Sony has completely changed the way it plans to shift towards profitability in a plan laid out in its Mid-Term Corporate Strategy for Fiscal Year 2015 – 2017. It says it will put Return on Equity front and center in the way it judges success in each group, and presumably reward management on the same KPI basis.
Instead of the “Sony One” campaign that was used to convince the varied groups to work together tried 5 or 6 years ago, this time the segments can operate as they like, as long as they find the right kind of return.
In order to achieve this Sony will put its segments into one of 3 clusters or descriptions, each measured in a different way – Growth Drivers are supposed to grow both revenue and profit; Stable Profit Generators are cash cows, while a third category suffer from Market Volatility, and need to stem losses.
The Growth Driver cluster will include Devices, Game & Network Services, Pictures, and Music and will drive profit growth over the next three years. This is also where the bulk of the money will be spent with Devices even building out production capacity and enhancing R&D, while Games will push for a wider installed base and Music plans simply to increase its focus on the streaming market.
In stable profit generators, Sony will put Imaging Products & Solutions and Video & Sound. The idea is to push into more profitable areas of the market rather than seek to grow the markets. Sony highlights products such as its advanced mirrorless single-lens reflex cameras which are highly profitable.
In volatility management Sony will put its TV and Mobile Communications businesses and will place the highest priority on curtailing risk and securing profits in these businesses. One strategy is to increase value added products using in-house technologies and component devices.
This plan, which to be honest could have been arrived at by any MBA in 15 minutes, is a genuine departure for Sony and it may well work, but many think it is likely that Sony will exit the volatile markets, through a sale, dumping TVs and smartphones.
Sony will split out the Video & Sound business unit by October 2015 to run as a self-sustained, subsidiary and may split out other business either for sale or to demonstrate what Sony would have achieved had it not owned them.