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Strategic Appraisal for Organizational Development Sony Inc.

Xilu

Introduction

Mr. Hirai, the CEO of Sony Corporations was faced with a challenge to return Sony to a fat operating profit by 2016. With its decreasing sales and increasing competition in the industry, Sony has faced a serious threat from the emerging Chinese mobile companies and is continuously facing a decline with an estimated operating loss of ¥40 billion in the year 2015. However, in order to fulfill his promise, Mr. Hirai the change management consultant for Sony has presented certain techniques and business solutions to improve the company’s performance and fulfill the CEO’s promise of having an acceptable operating profit in the years to come. This report presents a few of those techniques including methods for enhancing innovation and CSR activities for achieving a competitive advantage and the driving and restraining forces that relate to the current situation of the company.

Force Field Analysis’ on Sony’s current situation

Sony is going through a financial crisis. To survive, Sony has to take some major steps and bring in an organizational change. Here the force field analysis put in by Kurt Lewin comes into play. Lewin said that there are drivers which are in the favor of change and similarly there are some factors who oppose the change (Burnes & Cooke, 2013). The five driving forces and five restraining forces identified are listed below;

Five driving forces

Five restraining forces

Sony is competing not only in the division of smartphones but also in gaming consoles, television and other electrical appliances too. Sony has to compete with many different brands simultaneously and is losing share in the market. To regain their share, Sony has to take certain changes and bring about technological advancements. The case informs the current scenario of the employees working there; the structure is a kind of bureaucratic and there are people who are rigid enough to adapt to the new change arising due to innovating technologies. Sony at some point have achieved economies of scale but the important thing is that Sony has hardly taken the first mover advantage. Sony came in the game when the consumer had established a great taste for the alternative commodities such as Apple, Samsung or low tier Chinese brands.

So according to Cronshaw and McCulloch (2008) the agent for change has to use new technological advancements in the company and similarly make sure that the workforce and the employees are comfortable enough with it and using it properly for the betterment of the company. As analyzed by Gumusluoğlu and Ilsev (2009) the next important thing is to invest in research and development. R&D is very important for a company like Sony, especially all the technological companies due to the main reason that technological advancements are the most rapid ones and technology is somehow changing and taking new shape every single day.

So if Sony invests in R&D and comes with a new sustainable technology, with a better product which will enable a good customer satisfaction level, they can boost up their sales very well and in this way they can take the first mover advantage and can charge premium prices (Christensen, 2013). These premium prices will result covering the costs they had to put into research and development. But on the same note, the opposing force will be the lack of financial resources. Sony is in loss at the moment and doesn’t have any sort of resources to put forward for research and development.

Customer demand is an important force which can help to study the customer and through which the customer needs can be identified. After the gap is identified, it is easy for the company to fill in the gap and produce something valuable for the customer which will not only satisfy their needs but also make the customer loyal towards the company and brand. For this purpose, consumer research is very important but on the other hand there exists a restraining force which is the poor communication level not only between different departments but also between the customers and the company. This restraining force is a great hurdle and the company is not efficiently dealing with the consumer department which in return is losing customers which indirectly means a decline in sales.

Armstrong (2011) informs reader that for organizational development the next important driving force and the change agent is the giving of incentives to the employees and to the customers as well. There is this saying that happy employees produce the best results. So on this note, employees should be given incentives, should be provided with bonuses and other packages to facilitate them so that they work with more dedication, ambition and show more loyalty towards the company. In this way, the company will have the potential to produce much better results. But there is a problem with Sony at the moment that there are lack of resources and the company is not giving out any such bonuses which is reducing the motivation level of employees. The other thing is that the incentives are now worn out and do not have that kind of impact on the motivational level of the employees.

Cummings and Worley (2014) advocate maintaining organizational development trust among management and employees is critical for success. One other important driving force is that the CEO should trust the employees and the change agent. CEO should be the one supporting the workforce and motivating them because the employees look up on the CEO and consider him/her as the role model and the one to follow. If such a support is given by the CEO and the same level of support is received at the end of the employees it will spur a great level of determination and ownership among every individual working for the company. Ownership here plays an important role because when an employee feels that he has some kind of impact on the company and is being rewarded for it, employees produces more better and positive results (Cummings & Worley, 2014).

But another force that opposes it is the level of mistrust that can be generated between the senior level executives and the bottom level workforce. There might be a possibility that the employees do want to work for the CEO of the company but they have some trust issues with their manager or the supervisor they are working for. In this case, confusion can arise which can lead to devastating results in the future. Thus this kind of mistrust shouldn’t arise and the work force, the top level and the CEO should all be working as a single unit. Moreover, more transparent structure should be present in the company and the power distance should be minimized as much as possible in order to allow for an easy communication and healthy relationships among the employees.

Key Characteristics of a Change Agent/leader

A change agent is the one who brings about a differentiating change in an organization, the one who performs a radical role in the company in the same way as a catalyst performs in a chemical reaction (Cummings & Worley, 2014). So the change agent acts as a catalyst in bringing about a change. As described by Benn, Dunphy, and Griffiths (2014) The change consultant has an important stance in a company because he is the one who will be reinventing the whole organization and for that to happen properly, the change agent should have certain dominating traits.

The first important characteristic is to have a clear vision, which means that the agent should very well know what change he is going to introduce and what impact it will have on the company. The vision should be transparent and everyone in the company should be aware of it. If the vision of the agent won’t be clear he will not be able to persuade the employees and instead of motivating the work force the agent will confuse them and the employees will eventually be reluctant to adopt the change (Palmer, Dunford, & Akin, 2009).

Clear vision doesn’t mean having a single vision; the change agent should look into people’s expectations and see their vision too, see their strengths and ponder upon the fact that whether there are more ways to do the same job.The second quality is that the change agent should be patient and on the same time persistent (Cummings & Worley, 2014) . The consultant should have one thing clear that the change never comes overnight, change is the process of continuous improvement and at times it takes a lot more time than expected.

So the agent should be ready to face similar situation, the agent shouldn’t give up in just one go but keep striving towards the goal. People will resist because we still have people who are resistant towards it so the agent should be patient and persistent towards the work force and the employees are willing to trust the agent. Even moving a step forward is basically moving forward.Another important trait is to keep asking people questions, the workforce feel the ownership in the company when they feel that the executives and top level are involving them in important decision making and their opinion and feedback is equally important (Burke & Noumair, 2015).

In this way the employees work with more dedication. So the change agent should actively be involving the people, asking those questions, asking about their opinions about certain decisions and how they feel about it. In this way the change agent will have less difficulty in bringing certain changes. According to Burke and Noumair (2015) the change agent should be knowledgeable; the agent should have expertise towards the industry. When the agent speaks he knows what he is saying, he knows how he will make people believe him, and he sets examples for others to follow in such way that increases their credibility (Sydow, Schreyögg, & Koch, 2009).

The next quality that the change agent must possess is to build trust among the employees; make sure that the employees are listening to you. The change agent should be respectful towards them and he actively listens to them. In this way a stronger communication will develop which will result in a better relationship and their credibility will increase. The change agent should be flexible; he should know that he will be facing people with different views. So the change agent should accept their way of thinking and shouldn’t be rigid enough to forgo their methodologies and opinions towards certain concepts (Cameron & Green, 2015). The change agent should be strategic in action.

He should value time and the resources equally. The change agent is the one who knows how, when and why to apply certain changes in the company. He should be clear and strategic in thinking and effectively a step ahead of others and is futuristic rather than living in the present (Burke, 2013). Agent should very well know that at what point what strategies should be applied and their impact towards the company. The change agent should empathize, he should connect with the people emotionally so that they can trust him and acts upon his advice (Cummings & Worley, 2014).

If the change agent is not emotionally involved and does not actually feels what the people are going through and what their concerns are, such change agent would not be a successful one or the one people will follow. Other than emotional connection, the change agent should consider the employee’s condition and understand their situation as if he himself is in that situation.Another important trait is that the agent should be full of energy; he is the one towards whom people will look at, the one to follow; so the change agent should be optimistic and energetic enough so that employees are hopeful and have full trust on the agent.

If the change agent is energetic and hopeful then the workforce will behave in the same pattern and in this way they will strive for their common goal as a team (Burke & Noumair, 2015).Moreover, the reward system; the members in the company are capable enough to produce a change and benefit the company as a whole so the change agent should bring in a proper reward system. When the employees are given incentives the same work becomes more interesting and the employee’s work with more motivation and dedication.Furthermore, there should be an open and transparent structure (Cummings & Worley, 2014). Everyone in the company should know what sort of changes the change agent is bringing in.

Not only the senior level executives but the ones working at the lowest level should be equally aware what kind of environment the agent is trying to bring in so that everyone is on the same page and knows what is going on. In this way people will work as one and united and show more trust towards the agent.So for SONY, the company should be looking for an individual with such characteristics. The one who is not only strategically strong but holds a great moral and ethical character. The one who will serve as the role model for people. High ambitions and determination will also play a vital role. So Sony should make sure that such a person gets hired because the company is rigid enough in adopting new changes and mostly acts as a follower so the company needs the one who will give the company a direction and will help Sony to become a market leader.

Methods to enhance innovation in Sony Structural

Board of directors, selected within the annual stakeholder meeting, governs Sony to formulate its strategic direction. The diversified structure of Sony demands mission and vision statements for each specific business unit to maintain strategic advantage according to each industry specific environment. To drive the conceptual foundations for structural units Sony believes it has to become number 1 in consumer electronics and hence has to surpass competitors in every way.One of the critical identification is that Sony Inc. even though does not have a complex organizational structure faces communication problems that considerably inhibit the overall performance. Sony should apply GBM structure as applied by Samsung for better communication and understanding within the departments (Chang, 2011).

The structure drives a company to build the right culture and Sony Inc. need to promote departmental synergies to focus on core competencies and collaborate. Since when organization achieves collaboration then they use less resources in every thing while achieving their desired standards of efficiency. Complexities in communication have inhibited the process of innovation and have slowed the strategic success that Sony requires to compete with its competitors. Analysis by Dheeman, Schildwachter, and Harrison (2012) shows that internal conflicts occur that directly gives birth to politics, diverting employee efforts from original goals to unfruitful rivalries.

Hence this leads the company away from their mission strategy and internal battle for supremacy increases rather then focusing on external factors to effectively tackle competition. Sony Inc. has to focus more towards the internal rivalries. The issues requires removing the structural problems and removing complex boxes of KPIs or departmental hierarchies to allow employee to employee contact facilitating collaboration for higher order goals. Todays organizations believe in creating self sufficiency for employees that is regard as dysfunctional self-sufficiency by Morieux (2011) and he believes that people collaborate with they have cards in their pockets meaning are rightly empowered hence Sony organizational structure has to become simpler and should incorporate a pattern for shared responsibilities (Morieux, 2011).

Technological

Today in a company’s marketing plan, social media marketing plays a very important role which directly comes under the umbrella of internet marketing which is a gift of today’s technological advancement (Miller & Morris, 2008). Sony used this platform well when launching Xperia into the market and telling people about the water resistant quality of the newly launched xperia through videos spread all over the internet. Sony should now continue the same thing; it should interact directly with the consumer through platforms like internet and ask the audience about their feedback and what features they want in their products.

In this way, customer needs can be identified and these customer needs will serve as the platform for innovation because this is the fastest way to collect data and to have a better form of communication with the consumers. Internet advertisements can be run which will help to create awareness and the response could be recorded in a better way and that recorded data will serve us to better know our market need and to provide our consumers with something new and innovative (Prahalad & Ramaswamy, 2012). Not only this, but Sony should focus on providing new technological solutions and financial solutions too.

The same way as IBM did. IBM transformed its image from mainframes to such an organization which is a complete business solution provider be it technological or a startup. So, Sony can also focus on IBMs business model to innovate and give an impression that Sony is just not making Walkman’s but also giving out business solutions. Although this would require extensive research, training and technological enhancements but exploiting this opportunity to enter the market of providing business solutions is the next big step Sony can take to revitalize its existence in the world of technology.

Cultural and Human Resource

Sony needs constant innovation in its products in order to compete with the company giants like Samsung and Apple. Literature tells us that innovation basically comes from the employees that form the core of the company (Burke & Noumair, 2015). However, we have seen that companies continuously focus on innovating their technology rather than focusing on the fact that it is the human resource that comes up with new technologies.

Innovation can be brought into the company’s products either through utilizing existing skills, knowledge and resources by performing trial and error or through external knowledge i.e. learning from competitors, customers and previous work experience. For each of these methods, a creative workforce is a must. If the employees are creative, then that creativity will be evident in their work (Armstrong & Taylor, 2014). In order to enhance innovation in their organization, first of all Sony needs to alter its hiring process. A rigorous hiring process should be conducted in order to hire the most creative individuals among the lot.

Once the hiring process is done, it is the company’s responsibility to provide such a culture that enhances their productivity and enables them to think and implement their thoughts in a rightful manner. Such a culture might include a variety of benefits like on-site gym, relaxation pool, paid vacations etc. All these benefits would enable the employees to work in a relaxed atmosphere that provides them with the opportunity to clear their mind and focus on ideas for bringing up new innovative products.

Moreover, these passionate employees can also be provided with an opportunity to work on projects of their own choice that may include working on new features of Xperia or even wholly new smartphones that might be able to compete with brands like Samsung and Apple. Although this method of hiring and maintaining human resource and providing an adequate culture is sure to enhance their productivity, yet there might be many constraints in the implementation of this technique.

This method of employing human resource requires large amounts of financial resources in the form of hiring costs, training costs and compensation costs. As research already shows, Sony is unable to cover these costs due to its financial status. Therefore, another method that they can adopt is that instead of changing the entire culture of the company, they can use the external sources by hiring external innovation consultants in order to induce innovation in their products (Norman & Verganti, 2014).

Ways to enhance levels of CSR for Sony

Corporate Social Responsibility can prove to be a firm’s most valuable asset if it is conducted properly. The various activities conducted under the social responsibility umbrella can act as a tool for enhancing company’s reputation among customers and it can also relate to a firm’s profitability (Popoli, 2011). Upon viewing Sony’s current performance it is concluded that Sony should focus on this aspect of profitability in relation to corporate social responsibility. According to Kolk (2008) corporate social responsibility activities have the potential to create positive image of the company which in turn increases its value among the eyes of customers.

This increased value can reduce reputational risks in times of economic downfall and other such crisis and can also result in having loyal customers that are willing to pay premium prices. Thus in this time of downfall, Sony has the potential to use corporate social responsibility to have a profound impact on its current financial status.In order to enhance their levels of CSR, first of all Sony needs to find the most appropriate form of corporate social responsibility that would enhance the company’s value in the eyes of customers (Ditlev-Simonsen & Wenstøp, 2012). For this purpose, Sony can first divide its focus into three theatres of practice that are common practices among various companies around the globe.

The first theatre is philanthropy. Philanthropy is a trait of CSR that focuses on creating other-oriented value i.e. value and support for others in need. This theatre does not aim to generate intrinsic value or profits for the company itself but focuses on benefitting others through its assortment of activities. These activities may include involvement in community initiatives such as those adopted by various organizations and their application is well established. , Supportive attitude for employee volunteerism is a positive way forward to representing organization is the community. The second theatre of practice is improving the operational effectiveness.

This area focuses on benefitting the current business practices in a way that delivers environmental benefits and improves operational efficiency as well. Such practices may involve supporting the sustainability initiatives that can result in less use of resources and low production of waste that can indirectly reduce costs for the company. Another example can be of investment in areas that directly impact employees i.e. their working conditions, healthcare facilities and other such benefits. This would enable the company to reduce turnover ratio and increase employee retention and hence would contribute towards enhancing the reputation of the company.

The third and the last theatre of practice is the transformation of business model. In this theatre, CSR activities create a new form of business in order to address the environmental challenges. The extent of the challenges met is directly proportional to the improved business performance. A terrific example of such transformation of business model is that of Unilever’s project “Shakti” which enabled the company to introduce hygiene products to rural areas and enhancing the household income of women who participated in this project. This enabled Unilever to improve the lifestyle of these remote areas and empower the women in small villages. Also, this project had a profound impact on the company’s profitability and reputation.

After analyzing these three theatres of practice, we can examine the ways in which Sony can enhance its levels of CSR. Looking at Sony’s current financial status, it is evident that Sony is in such a stage that requires a combination of theatre two and three. It needs a program that creates a social impact and enhances the company’s profitability as well. Thus by putting in consideration the financial and organizational constraints, Sony can focus on these theatres and develop a program to have an environmental impact, increase its own financial status and regain its position in the industry.

Conclusion

To conclude, the driving and restraining forces presented in the force field analysis show that there is a need for change in the company and this can be done by weakening the restraining forces and strengthening the driving forces of the company’s current situation. For driving this change, a change agent needs to be employed who must possess the necessary skills like patience, flexibility, knowledge and a strategic vision in order to bring about change in the company with fully motivated employees in a transparent structure with a culture full of mutual trust and willingness to bring about a change in the company.

Moreover, to cater with Sony’s problem of lack of innovation, it is suggested that the company should bring structural changes by handing over the responsibility of bringing about innovation in each individual department. Other than that, extensive use of the platform provided by internet can also assist in altering the customer’s perception of the products offered by Sony. Furthermore, in order to bring about innovative products there is a need to hire creative individuals or external innovation consultants and provide the employees with a culture in the organization that could motivate them to think of creative ideas and bring them to reality. Lastly, Sony has the opportunity to improve its financial position by creating customer value through CSR activities which can enable them to achieve a positive reputation and even a financial benefit along with providing benefits to the society.

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