The secret to how SONY, a company that has been around for over 60 years, can innovate like a startup

[caption id="attachment_5387" align="aligncenter" width="294"] https://www.sony.net/[/caption]

One of the ways companies seek to innovate is often referred to as open innovation.

Open innovation is a concept established by Professor Henry Chesbrough at the University of Berkeley in 2003 in his book 'Open Innovation'. do.

Companies that have recognized the limits of sustainable growth only with internal resources and work methods have been making various efforts to incorporate the spirit of open innovation (?) into their corporate culture in their own way.

In fact, it's common in any region to constantly strengthen market and customer touchpoints by creating their own programs with separate organizations and dedicated investment capital to uncover better external resources and align them with internal organizations.

Even in Japan, in 2019 alone, there are more than 100 innovation programs conducted by public and general companies, so it is now commonplace.

In this atmosphere, we would like to briefly take a look at the past and present of ‘SONY’, a Japanese company that swept the world in the mid/late 20th century, and also look at its innovation moves.

Sony History:

[caption id="attachment_5389" align="aligncenter" width="370"] Sony's History[/caption]

Of course, in that Sony's innovation is not complete, but is being carried out at this time, I think there are various implications that we can catch.

The symbol of Japanese electronics First, let's take a brief look at what kind of company Sony is.

Tokyo Telecommunications Industry Co., Ltd., founded on May 7, 1946, by Masaru Ibuka and Morita Akio with a capital of 190,000 yen, was the predecessor of today's Sony.

[caption id="attachment_5823" align="aligncenter" width="418"] Masaru Ibuka[/caption][caption id="attachment_5825" align="aligncenter" width="187"] Morita Akio[/caption]

At that time, Japan was in the midst of a social recovery industry after the defeat in World War II, and the two founders repaired electronic products such as radios and manufactured vacuum electronic voltmeters, and gradually grew their business. 'Type-G' and 1955 transistor radio 'TR-55' were released for the first time in Japan.

I started using the brand 'SONY' with the export of radio products released at that time to the US. It was decided because it is easy and simple, but also easy to pronounce in any regional language other than Japanese.

When this radio became a hit in the United States, it changed its name to ‘Sony Corporation’ in 1958 and showed full-fledged growth.

At that time, Sony was able to stand tall as a global company loved by many people by continuously introducing original products.

If you list only the 'first' and 'minimum' titles that Sony has so far, you can easily see how it has led the market for about 60 years since its founding.

In particular, although it was not the industry's first, the Trinitron color TV released in 1968 not only lifted Sony to the top rank among TV manufacturers for a while but also became the first Japanese company to win an Emmy Award in 1973 for a non-human product. It was recorded as the first case.

* Emmy Award: Established by the American Academy of Television Arts and Sciences (ATAS), the Emmy Award selects and awards high It was called the Academy Award of the broadcasting industry for its status.

Finally, in June 1994, the accumulated sales reached 100 million units, leaving a definite mark in the industry as the best-selling home appliance at the time.

[caption id="attachment_5827" align="aligncenter" width="498"] Sony's Financial Report of the Year 1994[/caption]

Sony's Downfall:

[caption id="attachment_5390" align="aligncenter" width="314"] Sony's Downfall[/caption]

The downfall of a giant company drunk on champagne It is no exaggeration to say that Sony dominated the home appliance market in the 20th century with its Trinitron color TV as its main product, the cassette player 'Walkman' and the video camera 'Handycam' as its flagship products.

However, in the case of TVs that dominated the market, they continued to insist on CRT (CRT), which was the mainstream and did not actively respond to market changes to flat panel display methods such as LCD and PDP. It was the biggest cause.

Despite the many advantages of flat panel display TVs, such as being relatively thin and capable of increasing in size, high price and completeness issues continue to arise. continued to focus on

Until the early 2000s, the Trinitron brand was still valid in CRT TVs, but this may have been the decisive factor that made the switch to the new technology hesitant to the contrary.

After the Walkman, which sold 340 million units in 24 years since it appeared in 1979, was removed from the stage in 2003, Trinitron also slowly went downhill. Sony.

[caption id="attachment_5828" align="aligncenter" width="189"] Walkman Initial Prototype[/caption]

If you look at the performance of Sony's home appliances sector at the time, the external appearance was maintained at 5 trillion yen, but the operating profit fell sharply to negative, indicating that it was experiencing a major crisis.

At this time, competitors such as Samsung Electronics and LG Electronics made large-scale investments in flat panel display TVs to prepare for the future market, and soon they opened up the flat panel display TV market in earnest by upgrading quality, establishing a mass production system, and reducing prices.

Sony also announced 'BRAVIA', a new brand of high-definition flat-panel display TVs in 2005, and gradually reduced the production of Trinitron TVs.

Sony cannot produce panels independently and produces TVs supplied with LCD panels from Samsung Electronics, LG Display, and Sharp, but the reality is that its presence is weak. However, due to technical limitations, it failed to provide a product with competitive screen size and price.

As mentioned earlier, after giving up the top spot in the TV market to Samsung Electronics in 2006, it was also pushed aside by LG Electronics in 2009, and the gap is still widening.

[caption id="attachment_5831" align="aligncenter" width="193"] Current Global Market Shares[/caption]

For reference, after rising to the top spot in 2006, Samsung Electronics has maintained the top spot for 15 consecutive years until 2020.

Sony's Transformation:

[caption id="attachment_5392" align="aligncenter" width="324"] Sony's Transformation[/caption]

Transformation into an entertainment/financial company Sony's growth and crisis were briefly reviewed.

But in fact, Sony has put a lot of effort into expanding its business to other industries other than manufacturing since its foundation.

It will be easier to understand if you look at the history of the establishment of major new corporations.

From content areas such as music, movies, and games to financial areas such as insurance and banking, as well as medical, education, Internet services, technology solutions, and professional investment areas. We have pioneered new business areas through active mergers and acquisitions, joint ventures, or direct incorporation.

[caption id="attachment_5832" align="aligncenter" width="383"] Sony Growth in Gaming Industry[/caption]

In fact, due to this move, Sony may have been almost forgotten by many who remember Sony as a consumer electronics maker in the past, or, conversely, may no longer be recognized as a professional home appliance maker by the younger generation.

Looking at the performance of Sony, which has expanded its business in this way, over the past 10 years, it is impressive that sales are also drawing an upward curve, and operating profit and operating profit margin have grown noticeably.

Although its status as a home appliance manufacturer has declined, it has grown meaningfully in the camera imaging sensor market using its strengths of miniaturization and lightweight as a weapon and has been reborn as a complex entertainment financial company by showing steady growth in other business areas. there is.

Yamiken:

[caption id="attachment_5393" align="aligncenter" width="358"] Yamiken[/caption]

Roots of Japanese corporate innovation
'Yamiken'
In Japan, there is a corporate culture called “yamiken”.

It means that an individual or a small number of individuals engage in activities outside of business hours for informal R&D, etc. that are not recognized as formal work.

A typical example is Casio’s watch brand ‘G-Shock’.

[caption id="attachment_5394" align="aligncenter" width="190"] G-Shock[/caption]

Casio's engineer Kikuo Ibe made 200 prototypes with 'Yamiken' with the goal of developing a durable watch that can be dropped from a height of 10 m due to his experience that watches often break. The design was finalized through repeated testing while opening, and in April 1983, the 'DW-5000C' was released.

This series, named ‘Toughness’, recorded cumulative sales of 100 million units at the end of 2017, becoming a global hit product and at the same time establishing itself as a sensual accessory, leading Casio’s sustainable growth.

Honda's world's first biped robot 'ASIMO' is also a case of 'Yamiken' that cannot be left out.

Honda has been secretly promoting the development of the robot since the early 1980s, and while the project to develop the arm first was in progress, other researchers were promoting the development of the leg separately, which greatly contributed to the creation of the bipedal humanoid robot.

‘ASIMO’, which made its debut in the world in 2000 with its present form after steady evolution, has the same body and shape as a child weighing 130cm tall and weighing 48kg.

It is characterized by the ability to freely walk while controlling the center of gravity and zero moment point through predictive motion control.

* Zero Moment Point:

The point at which the sum of all moments acting on the robot's center of gravity becomes zero. The ZMP must always be present at the foot of the robot to ensure stability.

Going up and downstairs, jumping, kicking, dancing, detecting human movement and autonomous actions when reaching out to shake hands or avoid obstacles, special sensors for delicate hand movements and voice recognition for up to 3 people at a time, as well as simple conversations with presets it's possible.

Although development was finally halted in 2018 because of its low commercial value compared to the enormous development cost, the performance of ‘ASIMO’ at the beginning of its debut served as a great evangelist to introduce Honda’s robot technology to the world.

Sony also has a number of products released to the world through this 'Yamiken' activity. Not only the premium high-resolution signature Walkman 'NW-WM1Z', but also digital cameras, VHS, liquid crystal panels, CDs, etc. These are the products that raised Sony's status.

The success stories of these ‘Yamiken’ activities have established the perception that innovation is created through individual inspiration or effort, and is actually a force that has supported Japanese companies until now.

However, this perception has also caused companies to neglect research and education that can carry out innovative activities more systematically, and to rely on the passion and will of individual researchers.

In addition, as the social structure and life culture change, each individual's view of work changes little by little, and the open innovation concept introduced at the beginning was established, and the need for new innovative activities emerged.

Sony, which has been continuously releasing new products and services as well as expanding its business into heterogeneous industries, also paid attention to new innovation activities that fit the trend of the times.

In April 2014, we launched the ‘Seed Acceleration Program (SAP)’, a program that systematically supports the creation of new businesses, and started to carry out innovation activities in a unique way.

Sony's Evolved Yamiken Culture:

[caption id="attachment_5396" align="aligncenter" width="422"] Sony's Evolved Yamiken Culture[/caption]

'SSAP'

The launch of 'SAP' can be interpreted as a will to accelerate innovation by inspiring the 'Yamiken' spirit inherent in Sony in a rapidly changing era and bringing it into the bright rather than the dark.

Sony has a comprehensive support system from idea generation to business operation, alliances, marketing, and business expansion through 'SAP'. So far, more than 750 new business ideas have been reviewed at home and abroad, and 17 commercialization have been carried out through 34 incubation processes. I got results.

I think the crowdfunding platform, ‘First Flight’, which has been operating since 2015, played a big role in establishing this program.

This is because it is a transparent platform that allows you to freely collect ideas and check the possibility of success through funding from internal employees.

The ‘wena wrist’ is a representative example of how an idea turned into commercialization through this ‘First Flight’ platform.

I will introduce it in more detail later, but the ‘wena wrist’ is a band that easily turns a regular watch into a smartwatch.

[caption id="attachment_5397" align="aligncenter" width="304"] Wena Wrist[/caption]

After opening the 'Venture Flight Program', a short-term experience course to help advance into the global market by utilizing bases in the US and Europe in 2016, in December 2018, 'Creative Lounge' was opened on the first floor of Sony headquarters to move in and collaborate with external startups. In February 2019, we changed the name of the program to 'Sony Startup Acceleration Program (SSAP)' and declared open innovation in earnest.

However, 'SSAP' is a little different from other open innovation programs that you can often see.

In addition to in-house innovation through open innovation, the program is also provided to numerous external companies struggling to create new businesses.

It is divided into two courses: a course that supports the entire process from business conception to commercialization, and a course that provides short-term intensive training or partially supplements insufficient skills. This is a way to help customers create new business.

Sony engineers provide prototype design, Creative Center designers give advice on UX or product design, business planners provide video production and presentation know-how, and so on.

From the beginning of the program for external companies in October 2018 to February of this year, a total of 85 projects have been carried out, including large corporations such as Kyocera and LIXIL, educational institutions such as Tokyo University, and Ritsumeikan University, and NPO organizations such as UNOPS. It has established itself as a representative open innovation platform.

But why does Sony even support the creation of new businesses by other companies?

[caption id="attachment_5399" align="aligncenter" width="365"] But why does Sony even support the creation of new businesses by other companies?[/caption]

Clearly, this can be seen as the concept of 'OI as a Service', in which Sony has gained confidence in its innovation activities internally and provides it to the outside as a service.

In addition, 'SSAP' includes discovering opportunities for partnerships between companies that are essential for commercialization. If such a network is built up, it will be helpful for Sony to promote new businesses in the future, and it will also nurture talents and organizations skilled in business development so that not only companies but also various social issues are solved. Because you can also contribute.

Items that have succeeded in commercialization So far, Sony has successfully commercialized a total of 17 items in various fields such as electronics, healthcare, education, and drones through ‘SSAP’.

Wena Wrist:

[caption id="attachment_5400" align="aligncenter" width="344"] Wena Wrist[/caption]

Now, as I briefly mentioned earlier, let’s take a closer look at ‘wena wrist’, which is a representative success case of ‘SSAP’.

SSAP's representative role model 'wena' The smartwatch market is growing rapidly with Apple Watch, but there are still many people who hesitate to purchase it for various reasons, such as design, function, and familiarity.

In this case, the ‘wena wrist’ is a product that can easily transform an existing analog watch into a smartwatch.

This product achieved the target of 10 million yen at around 21:00 on the same day, 11 hours after the start of funding at 'First Flight' at 10 am on August 31, 2015, and at 8:45 am on September 1, the next day, less than a day later. It surprised Sony employees by exceeding 200% of the target.

After the first prototype was unveiled at the in-house developer demo event on September 7, until the end of October funding ends, Mitsukoshi Japan Technology (9/14), Felica Connect 2015 (9/28), CEATEC JAPAN 2015 (9/30), AnyTokyo2015 (10/23), he made his name known by participating in IT exhibitions held in Japan one after another, and especially at CEATEC JAPAN 2015, he won the semi-grand Prix in the social innovation category, and his ideas were recognized.

After that, all members of hardware, software, sales, etc. jumped in together and devoted themselves to the development of mass-produced products.

They did their best to put into practice their promises for commercialization by frequently sharing the development process with the funding participants as well as internal stakeholders and receiving feedback from time to time.

At the end of March 2016, pre-order sales of the first 5 types of commercial products were started at 4 stores of ‘Mitsukoshi Isetan Department Store’, and on June 30th, they were officially released, signaling the start of full-scale commercialization.

Just by making advance reservations for the first-generation products that took the first step in this way at a famous department store, we were able to attract a lot of public attention.

Since then, starting with a fashion select shop, they have continued to showcase products in collaboration with various brands, including fashion designers and animation content, and have established themselves well.

In particular, we have been continuously collaborating with professional watch brands such as ‘SEIKO’, ‘CITIZEN’, and ‘WIRED’, which shows that the value of ‘wena wrist’ is sufficiently recognized in the market.

Through these various collaborations, we have maximized the promotional effect and at the same time upgrading our products.

https://www.youtube.com/watch?v=12qMKj_Z-ls

Smartwatch Evolution:

On December 7, 2017, we released a second-generation product equipped with a function that provides brief information on a small display by linking with a dedicated app. About two years later, on October 1, 2020, We launched the 3rd generation product with IC card payment function 'Suica', Amazon voice assistant 'Alexa', and anti-lost tag 'MAMORIO' function.

It can be seen that it is evolving into a form to more faithfully provide various functions as a smartwatch.

A brief look at the 4 core features of the current 3rd generation product is as follows.
• Large-screen display: The second-generation model, introduced in December 2017, was designed with a smaller display size due to issues such as power consumption.

• Electronic money: Up to the second generation model, various electronic money such as Rakuten Edy, iD, QUIC Pay, and d-point has been already supported, but from the third generation, there is no need to add Suica, which is the most used by Japanese, and there is no need to switch when using each electronic money. Increase customer convenience

• Activity log: Steps, heart rate, sleep quality, stress level, and maximum oxygen uptake (VO2max) can be measured

• Alexa: Amazon's voice assistant, Alexa, enables voice control and information check

[caption id="attachment_5401" align="aligncenter" width="225"] Alexa[/caption]

Sony, which dominated an era as a home appliance manufacturer, developed various types of watch heads such as mechanical, solar, and chronograph as well as band-type smartwatches, thereby entering a new business domain that had never existed before.

But who started this business and how?

[caption id="attachment_5402" align="aligncenter" width="332"] But who started this business and how?[/caption]

Was it started by an influential executive within the company or an experienced, seasoned employee at the rank of second-in-command?

The main character is Teppei Tsushima, a new employee who joined Sony in 2014 and participated in an in-house training where he could make his/her favorite things three months after joining the company.

After simply designing the product that I wanted to make since my school days during the training period, I prepared it by asking other seniors at work what was necessary for the commercialization process, persuaded my classmates to form a team, and made product sketches, prototypes, revisions, and other materials. I developed my dreams by writing things like this, and in the first year of joining the company, at the 2nd 'SSAP' held in-house, I overcame 150 teams and got to where I am today.

Crowdfunding platform ‘First Flight’
As an employee who set a phenomenal funding record of over 100 million yen in total, he is currently the youngest manager of Sony and oversees the wena business unit.

However, there may be some who think of ‘THE BARREL +DUO’ when they talk about ‘wena’.

In June 2015, just before ‘wena’ appeared, it was a product that was funded on the crowdfunding site ‘Kickstarter’ as a watch band combined with Apple Watch.

In some ways, the idea was similar, but one was a new business item for the company and the other had lost its presence, so the methods and results were different.
Joe.

It makes me wonder if the result would have been the same if Tsushima had pursued it externally as a personal project rather than a company, or was merely performing a role following instructions given by a Sony superior.

Literally, a complete beginner in society successfully completed a cycle from ideation of the product he wanted to make to the final commercialization, and now to the sale of the 3rd generation product, 'SSAP' such as hardware design and development, mass production, and marketing is essential for commercialization. It was possible because we systematically supported the necessary parts.

In other words, it can be seen that this is a result that matches the innovation through quantification of the spirit of 'Yamiken' that Sony is pursuing through 'SSAP'.

Sony, a company that was once taken for granted by the modifiers of 'first' and 'minimum' as a manufacturer by introducing creative products, has rapidly expanded its business area through mergers and acquisitions and joint ventures. And based on the growth of networks, talents, and organizations, we are dreaming of a bigger future beyond the glory of the past.

Sony's ongoing innovation activities will be a good stimulus for other companies as well as individuals looking for creative solutions.