CEO Interview. . . You refer frequently to the interrelationship between hardware and software, and of the innovations has pioneered to produce the best possible benefits for people. Can Global Management you describe what you aspire to in linking hardware and software? hallenges C When we came up with the idea of a digital- recording on a small disk, with the joint effort of Phillips [a Dutch electronics firm], we were absolutely excited about this invention and the Akio Morita many promising possibilities. We thought it Chairman would be a historic innovation in sound recording technique with a similar impact as the Sony Corporation invention of Edison's phonograph recording.

If we did not realize the benefit of software as early as we did, I wonder how long it would have taken for CD technology to be appreciated as much as it is now. Sony, by combining CBS Sony audio software to our CD hardware, created a new industry--the CD industry. The music industry as a result has grown with the transition from records to CDs. This success in hardware-software synergy illustrates how hardware alone, no matter how good, is not sufficient for either expediency nor enrichment of human life. Moreover, it supports Sony's Akio Morita started Sony with $500 from his belief in how a good relationship between family, beginning operations in the basement of software and hardware can promote the further a bombed out Tokyo department store. Sony's growth of both industries. rise began in 1952 when the company purchased the Japanese rights to Western Developing successful business and Electric's newly developed . Using this technology strategies and then carrying technology, the company produced the world's them out can take a long period of time. Yet, first transistor pocket radio. From the in some business environments there is a beginning, Sony and Morita have used their push to demonstrate rapid results from genius to create products the world's people investments. As chief executive of a highly don't even know they want: the , the successful world class company, what are television, video watchman, the your thoughts about producing rapid results (CD), and more. in business?

At times we see some American corporate executives more interested in quick profits. This interview with Akio Morita is a unique Busily trying to make the bottom line of quarterly opportunity to examine the thoughts of one of reports, their concern is for the amount of profit the world's most innovative executives. You'll they can set aside for return to the shareholders. read Morita's thoughts on four different topics: Although this concern should not altogether be the relation between hardware and software, criticized, an excessive emphasis on short-term and the innovative thinking underlying their use orientation is dangerous. The popularization of at Sony; the CEOs responsibility to consider a this management philosophy has accelerated company's stakeholders as well as its the establishment of the world financial empire, shareholders; and the challenges of building a as well as the service industry, and leaves global business.

© Copyright 1995 James A. Senn. All rights reserved. behind the manufacturing sector which requires What advice do you have for businesspeople long-term perspectives, as in R&D. about becoming comfortable in an international location—a business or To whom besides employees and investors residence outside of their home country? does a business have responsibility? To be an integral part of the community, [The term] stakeholders literally refers to those Japanese corporations themselves are also who have stake in the company. Or, in a required to truly localize in their operations broader perspective, those who share common abroad. Localization is the process to formulate interests in the business operation, meaning and operate a company to serve the local needs growth and prosperity of the business. This and well-being of the local community to its best includes a wide range of people with whom ability. Making the best use of the talent corporations are involved in one way or available locally in management and work force another—from customers, employees, suppliers, should be very effective to this end. Only when communities, and shareholders. this true localization has been accomplished will Japanese companies be appreciated and Corporations need to fulfill the expectations of welcomed as good corporate citizens. their stakeholders. However, in trying to apply the stakeholder concept to Japanese firms, we Sony has had tremendous success notice that they have for a long time been worldwide and is a familiar brand name in paying close attention to their own employees, many, many countries. Based on your customers and clients, with comparatively less experience, what is the relation between attention to their shareholders. Consideration being a global company and yet accepted in for their community, whether it be at home or a local business community? Can a firm be abroad, an essential element in the stakeholder both global and local? concept, has also been insufficient. This is the reason why Japan's fast growing direct For companies operating worldwide, true investment in the U.S. sometimes arouses localization is the first step toward becoming a suspicion and in many regions, is not always "global enterprise." Managers of such global well received. enterprises must consider how to closely knit together or integrate each of their localized How difficult is it for Japanese operations so that they function as a single businesspeople, or for that matter any corporate entity. What is essential to this end is business person, to settle into a new a universally common management philosophy country? and technology on how to encourage the work force, and how to develop and market products. Among Japanese businessmen and their families living in the U.S., the importance of I introduced a slogan—"global localization"—to being a part of the community is not widely let Sony people know the importance of these recognized yet. Of course I understand how concepts. It is another Sony word, like difficult it is to become a true member of the "Walkman," and who knows, the phrase may community. It is not a simple thing to make the one day appear in a Webster's dictionary either adjustment, because the process is multi- under the word "global" or "local." I believe that faceted. I felt the difficulty myself when my I share the same idea with Mr. (Roberto) family and I moved to New York back in 1963. Goizueta [Chairman of the Coca-Cola But there is always at least one easy way out of Company], who in the past advocated the problems, and it sometimes happens to be concept, "Think globally and act locally." found in the simplest matter. When we were in the U.S., for example, I learned that even Another similarity, by the way, between the strange foreigners like us could easily acquaint Coca-Cola Company and Sony is that both of ourselves with the American people once we our trademarks were rated as two of the most could comfortably sit down with them as friends well-known around the world in a survey and neighbors around the backyard barbecue. conducted by Landor Associates last year.

2 What do you feel are the most formidable barriers to the globalization of business?

Businesspeople like us, involved in global operations, must cope in a huge market with different cultures, languages, and tastes. This diverse global market is our constituency, so to speak, as opposed to local constituency which politicians are most concerned about. In our global constituency, what counts to get votes from our constituents, or customers, is offering attractive products, and not shaking hands nor delivering speeches.

Drawing on your remarkable success, can you suggest a key thought that global managers should remember when introducing products in new countries?

Attractiveness of value-added industrial products measured by factors such as design, quality, reliability and service capability are critical in the customers' decision to buy.

Thank you for sharing your wisdom, your experience, and your insights so candidly.

Thank you very much.

3