Sony 2006 Annual Report Download - page 5

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Just over a year ago, I was asked to assume the role of CEO of
Sony. While truly honored by this opportunity, my experience in
running Sony’s North American operations over the prior eight
years gave me an acute sense of the challenges that lay ahead for
revitalizing Sony on a global basis. The world in which we operate
has been undergoing rapid and seismic changes—creating both
opportunities and threats for us at the same time. I knew that
staying ahead of this curve would require us to provide truly
differentiated products and services to the market. To do this,
we would not only have to improve our organizational structure,
resource allocation and focus, but, as importantly, we would need
to reinvigorate the Sony founders’ spirit for the digital age. I have
always been proud to work for this great company but believe—
as I am certain many of you do—that Sony could do even better.
With this in mind, I accepted the opportunity—along with my
partner, President and Electronics CEO, Ryoji Chubachi—to
rejuvenate Sony.
Soon after the new management team’s formation in 2005, we
established a global cross-company team tasked with diagnosing
Sony’s key issues and challenges and providing workable solutions.
Our team had frank and honest discussions with a broad range
of our key stakeholders—including customers, dealers, vendors,
shareholders and employees (who submitted more than 2,000
smart ideas about how to fix our company). Those discussions,
along with an extensive business review, led us to conclude that
Sony’s collection of assets is truly unique—but that the combination
of challenging market conditions and self-imposed structural
issues was hindering our ability to compete effectively. Sony is a
company with great traditions, and I intend to look after those that
make us unique and valuable. At the same time, however, we
must be prepared to abandon those traditions that had undoubtedly
contributed to our structural and competitive challenges. Sony
needed a revitalization plan that would allow us to become a
simpler, yet more highly focused, customer-driven organization.
In September 2005, we announced our mid-term corporate
strategy, outlining a revitalization plan that achieved a distinct
balance between restructuring initiatives designed to reduce costs,
and strategic growth initiatives designed to foster continued
innovation. A key component of the plan was a new organizational
structure that would break down internal barriers, encourage
communication across all of our businesses and enable these
initiatives to succeed. In its simplest form, this new plan attempts
to achieve three key objectives: (i) eliminate “silos;” (ii) sharpen our
focus; and (iii) create unique and sustainable competitive advantages.
As part of our new plan, Sony made firm commitments to the
financial community regarding cost savings initiatives and also
identified certain areas that we believed would be key to our future
growth—such as high definition (HD), software development, digital
content and Cell technology, among others. We outlined our key
financial target of reaching a consolidated operating profit margin
of five percent (before restructuring and one-time charges) by the
year ending March 31, 2008, and made a commitment to enhance
the transparency around tracking our new plan so that the financial
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