meJoe.com

I wrote this text for a business class. It takes the perspective of a Sony executive in June 2008, soon after discovering poor sales of the Playstation 3, especially when compared with the Wii and XBox 360.

At Sony we gambled that consumers would seek out the next generation in entertainment delivery mechanisms: the Blue Ray. With its high definition playback and super capacity, the technology represents a ten-fold incremental increase in the capabilities of the standard DVD. The Playstation 3 was meant to give consumers this technology in both their content consumption (movies, music, etc.) and gaming. This strategy closely ties our three core sectors: electronics, games and entertainment into one system (especially as outlined in our 2005 press release on corporate strategy).

Why don’t consumers see the obvious technological superiority over the Wii? The industry has flipped on us–the basis of competition has moved from faster and more life-like to slower and child-like. I have never in my career encountered such a regression.

In my search for answers, the article Strategic Dissonance provides me with some evidence for what went wrong. Here at Sony we are a well oiled machine. Our strategic intent and action are totally in-line. Our distinctive competence is making consumer entertainment electronics and content that people want to buy. In 2006 we even tweaked our internal strategy selection environment by clearing out unprofitable product lines.

We were ready to push the latest and greatest technology on to consumers… and totally missed the consumer’s need.

Nintendo saw change coming that we didn’t.

How did we miss this? I remember working as the Product Manager for the first Playstation. It was faster and more life-like than our competition. We had a great team, and are all now running gaming and electronics.

Our strategy has not changed—and there lies the source of our problem. We kept doing what we knew well. In our minds, the Playstation had cojones, and what else could you possibly need out of your gaming (except more cojones!).

Enter our Strategic Inflection Point. What next? Purchasing Nintendo, which is at a market capitalization of about 10 Trillion Yen or $111 billion, is obviously not an option.

I think we can beat them at their game. With Sony Pictures and Sony Music, there are a lot of opportunities to exploit our content for sole Playstation use. Additionally, we need to have some hard debates.  Do we drop the Blueray as primary Playstation functionality in order to lower the price? Do we release a functionally scaled down version? I will be reworking our strategic intent, and completing the third aspect of Strategic Recognition.

Fast Company, “Sony’s Risky Game”, http://www.fastcompany.com/articles/2006/11/sonys_risk.html

Sony.com, “Sony Corporate Strategy Press Release”,  http://www.sony.net/SonyInfo/News/Press/200509/05-050E/