The CEOs Who Don’t Understand The Business They’re In

Akio Morita would have understood it all right. If you bring out Japan’s first transistor radio, if you bring out the world’s first consumer-affordable video tape recorder, if you bring out the first CCD-based video camera , if you bring out the first portable music-player – then you have a massively successful business.

It’s so simple it makes you want to weep. Great products make great companies.

Sony has seen its PlayStation eclipsed in the market by the Nintendo Wii.

Sony has seen its market-leading position in TVs massively eclipsed by Samsung.

Sony has seen its portable music business eclipsed by Apple.

Sony has seen its e-reader eclipsed by Amazon.

And still there are buffoons about who believe that any good businessman can run any company in any industrial sector.

Sir Howard Stringer made savage cuts and terminated 30,000 people in his five years as CEO of Sony, but the company’s product record under his leadership has been lamentable.

Stringer’s previous experience was basically as a TV guy. Although Sony has TV interests, TV is not the core of Sony’s business. Now Sony is looking for a new CEO.

Stringer’s appointment may not have been quite as weird as Nokia appointing its lawyer to be CEO, but it comes close.



  1. Very true – to listen to many CEOs speak you’d think they had some sort of common hymn sheet they all sing from, Malcolm – cut costs (usually people), narrow your product line, out-source as much as possible, focus the R&D (to eliminate all chance of something unexpectedly helpful emerging), mouth green platitudes and profess to read Ayn Rand. Sad really.

  2. The really sad thing is that what these ‘business school’ types don’t seem to realise is by sanitising the process in line with their ‘wisdom’ they lay themselves open to total annihilation … everyone knows exactly how they will behave and react!!! Truth is, the ‘system’ has dumbed everything now down to so much predictability, anyone with a half brain just kicks them into the long grass. Nelson won the Battle of the Nile by doing what was unpredictable … try putting that on Harvard and Wall Street’s agenda.

  3. Spot on greg. Noyce, Moore and Grove were pretty successful at running their businesses without having gone anywhere near a business school.

  4. I agree David, Harvard Business School will not deliver success, however in every generation of people there are a range of personality types on a sliding scale from the completely idle, moral and mostly poor (ie Chris Yates – carp fisher) to the average joe trying to get by to the narcisistic (typical management types with few scruples) to the psychopathic, nasty and often rich (ie Alan Sugar types / screwtapes of the world). The screwtapes of the world always congregate around places of power and elite institutions. Harvard Business School is probably just this generations attempt at this. But I think this generation of screwtapes would exist whether Harvard existed or not. It would be called some other good old boys club or something similiar. I remember sitting in a HR lecture when the academic attempted to give guidelines to those in the class who were narcisistic so that they may be able to be successful. So there is some recognition, less any moral interference, of what the reality is.
    Its quite academically disgusting however that you will find management academics at harvard and elsewhere who actually believe Michael Porter invented competition theory in the 1980’s. What Michael porter missed out was the idea that the best guy to run a law practice is a lawyer – and that was probably on purpose – business schools themselves are pushing an agenda based on the cult of the all-knowing manager. I often liken business school to the army’s officer training as it takes not very sophisticated people and generates individuals with an an out of proportion belief that they are now leaders.
    I personally think the problem is that there is no training on earth that gives you a crystal ball. I also remember sitting in a strategy lecture when the professor came in and said just that – we don’t know what the future will hold so we need to do our best to guess. Management is all about guessing the future. The really nasty bit is that for the most part the screwtapes can guess just as well as those who have spent years studying things. The sad fact is that as an engineer I still have trouble ‘guessing’ how long a product will take to develop. If theres R&D involved that hasn’t been tackled before it may be quick or may never happen. So the dummy’s guess is often as good as mine – and this allows the dummy’s to do just as well. So that is probably the real takeaway from these schools – that you know just as much about the future as the ‘smart people’ – and that gives this personality type a lot of confidence.
    Going back to Dilbert, Scott Adams summed it all up in an interview he gave when he said “Well, managing is basically an offshoot of evil. By “evil,” I mean when people must do things that are good for them at the expense of other people. That’s the essence of management. The whole point of leading is to get people to do things that they don’t want to do on their own. Managers must work for the benefit of themselves and for interested
    third parties, like stockholders. Therefore, employees don’t necessarily view management as working for their best interests, so all leadership, in a sense, is making people unhappy. So you can’t be a manager and be effective, and not be evil.”
    Going to the conclusion I would say that the way out of this rubbish is for engineering institutions to be elitist themselves and promote entrepreneurship programs for engineers to establish new businesses thereby becoming the next generation of industrialists. They’ve been far to placid in accepting the business school view of the world.

  5. Hopefully, greg. bitter experience will start to make Wall St, VCs and shareholders generally realise that adhering to the principles of Harvard Business School will not necessarily deliver hi-tec success, and that technical insight, imagination and creativity are essential ingredients of a successful hi-tec CEO. .

  6. There was an amusing piece in the Wall Street Journal on the weekend where they interviewed Yoshihisa Ishida, head of Sony’s TV unit, and asked him about the CEO job where he said “I don’t want it” and that the company was “too diversified”.
    I can remember some years back when Sony appointed a western businessman as CEO. I was pretty shocked and thought that it was the beginning of the end for them in the same way I think Carly doomed HP to a slow agonising death many years from now. In actuallity I’m a bit schocked HS hasn’t run them into the ground completely. I wouldnt have been surprised if he did.
    I’m under the belief that the dilbert principle is right and leadership is nature’s way of removing morons from the productive flow. In all my jobs to date people surely appear to get dummer as you go up the power pyramid to me. I really don’t think Wall St Analysts want creative people in CEO positions. They want bureacrats who won’t rock the boat, be political in all their speak and always present the best picture to the market. Nobody with an ounce of humility can achieve all that. For example my company loses money in the 3rd quarter every year however we just had a great celebration where we annnounced record 3rd quarter growth and had the best 3rd quarter ever because we lost less money… and so the world moves.

  7. You’re right, Malcolm, any buffoon can sack people and cut costs, but it takes business leaders of real quality to get stuck in with their product people, decide which of them will change the world and which ones are the plodders, and then give real power and budgets to the ones who can change the world. The inventor of the Wii and the CEO who empowered him is an obvious example. Akio Morita and Steve Jobs are examples of CEOs who get stuck in with the product groups and inspire great products – often painstakingly developed. It’s extraordinary that such obvious truths are ignored by companies. It’s the products which make companies great – not the guy in the ivory management tower spinning numbers.

  8. Yes … it’s happened AGAIN !!! A good man (probably) taken out of his competence, other than being handy with a knife (hey … ANYONE can cut a business) but totally unable to grow the business (now that does take real talent) in what has been a very fertile industry period. Sorry HS/Sony; you can’t blame the market for this shambles. Time to add Company Boards to my list of “Forecasts, Wall Street, Government Plans – All Wrong” I think …

  9. I was exactly the same, Mike, I bought only Sony – but then I started to feel they got greedy e.g. they changed the format of the removable storage with each product, and each generation of product ,so you had to keep on buying new memory sticks etc. Eventually I decided to only buy electronics products which used standard peripherals. Less stylish, but more practical.

  10. The odd thing is that the Morito of this generation is lauded by Wall Street and his company is worth far above normal valuations yet no other CEO wants to do the same thing.
    I’m not a great fan of Apple myself but one can’t deny they aren’t innovative.
    As for Sony, I suspect they will still choose the wrong guy. I used to love their products but haven’t considered buying any of them in years.

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