Hirai’s select-and-concentrate: divesting VAIO and the battery business (2014)

Shrinking the business without breaking its jobs

The heart of this restructuring lay in a single question: how to wind down a loss-making business. Sony chose not to close factories and cut jobs but to hand both the PC and the battery businesses — plants and people together — to other companies. VAIO became independent under an investment fund; Murata took on the battery business along with about 8,500 jobs. A retreat that nonetheless prepared a destination for the business and its people. By softening the blow to local economies and employees, this method showed Japanese firms wrestling with how to release a shrinking business one workable template.

The other point is that the difficulty of “select and concentrate” lies more in the selecting than the concentrating. To picture what to grow is easy. What is hard is deciding to let go of a business one launched into the world oneself — like the battery — on the ground that it can no longer be expected to grow. That Hirai thought from his first day in office about what to discard shows how he faced that difficulty. Sony’s few years, returning from its largest-ever loss to its best profit in two decades, quietly show that a company’s shape is decided by skill at subtraction, not addition.