Sir Howard Stringer: Sony's Savior?

At the Consumer Electronics Show in Las Vegas this week, the CEO of Sony delivered the keynote address. That's no surprise; what is surprising is who that CEO is: Sir Howard Stringer, the first westerner ever to lead this epitome of "Japan Incorporated."
In the ultra-competitive electronics business, Sony has stumbled badly. Once a nimble innovator known for the coolest gadgets, it became a bloated, bureaucratic conglomerate. In 2004, Sony actually lost money for the first time in a decade.

Six months ago, Sir Howard was given the job of turning Sony around, and he's already shaken it up in ways his predecessors never could, precisely because he's not Japanese. But, as Lesley Stahl reports, that is also what makes his job so hard.

"I thought about taking this job for well over a week because I knew that the reason I got the job was because it was in financial difficulties," says Stringer. "And so I knew that I would have to use every personal skill I had to persuade and cajole and convince that for the greater good of the company, we might have to do some tough things."

Some of the tough things include firing thousands of people, something Sony's Japanese executives, so entrenched in the tradition of jobs-for-life, could never do. In Howard Stringer, they saw a guy who would cut like hell, but somehow be nice about it.

Stringer has announced a new restructuring plan which calls for the elimination of 10,000 jobs, and 11 of 65 factories.

Stringer has only named some of the 11 factories slated for closure.

"I mean, we know what they are. We're taking care of the employees before we take care of the press," he says.

"So you know what they are. And you're just not going to tell us?" Stahl asks.

"Yes! I'm not gonna tell you, no," says Stringer. "It doesn't mean I'm not gonna do what I've announced I'm gonna do. But it does mean I'm gonna do it carefully. It's not as easy to be cavalier about people's jobs as one can be in the United States."

But it's also not easy to run a company where you're never quite sure what the heck people are saying.

Sir Howard doesn't speak Japanese and just standing up makes him stand out: he's a foot taller than everyone.

The two weeks a month he spends in Japan are filled with cultural disconnects. Whether it's a shaky interpreter during a speech, or an upside-down business card exchange, or a just-not-done peck on the cheek for a factory worker, it's clear that Sony has never had a leader quite like Howard Stringer.

The company has 150,000 employees, $70 billion in revenue and products ranging from movies to music to all things electronic. Sony long defined the leading edge in gadgetry, transistor radios in the 1950s, Trinitron TVs in the 1960s and, in the 1970s, the revolutionary Walkman.

But if Sony had the market cornered for 25 years, it took Apple just months to steal it away.

Stringer admits that looking at one of Apple's iPods hurts, a major symbol of where Sony went off the tracks.

"There's no question that the iPod was a wakeup call for Sony. And the answer is that Steve Jobs was smarter at software than we are," he says.

Stringer says Steve Jobs came up with the iPod and iTunes, a simple system for people to download music — while Sony, worried about its record company — wasted precious time trying to figure out how to keep people from stealing songs.

"We tried to have a secure device. And that was a myth," says Stringer. "And a mistake. Sad for the music company, mind you."

It's not just the iPod. Samsung hurt them in flat screen TVs and, in videogames, Microsoft's Xbox challenged the PlayStation.

One could get the feeling that Sony is no longer the coolest, but Stringer says, "You can take iPod and beat us over the head with it, but it's only one product. And we have a thousand products. Apple has two or three."

But that "bigness" is Sony's problem. Too many divisions full of managers and bureaucrats not talking to each other.

"So, all of a sudden, the entrepreneurial company over 60 years has become this big elephant," says Professor Hirotaka Takeuchi, the dean of one of Japan's most prestigious business schools. "I don't know if you heard Steven Jobs' speech, the title of which was 'Stay hungry, Stay foolish.' "

And Sony, Takeuchi says, wasn't "as hungry or as foolish."

The man Sony is counting on to fix that — and foster unity and cooperation — is an unlikely choice and not just because he's a Sir rather than a samurai.

He doesn't have the typical CEO resume and doesn't hold an MBA. Does he view himself as a rare bird?

"Odd, I think, is probably the word," he says laughing. "And I don't have a financial background. I mean, I never, I used to deliberately say that I never want to be in management. I still don't know how I got into management in the first place."

Born in Wales 63 years ago, he lived in a house with no electricity, then won a scholarship to a fancy boys' school in England, and went on to college at Oxford.

At age 22, Stringer came to New York, got a job, and was then drafted to fight for the United States in Vietnam.

"I would use the word 'fought' loosely," Stringer says. "I served."

He wasn't an American citizen at the time. Why did he do it?

"Because I'm too stubborn. I was too stubborn to go back," he explains. "It was my great adventure, coming over to America with $200 in my pocket and looking for work all on my own."

After Vietnam, the work he found was at CBS News in the 1970s producing documentaries. In the 1980s, he ran the CBS Evening News with Dan Rather, which he still says was his favorite job ever.

But perhaps more defining is what happened when he was promoted to president of CBS News. In 1987, he oversaw the first layoffs in the company's history; he had to fire 200 colleagues and friends.

"Yet, this is the amazing thing: I don't know anybody who blamed you. Now how did you manage that?" Stahl asks.

"By communication. I did it myself. I mean I didn't send a memo to somebody and say 'Your job is over.' " he says. "And it was emotionally very draining. And it affected me."

But he had to do it again, and on a much larger scale. Stringer has actually worked for Sony for the last eight years; first winning notice and praise for turning around its ailing North American movie and music divisions.

Stringer eliminated 9,000 jobs and has been dubbed by a newspaper "the affable axe-wielder."

"I hope I wasn't chosen because of my axe-wielding skills," says Stringer. "You usually get a job, you're offered the job, because someone has not done a job well, or there's a crisis. And boy is there a crisis now: how to restore Sony's competitiveness in today's cut-throat global market."

He has already unified his workforce. What Japanese executive would work the rope line at American-style town-hall meetings? And he never misses a chance to get out on the factory floor, to see and be seen.

"There are a lot of young people who say 'Go on shake it up more. Do more.' Talk to me all the time. You know, 'Fight. Get rid of that crust of management. Go on, fight for it,' " Stringer explains.

Motivating young workers is the easy part; firing some of them won't be, especially with some analysts saying his cutbacks don't go far enough.

On the day of the announcement, Stringer got a tepid, if not negative response from Wall Street.

"I think that the tepid response from Wall Street is because Wall Street now always wants more blood than you could possibly deliver," says Stringer.

Still, Sony simply has to change. Profit margins for many consumer products have disappeared, its movie studio is in a slump again — "Memoirs of a Geisha," which Sony hoped would be holiday season hit, flopped instead — and the music division has a scandal over anti-piracy software it secretly planted on CDs. It seems there's trouble wherever you look.

"For Sony, they have always been a Yokozuna," says Takeuchi. "Yokozuna is a sumo wrestler who's the highest grand champion. … "They've always been at the top. They've always been a rule maker rather than a rule-breaker. Now they have to become a rule-breaker. And that's going to be tough to do."

Rule-breaking means being bold and innovative. And in electronics, they think they're on the way. Their Bravia flat-screen TV is a big hit. They hope the new digital Walkman will be just as cool as the iPod and a lot is also riding on the upcoming PlayStation 3.

To tout all his new products, Stringer is in perpetual motion around the world, on the red carpet in Hollywood, in black-tie in New York and at a new Sony facility in India, for example.

Asked what his travel schedule is for the next couple of days, Stringer says, "Well, I go to Los Angeles on Sunday for a movie premiere. I go back to New York on Monday night. I go to Japan on Saturday. … "I then come back to London, go back to London on Thursday, back to New York on the following Monday."

He is in a constant jet lag. "Seven hours sleep is tantamount to a miracle. I celebrate it," he says.

Stringer sees his wife, Jennifer, a doctor, and their two children, a 13-year-old son and 9-year-old daughter, just a few days a month.

His family lives in the English countryside, and Stringer said during a factory town hall meeting, "I don't see my family very much. My family is you."

Stringer admits there was a sadness in his voice. "This is a tale repeated around the world with all of these globe-trotting business executives. You don't know quite what I'm inflicting on my children. And so I overcompensate when I'm around them and I tend to walk in with bundles of Sony devices as a sort of social bribery."

If he's going to pay such an awful personal price, he doesn't want to feel like just another cost-cutting CEO, totally transforming the company to fit the model of American industry.

Sony, he says, deserves better.

"This is not a company on its last legs. This is a company with great traditions," he says. "I have to look after some of those traditions because that's why the company was successful in the first place. And I'm not sure that leaping on board an American business model of ruthlessness and viciousness and counter-attacks all the time is a good thing necessarily for somebody else. And, so, taking care of somebody else's culture is part of the joy and opportunity of this job. I have things to learn from the Japanese. And not just the other way around."

By Rome Hartman