As a senior executive at IBM, George Bailey often coached Japanese electronics companies to break free of the low-margin business of churning out new gizmos every few months. He encouraged them instead to think holistically about how to use technology—and software—to create something radically new. "The storage capacity of the devices in your home—the processing power—is incredible," he said in a 2005 podcast for IBM. "What seems to be the missing ingredient is how to pull all that together and really make a difference in how we live and how we work."
Now Bailey plans to lead Sony's search for the missing ingredient in his new post as the Japanese tech giant's new "chief transformation officer." Sony (SNE) announced Bailey's appointment on May 15 and said he will officially join next month. By hiring him, Chairman and CEO Howard Stringer gets an in-house management and tech expert who has been an adviser to some of the planet's leading tech companies.
Both IBM and Sony denied requests for an interview with and personal details about Bailey. Most recently he worked as general manager of IBM's Microelectronics Division. Before that, he spent five years through 2008 as managing partner in the company's Electronics Industry Consulting Practice.
Bailey's lectures and reports pointing out the industry's problems during his seven-year stint at IBM (IBM) offer some insight into how he hopes to help Sony regain its verve. He is likely to stump for technology solutions that simplify how gizmos link to each other as well as how they tap into Sony's huge library of video games, movies, music, and other digital content. He might also experiment with the huge brainstorming sessions that IBM has used to mine its rank and file for unconventional ideas and new business opportunities. "In the past, Japanese companies in this electronics industry have shown tremendous ability for incremental change," he said during a May 2007 podcast for IBM. "But what's needed now is something very different.… We need a way to create massive change on a very large scale."
Bailey has a daunting assignment: being a catalyst for change at a $76 billion company with offices and factories scattered around the world. But he knows what to expect. Four years ago, in another IBM podcast, Bailey told how internal rivalries among engineers at tech companies often got in the way of collaboration and slowed innovation. That's been Sony's problem for years—and held back Stringer's reform efforts since he took over in mid-2005.
Sony's recent struggles have been well documented. The onetime champ of the electronics industry has lost ground to rivals whose products offer slick services or boast superior design and lower prices. Sony's Walkman portable music players trail Apple's (AAPL) iPods, and its PlayStation 3 and PlayStation Portable video-game consoles are being outsold by Nintendo's (7974.T) Wii and DS. Its e-Reader has fallen behind online book retailer Amazon's (AMZN) Kindle, and its Bravia flat-panel TVs are no match for Samsung Electronics' sets. On May 14, Sony reported its first annual loss in 14 years and predicted another dismal year, blaming the global recession and a strong yen for its poor performance.
Bailey is only the second outsider to join Sony's executive ranks during Stringer's tenure. Three years ago, Stringer lured Tim Schaaff, an ex-lieutenant of Apple CEO Steve Jobs, to oversee software development. That has paid off: Schaaff has played a key role in getting Sony's division chiefs to contribute to the PS3 console's growing online offering of TV shows, movies, games, and music. He has also made progress in getting Sony to go with widely available software, such as Microsoft's (MSFT) Media Player, rather than insisting on developing proprietary software.
Pushing Through Bureaucracy
Like Schaaff, Bailey will report directly to Stringer and is likely to wield plenty of clout. Bailey will head a new transformation management office that is supposed to coordinate the company's various networking products and content initiatives. His appointment adds another big believer in software at Sony's highest rungs. Take, for instance, Bailey's musings on the home of the future, where anything plugged into an electric socket—kitchen appliances, video-game consoles, PCs, TVs, and even the air conditioner and lamps—can talk to each other: "The smart home is going to require a lot of very intelligent software," he said back in 2005. "It's not just the hardware and the boxes and the devices and the processor and the storage. It's going to be the code that makes all this stuff work together."
A Bailey-Schaaff team could be more effective at moving Sony's mammoth bureaucracy. Bailey might also give guidance to a crop of younger executives, such as Kazuo Hirai and Hiroshi Yoshioka. Stringer promoted both to key posts in a management reshuffle in February. The urgency of Bailey's task won't be lost on him. As he said of Japanese tech manufacturers in 2007: "If the transformation doesn't happen…there is a danger of the Japanese industry becoming irrelevant on the global scale."
Hall is BusinessWeek's technology correspondent in Tokyo.