IT’S A SONY!

Why the tech­nol­ogy gi­ant still leads the way

Business First - - FRONT PAGE -

Back in 2009, when the global fi­nan­cial cri­sis was at its zenith, Sony Disc and Dig­i­tal So­lu­tions pres­i­dent Di­eter Daum, com­mented, “When mar­ket con­di­tions are dif­fi­cult it is en­tirely un­der­stand­able when com­pa­nies be­come more con­ser­va­tive in their out­look and more averse to risk. How­ever, we live in an evolv­ing tech­no­log­i­cal land­scape and peo­ple’s media con­sump­tion pat­terns are chang­ing quite rapidly.

We see it as a pri­or­ity to keep abreast of these new de­vel­op­ments. In par­tic­u­lar, con­sumers are look­ing for in­creased mo­bil­ity. Dig­i­tal Copy is one ex­am­ple of how new tech­nol­ogy can en­hance our abil­ity to watch our favourite movies and TV pro­grammes on the move. At Sony DADC, we con­tinue to in­vest in the fu­ture of the home en­ter­tain­ment in­dus­try. In­vest­ing to make sure that we con­tinue to pro­vide best in class ser­vice and sup­port to our cus­tomers.”

Daum is known to have his fin­ger on the pulse. So is Dar­ren Houghton. Dar­ren came to Sony with a vast back­ground be­gin­ning his ca­reer in fi­nance, he moved into lo­gis­tics, (work­ing for a com­pany that supplied parts for Jaguar cars, Land Rover and BMW among oth­ers). He cred­its this com­pany’s train­ing pro­gramme with his early de­vel­op­ment. He then held po­si­tions in client ser­vices, mar­ket­ing and oper­a­tions.

“We were run­ning global dis­tri­bu­tion & man­u­fac­tur­ing sites and de­liv­ered sig­nif­i­cant im­prove­ments in ef­fi­cien­cies us­ing lean prin­ci­ples and Kaizen philoso­phies, the tar­get was to move away from whole batch process and move to a just in time ser­vice”

In 1999 Dar­ren was of­fered a con­tract with Jaguar’s North Amer­ica di­vi­sion. While his pre­vi­ous role with the com­pany taught him oper­a­tions man­age­ment, this was a more lo­gis­ti­cal ex­pe­ri­ence.

“I spent a few years run­ning the North Amer­i­can mar­ket which is a chal­lenge be­cause if you plan to bring parts over to the US, you had to try to find a port that wouldn’t go on strike. You had to find a way through Canada and the Panama Canal.”

He learnt a lot in the US, but due to fam­ily com­mit­ments he de­cided to move back to the UK. Back in the UK Dar­ren picked up a job with Deluxe Media as a pro­ject di­rec­tor. He im­me­di­ately

saw a ne­ces­sity for change.

They had made a lot of tran­si­tion in the busi­ness, but I knew there was an is­sue when I first went in. I kept see­ing all the signs in the ware­house. Staff was talk­ing about RDL. I asked them what that was and they told me it was ‘re­cently de­parted la­bel’. That didn’t sound too good.

“What Deluxe Media had done was taken over another com­pany, then poured in a lot of smaller ones. How­ever they didn’t re­alise that ev­ery com­pany needs a sig­nif­i­cant amount of fo­cus on man­ag­ing their busi­ness, be­cause ev­ery busi­ness is dif­fer­ent. They were used to man­ag­ing very well or­gan­ised big film stu­dios, but all these lit­tle in­de­pen­dents needed a com­pletely dif­fer­ent mind­set.

“They didn’t put enough fo­cus, enough re­source, sup­ply and ser­vice into the oper­a­tions.”

Dar­ren turned the oper­a­tions around and looked at dif­fer­ent op­por­tu­ni­ties to in­te­grate some of the busi­ness mod­els into Europe. He spent time in France and Swe­den, but the land­scape changed when Sony bought Deluxe Media in 2006.

For­tu­nately for Dar­ren they kept him on, but he was chal­lenged to prove him­self by the Sony ex­ec­u­tives and was de­ter­mined to demon­strate his abil­ity. He says the good thing about Sony is that they are fo­cused on peo­ple, pro­cesses, per­for­mance and re­la­tion­ships.

“Sony gave me the op­por­tu­nity and the first year we were run­ning the busi­ness in the UK we were do­ing about 27 mil­lion units in film and mu­sic. The fol­low­ing year we grew that to 50 mil­lion units but didn’t make a profit. The rea­son for this was that we were tak­ing on a lot of new clients, which proved cost pro­hib­i­tive. We were also build­ing a busi­ness at a fast rate, so it was a chal­leng­ing time.”

Dar­ren’s goal was to stream­line the UK di­vi­sion and de­fine it. He put struc­tures into place and the fol­low­ing year the UK arm turned a profit, af­ter two more suc­cess­ful and prof­itable years he was of­fered a job in Aus­tralia. The plan was to head to Aus­tralia in Novem­ber 2011, but fate had other ideas and de­layed the move.

In Au­gust 2011 the Lon­don ri­ots oc­curred. Lon­don burned for 12 days. Sony DADC’s clients lost 28 mil­lion units. Ac­cord­ing to Dar­ren it was the com­plete dis­as­ter sce­nario that you never ex­pect.

Noth­ing can re­ally pre­pare you for this level of dis­as­ter. Im­ages around the world showed a coun­try gone mad, but as the en­ter­tain­ment clients Sony deal with would say, the show had to go on.

“We were for­tu­nate. We had a busi­ness con­ti­nu­ity plan in place. The fire broke out at 10.30pm, by one o’clock in the morn­ing my se­nior man­age­ment team as­sem­bled in a ho­tel with the plans for what to do. By 8am the fol­low­ing morn­ing they al­ready had all the fastest mov­ing ti­tles ready to be repli­cated. Within 24-48 hours, we were dis­tribut­ing out of a tem­po­rary site next to the man­u­fac­tur­ing site.”

There’s a lot more to this story as you can imag­ine, but a cri­sis of this na­ture gives you a great idea of how a suc­cess­ful com­pany op­er­ates in times of tur­moil. The clean up was ef­fi­cient, no non­sense and ev­ery­body knew what role they had to play and the new fa­cil­ity was ready by June 2012 – built on the same site en­sur­ing the fu­ture for the re­mark­able team.

Dar­ren de­scribes the event as char­ac­ter build­ing, but would hate to see any­thing like that hap­pen again.

In the UK Dar­ren was the gen­eral man­ager run­ning dis­tri­bu­tion. In Aus­tralia, the coun­try he has resided in since March 2012, he has the re­spon­si­bil­ity for the dis­tri­bu­tion, man­u­fac­tur­ing, print­ing, graphic ser­vices and dig­i­tal busi­ness and the New Zealand dis­tri­bu­tion site as well.

“It’s a pretty broad role and re­ally chal­leng­ing, but en­joy­able be­cause you’re in­volved in so many dif­fer­ent things. Ev­ery day is dy­namic and ev­ery day is very dif­fer­ent. The en­ter­tain­ment in­dus­try is chal­leng­ing, it’s fast paced and we’ve got to adapt and change the way we do things to ac­tu­ally stay ahead of the com­pe­ti­tion but also sup­port our ex­ist­ing clients and po­ten­tial fu­ture clients. We’re of­fer­ing some­thing dif­fer­ent. Re­tail is be­com­ing tough, but we’ve got to fo­cus on work­ing with the re­tail­ers, to make it eas­ier to for the stores to sup­port the cat­e­gory. We need to stream­line our pro­cesses to de­liv­ery cost ef­fec­tive so­lu­tions for our clients.”

The chal­lenge in Aus­tralia, as it is around the world, is that in an age of dig­i­tal down­load, the phys­i­cal pack­age is de­clin­ing.

“It’s go­ing to hap­pen, there’s noth­ing that’s go­ing to change that; look around, you’ve got tablets, you’ve got live stream­ing, you’ve got down­loads and you can do all of that through your TV. I re­mem­ber as a kid I had three chan­nels. A child to­day with only three chan­nels, how would they sur­vive? No mat­ter where you go you can get prod­uct, whether you down­load it to a tablet, to your phone, or on your TV. It’s a chal­leng­ing mar­ket, but there is still a mar­ket for phys­i­cal pack­age media.”

In fact the num­bers are still quite healthy. Dar­ren says they will man­u­fac­ture 60 mil­lion units in 2013 in­clud­ing CDs, DVDs, Blu-ray and games.

This year the Aus­tralian arm of Sony DADC has un­der­gone a sig­nif­i­cant tran­si­tion to meet those chal­lenges.

“We started the year off with some very clear strate­gic ini­tia­tives. We out­lined where we want to be in 12 months, three years and five years. When I first came over last year we had a 12-month strat­egy that we re­viewed 12 months later.”

The re­fo­cus is clearly work­ing. Un­der Dar­ren’s guid­ance Sony DADC has won new clients for in­clud­ing Be­yond Home En­ter­tain­ment, Dis­ney, Twen­ti­eth Cen­tury Fox as well as win­ning back old busi­ness.

“The strat­egy for win­ning it back was prov­ing to be the best at what we do at an af­ford­able price. It also meant hav­ing the team all on the

same page, where ev­ery­one is treated equally while be­ing re­ally fo­cused on de­liv­er­ing re­sults.”

Dar­ren has form in fa­cil­i­tat­ing merg­ers hav­ing over­seen the 2013 ac­qui­si­tion of En­ter­tain­ment Dis­tri­bu­tion Com­pany, which was pre­vi­ously owned as a joint ven­ture be­tween Sony Mu­sic, EMI and Warner Mu­sic.

De­ci­sions also had to be made in the shrink­ing New Zealand mar­ket. There were three dif­fer­ent dis­trib­u­tors, in a small mar­ket in­clud­ing Vil­lage Road­show and MDG.

“We al­ready dis­trib­ute for Sony Mu­sic, Uni­ver­sal Mu­sic and Uni­ver­sal Pic­tures (in­clud­ing FOX and Para­mount). There was no way three com­pa­nies were go­ing to sur­vive, so we made a de­ci­sion to take over Vil­lage Road­show’s dis­tri­bu­tion cen­ter and also take over MDG. We have moved Sony Mu­sic, Uni­ver­sal Mu­sic, Fox and Para­mount into the one site and will be mov­ing Sony Pic­tures, Dis­ney and Warner into the new site in QTR1 2014. It means we’ll be work­ing very closely with the clients and re­tail­ers to de­liver a sim­pli­fied sup­ply chain model.”

Fi­nally, Dar­ren is over­see­ing the print side of the busi­ness, which he says is an ex­cit­ing, dy­namic part of the busi­ness. Sony had in­vested heav­ily in this area and they are now de­sign­ing, print­ing and as­sem­bling point of sale dis­plays that are be­ing used in most re­tail out­lets in­clud­ing the gro­cers. They de­sign a lot of prod­uct for launch in­clud­ing PlayS­ta­tion and Sony Mu­sic.

“We re­ally do ev­ery­thing from start to fin­ish with re­gard to the en­ter­tain­ment prod­uct. We can say to a client: ‘give us your con­tent to man­age, we’ll pro­duce, man­u­fac­ture, dis­trib­ute and de­liver it into re­tail. We’ll col­lect the cash, we’ll pay you the money, then you can just fo­cus on what you need to do, which is fo­cus on get­ting some good con­tent be­cause that’s what con­sumers are cry­ing out for’. We are see­ing growth in TV con­tent and have just fin­ished the man­u­fac­tur­ing and dis­tri­bu­tion of the hit TV se­ries Break­ing Bad which has had a phe­nom­e­nal suc­cess.”

Dar­ren has a great deal on his plate, but there is so much more to achieve. The fu­ture growth will come from the Dig­i­tal space where DADC is a key player in con­tent man­age­ment and ag­gre­ga­tion, TV Com­mer­cial and Mu­sic Video clip dis­tri­bu­tion. Sony DADC has re­cently added new ma­jor clients pro­vid­ing as­set man­age­ment and global dig­i­tal dis­tri­bu­tion

Dig­i­tal is an area where we re­ally need to grow, but we’re still fo­cused on grow­ing all ar­eas of the busi­ness in­clud­ing graphic de­sign, phys­i­cal dis­tri­bu­tion, man­u­fac­tur­ing and print. Whilst con­tin­u­ing to grow our tra­di­tional busi­ness we are in­vest­ing in new tech­nolo­gies and broad­en­ing our ser­vice of­fer­ing to other busi­ness sec­tors.

“It’s not only about grow­ing the busi­ness but how do we con­tinue to be prof­itable be­cause ul­ti­mately we’ve got to de­liver a profit. We do this through in­vest­ing in fu­ture de­vel­op­ment to leave another legacy to go for­ward with.”

Which brings us back to fast mov­ing tech­nol­ogy. Sony is at the fore­front lead­ing the way in phone sup­port tech­nol­ogy, media and the bal­ance be­tween how peo­ple want their con­tent de­liv­ered. And Dar­ren is clearly aware of what needs to be done to stay ahead of the game.

Dar­ren be­lieves there needs to be greater ac­tiv­ity in the dig­i­tal space.’

Man­ag­ing Di­rec­tor Dar­ren Houghton

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