1. SFGS 6334
Management of Innovation
SONY Corporation:
“Experiencing SONY as one of a
Global Leading Innovative Conglomerate”
Nurul Kamila Mohd Yusof SMB 110004
Wan Mohd Hasif Wan Muhamat Ali SGE 100008
Mohd Fadhli Rahmat Fakri SMB 110010 (Group Leader)
Pang Fei Yee SMB 110005
Department of Science & Technology Studies,
Faculty of Science, University of Malaya
1

2. 2
SONY Corporation Corporate Video: Make.Believe
taken from: http://www.youtube.com/watch?v=eiVNWynwd90

3. 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

4. Quick Snapshot of SONY!
O The Japanese multinational conglomerate
corporation
O 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

5. Innovation Management in Sony
Strategy Product
Innovation Innovation
5

6. Strategy Innovation (SI)
Flexible focus area
R&D activities strategically
managed
Dynamic R&D investment
Market can be created 6

7. 1. Flexible Focus Area
“Networked
Products and “3D World”
Services”
“Competitive
advantages through
“Emerging Markets”
differentiated
technologies”
7

8. 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 Sony
investment is the high
performance Device technologies.
processor
semiconductor “cell”.
8

9. Sony’s R&D Management Models
Sony‟s HQ Materials Laboratories
R&D Organization
Cubed Research Centers
Sony‟s Computer Science Labs.
Inc.
Information Technologies
Laboratories
Technology Development Group
Core Technology Development Group
Display Device Development Group
Sony‟s Product
Technologies
9

10. 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

11. Sony Operating Income by Segment 2010
11

12. 4. Market can be created!
“Consumers do not know what is
possible, but we do, so we don’t do a lot of
market surveys, but we focus and constantly
revise and improve the applications of the
products and develop new ones, and try to
lead the consumers and communicate with
them, thus creating the market”
Akio Morita, Sony’s Founder
12

13. Product Innovation
Has both
Product
incremental Protected by
Innovator and
and radical Patent
Fast Follower
innovations
13

14. Sony Main Product
• Playstation • Sony • Vaio
Ericsson
Game Mobile Computer
• Cybershot • Walkman • Bravia
Digital
Camera
Digital Mp3 and
Television 14
Camera Walkman

15. 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

16. 2. Has both incremental and
radical innovations
INCREMENTAL RADICAL
Example: Example:
Sony pioneered the Sony‟s Walkman is an
technology of example of radical
miniaturization to create a innovation to access a
whole new class of market of previous non-
portable consumer consumers.
electronics (such as
radios, cassette tape
recorders, and CD 16
players).

17. 3. Protected by Patents.
• By patenting, • Forces Sony to
market
Minimizing Products
Being 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

18. Sony’s Product Innovation
Success Factor
Geographic
al factor
Interdisciplin
Strengths
ary Product
of Social
Developme
Networks
nt
18

19. A. Geographical Factor
O 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 region
O 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

20. Sony’s worldwide research centers
20
Motoyama (2011)

21. B. Strengths of Social
Networks
Learning by
Doing or Effective and
Face-to-face
Learning only efficient social
communication
after making networks
mistakes
21

22. Learning by Doing
The process denotes to the capability of staffs to
enhance their productivity by frequently reiterating
the same type of action
Example:
The Vaio Computers
Development
22

23. 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, etc
Example:
Sony
Ericsson
23

24. Face-to-face communication
Sony also has applied the effectual face-to-face
communication among their thousands staff over
the world. Face-to-face communication produces a
great result of product marketing.
Example:
Mp3 and
Walkman
24

25. C. Interdisciplinary Product
Development
Game Mobile
Computer Digital Camera
Mp3 and Television
Walkman
25

26. Achievements
O 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

27. Sony’s Product Innovation
Challenges
Compete
Stay top at with outfit
Retain
the electric design such
market share
and as Apple,
in the global
electronic Sharp,
economy
market Samsung
etc.
27

28. Implementation Dimension
Human Capital Development
(Training & Employment)
28

29. Sony regards its employees as
the most important asset to the
company
because they believe that the process
of development and innovation
are derived by the human capital.
29

30. 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

31. Leadership Training and
Development Programs
O 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

32. Leadership Training and Development
Programs (cont.)
i. Appointing talented directors chosen among
regional human resources managers
ii. Job rotation (assignments through variety of
business and regions)
iii. Global recruiting system
32

33. Leadership Training and
Development Programs (cont.)
iv. Sony University
33
Source:
sony.net

34. 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

35. Engineering Training
and Development Programs
1) Sony MVP Award
2) Distinguished Engineer (DE) system
3) Collaboration with Keio University and other
universities in Japan
35

36. Personnel Development Programs
Sony 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

37. 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 projection
Other training programs:
-language classes
-lectures
37

38. Personnel Development Programs (cont.)
Total
number of
employees
per year
38
Source:
sony.net

39. Personnel Development Programs (cont.)
Source: sony.net 39

40. Employment in Sony
Students Opportunities
i. Engineering Internship
ii. MBA Internship
iii. Full-time positions
40

41. Employment in Sony (cont.)
Experienced Opportunities
-experienced professionals are recruited across wide
range of roles, business areas, and regions
41

42. Implementation Dimension:
SONY’s Working Culture
elevation of
O 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 and
O encouraging
providing rooms for creativity.
42

43. Compendium of SONY’s
Working Culture
Sonny Boys
Lifetime Employment
Decision Made in Groups
Company Philosophy Remain Enact
Job-Rotation & Job Switching
Seniority
43

44. Sonny Boys
Its founders derived the name SONY
from the Latin word sonus, which
means sound, and also from the
English slang word "sonny", they
considered themselves to be "sonny
boys", a loanword into Japanese which
in the early 1950s connoted „very
handsome boys‟. This jargon could be
easily used and feasible in any country
in the world without problems. 44

45. 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

46. 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

47. Company Philosophy
Remain 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

48. 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.
48
Image taken from http://ehow.com

49. 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

50. 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

51. Source of
Expenditure
51

52. Snapshot of Overall Picture: SONY
Expenditure
O Struggles through 1990’s and early 21st century for its financial
aspect
O Restructuring - from job cuts and other operational changes
hurt its profit
O Past 9 years, restructured 5 times
O Development costs - PlayStation 3
O Depreciation and amortization
O Capital expenditures
O Research and development costs
O Costs of sales
O Selling, general and administrative
O Financial services expenses
O Loss on sale
52
O Disposal or impairment of assets and other

53. Year 2007 - 2011
Yen in Million
Year 2007 2008 2009 2010 2011
Depreciation and 400,009 428,010 405,443 371,004 325,366
amortization
Capital expenditures 414,138 335,726 332,068 192,724 204,862
(additions to fixed
assets)
Research and 543,937 520,568 497,297 432,001 426,814
development costs
53

54. Capital expenditures &
Research and development
costs
54

55. Year 2009 to 2011 Yen in million
Year 2009 2010 2011
Cost of sales 5,660,504 4,892,563 4,831,363
Selling, general and 1,686,030 1,544,890 1,501,813
administrative
(Gain) loss on sale, 38,308 42,988 (13,450)
disposal or impairment of
assets and other, net
Financial services 547,825 671,550 675,788
expenses
Interest 24,376 22,505 23,909
Loss on devaluation of 4,427 2,946 7,669
securities investments
55

56. Challenges for SONY
O Earthquake and tsunami - earlier
year 2011
O Sony's 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

57. Strategic Alliances &
Smart Partnership
57

58. 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

59.  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 electronic
ii. access to Ericsson‟s experience.
base station and 3G iii. access to Sony‟s design
infrastructures. and production
iii. 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

60. Samsung
 South Korea
 A joint venture established in April 2004 in South
Korea.
 Samsung: A marriage of convenience because it
helps the world's 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

61. 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

62. 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 world's 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

63. 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

64. 64
SONY’s Product & Services Varieties: Make.Believe
taken from http://www.youtube.com/watch?v=JU3s2zxIA8Q

65. Conclusion
O 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

66. Conclusion (cont.)
4) SONY‟s Human Capital Development: Training and
Employment
5) 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).

67. References:
O Books and Journal:
Marshall, D. (1995). Akio Morita dan Sony. Translator: Amir Muslim. Kuala Lumpur: Dewan Bahasa dan Pustaka, Kementerian Pendidikan
Malaysia. Motoyama Yasuyuki, (2011). Innovation and Location: A Case Study of Sony‟s Vaio Laptop. The Industrial
Geographer, Vol. 8, Issue 1, Pg. 1-25.
Ratazzi, E.Paul. (2004). MiniDisc: Successful Innovation or Just Cool Technology? An analysis of Sony‟s Decade-Long Quest for Success.
Rome, NY: Air Force Research Laboratory.
O On-line Materials (accessed from October – November, 2011)
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%22
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http://www.birminghamstories.co.uk/db/media/lrg/ibuka_morita.jpg
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=auga2uYA.9cg
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http://www.foxnews.com/story/0,2933,193428,00.html
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http://www.v3.co.uk/v3-uk/news/2000816/google-partners-intel-sony-smart-tvs
www.sony.net/history/productandtechnologymilestone 67

68. Thank You!
Arigato!
Xie Xie!
Terima Kasih!
Shukran!
68