A Lesson for all of us from Sony

“Capital isn’t so important in business. Experience isn’t so important. You can get both these things. What is important is ideas. If you have ideas, you have the main asset you need, and there isn’t any limit to what you can do with your business and your life.”   — Harvey Firestone

When I was growing up, Sony was the most innovative company on the planet.  They practically invented consumer electronics as an industry. First came the transistor radio, which allowed us teenagers to party away from home.  Liberation!  Then came the portable cassette player and now we had access to the music we loved, not what the DJs were bribed to play.  Then another innovation in consumer technology, the portable Walkman and the CD.  Decades of innovation and the company grew in size and profits.  In 2000 Sony had a market cap of $82B.

Today, 2012, Sony Corporation has a market capitalisation of just $36B and is ranked number 79th in the Global Fortune 500.  Sony hasn’t made a profit in 4 consecutive years, just recently announced it will double its expected loss for this year to $6.4 billion, has only 15% of its capital left as equity (debt/equity ration of 5.67x) and is only worth 1/4 of its value 10 years ago!

There’s a great lesson here for companies, and individuals.

 Sony stopped innovating and started managing! 

The focus shifted from new ideas to cost savings and productivity measures.  From increasing the number of patents to increasing the number of MBAs. The father of Sony’s innovative decades, Akio Morita was replaced as CEO by US-trained MBA and finally by a non-Japanese, Howard Stringer.  The focus shifted from innovation and new products to budgets and balance sheets.

A similar shift happened at NASA, where the original focus on mission and scientific discovery gave way to a focus on budgets and professional management.  The ratio of scientists and engineers to MBAs and managers shifted dramatically, and so did the morale and safety of the organization, to say nothing of the innovation that also dwindled.

“It isn’t the incompetent who destroy an organization. The incompetent never get in a position to destroy it. It is those who achieved something and want to rest upon their achievements who are forever clogging things up.”  — F. M. Young

As I see it, there is an invisible force that comes into play when we are creating and when companies are innovating.  Human beings are designed to create, to make something new, to put 2 and 2 together and get 6! Whether it be art, music, dance, products or services, human beings have an urge, a need, to create.  If we don’t create, we wither as individuals, as corporations, as a race.

Look at the difference between the individual who has a creative hobby, a creative passion, and the individual who just works and comes home to television.  I’m not saying we are all artists and can create the next great thing.  But what I’m saying is that unless we create, we wither.

Create a short poem for your spouse or child, make up a joke to tell your friends at the pub, tie flies for flyfishing, take photographs, do arts and craft projects to decorate your home. All are creative endeavors. Each enriches our spirit and, I suspect, probably prolongs our life as well.

People don’t wear out, they rust out!

How do you create?  Does your company innovate?  Let’s start a creativity revolution.

Tight Lines

John R Childress

John@johnrchildress.com

About johnrchildress

John Childress is currently Visiting Professor in Strategy and Culture at IE Business School in Madrid and a pioneer in the field of strategy execution, culture change, executive leadership and organization effectiveness, author of several books and numerous articles on leadership, an effective public speaker and workshop facilitator for Boards and senior executive teams. In 1978 John co-founded The Senn-Delaney Leadership Consulting Group, the first international consulting firm to focus exclusively on culture change, leadership development and senior team alignment. Between 1978 and 2000 he served as its President and CEO and guided the international expansion of the company. His work with senior leadership teams has included companies in crisis (GPU Nuclear – owner of the Three Mile Island Nuclear Plants following the accident), deregulated industries (natural gas pipelines, telecommunications and the breakup of The Bell Telephone Companies), mergers and acquisitions and classic business turnaround scenarios with global organizations from the Fortune 500 and FTSE 250 ranks. He has designed and conducted consulting engagements in the US, UK, Europe, Middle East, Africa, China and Asia. Currently John is an independent advisor to CEO’s, Boards, management teams and organisations on strategy execution, corporate culture, leadership team effectiveness, business performance and executive development. John was born in the Cascade Mountains of Oregon and eventually moved to Carmel Highlands, California during most of his business career. John is a Phi Beta Kappa scholar with a BA degree (Magna cum Laude) from the University of California, a Masters Degree from Harvard University and was a PhD candidate at the University of Hawaii before deciding on a career as a business entrepreneur in the mid-70s. In 1968-69 he attended the American University of Beirut and it was there that his interest in cultures, leadership and group dynamics began to take shape. John Childress resides in London and the south of France with his family and is an avid flyfisherman, with recent trips to Alaska, the Amazon River, Tierra del Fuego, and Kamchatka in the far east of Russia. He is a trustee for Young Virtuosi, a foundation to support talented young musicians. You can reach John at john@johnrchildress.com or john.childress@theprincipiagroup.com
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