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Sony: Management By Whim


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Sony: Management by Whim

SONY

The Private Life

By John Nathan

Houghton Mifflin 347pp $26

In the late 1980s, Akio Morita, the silver-haired, flamboyant co-founder of Sony Corp., embarked on the most costly shopping expedition of his long career. A visionary who believed that Sony's future lay in the convergence of hardware and "content" such as music and film, Morita eventually set his sights on Columbia Pictures Entertainment, with its two studios and a vast library of movie titles and television series. In September, 1989, after months of on-again, off-again negotiations, Sony agreed to pay the inflated asking price of $3.2 billion and assume $1.6 billion in debt.

What was the rationale for such a decision? According to John Nathan's Sony: The Private Life, it was motivated only by senior executives' desire to please the company patriarch. Even Morita, then Sony's chairman and CEO, believed that Columbia's price tag, originally $35 per share, was exorbitant. In a closed-door meeting in August, 1989, details of which have never been fully revealed, he told his seven top aides, who made up the decision-making executive committee, that he was abandoning the idea of the acquisition.

That would have been the end of it had Morita not voiced regret over dinner that evening with the committee members. "It's too bad," he lamented, according to one of those present. "I've always dreamed of owning a Hollywood studio." The next day, the group reconvened and promptly decided that Sony would purchase Columbia after all. In the weeks that followed, Sony upped its bid from an initial $15 to $27 a share and, by late September, clinched a deal that was ridiculed by industry experts. Initially, writes Nathan, Morita, the "born showman," reveled in the events his studio managers staged for him with the likes of director Steven Spielberg. But by 1990, he had shifted the responsibility for the studios to Sony President Norio Ohga, who then delegated it to his protege at the time, Michael P. Schulhof, president of Sony Corp. of America. In 1994, mismanagement forced Sony to write off $2.7 billion and assume a loss of $510 million for its Hollywood experiment.Sony: The Private Life is filled with such insiders' tales, making it the most vivid and detailed account in English of the personalities who built the $50 billion-plus consumer-electronics giant. Nathan, a professor of Japanese cultural studies at the University of California at Santa Barbara and a translator of Kenzaburo Oe's difficult novels, got access to dozens of executives who had contributed to or witnessed Sony's development since its 1946 founding in war-devastated Tokyo. He also talked to Sony's former key American managers, including Schulhof and Peter Guber, the Hollywood studio chief who almost drove Sony Pictures Entertainment, as it's now known, into the ground. Unfortunately, Nathan was unable to meet the two founders, both of whom were ailing when he began his interviews in mid-1997. Masaru Ibuka, the brilliant engineer, died in December of that year. Morita has been disabled since a 1993 stroke and is now in critical condition in a Tokyo hospital.

Nathan offers, however, only limited analysis of Sony, the corporation. And he tends to go over well-trodden ground: how Sony established itself in the U.S. and how it developed famous products or devices, such as the transistor radio, the Trinitron TV set, and the Walkman. Much of this has appeared before in articles and, to a lesser extent, in books--including Morita's own 1987 Made in Japan.

This is not to say that Nathan's book has no point of view. The company's underlying problem, as illustrated in the Columbia case, is "that the environment in which the Sony Corporation has historically conducted its affairs is less public than personal: less rational than sentimental." Here, Sony might not be unique: Japanese founders of successful businesses tend to be passionate individualists, often driven by instincts rather than rationality. This holds true at times even at long-established companies such as NEC Corp., whose eccentric and imperious former chairman, Tadahiro Sekimoto, for years poured money into pet projects, including Packard Bell in the U.S.

Nathan excels in profiling the exuberant Morita, who for many years ranked as the world's best-known Japanese. In 1960, determined to create a global business, he founded Sony's American subsidiary and built it into a major enterprise. In 1963, he moved his family to New York, where for the next year he and his wife, Yoshiko, immersed themselves in American ways in order to understand U.S. consumers. Morita came to be regarded as cosmopolitan, but he remained something of a Japanese patriot. That became evident in 1989, when he co-authored The Japan That Can Say No, a book that attacked the U.S. for its complaints about Japanese imports. His son, Hideo, explains: "He had to act as the most international-understanding businessman in Japan.... But it was never real."

In conclusion, Nathan says that, under the current leadership of President Nobuyuki Idei, Sony is emerging as a rational company. Moreover, Idei and his practical-minded managers are intent on reinventing Sony as an Internet company. From now on, says Nathan, "personal relationships are not likely again to figure decisively." But how will this Sony fare? Nathan admits that a dazzling future is far from guaranteed.By Irene M. KuniiReturn to top


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