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Former Sony CEO Takes A Swipe At Arrogant Jap Company

Carl Rose the former CEO of Sony has taken a swipe at his old employer, indicating that they were not only an arrogant Company but believed that they were ‘invincible’.

Rose who left Sony after a major financial scandal which some say saw him become a “sacrificial lamb” ahead of more senior Japanese management who got hit with a $53M fine for questionable business practises involving transfer pricing.

Speaking to the Financial Review Rose claims that there is great intrigue today in how Chinese durable goods producers are plotting their own global rise and the response from Japanese and Korean brands.

In his last role before taking up his new job as commercial director for Aurenne Capital Partners, Rose was Vice President of Samsung’s AV and consumer operations and is considered as an experience consumer electronics professional.

Rose who quit Sony along with the Chief Financial Officer and director Nicholas Foster was basically so arrogant that eventually they believed in its own invincibility. Sony marketers, he says, bear some responsibility for the company’s mixed fortunes.

ChannelNews knows firsthand how arrogant Sony was back in the late 1990’s and early 2000.

Jenny Geddes a former Sony Communications Manager was so arrogant that she demanded that we take down several stories relating to the failure of Sony who were starting to bleed billions of dollars in losses during this period.

She claimed at the time that the stories were “damaging” the Sony brand.

When we refused, she moved to try and tarnish our reputation, she also banned 4Square Media from getting Sony press releases, we responded by proving that the pen is mightier than the sword, We broke story after story from accounting scandals to falling sales and sackings including the exit of Rose at Sony.

That same arrogance is still present today with the Company refusing to let us review their products because of “negative” reviews in the past and the fact that we wrote about their arrogance and business failings.

Rose said of Sony Australia “I think there was a realisation that whilst we had been clever in the way we introduced well-engineered products, we realised we had been a bit arrogant,” he says. “That’s a challenge for a lot of great brands; there’s a sort of arrogance-to-failure-to-humility-to-success circle that companies go on.

He told the AFR “You could say marketing’s job was to stop that arrogance, to just keep ourselves anchored by what our customers were starting to say in the mid-90s about a brand like Sony. We learned there was a loyal cohort of Sony fans that were clear when we’d made missteps, they would stick with us. They were saying ‘don’t worry, Sony will get it right because we have faith’.”

But Sony didn’t get back from their arrogant ways and have never been able to get back to their glory days, when the Japanese Company dominated the TV industry.

Today their TV business is unprofitable, and they have resorted to having to buy OLED panels from LG.

Their mobile business is also unprofitable with the Company pulling out of several global markets including Australia.

Rose claims that he is tipping point in Sony’s shift from confidence to arrogance occurred when it stuck with its Trinitron TV line, using cathode ray tubes rather than flat-panel TVs with circuit boards.

At one stage Sony who were desperate to get into the flat panel TV market formed a joint venture with Samsung to roll out Plasma TV’s they bragged at the time that it was a 50/50 joint venture when in reality the manufacturing business was 51% owned by Samsung.

This led to fights especially when it came to supply with Korean Company Samsung favouring their own operation over Sony who were often overloaded with stock or starved of supply.

“What the Koreans understood very early in the piece was that investing in semi-conductors and flat-panel technology helps you manage the upstream supply chain,” Rose said.

“What really became important was how much old stock you had in the market and the Koreans got on to supply-chain efficiencies really, really quickly. They didn’t have a lot of stock hanging around the system, so they could introduce new product faster. When that happens, it forces everyone else’s old product down in price faster.”.

And that’s where Rose says Sony’s marketing teams had to radically adjust to a new business case. Once hailed as a global benchmark in building consumer brand preference with epic advertising campaigns and edgy marketing communications, Sony had to adjust to faster tactics and the once unthinkable notion of regularly lowering prices to compete.

Rose, who holds a management science degree advised Harvey Norman among others between leaving Sony and joining Samsung. This was also a disaster with franchisees baulking at the concept of centralised supply which Rose was commissioned to initiate at the mass retailer.

Rose had clear brief at Harvey Norman, in an effort to compete with JB Hi Fi Harvey Norman wanted to centralise their buying and distribution operation. Franchisees rejected the notion of being told how many TV’s they would get, or which models were in the supply chain. Rose eventually left and took up the role at Samsung.

He says “fluffy marketers” would resist lowering pricing on a simple argument that it affected consumer brand equity, while advocates for dropping prices as a first and fast option were lazy.

“At Sony it was the marketers and engineers first. Finance was really important, but the culture was very much around engineering and marketing”.

Rose claims “The logical place for the ownership of customer experience is undoubtedly marketing,” he says. “I would venture to say in many consumer electronics companies, the customer service component is still stuck with engineering, spare parts and repairs. If marketing had perhaps done a better job commercially in the past, it could be more trusted with the customer experience job.

“A lot of companies don’t know where to put customer experience. They know it’s not a good fit with customer service in its traditional form because it’s very transactional. The key is the chief marketing officer needs to be joined at the hip to the commercial objectives and results of the organisation.

Rose claims that he is often troubled by those who viewed discounting and price as the first sales lever to pull in the heat of competition.

“I found myself in the middle of lots of conversations with the fluffy CMO on one side and the very basic sales discount trading executive on the other. I would say ‘please don’t talk about fluffy stuff and please don’t talk about 10 per cent off anymore, or just tactical promotions. What can we do with strategic partnerships, for instance?’ We might need a promotional element but let’s move our brand forward in a way that isn’t just 15 per cent off.”

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