‘Old boys’ say Sony chief is losing his way
http://www.bdlive.co.za/world/asia/2015/04/28/old-boys-say-sony-chief-is-losing-his-way
TOKYO — A group of former top Sony executives has delivered an unusually blunt critique to the company’s CE Kazuo Hirai, accusing him of losing sight of innovation by focusing on cost cutting.
At a meeting at Sony’s Tokyo headquarters, five former executives, including PlayStation creator Ken Kutaragi, took Mr Hirai to task for failing to encourage the kind of creativity that helped produce iconic gadgets such as the Walkman.
This sharp, behind-the-scenes criticism by alumni, known in Japan as "old boys," who can retain influence long after retirement, represents a new test for Mr Hirai just as he has fended off pressure from activist investor Daniel Loeb to sell off part of Sony’s entertainment business.
The move threatens to undermine him at a time when he is trying to show investors that he can lead Sony back to growth after a restructuring that cut about 15,000 jobs.
"Sony is like a ship that has set sail in the stormy weather of the electronics business, led by a captain who’s using a flawed nautical map," Tamotsu Iba, a former Sony chief financial officer and vice chairman, said in a letter sent to board members and management ahead of the meeting, which he attended.
"He doesn’t have the sensibility or intellect to notice it’s wrong. Do board members, who should be in a position to supervise the captain, not notice? Are they tolerating it, not willing to point it out?"
Mr Iba’s letter, which was a follow-up to a similar letter he sent in January, did not directly call for Mr Hirai’s removal but questioned his abilities as CEO and demanded hiring more engineers and appointing fewer outsiders to the board of directors.
Former company executives can wield a lot of influence in Japan. Former Sony executives had played a role in the exit of Mr Hirai’s predecessor Howard Stringer, people involved said.
At car maker Honda, Takanobu Ito stepped down as CEO in February after coming under criticism from two former CEOs over his handling of quality issues.
At Sony, Mr Hirai has had to cut earnings forecasts six times since becoming CEO in 2012, and while the company raised its financial estimates for the year that ended in March, it still expects a net loss of ¥126bn. Still, he has begun to win more confidence from investors, with Sony’s shares hitting a seven-year high last week.
Mr Hirai also has to strike a balance between maintaining employee morale while cutting thousands of jobs to revamp Sony’s electronics business. After splitting off its ailing TV business last year, Sony has announced it will do the same with other units in its electronics business.
Some Sony staff said they were worried more units could go the same way as the Vaio PC division, sold off last year.
Sources said Mr Iba and his allies, while holding shares, probably did not hold a large enough stake to vote out Mr Hirai or call a shareholder meeting. They also did not appear to have any alternative CEO candidates in mind.
