • There’s always a clear leadership (eg,Yoshihide Nakamura(1968.....) and Kazuo Hirai(2012... to date).The company encourages on the job training though their hosts of scholarships programmes available.2012 Corp Strategies includes Creating new businesses & accelerating innovation Sony’s continuous emphasis on restructuring exercises, rather than concentrating on cutting down on unnecessary product lines, and its continual focus on the consumer electronics business at a time when the industry itself was going through a slump period, could be cited as the primary reasons for its continual dismal performance
  • A blend of Eastern and western culture(Beamish 1999)A mix of “very Japanese thinking” and “not very Japanese thinking”The company encourages innovationInnovative staff are given new opportunities to enable them realise their dream.Eg,Head
  • - Sony previously worked with Nintendo under partnership agreement, started back in 1983Nintendo developed games and add-ons, Sony developed core technologyLater, Sony successfully developed CD-ROM but there were conflict between Nintendo, Sony stepped outSony then entered gaming market on its own, possessing CD-ROM technology as Core competence
  • I will mention that once Sony enter Game console market, it’s strategy was differentiation, try to completely differentiate itself from Nintendo. With the entrance of Microsoft, which using similar strategy as Sony has lower the uniqueness of Sony. So it’s current position, as in PS3, is a differentiation focus where the firm looks to typically gain it competitive advantage through product innovation and brand marketing rather than efficiency.
  • -From the model, we can notice that Sony PS3 and XBoX360 have very similar Strategy. The consumers would not have a clear choice when it come to decision making between either on of these consoles. Oppositely, Wii differentiate itself from the other 2, its unique gaming that cannot be found in PS3, or Xbox can overcome its advantage of poor graphic and additional feature such as movie player.-Only thing that Sony console manage to stand out from other product is its graphic and special disc format which offer optimum memory capacity of 25 GB
  • -CD-ROM become core competence of Sony as it entered the market due to its much larger memory, resulted in better graphic and user experiences.However, it faces the problem in persuading game developer to work under their new platform, due to its position and experiences in game console market Moreover, Sony spend largely to be in consumer mind by advertising in every major game magazineMicrosoft enter Gaming market in 2001 and introduce Xbox using DVD platform which offer higher memory than CD-ROMSony countered by Massive R&D and come up with Blu-Ray technology which offer better performance than DVDFrom several attempt in adding internet feature into Game console by Nintendo and Saga but failed due to technical error, only allow user to download some game on internet. Sony is the first one that brought the full potential benefit of internet to its PS3, allow people to fully download games, share games and play multiplayer mode only.
  • We are using Technology lock-in Strategy, Arthur (1998)Sony use its own platform, CD-ROM for its PS1 and 2 and Blu-Ray in PS3, totally incompatible with other consolesSony Introduce
  • Top management commitment and visible support for innovation Timing : Explicit time based strategiesAdopting a “carry-over” strategy (use inventions for multiple products). “The innovation process is defined as the development and selection of ideas for innovation and the transformation of these ideas into the innovation” (Jacobs and Snijders 2008). The main idea of SCE was to develop a next generation game console as a “Super family computer” along with Nintendo. But after getting betrayed by Nintendo, SCE decided to move into own project. In 1994 Rothwell, a key researcher in the field of innovation management identifies four key principles of Fifth Generation (5G) innovation process namely: integration, flexibility, networking and parallel information processing. These are fundamental principles underlying the innovation process of SCE. SCE integrated hardware developers from central lab, software-related image processing developers from Kihara institute, Sony Music Entertainment (SME), recording media division to work on PlayStation. Flexibility in research department has improved innovating thinking of all engineers. Upstream networking with small electronic component suppliers and downstream networking with demanding customers provided huge benefit in manufacturing process. SCEalso developed indirect knowledge-sharing mechanisms among the software developers byoffering software development support to third parties.SCE used incremental innovation process approach for Playstation2 and PlayStation3. By using latest technologies of the time, such as DVD media, an ultra- high-speed core engine (EE + GS),and ultra-high-speed memory system architecture (co- developed with Rambus), SCEsignificantly enhanced the hardware performance for PS2. For PlayStation3 SCE used a Cell processor by IBM and Toshiba which was based on the Power architecture and combined with NVidia graphics chip, high storage memory, full HD quality and blue ray drive along with minor changes in other components. To avoid long delivery times SCEstrategically chose to utilize a direct sales channel instead of the wholesaler channels in its distribution channel. Direct channels offered a substantial advantage in terms of shorter lead-time in taking orders and responding to additional orders from retailers. High quality business ideas were developed based on Sony's rich knowledge of the CDbusiness, while the hardware design for PS1was created bysharing all of Sony’s intelligence and information resources. PS2succeeded because of its internal development and production of the semiconductor for its core technology, which enabled SCEto achieve both high performance and lower cost. With these two successes in process innovation, Sony dominated the game industry. In short Sony have learned how to manage process (both in ‘do-better’ and ‘do different’ variants) so that they can sustain innovation (Foster and Kaplan, 2002, Geus 1996).
  • The Making Of: PlayStation( Psygnosis Story: John White, director of software ( Interactive ( Johns. (2006). Video games production networks: value capture, power relations and embeddedness. Journal of Economic Geography. 6 (1), p151-180.
  • - Created SCE in 1993 after being excluded from Nintendo project - Collaboration with SME’s R&D and business development for PlayStation - SCE offered incentives to third-party software developers that Nintendo did not provide. - Developed indirect knowledge sharing mechanisms among the software developers by offering software development support to third parties. Experimentation: - Using CDs in gaming consoles. - Using DVDs in PS2, although the technology was just developing at that time. - Releasing PS2 at high price and still maintaining sales - Trying to implement new high speed core processor “Cell” in PS3 and other products of Sony. ( This was a failure as the processor manufacturing was delayed) - Promoting independent game developers
  • REFERENCES Tidd, J., and Bessant, J.(2009) 4th Edition, Managing Innovation: Integrating Technological, Market & Organisational Change, John Wiley &Sons, Chichester.MIT Link: article:
  • From the innovation audit in Appendix ___ strategy and learning were given a high score of 6 whereas processes and links were given
  • Innovation Audit Sony

    1. 1. I N N O V A T I O N A U D I T SONY THE GAME BEGINS IN 3 2 1…
    2. 2. SONY Press Start ... • May 7, 1946 and is headquartered in Minato-Ku,Japan. • Operates three business units- Electronics, Entertainment and Financial Services. • Major products -Televisions, Digital imaging, Semiconductors, Electronic components, Professional solutions, Medical • Staff Strength of 168,200 • 183 countries. • Mission: "To experience the joy of advancing and applying technology for the benefit of the public.” • Brand Message: “Make. Believe”.
    3. 3. SONY Core Competencies • • • • • • Brand Name Networking Global Market Position Design Development Manufacture • MINIATURIZAT ION
    4. 4. SONY Innovative Organisation • Restructuring in its organizational structure. • The quest to be innovative is one of reasons for the restructuring. • Latest Restructuring was on April 1st, 2012. • Divisionalised and Adhocracy.
    5. 5. SONY Innovative Organisation
    6. 6. SONY Innovative Organisation • Visionary-Top-down identification. • President Kazuo Hirai, Sony switches to a new management structure with gaming - core pillar. • New structure - Revitalization and Growth of Electronics Businesses and Deliver Compelling User Experiences as “One Sony”. • Three core pillars: digital imaging, game and mobile.
    7. 7. SONY Initiatives to promote innovation • Lunch time learning aimed at encouraging creativity and managing stress • Sony University at nurturing talents anywhere in the world • High Potential Programme-Progresses the core skills of Super Sony Folk • “Work Smart”-Designed to enhance an individual's body, mind, emotions
    8. 8. SONY Diffusion of Innovation Diagram Nintendo Entertainment system (62 million units sold) 1972 Nintendo N64 (33 million units sold) Nintendo Super Famicon (49 million units sold) Odyssey, Magnavox (330,000 units sold) Innovators Sony Play station (125 million units sold) 1983 Nintendo, Color TV game6 (3 millions units sold, in Japan) Nintendo Game Boy (118 million units sold) Early Adopters Early Majority Source : Sony PS 2 (138 million units sold) Sony PSP (76 million units sold) Nintendo DS (154 million units sold) Xbox (24 millions unit sold) late Majority X Box 360 (76 million units sold) Laggards Sony PS 3 (77million units sold)
    9. 9. SONY Innovative Timeline Introducing New disc format Blu-ray in its new PS3, internet gaming Conflict with Nintendo, Entering Game Console Industry 1983 1994 2005 2013 2000 Introducing Dual-Analog Technology, Shift in User Experience Persuading Game developer to work under their new platform, CD-ROM Introducing PS4, Game Sharing, Face Tracking. More?
    10. 10. SONY Porter’s Generic Strategy Lower Cost Differentiation SONY Broad Target Cost Differentiation Leadership SONY Narrow Target Focus Focus Generic Strategy (Porter, 1980)
    11. 11. SONY Blue Ocean Diagram
    12. 12. SONY Response to threats and Opportunities
    13. 13. SONY SONY Technology Lock-In Strategy • Technically differentiate product (incompatible with rival, so zero sum game) • Introduce better quality products • Form strategic alliances (catch-up) • Develop more effective process technologies • Price • Target marketing in leading magazines and media • Cross-leverage installed user bases in related markets • Understand heterogeneous demand (distinct user groups) • Build brand image amongst key socio-economic groups • Improve / exploit distribution channels • Exploit better organisational resources • Exploit better access to key resources
    14. 14. SONY Processes Search Select Implement Capture •Process is top-down •Senior management search and select •Middle to lower level management deal with Implementation •Capture is determined as success or failure by the whole organisation
    15. 15. SONY Top management commitment and visible support for innovation Time based strategies Carry-over strategy Linkages CONTINUOUS INNOVATION AS A MULTI ACTOR PROCESS Research design and commitment Integration within the firm, Extensive networking Incremental development strategy, Upstream with suppliers Manufacturing strategy Process MARKET SUCCESS Implementation and launch, Downstream with demanding customers
    16. 16. SONY Linkages Collaborations: IBM & Toshiba Unity Technology Ustream Acquisitions: Psygnosis Verant Interactive Partnerships: Nintendo FIFA
    17. 17. SONY UEFA Champion League Tomorrows Hottest Titles Sponsorship Ozzfest Vans Warped Tour Don’t mess with Zohan
    18. 18. SONY Learning: Kolb’s experiential learning cycle  Experience – Honest capture of experiences (even costly failure) thus having raw materials to reflect  Reflection – what happened, what worked well, what went wrong etc.. Experience Experiment Reflection  Conceptualizing – capturing and codifying the lessons learned into framework and eventually procedures to build on lessons learned. Concept  Experimentation – the willingness to try and manage things differently next time, to see if the lessons learned are valid.
    19. 19. SONY Learning  Capturing and re-using past experiences: - SCE in 1993 - Nintendo project - Collaboration - SME’s R&D & Business Development - Incentives to third-party software developers - Indirect knowledge sharing  Experimentation: - Using CDs . - Using DVDs in PS2. - High price and still sales. - High speed core processor “Cell” in PS3 - Promoting independent game developers
    20. 20. SONY Learning  Conceptualizing: - Releasing PS4 - lower price - Utilization of all Sony’s resources (intelligence and information).  Learning and Adaptability - Main strength - Cutting edge technologies into PSs’ hardware. - Improvising on the product even after its release there by finding new ways for price reduction. - Reasonably pricing of PS4. - Enabling offline mode in PS4. - Encouraging independent game developers.
    21. 21. SONY Strategy 7 6 5 4 3 Innovative Organization Learning 2 1 0 Process Linkages I N N O V A T I O N A U D I T