Sony, which is one of Japan’s top two companies by market capitalisation is a global household name. It will get a new president in April as it seeks to freshen things up amid a challenging business climate. Japan correspondent Walter Sim reports.
TOKYO – Sony Group, the tech giant behind PlayStation gaming consoles, Vaio laptops, and blockbusters like the Spider-Man series, will get a new president from April as the company seeks to break new ground in areas like the metaverse and electric vehicles.
The company has named Mr Hiroki Totoki, 58, currently the executive deputy president and chief financial officer, as its new president from April 1, in the company’s first change at the top in five years. He will continue to double-hat as CFO.
He succeeds Mr Kenichiro Yoshida, 63, who will remain chairman and chief executive, adopting a “dual leadership” model that it once employed to disastrous effect in the 2000s.
Mr Totoki, born in Yamaguchi prefecture in western Japan, joined Sony in 1987 after graduating from Tokyo’s Waseda University with a bachelor’s degree in commerce.
Sony was Japan’s second-most valuable company behind Toyota by market capitalisation, at 14.32 trillion yen (S$141.8 billion), at market close on Friday.
The company, founded in 1946, made its name in electronics, producing everything from televisions to cameras and the iconic Walkman portable music player that in the 1990s made Sony a global household name.
Beyond electronics, it now has businesses across music, movies, gaming, finance and semiconductors, among others.
“Diversity in talent and business is in Sony’s DNA, and will be key to strengthening our resilience as a group,” Mr Totoki said at a news conference in February, noting that this has cushioned the company’s bottom lines when one segment faces external pressures.
“I aim to build a future where we can unleash the imagination and creativity of our varied team and enable us to grow as a company and as individuals,” he added.
In 2001, Mr Totoki was tasked with establishing finance subsidiary Sony Bank from scratch, a role that he says helped him to hone an entrepreneurial start-up mindset.
More recently, as CFO to Mr Yoshida, he has been credited for having a keen eye for new opportunities.
Under his watch, Sony made three tranches of investments between 2020 and 2022 in American developer Epic Games, which produces such video games as Fortnite, as Sony seeks to stake a claim in the metaverse.
He also supported Sony’s foray into electric vehicles by joining hands with Japanese carmaker Honda to form the joint venture Sony Honda Mobility in 2022.
In November 2021, Sony announced a joint venture with the world’s largest chipmaker, Taiwan Semiconductor Manufacturing Company, better known as TSMC, to build the latter’s first foundry in Japan in the south-western prefecture of Kumamoto.
Analysts believe the return to the “dual leadership” structure will serve the company well, given Mr Yoshida and Mr Totoki’s track record of working well together and their complementary strengths.
This is unlike in 2000, when the late former chairman and CEO Nobuyuki Idei ceded the role of president to Mr Kunitake Ando, in a management reorganisation that he has described as his “biggest failure”.
The restructuring triggered what tech publication Wired described as an “internal civil war” between the entertainment and electronics divisions, and the company failed to make up lost ground on innovation.
One pertinent example was how Sony, despite its Walkman portable music players, was beaten to the punch by Apple’s iPod in developing MP3-compatible music players.
But a return to the dual leadership structure with Mr Totoki and Mr Yoshida at the helm, analysts say, is all the more pertinent as the company navigates potholes such as changing consumer preferences and technological disruption.
Mr Yoshida, in announcing Mr Totoki’s promotion in February, said he has “seen and learnt a great deal from his bird’s-eye view of the business environment”.
Fitch Ratings director Shelley Jang told The Straits Times that she expects Mr Totoki’s appointment to “strengthen the group’s management structure” amid Sony’s concurrent goals of boosting its entertainment products while developing electric vehicles and software.
Kwansei Gakuin University economics professor Masatoshi Kato also wrote in the Nikkei that a dual leadership structure is “more effective when the challenges faced by a company are extremely complex and require too many skills for one person”.
While the electronics business accounted for about 40 per cent of Sony’s revenues 10 years ago, it now contributes about 20 per cent. Entertainment is now its biggest revenue driver, accounting for more than half of its revenue of 9.9 trillion yen in fiscal year 2021.
Upcoming projects include the animated film Spider-Man: Across The Spider-Verse, scheduled to open in cinemas in 2023.
The PlayStation 5 game console – launched to much fanfare in November 2020 – has shifted 32 million units, including 7.1 million over the recent Christmas holiday season.
Describing this as “not a bad number”, Mr Totoki acknowledged the frustration in being unable to meet demand given the prolonged shortage of parts such as semiconductors. But he was optimistic that the scarcity is nearly over. He described courage and endurance as key traits of his management style.
Courage was about being decisive and open to new ideas while keeping an eye on risks, he said, adding that endurance meant being able to weather headwinds and tough times.
“There is a very fine line between rapidly advancing technologies turning into further growth, or being disrupted along the way,” he said, vowing to pursue growth.
