Sony Corporation: Organizational Culture Analysis

Defining Organizational Culture

Organizational culture can be defined in several ways. Organizational culture, as defined by Morgan (1986), refers to the development patterns mirrored by a society's ideology, laws, knowledge systems, daily rituals, and customs. Schein (1985) says that organizational culture relates to observed norms, behavioral regularities, policies, philosophies or values, acceptable behavior, and the sense of belonging that an individual has by being part of an organization (pp. 6, 9). An organization's culture is essentially a product of its members. The members are driven to achieve the goals of the organization, which in turn affects the organization's life. The data used in this essay has been sourced from secondary electronic and print sources.

The Nature of Sony's Business

Sony is a leading brand across a wide range of electronic products, including home entertainment video systems and audio equipment, communication gadgets, professional electronic and broadcasting devices, PCs, robots, and digital cameras. The Japanese corporation has evolved into a giant in the electronics industry with global operations. This essay explores the organizational culture at Sony and how that culture impedes or promotes Sony's effectiveness.

The operations of the company include Sony Corporation (Sony Electronics, located in the United States), Sony Computer Entertainment, Sony Pictures Entertainment, Sony Music Entertainment, Sony Financial, and Sony Ericsson. Sony also manufactures semiconductors and ranks well among the Worldwide Top 20 Semiconductor Sales Leaders.

The company was founded on May 7, 1946. The representative corporate executives at the time of writing were Howard Stringer (Chairman, CEO, and President), Ryoji Chubachi (Vice Chairman), and Nobuyuki Oneda (Executive Deputy President and CFO), as provided by Sony Global (2009).

The Sony Corporation — popularly known simply as Sony — is a multinational conglomerate headquartered in Minato, Tokyo, Japan. It is among the world's largest media conglomerates, recording revenues in excess of 7.730 trillion yen, or approximately $78.88 billion U.S. (FY 2008). Sony's name is derived from the Latin word sonus, meaning sound.

Sony's Founding Culture, Vision, and Corporate Objectives

Mr. Ibuka envisioned an organization with a very stable working environment that would encourage visionary engineers with a great appreciation for technology to work toward their goals and visions wholeheartedly. To inspire these workers, Mr. Ibuka encouraged them to embrace a spirit of cooperativeness and to unleash their technological potential without reservation (Sony History). These were the aspirations he desired to witness in Sony, and they shaped what he set out to create.

The culture in this organization places emphasis on a spirit of open-mindedness and freedom, as well as a burning drive for innovation. The founder articulated this great vision in the initial Prospectus, and so this philosophy has persisted throughout the life of the organization — exemplified by its employees and evident throughout Sony's history.

Since the corporation's inception in 1946, it has consistently produced products so innovative that they inspire fresh lifestyles. Morita and Ibuka, the founders, inculcated a challenging spirit for the production of products not yet manufactured and a will to bring excitement and happiness to the people who used them. This philosophy is in the corporation's DNA and remains strong even after six decades.

Sony's aim is to create a working environment that inspires its workers and encourages them to pursue fresh challenges, thereby expanding their potential and realizing growth through their innovative and creative abilities. The company has always striven to encourage personal development through on-the-job education and learning, and through employee access to programs designed to meet varied needs — including the education of next-generation business leaders, management skills training, and training aimed at improving individual skills and abilities.

Sony's original incorporation objectives included: the establishment of an ideal factory emphasizing open-mindedness and freedom, where sincerely motivated engineers could maximize their skills and technological abilities; the reconstruction of Japan and the elevation of the nation's culture through fluid manufacturing and technology; the prompt application of advanced technologies developed in various sectors during wartime, targeting common families and households; the rapid commercialization of superior technological findings from universities and research institutions applicable to common households; the promotion of radio communication and similar devices for common households and the promotion of home appliance usage; active participation in reconstructing communication networks damaged during the war; the provision of high-quality radios and useful radio services for the coming era; and the promotion of science education in the public sphere (Sony History).

The fundamental ideologies informing these objectives are quite striking. The weight given to Japanese culture in the formulation of these objectives is evident, even setting aside the context that the corporation was born in the aftermath of the destruction caused by the Second World War. Mr. Ibuka's apparent vision was that Sony would serve as his contribution to Japan's development, and that technology would be important to the nation's growth — a vision in harmony with the national advancement the government was then seeking to achieve.

To what extent are the initial incorporation objectives still relevant? Mr. Yoshihide Nakamura, Sony's Core Technology and Network Company deputy president, said in an interview that the culture at Sony is a mix of Japanese and not-so-Japanese thinking. He noted that in a way, they are quite free — not pushed to do anything provided they are performing well. The freedom at Sony is tremendous. The innovative are given fresh opportunities. Some individuals who might be unsuitable elsewhere can thrive at Sony (Richard Gershon and Tsutomu Kanayama, 2002).

Sony's Strategy and Organizational Structure

When Howard Stringer joined Sony Global Japan as the new CEO, he developed fresh strategies and used them to streamline Sony. First, he assessed the organization's core business and competencies and channeled his energies on games, entertainment, and electronics products. A growth strategy was established within the organization with the goal of realizing consolidated sales revenue of at least eight trillion yen and an operating profit margin of five percent (four percent in electronics) by the close of the 2007 fiscal year.

The strategy to revitalize the company over a three-year window (2005–2008) included: restructuring of the electronics organization; eliminating corporate silos and focusing on competitive expansion and growth; taking steps to improve the organization's profit structure; reducing costs; selling non-core assets such as stock and real estate; strengthening the prevailing electronics business; focusing more on the electronics field and improving profitability in the television arm by the second half of 2006; launching a variety of HD products in 2006; focusing on interoperable and intelligent products; developing network-enabled applications and products; solidifying technology development; creating mobile and home platforms; concentrating investment on important component devices and semiconductors; advancing next-generation display technology (OLED); enhancing software development; pursuing a group convergence strategy; pursuing mobile entertainment; and establishing a center for mobile development.

On taking over as CEO, Howard Stringer formulated strategies for each of Sony's product lines. Looking at these strategies, it is apparent that he divided the organization along product lines, with every product having its own strategy. The organizational structure of Sony followed the same division, making the organization flatter, with every division reporting to the head office.

As is common in organizations divided into several divisions, the divisions gain flexibility — they can pursue mergers, add divisions, or close others. This held true for Sony, as its mobile division merged with Ericsson to take over production of Sony Ericsson mobile devices. It is also public knowledge that Sony's music entertainment division undertook a 50-50 joint venture with Bertelsmann Music Group, changing the division's name to Sony BMG Music Entertainment. In August 2008, Sony acquired the remaining 50% stake and renamed the division Sony Music Entertainment.

Given the multidivisional structure at Sony, each division is capable of operating on its own and thus able to pursue joint ventures, as in the case of Sony Ericsson, or make acquisition decisions, as with BMG. Howard Stringer also, on joining Sony, shut down restaurant chains and other non-core operations that Sony had controlled.

Given the multidivisional nature of the company, Howard was left to oversee the divisions by evaluating each division's performance from a higher vantage point. Dividing organizations along product lines gives them the opportunity to specialize and advance their core competencies. Each division has effectively become a company of its own — for example, Sony Pictures Entertainment Inc., Sony Electronics Inc., and Sony Computer Entertainment Inc. Redundancy assessments across various reports reveal that each division maintains its own head office, which explains the multiple parent-level structures at Sony. Crucial departments such as IT and HR face redundancy, but due to the organizational structure, these offices must be maintained. Despite limited knowledge-sharing across the organization, this problem has been addressed by the CEO establishing five strategic committees covering all business units: technology, product, production, sales, and procurement. Standardization has therefore helped reduce duplicated effort and poor coordination.

Additionally, the CEO travels around the world visiting Sony's operations, covering almost 30,000 air miles every month (Nakamoto, 2006). This builds employee morale, and the excitement can be seen in the eyes of employees across the globe.

Four words describe the expectations of the Sony Group: Unique — uniqueness guarantees the corporation's constant innovation; Quality — the best description of the products the company produces; Speed — how fast the corporation is able to adapt to its changing environment; and Cost — the importance of pricing products competitively (Sony History). These four elements are the key components of Sony's organizational culture. The company continues to meet current and changing demands, ensuring that it remains relevant in the international market.

Sony Corporation reorganized its structure in 1999. Nakamura explains that this was a necessity because the digital network era had just dawned, and the reorganization was needed to keep the company competitive in the 21st century. Though Sony is now a giant company, it strives to maintain the feel of a small company. To achieve this, Nobuyuki Idei, the company's president in 1995, introduced two clarion calls — Digital Dream Kids and Regeneration (Beamish, 2000). President Nobuyuki noted that these concepts give employees the opportunity to collaborate and promote teamwork rather than working individually. Regeneration was established as a new management theme to ensure the company remains excellent over the next 50 years, conserving the founding spirit. Through Regeneration, current workers can renew themselves and aim for higher heights. Being present in the digital age is exciting to people of any age — both the young and the old marvel at technology. The digital dream kids are the company's future customers, and Sony strives to exemplify this mindset at all organizational levels so that customer needs are always met.

The organization was deconstructed into four divisions: the Home Networking Company, the Core Technology and Network Company, the Personal and Information Technology Network Company, and Sony Computer Entertainment (Beamish, 2000).