Sony Playstation Intraprenuership Story
This summary of the Intrapreneurship success story of the Creation of the very profitable Sony PlayStation by Intrapreneur Ken Kutaragi within Sony Corporation. Ken Kutaragi, who was educated as an electrical engineer, joined Sony Corporation in Japan in 1975, at the age of 25. Ken Kutaragi was working in the sound labs at Sony Corporation when he bought his young daughter a Nintendo game console. Ken observed his daughter playing with the new Nintendo game but he was displeased with the quality of the sound of the Nintendo game. Because of his training and experience in electronics Ken concluded that a digital chip, dedicated solely to sound, would significantly improve the quality of the Nintendo gaming system. Because the Sony Corporation was not involved in computer games, Ken Kutaragi negotiated to keep his job at Sony, while working as an outside consultant (entrepreneur) for Nintendo on their computer gaming devices. gaming gaming2 gaming gaming2 Fortunately for Ken, he had the strong support of Norio Ohga, the then Chief Executive Officer of Sony Corporation. Chairman Ohga personally recognized the value of Ken’s creativity, entrepreneurial spirit, and innovation, so he encouraged Kutaragi’s efforts. Then with the Sony Corporation CEO’s support (and begrudgingly the rest of Sony’s senior management’s blessing) Kutaragi continued to work as a part-time consultant to Nintendo. Ken successfully developed a CD-ROM-based system for Nintendo. Then in a life changing twist of fate Nintendo elected not to go forward with the CD-ROM system. Ken Kutaragi saw the market and business opportunity of computer gaming systems for Sony. With his Intrapreneurial spirit, Ken pressed hard to convince the Sony Corporation to enter the electronic gaming business. While most of Sony’s senior management did not consider Ken’s computer gaming device more than a toy and not worthwhile for Sony, Chairman Ohga took a major chance and backed Kutaragi’s plan. Ken was persistent and he went on to lead the effort to help Sony develop its own gaming system, which became the blockbuster product success “PlayStation”. Ken Kutaragi has been often been referred to as “The Father of the PlayStation,” was well as all related Sony products, including Sony PlayStation 2, Sony PlayStation Portable, and the current Sony PlayStation Model. Ken Kutaragi has the heart and soul of an Intrapreneur or Corporate Entrepreneur. He fought against all the corporate “naysayers” within Sony’s management ranks. Ken literally laid his job on the line at Sony to press for the creation of the computer gaming product within Sony. Ken is created with saying, “I wanted to prove that even [when] regular company employees said no, [and] especially regular company employees – could build a venture of this scale with superb technology, superb concepts, and superb colleagues.” Sony’s “System G” 3-D technology, aka Sony PlayStation, was released in 1994. It immediately outsold Nintendo’s Super NES to quickly become the world’s top home-gaming platform. Ken’s group within Sony did not rest on its significant laurels, Kutaragi and Sony took another major financial gamble on PlayStation 2. Sony backed Ken’s corporate entrepreneurial (Intrapreneurial) venture by investing $2.5 billion into the PlayStation start-up, and has gone on to build over 70% of the home-video-game-console international market share. Sony’s PlayStation product line has become the leading video-game platform. The financial payback to Sony has been astronomical. At of the end 1997, Sony’s PlayStation annual sales had grown to $7 Billion, in only first four years of the PlayStation product line existence. Ken’s Intrapreneurial (or corporate entrepreneurial) success has been called one of the greatest new business creations and launches in business history. Since the 1994 PlayStation’s launch, this new Sony product line outperformed both the Sega Enterprises and Nintendo gaming machines. As the amazing result of a successful use of Intrapreneurship, the Sony PlayStation has taken the clear market share of game consoles, with PlayStation sales of more than 70 million units in the late 1990’s. At that time, one in four United States households owned a Sony PlayStation product. The financial success of the Sony PlayStation was so impressive that by 1998, the PlayStation was providing 40 percent of Sony Corporation’s operating profits. The strong profits from the Sony PlayStation line still accounts for about one quarter of the overall Sony Corporation’s profits. Kutaragi was soon rewarded for his significant success as an intrapreneur within Sony. Ken was promoted to be the Chairman and Chief Executive Officer of Sony Computer Entertainment (SCEI), the video game division of Sony Corporation. As Chairman and CEO, Kutaragi built Sony Computer Entertainment group into a major profit center for the Sony Corporation. In late 1996, Ken was replaced as President of Sony Computer Entertainment and was promoted to Chairman of Sony Computer Entertainment. That was only a temporary situation as Ken retired from that position in 1997 and became the honorary Chairman of SCEI. Source: https://www.selfgrowth.com/articles/intrapreneurship-case-study-of-the-sony-corporation-s-playstation-by-intrapreneur-corporateOutsurance Intraprenuership Story
Willem Roos met Howard Aron and René Otto in 1996, when they were all working at Aegis, a company in the Rand Merchant Bank Holdings (RMBH) group. They researched and developed the concept behind OUTsurance and presented it to the RMBH board. Laurie Dippenaar was impressed and he asked the three to conduct some more research, draw up a business plan and present a business case. They did, and Dippenaar liked what he saw. The board approved funding for the concept within eight weeks and the rest is history. Otto left the business in 2001, but the RMBH board recognised the combined strengths and common vision of Roos and Aron and appointed them as joint CEOs. Roos, Aron and Otto had complementary skills. “René was a true visionary,” says Roos.
“He had a huge amount of experience in the short-term insurance industry. Howard is an IT expert and was able to build the platform for the actuarial rating and underwriting, the claim management and the costs that differentiate our business. I was only 25 at the time but I was hungry and, being an actuary, I had a good feel for the numbers.”
The OUTsurance business model is simple and is based on superior risk management through innovative product design.
How did you obtain funding?
After we presented the concept to the RMBH board, it took two months for the board to agree and they provided us with R120 million start-up capital on an incremental basis. In the end we used only R90 millions of that. Our experience was quite unique in that we were fortunate to be part of Aegis, in which RMBH had a stake. Because we worked within the group there was a great deal of trust right from the start. In the first two years, we lost R55 million before turning cash positive. The business plan had estimated a loss of R53 million, so we did not do too badly given that our set-up costs were enormous. I have to stress that we were not ostentatious in any way, and we still do not spend on things that are unnecessary. Our premises are comfortable without being showy.
How long did you take to complete the research?
We did it in a number of weeks. I don’t want to sound glib, but the idea was already very clear in our minds and we had a huge amount of detailed financial knowledge. The most important component was really to determine what we were going to do that would give us a competitive advantage. I cannot stress enough how important it is to do the numbers. If you cannot make your business work on paper, don’t do it.
What trials did you face in year one?
I was so young back then that I never had any doubt it would work. We were fortunate in many ways given that we launched a new company in an industry that was highly competitive and capital intensive, but we had the right skills and the right plan. Many new opportunities came along, but we made sure we did not become derailed. A good strength of ours is to be focused and single minded. I do remember that whenever we deviated even slightly from our core intention, things would not go as planned and we would simply stop and refocus. In an already complex business, it’s vital that you do not overcomplicate your environment.
What were the highlights of year one?
We launched on 26 February 1998 and when the advertisements played on radio the phones started to ring and they have not stopped since.
What were the key components of your research?
I am not the biggest fan of research as it sometimes impedes action. However, the most important component of our research was a thorough understanding of our competitive advantage. We also devoted a lot of time to building financial models. To this day I think Excel is the best thing since sliced bread. Financial dynamics are what make an organisation successful quickly – a good financial model enables you to break- even more rapidly, which in turn enables the business to grow rapidly.
What were the key aspects of the business plan?
Our success is largely attributable to the fact that we underwrite risks accurately. To do that you need very good systems in place, as well as great actuarial skills. Because we deal directly with clients, we cannot rely on brokers to give good service – we therefore place a strong emphasis on our marketing strategy and our customer service standards. Uniqueness was another aspect of the plan. We figured that as we had the opportunity to start a new company, we may as well create something that was different and fun. Ultimately, we sold the business on systems, processes and underwriting. Most of our competitors are not as sophisticated in that arena.
Once the results of the research indicated potential, how did you go about building the business plan?
We did not go to a textbook, but we gave an overview of the proposed business, an analysis of the industry, and the perceived weaknesses of the industry. We also discussed our main assumptions, our costs estimates, and the kind of customer experience we wanted to deliver. It was extremely detailed, down to noting when we would appoint each new call centre person in line with our projected growth.
https://www.experthub.info/success/success-stories/entrepreneur-profiles/outsurance-willem-roos/
What career advice do you have for a young person?
Read widely and try and understand the world around you. It easier to be innovative if you have broad knowledge, together with being an expert in your own field. Innovative people succeed. Be entrepreneurial early on in your career. This does not always mean that you need to start a new business on your own. Do something new and innovative in your current job. If the culture of your current employer does not allow that, resign and find a company that will.
https://mybroadband.co.za/news/business/248905-career-advice-from-the-man-who-founded-outsurance-and-now-runs-rain-mobile.html
Mzansi Innovators- Discovery Insure Founder, Themba Baloyi
Meet the young South African Innovative Entrepreneur, the Founder and Executive Director of Discovery Insure- the man who launched the business 3 years ago when He was 34 Themba Baloyi, a very humble yet full of presence individual started Discovery Insurance in 2003 with valuable assistance from Discovery Director Barry Swartzberg after having pitched the idea to Discovery CEO Adrian Gore in 2003 who encouraged Themba to pursue it. I must admit for a while I thought they were referring to another Discovery Insure brand because the Discovery I know is the huge South African brand which holds Discovery Health. However, the man they were introducing on stage was too young to be a founder of Discovery Insure when they introduced him at one of the events as a guest speaker. He took the stage with confidence and radiance and right there he put up the Discovery Insure logo and it was the very same huge company we all know. Today at Discovery Insurance, he is one of the leaders in the insurance business and puts innovation ahead to stay abreast. Many South Africans have been encouraged to join the Discovery Insure Driving Challenge where South Africans compete using the app to see who is the best driver in the country. This of course is an innovative way to get motorists behaving well on the road which not only saves Discovery Insure money but also saves many lives with the death toll on our roads rapidly increasing and this challenge adds the element of social innovation to solving one of the country’s biggest challenge. Source: https://www.nunnovation.com/2014/10/20/mzansi-innovators-discovery-insure-founder-themba-baloyi/The big story though….is Discovery Insure. Take us through the thought process behind that.
I recall that in 2006, after probably delivery what I thought was one of my best works, I was told that it’s never going to fly. In fact, I got a call from one Executive from the company when he was back in the U.S., saying to me ‘what did you say to the CEO and I said ‘what do you mean’. He replied ‘because he’s asking too many questions. He’s asking if we should find you a better job or something bigger to do in the business. Just forget about this idea. It’s not going to fly’. It was out of that conversation…I remember when I went for my long midday run (and typically, I do that now and then where I sacrifice my lunch and go for a run) and it hit me that I’m not just going to accept what this Executive telling me. I’m going to fight on because this is something I deeply believe in.