'If you don't act, you will kill the company'
Interview: New Sony chief Howard Stringer on what it will take to rally his struggling company.
By Brent Schlender

(FORTUNE Magazine) – FORTUNE's Brent Schlender talked with Howard Stringer in New York City shortly after he was named Sony's CEO. Edited excerpts:

People say Sony has lost its edge. Your thoughts?

Because Sony has such a broad range of products, you get picked off by competitors along the way. You don't get necessarily beaten, but you get seriously challenged. Kodak is back in the camera game and Canon is back in it. And you get HP and Dell in the computer side, and then you get more people than ever in the electronic side, including the Chinese, who have taken a real dent out of the high-end marketplace. But in terms of the variety of products, Sony is still unbeatable. The question is how much variety is too much variety.

How do you address that, and how can you use the new power that you have?

Fire people. You have to demonstrate accountability. I forget who described AT&T this way, but they tried one-stop shopping: Any one person could stop anything--and there is some of that at Sony. Part of that is the scale of the company. Part is the protection afforded every employee from consequences. We put out a device, the "networked" Walkman, without client software that was of any value. We were committed to proprietary music encoding. People seemed incredibly surprised when it didn't accept MP3 files. Well, it happened because the silos were not the slightest bit interested in coordinating, or there was no one to coordinate them. More particularly, somebody got ignored.

So how do you fix that?

Well, without wishing to scare everybody, I will fail fairly quickly if I can't fix that. There will be huge resistance to the kind of change we're talking about. There will be anger, which you can direct at me as a foreigner, which is fine, but if you don't act, you will kill the company by kindness--and all the generous qualities of lifetime employment and all the things that are in many ways an admirable part of (founder Akio) Morita's vision. But one would suspect if Morita-san was alive today he'd say, "Well, I understand why it worked when we were growing, but in these circumstances we've got to do something very, very drastic, because 160,000 happy employees are not going to be happy the day the company is taken over by somebody else or is broken up."

The board is a smaller entity now, with a clear majority of outsiders. How will that help you?

I think Idei is now being astonishingly thoughtful about removing obstacles that he thinks would make my job very difficult. He's offered to do the dirty work in many areas before I get the job. He's willing to fight the battles because he thinks they should be fought, and he understands that if I want to hit the ground running, any obstacles he clears away will make my life easier.

Have you consulted with any other prominent CEOs for advice on how to approach your new job?

Between Carlos Ghosn (see box, "Advice From a Fellow Outsider") and Lou Gerstner, the former head of IBM, who I will go to for some advice, I hope to learn a lot. (Gerstner, of course, turned around another big, troubled company.) How you effect change in these organizations is something I've really got to think through over the next month or so. I have to really say to people, "Look, you love this company. I love the company. You can't let it go under. You can't be beaten by Samsung or by cheaper products from China or by whatever it is. The pride of Sony says let's turn this place around."