Sony: The Private Life. This book will explain the secrets and private lives of the leaders of the Japanese corporate empire, Sony. It will cover the right and wrong decisions the company made and who was behind them. What special relationships did these people have with each other? What obstacles did this traditional company face when it penetrated the Western market?
This book was written by American professor John Nathan. In the eyes of the American public, Sony is the first company that comes to mind when they think of Japan or electronics. When this book was finished in 1998, Sony was thriving, ranked 30th among the world's top 500 largest companies. It even surpassed American giants like Coca-Cola and General Electric. Sony became the most supported company with the most valuable brand in the United States.
By the 21st century, Sony's electronics products began to decline. The company then shifted its focus to the entertainment film industry, music, and games. It has since become the number one film company and the number two music production and game development company in the world. However, after Sony entered the film industry in 2008, the company consistently lost money. Combined with the decline in electronics sales, Sony, which was once ranked 30th, dropped to 97th.
The key question we want to know about Sony is: why did it grow so fast, and what strategies did it use to penetrate Western markets? And in the 21st century, why did the company decline like this? The book "The Private Life of Sony" will explain these mysteries.
Why is the book named "The Private Life of Sony"? Because Sony, which appeared to be a global standard company, revealed in the late 20th century that it was a family-style company, purely Japanese. The shareholder structure and decision-making power in the company were in the hands of one person. And this power came from good relationships among the leadership. This close relationship and decisive power was a factor that helped Sony move forward quickly and successfully. This was also the reason for many of Sony's wrong decisions. When Sony entered foreign markets, we could see the differences between a Japanese family-style company and a standard American company.
Here, we will summarize this story in two parts.
Part one: Who were the three people who led Sony to its incredible achievements today? And what special relationships did they have?
Part two: How did this internal structure and relationships affect the problems Sony faced when entering the Western market?
Sony was founded in 1954, and by 1995, it was 50 years old. In this half-century, Sony had three important leaders: the two co-founders, Mr. Ibuka and Mr. Morita, and a successor, Mr. Ohga. These three men, in terms of appearance, character, and life story, were as different as the sky and the earth. But they had a special relationship, like a three-stage rocket that propelled Sony to fly as fast as a rocket.
Let's talk about the first person: Mr. Ibuka. Masaru Ibuka. He was a co-founder of Sony, a skilled engineer full of talent. Technology was his soul. Most of his life was spent on research and production technology. He created Sony not to make huge profits or become rich, but to fulfill his own ambition as a technology engineer. In the beginning, despite lacking capital, the company created many of Japan's "first" products, like the tape recorder, transistor radio, and the CRT television that many of you may have seen. It can be said that Sony's prosperity came largely from the legacy of this veteran founder, Sony's first technology expert. Ibuka had a slogan: "The reward for successfully completing a task is an even more difficult task."
Ibuka and his team ate and slept in the lab, always thinking about creating new products. For the employees there, salary wasn't the most important thing. This technological work was what they loved, and it was their soul. To love this kind of work is hard to find today. And if you work hard without thinking about such conditions, it's hard to fail even if you want to. Ibuka's team respected him greatly. For them, recognition and praise from Ibuka was a priceless form of encouragement. Ibuka held the CEO position until 1971, after which he stepped back from company operations to become the Chairman of the Board of Advisors. From that point on, Sony's momentum gradually faded. This was likely due to Sony's own corporate culture, where power was in the hands of one person. And when he left, the company inevitably fell into a state of chaos.
It is true that Sony was able to grow because of its unparalleled technology. But another factor that helped Sony step onto the international stage was the successful marketing strategy of another person: Morita. Akio Morita, who was also a co-founder of Sony.
If we compare the two co-founders, Ibuka was strong in technology, while Morita was strong in building relationships. Morita's entire life was spent on stage. He was recognized as a shining business card for Sony on the international stage. Everyone knew Morita. In the eyes of others, these two co-founders seemed like an unlikely pair. They had a 13-year age gap. Ibuka was an orphan who lost his father, lived with his grandmother, was large, wore thick black glasses, and was purely a farmer's son. Morita, on the other hand, was from a wealthy family, received a high-level education, liked to wear fine suits, and was always impeccably dressed. Their appearances and characters were completely different. But these two people lived together, worked together, and created many great miracles in history together.
They first met during World War II. At that time, Morita was a university student, and Ibuka was an electrical engineer. Their meeting seems to have been fated. After the war ended, Ibuka finished his engineering career and returned to Tokyo to start a business. Morita, who didn't know about this, happened to see an article about Ibuka in a newspaper. He rushed to Tokyo to find Ibuka to start a business together, without any hesitation. Morita gave up his succession to the 14-generation family sake business to join forces and create Sony, which was initially named Tokyo Telecommunications Engineering Corporation.
Morita's wealthy father provided them with the initial capital. And as the company needed more funds, his father continued to invest, bit by bit. Eventually, this made Morita's father the largest shareholder in Sony. With one strong in technology, one strong in business, and ample capital, Sony grew rapidly, surpassing its competitors in its field. The relationship between the two co-founders was like fish and water. They couldn't be without each other. Their offices were next to each other, and they worked in perfect sync. In public or at meetings, if one said "yes," the other never said "no." When they were talking, no one dared to interrupt them, not even their own family members. Later, they both suffered strokes, becoming paralyzed on one side. They couldn't speak and lay in the same hospital, holding hands and shedding tears, remembering the many bittersweet stories they had shared. Such a close relationship between founders is rare in business history.
Two major things Morita did were to create the Sony Walkman and take Sony to the international market. The Sony Walkman is a successful product that everyone knows. It was a small, portable MP3 player that every youth in the '80s and '90s had to have in their pocket. The fame of the Walkman at that time was no different from the fame of the iPhone today. But the strange thing is, the Walkman was a product different from other Sony products. Sony's products were all high-tech, but the Walkman had no technology at all. It was created for the personal needs of Mr. Ibuka. Because he was old, he wanted to listen to music without disturbing others. So, they started research to create a small machine that he could carry and listen to alone without bothering anyone. The engineers took a tape recorder, removed the recording function, leaving only the playback function, and replaced the speaker with headphones. And thus, the first MP3-like machine in the world was born, which was later named the Sony Walkman.
When Morita saw this music player, he saw a huge business opportunity for Sony: to create the Sony Walkman to sell to young people. At that time, young people liked to carry large boomboxes, playing music while walking down the street. They loved listening to music. They would surely love this small, portable MP3 machine. So, Morita had 30,000 Walkman units produced before the summer vacation arrived. At that time, the management, including Ibuka, did not support the idea. They thought no one would spend money to buy a tape recorder that couldn't record. Moreover, at that time, wearing headphones was only for deaf people using hearing aids. For young people to wear headphones would make them look no different from a deaf person. No one would take money out of their pocket to buy such a silly thing. But as you know, the Walkman became immensely popular, one of Sony's most successful products, selling over 250 million units. In the West, the media called Morita "Mr. Sony Walkman."
Behind this success, we see two things. First, Morita's quick thinking and special intuition to see opportunities in problems. Second, his decisive power as the top leader of the company. Even when everyone objected, he could make the decision alone.
A few years later, Sony made a shocking decision to acquire Columbia Pictures for a sky-high price of $3.4 billion. This offer was accepted by the CEO and largest shareholder of Columbia Pictures, but later, it was rejected by the company's board of directors. This really surprised Morita, who was the CEO of Sony at the time. If the CEO and largest shareholder said "okay," how could the board of directors say "no"?
In Sony, the ultimate decision-making power rested with the top management council, which included the chairman of the board, the CEO, and some high-level board members. But this council was just a name. Everything was decided by Morita. In meetings, when Morita said something was a good idea, it meant he had approved it. But if he said the idea wasn't good, no one would bring it up again. And if he said, "This is an interesting idea," it meant, "Let's bring it up next time to discuss."
Until the 1980s, Morita spent a lot of time pushing Sony onto the international stage and making big decisions. The daily operations of the company fell into the hands of another person named Ohga. But until 1993, the major decision-making power was still in Morita's hands. It is said that when Morita was in a meeting, Ohga never expressed an opinion. Only when Morita asked did Ohga answer. But if you think Ohga was incompetent, you are probably mistaken. Ohga's ability and ambition were not inferior to Morita's. Ohga had two different identities: an artist and a businessman. Art and business—it's hard to find these two skills in one person, but Ohga was a special case. Ohga graduated from the music and fine arts department of the Tokyo University of the Arts. During his studies, he was sent by the school to buy a tape recorder from Sony, where he met Morita by chance. Morita was impressed with him from the first meeting. Morita saw that Ohga had two special talents in one person, a truly rare find.
After Ohga graduated, Morita invited him to join Sony, but Ohga refused. Ohga's dream was to become a singer, and he had decided to continue his studies in Europe to pursue his path in music. Morita did not give up on him. He waited for Ohga and even supported Ohga's studies abroad by paying him a full salary, even though he was not a Sony employee. This special favor was unheard of in Sony's history. Four years later, when Ohga finished his studies in Europe and returned to Japan, Morita sent him another message: "If you join Sony now, one day the CEO chair will be yours." Even Ohga himself did not know what Morita saw in him to receive such recognition and trust.
Later, Ohga did join Sony. As soon as he joined, he became a department president. You should know that a normal employee at Sony had to work for at least 20 years to become a department president. 23 years later, Morita stepped down and handed the company over to Ohga as his successor, just as he had promised. When Ohga took over Sony, he used his artistic talent and business acumen to reshape Sony, from product design to advertising and packaging design. Everything was changed. The modern and popular Sony products you see on the market today are all Ohga's creations. Not only that, but he also created Sony's subsidiary, Sony Pictures Entertainment, which made huge profits for Sony. It was a money-making machine for Sony. Under Ohga's leadership, he also made a historic change: creating the CD to replace film cassettes. And Sony also produced millions of CD players for sale in the market.
After leading Sony for over 40 years, Ohga said, "I never imagined I could walk a path I didn't want to walk, and walk so far." If we say the relationship between co-founders Ibuka and Morita was a life-and-death friendship, then the relationship between Morita and Ohga was like that of a father and son. When Morita was about to pass away, his own children said, "No matter how hard we try, we never get recognition from our father." Ohga heard this and was deeply moved. He knew it was because of Morita's help and trust that he was where he was today. In Morita's eyes, only Ohga was the true successor. Ironically, Ohga also suffered a stroke, became paralyzed on one side, and passed away in 2011 at the age of 81.
The second point we need to discuss is how this Japanese family-style company entered the Western market, what problems and obstacles it faced, and how they solved them. Let's talk about an American individual with the highest position in Sony, Michael. Michael said that when he joined Sony, he knew all the power was in Morita's hands. As long as he had a good relationship with Morita, he could do whatever he wanted at Sony, as long as Morita didn't object. Everything happened as he thought. Michael rose through the ranks quickly because of his close personal relationship with Morita. At one point, Morita almost gave the CEO chair to Michael, but later the decision was not made.
Morita was a man with great skill and a knack for networking in business. He was different from other Japanese businessmen. His demeanor and speech could fit in perfectly with foreigners. So, foreigners never considered him just a Japanese person. He had good relationships with big businessmen and government officials in the United States. But was Morita really this kind of person? When his own son saw him interacting with foreigners at various events, his son said one word: "Acting. This is just an act. My father is not this kind of person."
In fact, Morita was a Japanese man who held onto Japanese traditions most. He was a stern, tough, very stubborn, and introverted person. But because he had a big mission to push Sony into the international market, maintaining good relationships with foreigners was something a CEO had to do, even if he didn't like it. Over time, his life became like this, a man wearing a mask. Morita himself admitted this. He created a business club with a slogan: "We Japanese businessmen, if compared to an animal, must be a type that can live in water and on land." This means they must be able to adapt to any situation. Go with the flow. The culture, customs, and business practices of Japan and the West are very different. But Japanese businessmen must learn the customs and ways of doing business in the West, but not copy them.
Morita's true character was no different from Sony's true character. Sony was the first Japanese international giant to be listed on the NYSE in the US, a brand that was highly supported and recognized by foreigners, and the first Asian company to successfully enter Hollywood. But in reality, its working methods and spirit were still family-style Japanese, and some of its management methods could never fully adapt to the Western world. There are many reasons for this. For example, Sony hired many professional American personnel for top positions, but none of them worked there for long. They were either dismissed by the top management or resigned on their own. It was hard to find anyone who stayed as long as the old Sony employees.
In the 1980s, Sony Corporation of America, a subsidiary of Sony, had an American CEO. In just five years, he managed to double the company's performance. This proves he was a capable leader. But the problem was, he did not understand the Japanese way of working. When working, he did not care about "face" and made decisions based on what he thought was right and logical, without any emotional involvement. Once, this CEO scolded Morita's younger brother in a meeting due to a disagreement. And he would not follow Morita's orders without a good reason. For example, when Morita created the Betamax machine, he hoped this CEO would help him launch it in the American market, advertise it, and sell a lot on US soil. But this CEO thought that doing so would affect the annual profit, and the effectiveness of the advertising was hard to predict. So he decided not to follow Morita's request. This decision made many of the Japanese leaders unhappy. Not long after, this CEO resigned because he couldn't work in such a family-style corporate environment.
This made Morita very troubled, and he didn't dare to hire another foreigner as CEO. It wasn't until the last 10 years that the new CEO of Sony in America was Michael, whom we mentioned earlier. Michael was different from other Americans. He understood and researched Japanese culture and work style well. He had a good and close relationship with Morita, and Morita regarded him as a younger brother. Under Morita's guidance, Michael worked at Sony for 21 years, becoming the foreigner with the highest position in Sony. Hearing this, you can probably guess that Michael was destined to be Morita's only successor. But in fact, the CEO position of Sony Corporation at that time did not go to Michael. Morita gave it to a Japanese man named Idei.
When Idei became CEO for a year, he dismissed Michael from his position. In fact, Michael's lost opportunity was related to the internal structure of Sony, which found it difficult to trust an American to lead a company with a strong Japanese heritage. But to be frank, it was also related to Michael's own arrogance. First, he did not show respect to Morita's younger brother, who was the fourth most senior person in Sony. Moreover, the biggest issue was the massive failure of the Columbia Pictures acquisition for a sky-high price of $3.4 billion, which caused Sony to suffer huge losses and endless legal troubles. And this acquisition was Michael's idea.
But the decision to buy Columbia Pictures was not entirely based on Michael's recommendation. This was a gift from Sony's board of directors to Mr. Morita. Because he had a dream to create a Hollywood film production company. He had revealed it once. "I have a dream to create a Hollywood movie by myself, making Sony not just a hardware company, but also able to produce its own content." As soon as Morita mentioned this, all the board members made the decision to buy Columbia Pictures as a final gift to fulfill Morita's wish, despite the incredibly high price. As a result, this was one of the most expensive wrong decisions in history. The market price for Columbia Pictures shares at that time was only $12 per share, but Sony bought them for $27 per share. This was because Sony had no one with expertise in the film industry who could negotiate the price that Columbia Pictures set. Because they were not in this industry, they accepted whatever price was given. They did not even have the right to negotiate.
Later, Sony poached two professional film producers from WB Entertainment, who had not even finished their contracts. Sony was sued by WB Entertainment and lost, having to pay hundreds of millions of dollars in damages. What made things worse was that the news of Sony's acquisition of Columbia Pictures received a strong negative reaction at the time. Japanese products had flooded the American market, making American companies and related parties unhappy with this matter. Morita also saw this. He tried every means to erase Sony's origins, to make the public think that Sony was not a Japanese company, but an American product. The newspapers wrote big headlines like "The Japanese Invade Hollywood," which made the situation even more chaotic.
In summary, Sony spent over $6 billion to finally settle everything and successfully acquire Columbia Pictures. It can be said that this was a very costly wrong decision and a very expensive lesson for Sony.
At this point, let's summarize the key points of the book. Sony seemed like a standard international company, but in reality, it was a family-style company with Japanese management and working methods. When it entered the Western world, it was out of its element and made many costly wrong decisions. The company that once prospered to the heavens, surpassing veteran American giants like Coca-Cola and GE, fell from the rankings in just a few years.
The good relationship between the two co-founders and their successors is something rare to find. The friendship, sentiment, and brotherhood of the leaders in this company were important factors that helped Sony move forward quickly. But because of this unusual personal relationship, it caused many problems that led Sony to stumble clumsily into the Western market. The way of working and managing a business for Japanese people is very different from the West, especially the US, which is flexible, free, and does not mix emotions with business. By entering the Western market, Sony made many wrong decisions, like firing foreign personnel who did not obey individuals, and the decision to buy Columbia Pictures based on emotion without considering the business pros and cons.
This is why Ohga's successor, Mr. Idei, carried out a revolution to change the perspective and personal relationships within Sony. He changed the leadership, which was based on connections, to a leadership based on knowledge and real expertise, including both Japanese and foreigners. He reformed the top management and board of directors to be fully competent and fair. They had the right to make independent decisions, not just being a shell like in the old days.
The story does not end here. Even though Idei tried to make reforms, under his leadership, Sony did not see the same glory as before. It only got worse. So in 2005, the board of directors decided to remove Idei from his position and replaced him with an American CEO, Mr. Howard Stringer. This was the first time in history that Sony Corporation had a non-Japanese CEO. Not long after, in 2012, Howard Stringer also packed his bags and left Sony, replaced by a Japanese man named Hirai. The many mistakes in changing leadership so often show the hesitation of Sony. Twenty years after this book was published, Sony still has not been able to find the glory it once had.