Flexible Focus Area:R&D activities strategically managedR&D InvestmentMarket can be created
Flexible Focus Area:Sony’s focus areas can be distilled into four key themes; “Networked Products and Services”, “3D World”, “Competitive advantages through differentiated technologies” and “Emerging Markets”.
R&D activities strategically managedSony R&D centers over 20 countries in the world in 1980s until 1990s outside the Japan.Sony focusing on the various type area such as home and mobile electronics, which is focusing on high-definition and related technology.R&D Structure – Centralized model the Headquarters have the direct control to individual R&D centers. Sony is holding monthly meeting between different R&D groups, also with other business networking to build strong web connection within the firm.Key secret of Sony investment is the high performance processor semiconductor “cell”. Semiconductor division was established on 1985 to support Sony’s global efforts in developing innovative, value added products for wireless and optical communication, audio visual and computer applications. The semiconductor industries ranges from CDs, GPS, and computing applications. 1995 is the historical moments for Sony when they collaborate with Toshiba and IBM to unveiled the next generation microprocessor “Cell” which is more than 10 times faster than normal PC Processors.Device technologies such as Touch screen and Blu-Ray and high performance technology for small LCD were said as one of the Sony’s success story in R&D.
R&D InvestmentMajority of Sony R&D costs are allocated on the Networked Products and Services (NPS) segment. In 2008, expenses in electronics segment has been allocated 438.7 billion yen and game segment is 77.1 billion yen. Over half than electronics segment has been used for develop new product, where the rest were used in developing middle long term technology.
Product Innovator and Fast FollowerKeep Sony’s mature products fresh all the time. New products are released constantly which are cheaper and better than previous one. Sony’s developed the new products by looking back the mature one, fixed and improve them with current functions. Sony believes that market may be mature, but there is a never mature products.
Has both incremental and radical innovationsIncremental innovations exploit the potential of established designs, and often reinforce the dominance of established firms. Sony improve the existing functional capabilities of a technology by means of small-scale improvements in the technology's value, adding attributes such as performance, safety, quality, and cost.Generational or next-generation technology innovations are incremental innovations that lead to the creation of a new but not radically different system.Radical innovations introduce new concepts that depart significantly from past practices and help create products or processes based on a different set of engineering or scientific principles and often open up entirely new markets and potential applications. They provide new functional capabilities unavailable in previous versions of the product or service. More specifically related to business, radical innovation has been defined as "the commercialization of new products and technologies that have strong impact on the market, in terms of offering wholly new benefits, and the firm, in terms of its ability to create new businesses." (O'Connor and Ayers)Sony developed the Walkman audio player, redefining the market for portable music devices, even though Walkman is considered as radical innovation because it is invented by its original design and specific functions but its still failed to develop a successful MP3 player and allowed Apple to displace it in the portable audio space with the iPod.
Learning by doing is a concept in organizational studies to encourage the creation of innovation.The Vaio laptop was a messy, lengthy and unpredictable process. It is also not the creation of one engineer who designed it from beginning to end.
Social Networking and Face-to-face communication were important among the development team members when they discussed the meaning of the product concept and the stylishness of the most updated model. It is very crucial to ensure the same understanding among the team members to get the concept of “good looking” in project members’ minds from past experience and further elaborated in their discussions during the projects.
We can see throughout the evolution of Sony products actually the Sony success factor also was depends to its ability to innovate the product as the market needs. Far away from that reason, innovation itself was applied into the segmentation of their products which evolved from Government use equipment to Basic home based entertainment products and lately evolved to the very interdisciplinary products which offers the customers and market needs merchandises a better choices.
SFGS 6334 Management of Innovation SONY Corporation: “Experiencing SONY as one of a Global Leading Innovative Conglomerate”Nurul Kamila Mohd Yusof SMB 110004Wan Mohd Hasif Wan Muhamat Ali SGE 100008Mohd Fadhli Rahmat Fakri SMB 110010 (Group Leader)Pang Fei Yee SMB 110005 Department of Science & Technology Studies, Faculty of Science, University of Malaya 1
2SONY Corporation Corporate Video: Make.Believe taken from: http://www.youtube.com/watch?v=eiVNWynwd90
Outline of Presentation Sony Corporate Video Quick Snapshot of SONY Innovation Management in SONY: O Strategy Innovation O Product Innovation Implementation Dimension Human Capital Development Sony’s Working Culture Source of Expenditure Strategic Alliances & Smart Partnership Conclusion References 3
Quick Snapshot of SONY!O The Japanese multinational conglomerate corporationO a well-known company and one of the leading manufacturers of electronic products.O Founded in 7th May 1946 by Masaru Ibuka and his colleague Akio Morita, this company initially named as Tokyo Tsushin Kogyo K.K. (Tokyo Telecommunications Engineering Corporation).O dated back to the time of post-World War II when Ibuka started a radio repair shop in the late 1945. After he was joined by Morita in the following year, their company grown up and finally changed its name to Sony in January 1958.O Headquarter is located at Minato in Tokyo, Japan. 4 Images taken from http://blog.travelpod.com
Innovation Management in Sony Strategy ProductInnovation Innovation 5
Strategy Innovation (SI) Flexible focus area R&D activities strategically managed Dynamic R&D investment Market can be created 6
1. Flexible Focus Area “Networked Products and “3D World” Services” “Competitiveadvantages through “Emerging Markets” differentiated technologies” 7
2. R&D activities strategically managed Sony R&D centers over 20 countries in R&D structure – the world in 1980s Centralized model.until 1990s outside the Japan. Key secret of Sonyinvestment is the high performance Device technologies. processorsemiconductor “cell”. 8
Sony’s R&D Management ModelsSony‟s HQ Materials LaboratoriesR&D Organization Cubed Research Centers Sony‟s Computer Science Labs. Inc. Information Technologies Laboratories Technology Development Group Core Technology Development GroupDisplay Device Development Group Sony‟s Product Technologies 9
3. Dynamic R&D Investment Majority of Sony R&D costs are allocated on the Networked Products and Services (NPS) segment. In 2008, expenses in electronics segment has been allocated 438.7 billion yen and game segment is 77.1 billion yen. Over half than electronics segment has been used for develop new product, where the rest were used in developing middle long term technology. 10
4. Market can be created! “Consumers do not know what ispossible, but we do, so we don’t do a lot ofmarket surveys, but we focus and constantlyrevise and improve the applications of theproducts and develop new ones, and try tolead the consumers and communicate withthem, thus creating the market” Akio Morita, Sony’s Founder 12
Product Innovation Has both Product incremental Protected byInnovator and and radical PatentFast Follower innovations 13
Sony Main Product• Playstation • Sony • Vaio EricssonGame Mobile Computer• Cybershot • Walkman • Bravia Digital CameraDigital Mp3 and Television 14Camera Walkman
1. Product Innovator &Fast Follower O Maintain its old digital vision market – Therefore Sony‟s new inventions and innovations product are highly related to its mature products. O From there, it moves faster than its competitors. 15
2. Has both incremental and radical innovations INCREMENTAL RADICALExample: Example:Sony pioneered the Sony‟s Walkman is antechnology of example of radicalminiaturization to create a innovation to access awhole new class of market of previous non-portable consumer consumers.electronics (such asradios, cassette taperecorders, and CD 16players).
3. Protected by Patents. • By patenting, • Forces Sony to market Minimizing ProductsBeing first into the competitors Seeks for new can only technologies follows Sony‟s and designs. product while • Introduce the Sony will perfect always release products. the new ones. 17
Sony’s Product Innovation Success Factor Geographic al factor Interdisciplin Strengths ary Product of Social Developme Networks nt 18
A. Geographical FactorO Particular analysis of Sony reveals that over 95 percent of its R&D not only occurred in Japan, but more specifically in the Southern Tokyo regionO Japan as known by the world is the pool of the ICT and engineering expertise.O The mobility of labors and skilled workers to the Southern Tokyo gave a great impact to the innovation and product technological development in Japan 19
Sony’s worldwide research centers 20 Motoyama (2011)
B. Strengths of Social Networks Learning by Doing or Effective and Face-to-faceLearning only efficient social communicationafter making networks mistakes 21
Learning by DoingThe process denotes to the capability of staffs toenhance their productivity by frequently reiteratingthe same type of actionExample:The Vaio ComputersDevelopment 22
Effective and efficient social networks The huge networks among the business community makes Sony situated themselves as a well-known brand in the world brand list equal to the Panasonic, Dell, HP, Apple, etcExample:SonyEricsson 23
Face-to-face communicationSony also has applied the effectual face-to-facecommunication among their thousands staff overthe world. Face-to-face communication produces agreat result of product marketing.Example:Mp3 andWalkman 24
C. Interdisciplinary Product DevelopmentGame MobileComputer Digital CameraMp3 and TelevisionWalkman 25
AchievementsO Sony has dominating the electrics and electronics market for nearly half and century.O They gained over 70% sales from overseas market besides Japan in 120 countries over the world which Asia, Europe and North America are the main market. 26
Sony’s Product Innovation Challenges Compete Stay top at with outfit Retain the electric design suchmarket share and as Apple,in the global electronic Sharp, economy market Samsung etc. 27
Implementation DimensionHuman Capital Development (Training & Employment) 28
Sony regards its employees as the most important asset to the companybecause they believe that the process of development and innovation are derived by the human capital. 29
O Sony is adopting holistic approach; their development is not just technologically driven but also derived by a good management and well-trained employees.O In developing its „community‟, Sony is focusing in three major strategies: i. developing business leaders ii. nurturing engineering talents iii. enhancing abilities and skills of individual employees 30
Leadership Training and Development ProgramsO Sony operation is scattered around the globe, thus it is vital to have global leaders that can lead through diversified cultures and different working environment. 31 Source: sony.net
Leadership Training and Development Programs (cont.)i. Appointing talented directors chosen among regional human resources managersii. Job rotation (assignments through variety of business and regions)iii. Global recruiting system 32
Leadership Training and Development Programs (cont.)iv. Sony University 33 Source: sony.net
Leadership Training and Development Programs (cont.) 1) Next Generation Business Leader Program (Japan) 2) Course 10 (Japan) 3) Web portal for management-level employees (Europe) 4) Strategic Career Management Committee (SCMC) (Asia Pacific) 5) Chinese employees opportunity to work abroad and work in China when return home 34
Engineering Training and Development Programs1) Sony MVP Award2) Distinguished Engineer (DE) system3) Collaboration with Keio University and other universities in Japan 35
Personnel Development ProgramsSony offers training programs using various methods: -group training sessions -e-learning -correspondence courses -on-the-job training-tutor system (basic workplace routine, work attitudes, how to complete particular task) 36
Personnel Development Programs (cont.)To support its employees‟ career development,October “Career Month” is designated. -employees can meet directly with their supervisors discussing about their career‟s projectionOther training programs:-language classes-lectures 37
Personnel Development Programs (cont.) Total number of employees per year 38 Source: sony.net
Personnel Development Programs (cont.) Source: sony.net 39
Employment in SonyStudents Opportunities i. Engineering Internship ii. MBA Internship iii. Full-time positions 40
Employment in Sony (cont.)Experienced Opportunities -experienced professionals are recruited across wide range of roles, business areas, and regions 41
Implementation Dimension:SONY’s Working Culture elevation ofO SONY‟s mission statement by the Japanese culture and national status →SONY as one of the leading pioneer on its field that is by not following others and keep on exploring the impossible. individual ability andO encouraging providing rooms for creativity. 42
Compendium of SONY’s Working Culture Sonny Boys Lifetime Employment Decision Made in GroupsCompany Philosophy Remain Enact Job-Rotation & Job Switching Seniority 43
Sonny BoysIts founders derived the name SONYfrom the Latin word sonus, whichmeans sound, and also from theEnglish slang word "sonny", theyconsidered themselves to be "sonnyboys", a loanword into Japanese whichin the early 1950s connoted „veryhandsome boys‟. This jargon could beeasily used and feasible in any countryin the world without problems. 44
Lifetime Employment• SONY introduced its unique-yet-friendly policy of Lifetime Employment.• Employees are not terminated or dismissed thereafter on any grounds, exceptionally for serious or isolated case of serious breaches of ethics.• Each employees become part of SONY‟s big family regardless of all strata of life.• Later on, it provides good reason for SONY to invest in them. 45
Decision Made in Groups• democratic policy on decision making processes.• Members of SONY make up their decision after long discussion on which they provide platform for dialogue and fruitful discussion even when there is conflict of opinion or conflict of interest among them. 46 Image taken from http://eurofedop.org
Company PhilosophyRemain Enact Originality• reflect so much on the overall Lifestyle Japanese organizations which truly Functionality believes and stick with their common philosophy. Usability• Their philosophy does not change with the coming-and-going of people in its organization, which is the opposite of the western organizations.• Corporate philosophy statement: 47• “ do what has never been done before”• “ Always stay one step ahead” Image taken from http://jinhogroup.com
Job Rotation Justification to explain the unique working culture of SONY on job rotation: • To make employees acquaintance with the organization , • To develop mutual understanding among SONY’s different departments functioning for the common good of organization as a whole. 48Image taken from http://ehow.com
Job Switching• implementing such practice called ‘Job Switching’• Result: • to make its employees to be more empathic towards one another; • to make them understand the dilemmas faced by their colleagues at different end of the organization. 49 Images taken from http://management-punditz.blogspot.com
Seniority • Determined by the year of an employee‟s class officially become part of SONY. • Regarding employees‟ salaries and promotions, it is said to be increased each year uniformly. • Purpose: to maintain harmony & to avoid stress & jealousy inter/intra-group. 50 Images taken from: http://zazzle.com
Snapshot of Overall Picture: SONY ExpenditureO Struggles through 1990’s and early 21st century for its financial aspectO Restructuring - from job cuts and other operational changes hurt its profitO Past 9 years, restructured 5 timesO Development costs - PlayStation 3O Depreciation and amortizationO Capital expendituresO Research and development costsO Costs of salesO Selling, general and administrativeO Financial services expensesO Loss on sale 52O Disposal or impairment of assets and other
Year 2007 - 2011 Yen in MillionYear 2007 2008 2009 2010 2011Depreciation and 400,009 428,010 405,443 371,004 325,366amortizationCapital expenditures 414,138 335,726 332,068 192,724 204,862(additions to fixedassets)Research and 543,937 520,568 497,297 432,001 426,814development costs 53
Capital expenditures &Research and development costs 54
Year 2009 to 2011 Yen in million Year 2009 2010 2011Cost of sales 5,660,504 4,892,563 4,831,363Selling, general and 1,686,030 1,544,890 1,501,813administrative(Gain) loss on sale, 38,308 42,988 (13,450)disposal or impairment ofassets and other, netFinancial services 547,825 671,550 675,788expensesInterest 24,376 22,505 23,909Loss on devaluation of 4,427 2,946 7,669securities investments 55
Challenges for SONYO Earthquake and tsunami - earlier year 2011O Sonys PlayStation Network and Sony Online Entertainment services were hacked and personal data of more than 100 million accounts was stolen. The service was unavailable for weeks until it was recently partially restored. The cyber-attack cost an estimated $170 million in damages. 56
Sony Ericsson Established on October 1, 2001. Ericsson: Swedish telecommunications company. combine Sony‟s consumer electronics and design expertise with Ericsson‟s technological knowledge in communication sector to produce mobile phone. Has 3,500 employees. Walkman and Cyber-shot series. Sony Ericsson creates value for its operator customers by bringing new ways of using multimedia communication while mobile”. 58
Benefits to Sony: Benefits to Ericsson:i. share of Ericsson‟s i. access to Japanese international market. telecommunication ii. access to Sony‟s experience. consumer electronicii. access to Ericsson‟s experience. base station and 3G iii. access to Sony‟s design infrastructures. and productioniii. share Ericsson‟s processes. research and iv. access to Sony‟s development costs. production facilities.iv. access to Ericsson v. shared research and handset core technology. development costs. 59
Samsung South Korea A joint venture established in April 2004 in South Korea. Samsung: A marriage of convenience because it helps the worlds largest microchip maker clinch the top spot in the market for flat-panel televisions. Sony in turn secures a supply of flat panels for televisions and computers as it seeks to fix its product offerings. It produces liquid crystal display (LCD) panels. Reshaped the televisions industry in year 2004 by overtaking plasma. 60
Electronic Arts American developer, marketer, publisher and distributor of video games. Founded and incorporated on May 28, 1928 by Trip Hawkins. The Sims series, FIFA series, Medal of Honor series, Dead Space series. Provide exclusive content on PlayStation 3. 61
Google Founded in 1998: Larry Page and Sergey Brin. Headquartered in California, United State. Top search engine in global world Bring internet to TV. Sony Internet TV" : the worlds first TV to incorporate the "Google TV" platform into its design. Google TV :TV meets web, web meets TV. Able to search and access content from TVs and across the Internet - a rich Internet experience on consumers TVs. 62
3net Television network. Sony Corporation, Discovery Communications and IMAX Corporation. Launched in the United States on February 13, 2011. Plans to offer viewers the world‟s largest library of native 3D entertainment content. 63
64SONY’s Product & Services Varieties: Make.Believe taken from http://www.youtube.com/watch?v=JU3s2zxIA8Q
ConclusionO In a nutshell, drawn upon discussion and examples on management of innovation of SONY Corporation from both perspectives of policy dimension and implementation perspectives, thus it is safe to say that SONY is innovative in terms of:1) Corporate Vision & Mission: SONY‟s slogan Like.No.Other and Make.Believe truly inspire and help in directing SONY towards its goals as a multinational conglomerate corporation.2) Product evolution : Its ability to conquer the world market in electric and electronic goods and services industries was depends to its forte in adapt and understand the radical and incremental transformation of the global and regional needs.3) Multi-faceted and Beneficial Working Culture: directly and indirectly encouraging and motivating SONY‟s employees internally. 65
Conclusion (cont.)4) SONY‟s Human Capital Development: Training and Employment5) Sources of Expenditure: clearly shown to us the allocation and direction of SONY that supports the sub-set activity of innovation processes which is Research and Development (R&D)6) Strategic Alliances and Smart Partnership: due to its multi-range of products-and-services, SONY made a strategic and smart collaboration with its counterpart to fully explore their multi-niche market needs such as with Samsung (LCD), Google (search engine), Sony Ericsson 66 (mobile phones), Electronic Arts (video games) and 3Net (3D-based entertainment).