Transitions – II

The news reports are focusing on another transition – the designation of Howard Stringer, the Welsh-born American executive in charge of Sony’s U.S. operations, as the new chief exec of Sony. Gary McWilliams had a particularly good front page story on this in the March 10th issue of the Wall Street Journal (available online to subscribers only).  Some key points:

• American companies are using the transition to digital technology in consumer electronics to reassert position in this industry, especially relative to the Japanese
• One key weapon in this transition is the greater willingness of US companies to outsource significant business operations relative to Japanese companies

The article does a great job of discussing broader trends in the consumer electronics industry but then doesn’t circle back to the appointment of Stringer. Why Stringer?  He’s a content guy but, as the article suggests, content is not where Sony’s problems are – they need to fix the device business and, in the process, break some deeply embedded mindsets and practices.  Two possible answers. One, Sony is going to move further into content to escape the intensifying competition in devices.  Or, more likely, two, Stringer is going to have some real challenges in moving beyond his comfort zone to turn Sony’s device business upside down. There’s a third scenario – Sony tries to fix its ailing device business by coupling devices with distinctive content. Let’s hope this is not the path Stringer chooses to follow – it’s a losing strategy. As they say, film at 11 . . .

For further perspective on the battle being played out, check out two essays in a book published in 2000 – International Production Networks in Asia by Michael Borrus, Dieter Ernst and Stephan Haggard:

• The intro essay – "Cross-Border Production Networks and the Industrial Integration of the Asia-Pacific region"
• The essay by Michael Borrus, "The Resurgence of US Electronics: Asian Production Networks and the Rise of Wintelism"

For a really current perspective, of course, you’ll have to check out The Only Sustainable Edge, the new book that John Seely Brown (hereinafter forever referred to as JSB) will be publishing in a few short weeks – pre-orders are being taken at Amazon – it not only discusses the challenges that companies like Sony are facing, but outlines the approach they will need to take to rebuild competitive advantage.