Launching Sony’s Turnaround

Kazuo Hirai just might have the toughest job in the corporate world.  Named CEO of Sony in February, his task is to turn around the struggling electronics conglomerate after years of strategic drift and financial losses.  He’ll have to revive the brand, excite consumers with new products and revamp operations – all while competing with nimble global giants like Apple and Samsung.  That’s a tall order.

In a corporate turnaround, it’s vital that the CEO communicate clearly and with conviction.  So give credit to Hirai, who outlined his strategy in a worldwide videoconference this week.  His remarks demonstrated four important elements for communicating effectively in a turnaround:

1.  Present a simple plan.  Fixing Sony is complex to execute but should be simple to communicate.   Clear, uncomplicated communication makes the plan memorable and sound achievable – two important goals for launching a turnaround.  Hirai’s remarks were built around just three simple points:

“There are three points I would like to discuss about how to bring about change. The first is acknowledging the issues at hand. The second is the key initiative to transform the electronics business and the third is the management’s structure to execute these key initiatives.”

2.  Articulate the company’s strengths.  When the road to recovery is tough, it’s important to remind people of what the company has going for it.  Hirai spoke about the assets that will drive Sony’s turnaround:

“How we go about making this happen will determine if Sony will be back. And whether or not we can do that lies entirely with Sony’s strengths. They are one, a business reach and brand recognition that span the globe; two, technological strength in imaging, gaming and other fields; three, content and business know-how in film, music and games; four, and lastly, something I believe in very strongly, what I call the Sony DNA – the will to drive new value that is in so many of our talented employees.”

3.  Acknowledge tough decisions.  No one could have missed Hirai’s emphasis on the need for change – he used the word 18 times in his presentation.  He announced sweeping cost cuts and layoffs that would trim headcount by 10,000.  He also cleaned house in the executive ranks, eliminating entire layers of management in some divisions.  Those are just the first of many difficult decisions; others await on R&D, product development and marketing.

4.  Make it personal.  The most effective CEO speeches speak from the heart.  (See the Stanford commencement address by Steve Jobs for perhaps the best example.)  Hirai didn’t have the audience shedding tears, but he spoke openly about the challenges facing Sony and his personal determination to revitalize the company:

“Since I was nominated President and CEO in February, I have received laurels of encouragement from investors, analysts, the press and other stakeholders. They want Sony to change and to support Sony’s process of change in transformation. So do the employees. They want to restore Sony to its former glory and go further beyond. Sony will change. I have fully dedicated myself to changing Sony.”

Good communication is just as important to the success of a turnaround as new products and efficient operations.  Communication keeps everyone on the same page, speeds decision-making and rallies the team when setbacks arise.

Hirai has made a good start in his first weeks.  He’ll need to keep the communication going, with regular updates and tangible proof that his measures are working.

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