Stoic numbers guy takes over as Sony CEO
When it comes to crunching numbers or winding down bad businesses, nobody at Sony Corp has been as sharp as Kenichiro Yoshida. Now, as chief executive officer, he faces a tougher task: rekindling some lost magic.
The driving force behind Sony’s turnaround during the last five years when he was in charge of finance, the reserved 58-yearold took the company’s top job yesterday. Investors love him, but managers who worked with him said they worry he isn’t in love with the kind of gadgets that once made Sony a household name.
Sony is making record profits again, but it’s no longer making the world’s coolest stuff. The company that gave us the Walkman and the Trinitron color TV has become a less-inspiring hodgepodge that includes an insurance provider and a semiconductor maker, along with Playstation game consoles and movies. Once ranked the No 1 brand by American consumers, Sony and it’s incoming CEO need new hits to keep from falling further behind Apple Inc and Samsung Electronics Co.
“Yoshida is essentially tasked with taking an older company and trying to make it young again,” said Damian Thong, a Tokyo-based analyst at Macquarie Group Ltd. “There’s a tension between his desire to maintain steady profits and taking the risks necessary to drive innovation. Balancing those two will be a challenge.”
It’s rare that CFOs are chosen to lead businesses that aren’t in the middle of major restructuring, according to Stephen Kaplan, a professor at Chicago University’s business school. Finance chiefs, he said, are usually less adept at building companies than digging them out of holes. Still, a Bloomberg analysis of share price data suggests that CFOs-turned-CEO tend to perform well. In the 28 instances since the mid-1990s when large non-financial corporations promoted their finance chiefs to the top job, the stocks on average did twice as well as the broader market during their tenure.
In 2013, when former chief executive officer Kazuo Hirai made Yoshida his CFO and closest lieutenant, Sony was definitely in a deep hole. Losses had totalled more the $6 billion over the previous five years.
Vowing there would be no “sacred cows,’’ Yoshida shed or trimmed one bloated business after another: first laptops, then TVs and smartphones. Humility and quiet seriousness—traits especially prized in Japan— helped Yoshida win support even as he cut 20,000 jobs, according to several Sony managers, who spoke on condition of anonymity. Less showy than Hirai, Yoshida wasn’t afraid to ask questions or admit he didn’t understand something, and he knew the numbers inside out, they said.
Five years on, the results are hard to argue with. Sony is making more money than ever, the stock price has more than tripled and there’s $12 billion in cash on the balance sheet—a war chest that gives Sony plenty of room to maneuver, and may also test Yoshida’s vision.
“The board is making a bet he’ll be able to shift from being an enforcer to an all-around strategist,’’ said Elena L Botelho, partner at consulting firm gh SMART and co-author of “The CEO Next Door,’’ a 2018 book on leadership. "Just because someone delivered a remarkable turnaround from the cost perspective doesn’t mean they can be a leader for the overall business and grow it.’’