Spearheading Sony’s ‘operation transformation’

6 Mar 2012

George Bailey, chief transformation officer and group executive of Sony Corporation

Sony’s chief transformation officer George Bailey is focused on ensuring the Japanese consumer electronics giant wins by returning to its core strengths of innovation and quality. He tells John Kennedy that this strategy is also key to the future of nations like Ireland and the US.

The afternoon that I speak to George Bailey is just days before the launch of one of the consumer electronics giant’s most daring ventures yet – the Sony PlayStation Vita handheld console. In this one device rests much of Sony’s ambitions for the future. I believe so because it is a bold statement of intent: it’s not merely a gaming device; it’s practically a tablet computer with a lot of opportunities for Sony to drive new digital distribution channels, such as apps and games.

What Bailey tells me next ties in with this assertion. He had spent the previous few days touring Silicon Valley, meeting young web start-ups with millions of online users. He’s in the mood for change, so is Sony. Change is what he does best.

And he’s determined that Sony returns to the No 1 spot in consumer electronics, wresting the crown from Apple.

Bailey’s connections with Ireland go back to his mother’s side of the family. His mother was a first-generation American whose mother hailed from Cork. Even though his father was Dutch, as far as his family were concerned, they were Irish.

He grew up on the East Coast, in New Jersey, and completed his university studies in California and diving straight into Silicon Valley’s modus operandi.

Beginning his career with consultancy firm Towers Perrin Bailey went on to lead innovation drives at PricewaterhouseCoopers.

Former IBM CEO Sam Palmisano put him in charge of migrating 30,000 people from PricewaterhouseCoopers into IBM Global Services to create the world’s largest consulting firm.

“My direct boss at the time was a lady named Virginia Rommety who has now just become CEO of IBM. One of the core lessons I learned when I joined IBM was that the center of the tech world was not Northern California, it was Armonk, New York.”

At IBM Bailey headed its US$4bn electronics group and oversaw its semiconductor business before his friend Sony chairman Sir Howard Stringer came a calling in 2009 and urged him to help him execute a major transformation of Sony which was struggling to maintain its edge as an innovation leader in the face of major competition from players like Apple and Samsung.

“I accepted the job on 1 June and by 2 June I was living in Tokyo and I’ve been there ever since, helping Sony to become the No 1 consumer electronics company in the world, which is a title we lost quite convincingly to Apple, unfortunately.”

Sony targets specific market need

With technologies like the PlayStation Vita, Bailey believes Sony is addressing a specific market need and by focusing on things that matter, hopes to close the gap with Apple.

“Some people are quite content playing Angry Birds on an iPad or a smartphone but at Sony we believe we are serving gamers who want a higher-level experience than any tablet can give you.

“For Angry Birds, a tablet is fine, and we have a smartphone with PlayStation game controls, but if you want a real captivating mobile gaming experience then the only way to take it with you is the Vita, which is an amazing device.

“The question is how big is that market for people who want an immersive gaming experience, so we’re going to find out!”

I ask Bailey how it was that he got involved with the Irish Technology Leadership Group. “I have had a friend in my entire business career by the name of Rich Moran. I hired Rich when I was in the consulting business in the US and he was at Atari at the time. We worked together really well for a long time. About six or eight months ago he called me up and told me that I should really get to know the ITLG. I replied that it sounds interesting and the next thing I knew he had talked me into hosting an event at Sony Pictures in LA which turned out really well. It was a first class event with great attendees, a great program, a great frame for Sony and I hooked in with guys like John Hartnett and others.”

The birth of the Irish Technology Leadership Group

The ITLG was born out of a realization by Irish expats that Ireland wasn’t making the same use of its vast diaspora that countries like Israel have leveraged so well from theirs, and I ask Bailey about the challenges Ireland faces.

“I think Ireland has a tradition of being tech-friendly and I think in this global business battle that unfolds every day, different countries rise and fall off the radar screen and one thing I think this group does is it keeps Ireland right there on the radar screen so people can see it and think about it. This awareness counts a lot in this crowded world where people are thinking maybe I should be in India, maybe Brazil, Indonesia, Vietnam, and all of a sudden Ireland is on the screen. So that’s a big plus and people become more aware of tax policies and the workforce and for certain kinds of jobs Ireland can be an attractive place to do business.”

Bailey is highly amused when I point out that at one point in the last decade Ireland had the second highest penetration of PlayStation devices of any country in the world, outside of Japan.

The key for Ireland going forward he says is innovation. “I think Sony and Ireland have at least one thing in common: we’re never going to win any race to the bottom. There’s no way Sony will ever be a low-cost producer and neither will Ireland in today’s world

“So, you’ve got to have competitive costs and be efficient. They are the table stakes. The only way for Sony to win and for Ireland to win is to out innovate other places.

“That was Sony’s heritage and that’s still what we aspire to be, the world’s leading innovation company for consumer electronics and entertainment and so I think that’s in our DNA, that’s what we have to do to be successful.

“But I suspect that the same is true of Ireland, you are never going to have the labor rates of Vietnam but on the other hand a skilled workforce with new ideas is the way to win. In fact that’s the only way to win.”

Steps to transform Ireland

As a man who specializes in strategy and transformation, I ask him what steps should Ireland be taking to transform its future.

“Firstly it is focus. The idea of focus is you can’t be good at everything so I would pick your spots – for example, hardcore manufacturing of commodity TVs is a bad focus for Ireland, you will never be competitive and its not something you should be investing in and even with government support it’s a losing battle so don’t do that.

“Focus on the areas you can win – when you look at that you will find that there are areas within innovation where Ireland is competitive in fact. Really create a culture of entrepreneurship, speed and risk-taking – in a positive way, not in a property, speculation way.

“I’m in Palo Alto today, and we’ve been spending the last few days touring Silicon Valley and meeting with a lot of start-ups and the whole culture of innovation and the speed in which companies are created and the amount of success they can have quickly is unbelievable.

He explains that new businesses and new business models emerge within months now, not years and this needs to be understood by nations, governments and entrepreneurs.

“One start-up we saw yesterday had 28 people and was only six months old with 15m users right now. In today’s internet-enabled world, things happen fast. They should happen fast.”

Silicon Republic has joined forces with the Irish Technology Leadership Group to bring you The Silicon Valley 50 most influential Irish-American people in the tech world ahead of the ITLG Innovation Summit in California on 12-13 March.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years