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As Sony struggles, many see cautionary tale for Japan

Sony, whose Walkman music players once epitomized Japanese innovation, hasn't turned a profit since 2008. Many worry Sony represents a bigger problem with rigidity in Japan.

By Correspondent / June 26, 2012

A man looks at Sony television sets, which are displayed at an electronics shop in Tokyo June 22.

Kim Kyung-Hoon/REUTERS

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Tokyo

When Sony announced some $6 billion in losses in May along with plans to cut 10,000 jobs, it wasn't taken here simply as evidence of an iconic electronic titan in trouble. To many Japanese, it symbolized a larger problem: a society clinging to outmoded ways and rigid seniority in a world where rewards increasingly go to the entrepreneurial. 

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That Sony would prompt such a reaction is riddled with irony. In the mid-1980s, Sony revolutionized people's relationship to their music with the introduction of the Walkman. The epitome of cool, it nearly banished boom boxes from the streets and became a darling of runners. 

"It's a systemic issue, and Sony exemplifies Japan as a whole," says William Saito, a venture capitalist and council member on national strategy and policy at the Japanese government's National Policy Unit. Mr. Saito believes that Japan has failed to adapt to its shrinking and aging population, and instead clings to the belief that success can come from focusing on the domestic market. 

Too many Japanese firms "are seniority-based, where the ideas of globally connected people are not realized," Saito says. "When the domestic market was enough, that was OK, but not now."

Joi Ito, an entrepreneur and director of MIT’s Media Lab in Cambridge, says Japanese firms need to rip up their centrally designed plans and "embrace serendipity." 

"If you plan everything you can't be lucky, and you need a lot of luck [to succeed]," Mr. Ito said at a meeting of the Japan Society. "The Japanese have very good talent; but the minute you institutionalize, and you create all the hierarchy and the process, and bring in all of the gyosha [trading companies], it suddenly becomes this thing that's very difficult."

That can result in ill-considered visions for expansion that make little sense in the long run, says Yasunori Tateishi, who cites Sony's ultimately disastrous acquisition of Columbia Pictures in the mid-1990s as evidence that empire-building clouded its focus on the products that helped it make its name in the 1970s and '80s: consumer electronics.

New vision?

The last time Sony turned a profit was in 2008. And last year was the worst fiscal year in its 66-year history and sent shares in Tokyo to their lowest level for more than three decades.

On top of rough economic times and a wider malaise in Japan that stifles innovation and entrepreneurship, Sony has performed poorly amid foreign competition from Apple and Samsung, according to Mr. Tateishi, author of "Farewell, Our Sony." It's because the company has overextended its reach, he says. 

"Having so many faces is Sony's biggest problem," he says. "It's increasingly unclear what kind of company it is."

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