Apple Didn't Just Win -- Sony Lost, Too

With Apple having sold its 250 millionth iPod in September of this year, it's no stretch to say that Apple's iPod is portable music. In fact, in the same way that Xerox and Kleenex have grown out of their brands to epitomize entire product categories, I've heard the term iPod used to describe other portable music players.

But before the iPod, there was the Walkman. (Remember those? If you're over 30, you do.) Up until the turn of the 21st century, Sony reigned supreme in the realm of personal, portable music technology with the once-ubiquitous Walkman (whose discontinuation in October of this year, juxtaposed with Apple's sales spike, got me thinking on this subject). The question in my mind was, how did Sony—once the unquestioned leader in this field—get so summarily and decisively dethroned by Apple in the portable music player market?

The answer isn't as simple as you might think, as it doesn't only lie in the product (iPod) and services (iTunes) innovations that Apple has brought to the market. In an article in Marketing Daily, author David Aaker argues that while credit should go to Apple, blame should also go to Sony, as a large part of Sony's inability to bring a strong, competing product was because they were infected with “silos”.

(A quick word about this "silo-sitis" infection: Silos, as explained by Adrienne Fox in an article for HR Magazine, are “psychological and physical barriers that separate people, business units or locations, and prevent people from collaborating with one another”.)

In 1999, Sony debuted two portable, digital music players at a Comdex show in Las Vegas. Remember, this is a full two years before Apple debuted the iPod.

According to Aaker, he operative phrase here is “two portable, digital music players”. Despite being innovative products, they had significant feature overlap. One came from the Vaio division of Sony and the other was developed by the Sony Personal Audio Company. Aaker argues that the simultaneous release of the two digital players by a single company not only confused the market but also exposed redundancy of effort and internal competition, which in turn hamstrung Sony's continuing efforts in this space. The ensuing battle for dominance within Sony silos took away from energy to engage the market around one product. As a result, Sony lost the opportunity to continue in its position as the unquestioned leader in portable digital music technology, even as Apple was uniting to win it.

Unlike their namesake, business silos don't necessarily display material architecture, so how can they be detected? According to Fox, the hallmarks of silos are redundancy of effort, difficulty in obtaining and sharing information between sectors of a company, a lack of understanding what other people in the company "do for a living", and an absence of cross-departmental cooperation and support.

The are several reasons for the presence of silos, explains Fox. One is that people are naturally self interested and driven to complete -- and promote -- their own projects. Another is that the complexity of large organizations stems, in part, from inter-departmental differences that naturally make effective communication more difficult: differences in language and culture, differences in incentives, and differences in success markers.

The fix, says Fox, is to:

Reward collaboration and knowledge sharing
Implement job rotation and cross training
Establish cross-functional product development teams
Create informal networking opportunities (as I've written before, social software can help provide this)
And implement open space architecture that fosters informal communication and inter-departmental mingling.



Related posts:
What effect is social media having on us?
Ten Credos of Marketing 2.0
Resistance is futile -- you WILL be social

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