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Sony's new boss seeks to inject entrepreneurial spirit

Yoshida shelves cost-cutter title for now and will focus on creating new businesses

Sony enjoys a stable source of revenue through recurring game membership fees.   © Reuters

TOKYO -- Most new Japanese corporate leaders start their tenure by departing from their predecessor's course. When Kenichiro Yoshida takes control of Sony on Sunday, he is expected to take a different stance, emphasizing continuity as he picks up the baton from President and CEO Kazuo Hirai.

Together, Hirai and Yoshida, until now Sony's executive deputy president and chief financial officer, have built a scheme under which the electronics heavyweight can expect a stable source of revenue, mainly through recurring membership fees for PlayStation Online.

If President Yoshida were to steer the ship in a new direction, it would ironically not be through cost-cutting, which Yoshida championed as CFO, but through his other trait, which is business incubation.

When he headed Sony Network Communications, the internet service provider known as So-net, Yoshida handpicked and actively invested in such promising startups as medical information services provider M3. Yoshida also serves on the management advisory committee for the president of Recruit Holdings, a human resources services giant known for creating new services and cultivating entrepreneurs.

Kenichiro Yoshida, Sony's new president and CEO.

Yoshida's values can be seen in his remarks. "We'll bolster creator-oriented investments," he said Feb. 2. On a separate occasion last October, he commented: "What is important is to have a culture of starting businesses take root."

As CFO, Yoshida has generally taken a back seat to Hirai in public. But he gets talkative when asked about new businesses, once proudly stating that his favorite Sony product was the Aibo robotic dog.

Many Sony employees took the pay hikes for fiscal 2018 announced recently as a message from Yoshida that "he is determined to go aggressive," a person familiar with the matter said. The increases, the first in 15 years, will raise worker pay by about 5% on an annual basis, including a bonus.

Group operating profit is expected to more than double on the year to 720 billion yen ($6.78 billion) for the year through Saturday. Yet senior executives doubt that profit will keep growing at this pace. Given Sony's exposure to electronics, which are susceptible to commoditization, Yoshida, along with others in the leadership, has repeatedly stressed that "sustainability is one of the biggest challenges."

Yoshida is carrying on many elements of Hirai's management approach, with a particular focus on recurring earnings. One prime example is the video game segment, where network services generate roughly half of the segment's 2 trillion yen in annual sales.

Interchangeable-lens cameras and insurance policies are also dependable generators of earnings. The company seeks to strengthen maintenance services and parts sales to build a business model that can withstand rapid changes in the market.

Employees and investors alike feel confident that Yoshida will manage risks to the company as he has always done. He built his reputation by having no hesitation in slashing Sony's signature consumer products in hard times.

What they will be looking for is whether he can mobilize the team and reinstall the entrepreneurial culture that led to creation of tape recorders and Walkmans in the company's illustrious history.

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