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Internal Sony difficulties come to light

Author: Brett Thomas
Published: 7th March 2007

Sony's CEO and Chairman Howard Stringer is, by many accounts, a pretty likeable guy. How, then, has it been that his company has been at odds with its consumers and the press for over a year? Stringer has finally come out and talked about it in a tell-all interview with The Wall Street Journal, and what he has to say is pretty interesting.

Stringer lays most of the blame at the feet of his Japanese executive team, and cites cultural differences as a huge problem within the company. Stringer is from the "western" world, and says that he has found it hard to deal with his lead man Ken Kutaragi, who is considered the "father of the PlayStation."

Apparently, the Japanese side didn't see much good in reporting progress that was not complete. Thus, Stringer was kept out of the loop on development issues and problems.

Kutaragi was also blamed for having been frequently over-budget with his development of the console, and then simply blind sided Stringer in a board meeting with news that the Japanese console would launch 20 percent cheaper than anticipated.

Stringer didn't have much that he could do to control the situation as, according to his interview, Kutaragi was already in the process of doing so. Again, this is blamed on poor communication via cultural differences - Japanese culture encourages an aware employee to already be implementing solutions before the boss knows there is a problem.

After the PS3 debacle, Ken defied gravity by falling upward. He was "promoted out" of his Presidential position at Sony Computer Entertainment to CEO and chairman of SCEI. However, the PS3 was only the straw that broke the camel's back - Kutaragi was also not good at keeping other Sony division heads "in the know" either. At the launch of the PSP, Kutaragi even held a Las Vegas launch party and failed to invite several Sony executives that were not directly related to the project - even though their divisions provided parts for the PSP.

The interview continued with discussion of how the Japanese team also failed to notify him properly about the battery recall issue, Sony's other defining moment of 2006. Of course, he might have found out more if he were ever present - Stringer has no residence in Japan, nor shows any other real effort to work with the country's very strong national identity or business processes. So although Stringer places a lot of blame in Japan, the rest of the company puts it back on him for refusing to attempt to integrate into its corporate culture.

This view of mutual missteps, where everyone is at fault but nobody is to blame, is echoed by industry analysts. One analyst stated eloquently that "Mr. Stringer has no background and he's not in Japan managing the day-to-day. Sony's DNA is in electronics... so the top management needs to understand what's going on there." Other members of the industry are taking notice of Sony's troubles, too - the outgoing CEO of Electronic Arts went on record to say that Sony's video game dominance is beginning its decline, starting with this console generation.

It just goes to show that the trouble with family matters is that they never stay only in the family.

Do you have an opinion on Stringer's tell-all? Or is this just a "Don't blame me, I'm western!" attempt to dodge a possibly upcoming shareholder bullet? Tell us your thoughts in our forums.

Note: WSJ link requires registration

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