Stringer on "the Sony Spirit"

The new, New York-based boss explains why he thinks the Japanese giant has what it needs to succeed in the Digital Age

More than 13,000 air miles and five days later, Sony's newly anointed Chairman and CEO Howard Stringer was still going strong in his Madison Avenue offices on the afternoon of Mar. 9. What had preceded was a flight on Saturday from Britain to Tokyo, meetings on Sunday with Sony (SNE ) executive staff, a press conference Monday announcing his ascension, and a return flight on Wednesday morning, Tokyo time. After a quick shower, the 63-year-old Welshman was back at his desk.

In his first extensive interview since news of his appointment broke on Mar. 6, Stringer spoke to BusinessWeek Media editor Tom Lowry about his whirlwind week and his plans to revitalize Sony. Here are edited excerpts from that conversation:

Q: As a foreigner coming in to run a company with a very established culture, you face big challenges, particularly in trying to halt Sony's slide in consumer electronics. What's your plan?

A:

When a company gets to be the size of Sony and revenue growth slows, it makes it very hard for young, dynamic people to move up the corporate ladder. How you change that in a culture where everybody has known each other for most of their working lives is the task, especially at the senior level. The loyalty within Sony is quite extraordinary, and that's a remarkable thing. Some of that has to be sustained because it's part of the Sony spirit.

But there's a hunger to reward people more efficiently and to make people accountable more effectively and to bring the next generation into the mainline because they'll be the ones to design the cool products.

Q: Has somebody else taken on the kind of challenge you're taking on who you might want to emulate, like Nissan (NSANY ) CEO Carlos Ghosn, for example?

A:

Yes. Carlos is on our board. Unfortunately, he hasn't attended any of our meetings in the last six months because of his own crisis. But I am going to e-mail him later today to ask him to please give me some time.... I'm dying to talk to him about how you achieve what you need to achieve.

I cannot allow the generosity of Sony to resist particular changes because kindness, in the end, can kill a company. Everybody wants change. Everybody is talking in unison. The question is execution.

In a sense, it's easier for me as an outsider to execute, provided I find a way to enlist the support of the employees. The worst nightmare would be passive resistance. I have no reason to believe that would be plausible. I think I have goodwill. Frankly, I was surprised at how generous the Japanese press has been to the idea of a foreigner running Sony.

Q: Is there a plan to hire more designers, engineers, inventors to help Sony recapture the magic?

A:

No, you don't need it. It's not about the absence of great engineers or the absence of great ideas. It's about the orchestration of the engineering groups and deploying them more effectively. And deciding just how many products we do. Unlike almost any other company, we are in every area.

So in the Digital Age you can be targeted more aggressively [by your rivals]. You have Kodak (EK ) and Canon (CAJ ) on the camera side. You have Dell (DELL ) and HP (HPQ ) on the computer side. You have Philips (PHLKFM ), the Chinese, Samsung knocking on the door on the TV side. Effectively, Sony is battling on a very broad front. That may be one way to do it, but you're going to have to look at the balance sheet to see if there are too many winners and losers this way.

Q: How will you roll out products more quickly, a criticism of Sony in recent years?

A:

It's an interesting question about starting in Tokyo and getting somewhere else. The [Sony] design center in Tokyo is dazzling, but we haven't been able to isolate the star items and capture the sense, in Tokyo particularly, that we are a cool company. Oddly enough, all the polls that say that's true in Japan don't apply here in the U.S. The aggregate brand here is stronger because it is an aggregate brand. It's much less device-centric than Tokyo. This culture knows we produce music, movies, and TV shows. In other words, in regard to problems with the brand, we can buy a lot of time here because of the scope of the brand.

Q: How can you avoid being licked by iPods when it comes to portable video devices? 

A:

IPod is a great device, but it doesn't sell us a helluva lot of content. What we didn't do well, that Steve Jobs did, was iTunes. We have excellent hardware and content, but we need to improve our client software and have better integration between our services and our device portfolio.

We have a range of devices coming up in this aspect of the market, and we are pushing interoperability. We have a range of content, which has come from PlayStation and some from other operating companies.

Everybody learned the lesson. iPod was like a hanging: It concentrates the mind wonderfully. We're not going to fail with [audio/video devices], so it will be very competitive. We will put the muscle behind it with advertising. We got so discouraged that we pulled back on advertising in the past. You have to advertise in good times and bad.

Q: How will you marry content and technology more seamlessly?

A:

Phil Wiser, our chief technology officer, is working on the inside at the center of the engineers' circle. So the range of cooperation of representatives of content and hardware has gathered great momentum. There's no longer resistance to content participating in everything.

You know we're releasing a million UMDs [Universal Media Discs] of Spiderman with music videos to go with the sale of PSPs [PlayStation Portable]. One of the advantages of being in this job is that no one will resist me on this. We have to make each other look stronger, and we don't have to worry about whose balance sheet looks stronger. What we have to do is all for one, and one for all, as Idei said the other day.

[Sony Corp. of America] paid for the million Spiderman UMDs, but it all comes back to the same company -- and that umbrella is something that has taken a long time to design and get acceptance. It's the fragmented nature of the operating companies that made us slow to conquer the digital world.

Q: You may already have the distinction of having more air miles than any other media executive. Give us some sense of what your schedule will look like as chairman of Sony.

A:

I will probably spend at least one week a month -- and sometimes through the weekend -- in Tokyo. I used to spend a week a month there when I first started but reduced my trips to about six or seven times a year. And the senior executives will travel more frequently to New York or meet me in London. We'ill have a transcontinental modus operandi.

Q: But won't it be hard to run this company without being in Tokyo full-time?

A:

Listen, I run two entertainment companies, and I'm in Hollywood once a month. The fact is that I have such strong management in place that I don't need to micromanage. Take Andy Lack, who's in the same building as I am [in New York], but he has done all this cost-cutting and layoffs at Sony BMG without a bit of help from me, except a kind word every once in awhile.

We now have most sophisticated video-conferencing the world. We have [the new chief of the electronics division Ryoji] Chubachi in place to execute all the management changes, and I will be in touch with him all the time. It's not like when I leave Japan, I disappear.

Q: What's the timing of your plan. You're 63 now. Will it be a three-year, four-year task?

A:

It will be a long commitment.

Q: If you see that the plan isn't working and there's outside pressure from investors, would you consider breaking apart the company?

A:

Whether you unlock value in a company by that method is something you always have to look at.  But at the moment, I'm trying to demonstrate the advantages of integration and working together. There are targets of opportunity for us to work together and get it right together.

I say I don't want to split things apart unless there's some consolidated opportunity down the road because the [content and electronics sides] can help each other. I believe that wholeheartedly. It was something of a disadvantage in the early going, but everybody gets it now. The message is clear. The advantage of me at the content company is that I can really just say "let's just do it."

Edited by Beth Belton

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