Month: February 2014

It Isn’t Nice to Kick Someone When He’s Down…

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…but the woes at Sony Corporation remind me of a couple of my posts about the path this company has been taking.

From March, 2005:

The New York Times (3/13, registration required) quotes Sir Howard Stringer, the new chief executive of Sony, arguing for mutual benefit between his company’s electronics and entertainment divisions. At the Consumer Electronics Show last month, Sir Howard said, “A device without content is nothing but scrap metal.”

Following the chain of logic he seems to be developing, we could also argue that a car without fuel is scrap metal…and therefore, auto companies need to own oil companies. Or that computers are useless without software…so all computer manufacturers need to possess large software operations.

Randall Stoss, author of the NYT article, observes that Sir Howard’s remark is “a platitude beneath mention–unless, perhaps, one were a mite defensive about owning both a widget factory and an entertainment factory.” Stoss goes on to credit the success of the iPod (far greater than Sony’s competitive product) to the fact that Apple has not pursued synergies between device and content…

A company thrives when it has all that it needs to make a compelling product and is undistracted by fractiousness among divisions that resent being told to make decisions based upon family obligations, not market considerations.

From September 2012:

In his Financial Times article Why Sony did not invent the iPod, John Kay notes that there have been many cases in which large corporations saw correctly that massive structural changes were about to hit their industries–attempted to position themselves for these changes by executing acquisitions or joint ventures–and failed utterly. As examples he cites Sony’s purchase of CBC Records and Columbia Pictures, the AT&T acquisition of NCR, and the dreadful AOL/Time Warner affair. He summarizes the reason why these things don’t tend to work:

A collection of all the businesses which might be transformed by disruptive innovation might at first sight appear to be a means of assembling the capabilities needed to manage change. In practice, it is a means of gathering together everyone who has an incentive to resist change. 

I’d also note that the kinds of vertical integration represented by the above mergers don’t exactly encourage other companies–which were not competitors prior to the merger but have become so afterwards–to participate in an ecosystem.
Kay references the work of Clayton Christensen, whose book The Innovator’s Solution I reviewed here.  See also Mergers, Acquisitions, Princesses, and Toads.

 

John Robb’s HomeFree America

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Have you been reading HomeFree America?

You should be. It is “John Robb’s open notebook on the future of the American Dream.” It is also the first draft of the book he is working on.

Mr. Robb’s analysis of the collapse of the Blue Model, 20th Century legacy government and economy is very similar to the arguments made by James C. Bennett and myself in our book America 3.0. He sees, as we do, that they are doomed. He sees, as we do, that a much better world is coming. Ah, but the transition period. That will be a challenge.

This is the quote of the day:

All layers of government — city, state, and federal — want the old, bureaucratic economy to continue, unchanged. They can’t imagine a world without plentiful flows of taxes levied on corporate profits and withholding from personal incomes.
 
Without this flow of tax income, the entire edifice of the current economy falls. It is the source of the financial life-support to the increasingly obsolete bureaucracies – from the civil bureaucracy to education to national security to banking to health care — that still offer traditional jobs. The rest is spent providing services, from health care to retirement income, in an attempt to keep the existing economic system alive.

From this post.

People who tell me the the current corrupt model cannot be defeated have it backward. It cannot survive. The only question is how hard the transition to a better political and economic order will be. Not if, not even when, but how.