“Not Invented Here” is an old problem at Sony. The Betamax video tape recorder failed in part because the company refused to cooperate with other companies. But in recent years the problem got worse. Sony was late in making flat-screen TVs and DVD recorders, because its engineers believed that, even though customers loved these devices, the available technologies were not up to Sony’s standards. Sony’s cameras and computers weren’t compatible with the most popular form of memory, because Sony wanted people to use its overpriced Memory Sticks. Sony’s online music service sold files in a Sony-only format. And Sony’s digital music players didn’t play MP3s, which is a big reason that the iPod became the Walkman’s true successor. Again and again, Sony’s desire to control everything kept it from controlling anything.
[...] The trend, in other words, is toward what Henry Chesbrough, a business professor at Berkeley, has dubbed “open innovation.” With so many companies investing so much money and energy in innovation, it’s hard for any one of them to consistently outsmart the rest. And technologies are so complex that it’s impractical for a company to gather all the resources it needs under one roof. The spirit of collaboration extends to customers, too. In the new book “Democratizing Innovation,” Eric von Hippel, a management professor at M.I.T., shows that, in fields ranging from surgical instruments and software to kite surfing, customers often come up with new products or new ways of using old ones. Some companies encourage their customers to modify their merchandise. Others, however, do not: when a devoted user of the Aibo, Sony’s robot dog, wrote applications that would allow the Aibo to dance to music, Sony threatened the man with a lawsuit.
Ultimately, Sony doesn’t have much choice: it will either change or continue to come up short.