Historical review of Sony's innovations and future steps

Abstract

This thesis reviews Sony's successes and failures in product innovations from the 1950s into the 2000s. It analyzes key success factors in Sony's significant sales and profit growth in each decade. Sony's first business success-the transistor radio and TV business in the 1950s and 1960s-was based on a process that combined new technologies to improve affordability and create new markets. During the video product development of the 1970s, Sony created three core competences: a knowledge-sharing culture, a knowledge management system for tuning technology, and a "waterfall" strategy, which increased market value and maximized opportunities for Sony and its partners. As a result, Sony became competitive in new businesses and technology idea generation, resource utilization, and cost reduction and premium pricing. This contributed to rapid revenue and profit growth during the 1970s and the 1980s. The turning point was the 1990s when Sony's knowledge-sharing culture disintegrated, and the R&D organization structure became a divisional self-supporting system. As a result, Sony lost its key advantages and subsequently delayed development of its core hardware and PC software-the keys to maintaining competitive advantage in the digital consumer electronics industry. Thus, from the mid-1990s, Sony began to lose market share even in areas where it had held a dominant position since the 1980s. By analyzing these successes and failures, I determined six key factors of success: (1) value capturing (cost) advantage, (2) strong leadership, (3) strong technology advantage, (4) efficient use of HR, internal/external know-how, (5) a rich flow of business/ technology ideas, and (6) incentives for suppliers. These factors meant the difference between success and failure, and they are now what Sony should focus on in order to succeed in the future. Finally, I propose two solutions that will enable Sony to fulfill the six success factors and regain its knowledge-sharing culture. These solutions are: (1) unification of the microprocessor platform, and (2) development of an open application aggregation platform. Both are practical and strong solutions, which Sony should aggressively adopt in order to revive its corporate culture and R&D structure of the Golden Decades.