TOKYO -- After years of struggling to reenergize its sputtering money-making machine and regain its technological edge, Sony recently produced some good news for its shareholders.
The electronics giant has apparently managed to put itself on the path toward profitability, and its stock has enjoyed an upturn.
But many of the shareholders who attended the company's annual shareholders meeting on June 23 remained skeptical about Sony's comeback story.
At the meeting, a woman who was the first shareholder to question the Sony management team voiced concerns that the company's dragging restructuring drive to cut costs may stifle innovation.
"I'm wondering if this continued restructuring only increases the number of employees who are inclined to self-protection and encourages talented people to leave the company," she said.
Sony President Kazuo Hirai tried to reassure investors by stressing that the company remains focused on innovation.
"The spirit of creation and challenge is in Sony's DNA," he said. "We are trying to stimulate employees' inquisitive mind."
But Hirai's words failed to convince many shareholders that Sony is finally back.
Staid and stuffy
Conversations with some former Sony employees suggest that the company has lost its pizazz and become a rather staid and stuffy organization.
Last autumn, Kazuma Morimoto founded Safie, along with two other former employees of Sony and So-net, a Sony group Internet service provider.
The three Safie co-founders, all in their 30s, share an ambition to build up a global "Internet of Things" (IoT) business based on the growing trend toward online networking of all kinds of goods equipped with sensors and computing and communications capabilities.
"We want to expand internationally with our IoT business while joining hands with various companies with excellent technologies," Morimoto said.
The first product Safie developed is a low-cost home security system using small cameras and a smartphone. Despite the founders' origin, the startup has no special preference for Sony products. It does not have a policy of using Sony cameras for its security system, for instance.
That's because IoT businesses grow by connecting a wider range of products. Safie is completely neutral in selecting the technologies it uses.
Sony was once known as a lithe, innovation-oriented company with a corporate culture that encouraged employees to "think different." In the 1960s, Sony recruited new employees with an ad saying, "Wanted: the nail that sticks out." It was the antithesis to Japan's conformity-oriented culture, symbolized by the saying, "The nail that sticks out will get hammered down."
Half a century on, Sony is now a much bigger and more complicated organization. It may no longer be a company that can attract people who "think different."
Hidekazu Kondo, who founded Lunascape, an Internet browser developer, after leaving Sony, is worried about the future of his former employer.
"Many young people who are among the best and brightest become entrepreneurs, while very talented students can land a job offering nearly 20 million yen ($162,000) a year at Google," said Kondo, who also engages in activities to support entrepreneurs. "In such an age, Sony should ask itself whether it is a competitive player in the recruitment market."
Competition among tech-oriented companies for young people with the potential to create innovative products is fiercer now than ever before.
Even big-name companies are finding it increasingly harder to hire talented young people.
More to the point, many Japanese companies lack a human resources strategy designed to capitalize on the unique talents of employees.
Kondo joined Sony with a desire to see the browser he had developed himself be used globally. He created the product himself while he was a university student.
But he was assigned to a section that had nothing to do with Internet browsers.
It was not long before he decided to go independent. He finally left Sony about a decade ago.
Today's Sony is even more conservative than it was back then.
In the personnel and wage system reform this spring, the company abolished all seniority-based factors in its promotion approach.
If this reform ends up doing nothing but cut costs, however, it will only make the company's culture even more stifling and stuffy.
Atsushi Osanai, associate professor at Waseda Business School, argues that Sony's Hirai needs to offer an inspiring vision to galvanize the company's employees.
"It is Hirai's turn to present Sony's 'Apollo Program'," Osanai, also a former Sony employee, said. "He needs to come up with a large-scale idea to stir up engineers and other employees."
Sony will keep losing high-quality employees if it fails to regain the ability to make good use of "the nail that sticks out."