Hirai has his work cut out for him.

Photographer: David Becker/Getty Images

Sony's Smart to Think Small

a | A

The future of Sony, a $32 billion giant, may turn on $50,000. That's how much a crowdfunding initiative championed by Chief Executive Officer Kazuo Hirai had raised as of Thursday for a new technology that seeks to empower would-be inventors. The project -- the brainchild of Sony engineer Takehiro Hagiwara -- is part of an improbable effort by the Japan Inc. icon to come up with the next Walkman.

Hagiwara's invention, called MESH (for “make, experience and share”), combines hardware, wireless technology and an app that runs on iPads: A series of boxes the size of chewing gum packets can be linked up in various combinations to make cameras, sensors, alarm clocks, whatever. It's one of several small, unusual projects being fostered within the company. The hope is to revive the culture of innovation that once propelled Sony to the top of the tech world.

For decades, Sony’s corporate culture has favored top-down ideas delivered from executives to engineers and designers. That strategy has been a dismal failure, as evidenced by the company’s weak roster of products. Last year, Hirai decided to reverse direction and promote ideas from below, funding them outside normal channels.

As my Bloomberg colleagues Pavel Alpeyev and Takashi Amano report, Hirai now meets personally with young developers to probe their ideas, test prototypes and give feedback. MESH, for example, will be offered for free -- a very un-Sony approach. Hirai has embraced crowdfunding to support other products as well, including a watch made out of electronic paper and a door lock controlled via smartphones.

Silicon Valley companies such as Google have long encouraged employees to dream big and work on their own projects on the side, hoping to nurture breakthrough technologies. The question is whether Hirai can pull off such a revolutionary culture shift at a company as staid, bloated and siloed as Sony.

To do so, he’ll have to show an appetite for shock therapy that he hasn’t displayed before. "Disruptive ideas can come from everywhere and at any time, so the key to success is to foster a culture of 'disobedient participation' across the entire company allowing anyone to step forward," says Martin Roll, Singapore-based advisor to business leaders and author of "Asian Brand Strategy." "Great ideas don’t emerge from a formula, so rules must sometimes be broken. The future of Japanese corporations partly depends on whether their leaders dare to establish and implement strong, innovation-driven operating models across key businesses."

The danger is that Sony’s size, hierarchy and competing fiefdoms will squelch any individual attempts at creative thinking, even if backed by Hirai. There's never been a shortage of smart engineers and designers at the company, remember. Sony had little trouble becoming a major force in the camera business over the last decade, going head-to-head with the likes of Canon and Nikon. The PlayStation 4 game console quickly put Sony on top in the console wars.

But Sony’s engineers have been better at producing faster and more versatile versions of existing gadgets rather than breakthrough inventions. That’s a challenge now, as smartphones perform more and more tasks and single-use products lose their appeal. From a hardware perspective, Sony makes decent smartphones, with high-resolution screens, great camera chips and a smooth interface. Yet its efforts to create an ecosystem to rival Apple’s iTunes, built around the PlayStation, have had minimal success. And there's the price problem as consumer power shifts to emerging markets. Japan's preference is still to hawk video games for $70 -- not to let users download them for $2 or $5.

A decade after Steve Jobs showed how disrupting his own product line was smart business, Sony remains reluctant to cannibalize for consumers' benefit. Sony could've offered a smartphone PlayStation years ago, just as Apple had the confidence to eclipse the iPod with the iPhone and then to take a risk again with bigger phones that ate into iPad sales. Japan Inc. has yet to show itself capable of such daring.

Kudos to Hirai for trying to change things. But to give ideas from Sony's ranks a fighting chance, he’s going to have to make innovation a central priority across the company, altering incentives so that would-be inventors can expect a cut of whatever breakthrough gadget or app they dream up. (There are hints that the company may be considering this.) He’ll have to break down silos from above even as he promotes out-of-the-box thinking from below.

The potential benefit is huge. As Bryan Norton, CEO of Tokyo's T-Mark Kabushiki Gaisha says, if Hirai “can trigger a rush of little business and/or product ideas from the creative young staff, then the critical mass could be there to propel Sony back to the realm of cutting-edge company." He just needs to make sure the rest of his company doesn’t get in the way.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Willie Pesek at wpesek@bloomberg.net

To contact the editor on this story:
Nisid Hajari at nhajari@bloomberg.net