SECTION 3
Beware the Danger of Nondisruption
From its start in 1946, Sony went against all prevailing beliefs about the electronics industry. The company was an upstart in postwar Japan, a country which until then had not been thought of as a hub of innovation for electronics. Companies in the United States and Germany were the market leaders, and it was inconceivable that businesses from other countries could make a considerable dent in their domination of the industry.
So, Sony’s executives did the only thing they could do under the circumstances—they blatantly stole ideas and technology from the West, improved on them, and made them their own with great success.
By the time the company’s most famous product, the Sony Walkman, arrived on the scene in the 1980s, Sony was clearly the world leader in most segments of the consumer electronics industry. (Interestingly, few people at the time noted publicly that the Walkman wasn’t much more than a stereo version of a transistor radio with a cassette player added in for good measure.)
But with the death of Sony’s founder and visionary, Akio Morita, and the creeping Japanese malaise of the “social contract” between employees and employers, Sony handed its leadership over to companies more openly disruptive, such as Canon, Apple, Samsung, and LG. By the beginning of the new millennium, these competitors had taken market share away from Sony in a few key product categories such as cameras and TVs. Some competitors—including IBM and Amazon—had even created new segments that the decision-makers at Sony were unable to develop the right products for, such as electronic readers and tablets.
This is not to imply that Sony’s engineers were not excellent at what they did. But the engineering values they had previously cherished and which had made Sony successful for decades, such as quality, excellent design, longevity, and fidelity were no longer relevant in the marketplace. Other values, such as sharing (as in the case of MP3s), agility, and ease of use had replaced them.
Sony was still widely considered to be the most powerful company in the consumer electronics and entertainment industries when I moved to Tokyo, Japan in 2003 to work as the chief strategist in the CEO’s Office for Strategy. Internally, however, it was clear to most executives that Sony was losing ground fast and the CEO who had hi