Learning from SONY

Belajar dari pengalaman pahit memanglah tidak mengenakkan. Tapi itu sangat dibutuhkan untuk bangkit dan maju agar tidak terjatuh pada kesalahan yang sama atau belajar dari kesalahan orang lain. 

Siapa tidak kenal dengan SONY. Pastilah sering kita dengar terutama kedigdayaannya dalam beberapa dekade belakangan ini. Tapi, karena fokus yang salah, sehingga saat ini SONY jauh ketinggalan dengan produsen-produsen elektronik lain seperti Samsung, Apple, Dell, dll. Mungkin ini bisa kita jadi pelajaran berharga bagi kita.

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Sayonara Sony: How Industrial, MBA-Style Leadership Killed a Once Great Company

Who can forget what a great company Sony was, and the enormous impact it had on our lives? With its heritage, it is hard to believe that 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!

Sony was once a marketplace creator, and leader

After World War II Sony was the company that took transistor technology invented by Texas Instruments (TI) and made the popular, soon to become ubiquitous, transistor radio. Under co-founder Akio Morita Sony kept looking for advances in technology, and company leadership spent countless hours innovatively thinking about how to apply these advances to improve lives. With a passion for creating new markets, Sony was an early creator, and dominator, of what we now call “consumer electronics:”

·    Sony improved solid state transistor radios until they surpassed the quality of tubes, making good quality sound available very reliably, and inexpensively

·    Sony developed the solid state television, replacing tubes to make TVs more reliable, better working and use less energy

·    Sony developed the Triniton television tube, which dramatically improved the quality of color (yes Virginia, once TV was all in black & white) and enticed an entire generation to switch. Sony also expanded the size of Trinitron to make larger sets that better fit larger homes

·    Sony was an early developer of videotape technology, pioneering the market with Betamax before losing a battle with JVC to be the standard (yes Virginia, we once watched movies on tape)

·    Sony pioneered the development of camcorders, for the first time turning parents – and everyone – into home movie creators

·    Sony pioneered the development of independent mobile entertainment by creating the Walkman, which allowed – for the first time – people to take their own recorded music with them, via cassette tapes

·    Sony pioneered the development of compact discs for music, and developed the Walkman CD for portable use

·    Sony gave us the Playstation, which went far beyond Nintendo in creating the products that excited users and made “home gaming” a market.

Very few companies could ever boast a string of such successful products. Stories about Sony management meetings revealed a company where executives spent 85% of their time on technology, products and new applications/markets, 10% on human resource issues and 5% on finance. To Mr. Morita financial results were just that – results – of doing a good job developing new products and markets. If Sony did the first part right, the results would be good. And they were.

The origin, and impact, of “Japan, Inc” on Sony

By the middle 1980s, America was panicked over the absolute domination of companies like Sony in product manufacturing. Not only consumer electronics, but automobiles, motorcycles, kitchen electronics, steel and a growing number of markets. Politicians referred to Japanese competitors, like the wildly successful Sony, as “Japan Inc.” – and discussed how the powerful Japanese Ministry of Trade and Industry (MITI) effectively shuttled resources around to “beat” American manufacturers. Even as rising petroleum costs seemed to cripple U.S. companies, Japanese manufacturers were able to turn innovations (often American) into very successful low-cost products growing sales and profits.

So what went wrong for Sony?

Firstly was the national obsession with industrial economics. W. Edward Deming in 1950s Japan institutionalized manufacturing quality and optimization. Using a combination of process improvements and arithmetic, Deming convinced Japanese leaders to focus, focus, focus on making things better, faster and cheaper. Taking advantage of Japanese post war dependence on foreign capital, and foreign markets, this U.S. citizen directed Japanese industry into an obsession with industrialization as practiced in the 1940s — and was credited for creating the rapid massive military equipment build-up that allowed the U.S. to defeat Japan.

Unfortunately, this narrow obsession left Japanese business leaders, by and large, with little skill set for developing and implementing R&D, or innovation, in any other area. As time passed, Sony fell victim to developing products for manufacturing, rather than pioneering new markets.

The Vaio, as good as it was, had little technology for which Sony could take credit. Sony ended up in a cost/price/manufacturing war with Dell, HP, Lenovo and others to make cheap PCs – rather than exciting products. Sony’s evolved a distinctly Industrial strategy, focused on manufacturing and volume, rather than trying to develop uniquely new products that were head-and-shoulders better than competitors.

In mobile phones Sony hooked up with, and eventually acquired, Ericsson. Again, no new technology or effort to make a wildly superior mobile device (like Apple did.) Instead Sony sought to build volume in order to manufacture more phones and compete on price/features/functions against Nokia, Motorola and Samsung. Lacking any product or technology advantage, Samsung clobbered Sony’s Industrial strategy with lower cost via non-Japanese manufacturing.

When Sony updated its competition in home movies by introducing Blu-Ray, the strategy was again an Industrial one – about how to sell Blu-Ray recorders and players. Sony didn’t sell the Blu-Ray software technology in hopes people would use it. Instead it kept Blu-Ray proprietary so only Sony could make and sell Blu-Ray products (hardware). Just as it did in MP3, creating a proprietary version usable only on Sony devices. In an information economy, this approach didn’t fly with consumers, and Blue Ray was a money loser largely irrelevant to the market – as is the now-gone Sony MP3 product line.

We see this across practically all the Sony businesses. In televisions, for example, Sony has lost the technological advantage it had with Trinitron cathode ray tubes. In flat screens Sony has applied a predictable, but money losing Industrial strategy trying to compete on volume and cost. Up against competitors sourcing from lower cost labor, and capital, countries Sony has now lost over $10B over the last 8 years in televisions. Yet, Sony won’t give up and intends to stay with its Industrial strategy even as it loses more money.

Sony’s Leadership was a willing conspirator to the failed strategy

Why did Sony’s management go along with this? As mentioned, Akio Morita was an innovator and new market creator. But, Mr. Morita lived through WWII, and developed his business approach before Deming. Under Mr. Morita, Sony used the industrial knowledge Deming and his American peers offered to make Sony’s products highly competitive against older technologies. The products led, with industrial-era tactics used to lower cost.

But after Mr. Morita Sony’s other leaders were trained, like American-minted MBAs, to implement Industrial strategies. Their minds put products, and new markets, second. First was a commitment to volume and production – regardless of the products or the technology. The fundamental belief was that if Sony had enough volume, and cut costs low enough, Sony would eventually succeed. Without any innovation.

By 2005 Sony reached the pinnacle of this strategic approach by installing a non-Japanese to run the company. Sir Howard Stringer made his fame running Sony’s American business, where he exemplified Industrial strategy by cutting 9,000 of 30,000 U.S. jobs (almost a full third.) To Mr. Stringer, strategy was not about innovation, technology, products or new markets.

                                           

Sony’s Industrial Strategy was cost-cut first, products are less meaningful

Mr. Stringer’s Industrial strategy was to be obsessive about costs. Where Mr. Morita’s meetings were 85% about innovation and market application, Mr. Stringer brought a “modern” MBA approach to the Sony business, where numbers – especially financial projections – came first. The leadership, and management, at Sony became a model of MBA training post-1960. Focus on a narrow product set to increase volume, eschew costly development of new technologies in favor of seeking high-volume manufacturing of someone else’s technology, reduce product introductions in order to extend product life, tooling amortization and run lengths, and constantly look for new ways to cut costs. Be zealous about cost cutting, and reward it in meetings and with bonuses.

Thus, during his brief tenure running Sony Mr. Stringer will not be known for new products. Rather, he will be remembered for initiating 2 waves of layoffs in what was historically a lifetime employment company (and country.) And now, in a nod to Chairman Stringer the new CEO at Sony has indicated he will react to ongoing losses by – you guessed it – another round of layoffs. This time estimated to be another 10,000 workers, or 6% of employees. The new CEO, Mr. Hirai, trained at the hand of Mr. Stringer, demonstrates as he announces ever greater losses that Sony hopes to – somehow – save its way to prosperity with an Industrial strategy.

Sony may not go bankrupt – but avoid it

Japanese equity laws are very different that the USA. Companies often have much higher debt levels. And companies can even operate with negative equity values – which would be technical bankruptcy almost everywhere else. So it is not likely Sony will fill bankruptcy any time soon, if ever.

But should you invest in Sony? After 4 years of losses, and entrenched Industrial strategy with MBA-style leadership focused on “numbers” rather than markets, there is no reason to think the trajectory of sales or profits will change any time soon.

As an employee, facing ongoing layoffs why would you wish to work at Sony? A “me too” product strategy with little technical innovation that puts all attention on cost reduction would not be a fun place. And offers little promotional growth.

And for suppliers, it is assured that each and every meeting will be about how to lower price – over, and over, and over.

Every company today can learn from the Sony experience

Sony was once a company to watch. It was an innovative leader, that pioneered new markets. Not unlike Apple today. But with its Industrial strategy and MBA numbers- focused leadership it is now time to say, sayonara. Sell Sony, there are more interesting companies to watch and more profitable places to invest.

http://www.forbes.com/sites/adamhartung/2012/04/20/sayonara-sony-how-industrial-mba-style-leadership-killed-once-great-company/1/

Preventive Maintenance Alone is not Enough to Eliminate Breakdown

Sering sekali kita mendengar beberapa perusahaan menerapkan program preventive maintenance tetapi jumlah equipment yang mengalami breakdown tidaklah berkurang secara signifikan. Pertanyaan sebenarnya apakah preventive maintenance sendiri bisa mengurangi bahkan menciptakan zero breakdown.
Berdasarkan prinsip reliability engineering, penyebab equipment breakdown berubah terhadap waktu. Hal ini bisa dijelaskan dalam “life span charateristic curve” atau yang biasa disebut dengan bath-up curve. Gambar berikut memperlihatkan bath-up curve dan hubungannya dengan penyebab dan strategi yang bisa digunakan sebagai countermeasure.

Ketika mesin/equipment dalam kondisi baru, failure rate pada awalnya tinggi dan perlahan-lahan turun seiring dengan penyesuaian kondisi operasi equipment dengan proses. Dan, pada akhirnya failure rate akan menjadi lebih stabil pada periode tertentu, dan pada akhir umur equipment tersebut, failure rate akan naik (wear-out failure period).

Early period, accidental period dan wear-out period memiliki penyebab yang berbeda. Hal ini terlihat jelas pada gambar diatas. Oleh karenanya untuk mencapai zero breakdown yang diinginkan karateristik dari breakdown tersebut harus diketahui dengan baik sehingga pencegahan (countermeasure) bisa diimplementasikan secara spesifik.

Penyebab failure pada state awal (early period) adalah adanya kesalahan pada tahap desain dan manufaktur. Untuk mengatasinya, team desain harus melakukan tes terlebih dahulu sebelum benar-benar terpasang dan beroperasi. Dengan mengembangkan prosedure tes ini diharapkan semua kelemahan yang ditemukan bisa dilakukan improvement untuk mengkoreksi semua weakness yang ditemukan sehingga meminimalisasi kegagalan pada saat pengopersian.

Accidental failure disebabkan terutama oleh kesalahan yang disebabkan oleh pengoperasian equipment dengan tidak benar. Dan yang paling efektif untuk pencegahannya adalah menjaga agar equipment tersebut bisa beroperasi dengan benar dan tepat.

Wear-out failure disebabkan oleh terbatasnya umur alami dari sebahagian atau keseluruhan part dari sebuah equipment. Masa pakai equipment tersebut bisa diperpanjang dengan cara preventive maintenance dan improvement dari sisi maintainability nya (melalui perubahan di design). Hal ini bisa mengurangi failure rate di akhir masa pakai dari equipment tersebut.

Dari ketiga tipe failure yang terjadi, maintenance prevention adalah metode yang paling efektif untuk mencegah sebuah equipment mengalami failure/kegagalan oleh ketiga tipe tadi. Juga, maintenance free equipment design haruslah menjadi pemikiran utama pada saat design dari sebuah equipment sehingga ketiga tipe failure tersebut bisa dicegah. Oleh karena itu preventive maintenance sendiri tidak mampu untuk mengeliminir breakdown equipment. Sehingga jelaslah bagi kita bahwa semua bagian turut serta bertanggung jawab. Mulai dari design/planning, operation department dan tentu saja departement maintenance.

Source : Seiichi Nakajima, “Introduction to TPM” Productivity Press.