Tactful Audacity: Sony Mobile's Triumph in a Changing Market

In July 2014, the CRC (Comisión de Regulación de Comunicaciones, or Chamber for Regulación de Communications Regulations) resolution 444 (2014) became effective. It mandated that ‘permanence clauses’ in mobile service contacts were forbidden in Colombia. As a consequence, carriers would stay for the time needed to ensure payback. This initiated a downward trend at the high end of the mobile market, which shrank 53 per cent versus the first semester of 2014. Gustavo’s client, the carrier, announced immediately that it would, following this announcement, be focused only on selling the low-end-handsets.

This would have a disastrous effect on Sony Mobile’s market share, as its smartphones required the carrier’s support. It was in this context that Gustavo seriously began to question his personal values and mindset. What would it take of him and his account team to deal with this problem? As he commented, ‘The rapidly changing market affected the entire team’s mindset, including myself. We had fallen prey to negative mindsets while struggling to deliver the company’s sales goals.’

His reflections, based on surveys with his managers and his team, highlighted that he had to adopt a supplier-centric mindset and used manipulation to try to get what he wanted. He was aware that he was seen by his team as demonstrating overt arrogance and complacency, but was concerned they saw many of what he recognized as bad mindsets as being good. He realized that he had to change the entire approach of the team and also recognized that, in doing so, there was little risk – after all, it looked like no matter what they did, the client had made up its mind. He also became aware that the tension-induced relationship prompted by his customer also helped drive the negative mindsets.

The point is that our values and behaviours can be shaped by our customers: as we have seen, customers do not trust salespeople often, and it’s also the converse – salespeople do not trust customers, particularly those in procurement.

He was convinced he needed a radical rethink of his personal behaviours and mindset if he were to succeed, and not at all sure that he would be able to change the mindset of his customer. He used a range of critical reflection techniques, such as customer strategy grid, ‘5 why analysis’, appreciative enquiry, and customer’s customer thinking, to consider customer position.

Gustavo's Observations:

The measure that carriers care most about is how to build average revenue per user (ARPU). ‘The challenge of building ARPU growth is a goal that could only be achieved through consumer experience (Zhou and Rahman 2013) and one that could only be delivered with high-end smartphones such as Sony Mobile devices.

Gustavo and his team were convinced through research they had conducted, that the Colombian customers wanted a high-end consumer experience, and they would find ways to pay for this experience! It was Gustavo’s view that playing in the low-price segment would result in a loss of long-term focus for the client; they have started to give away the more profitable, high-end segment. His client had to keep their financing model intact to maintain the dominant position in the marketplace.

Gustavo and his team thought this through from the customer perspective, wanting the experience of the smartphone, and linked this to the stated goal of the carrier, which was to build market share through customer experience. He realized they were making a big mistake. Stopping the smartphone segment would have a disastrous effect on the carrier’s business and completely destroy all the differentiation they had built in recent years.

Gustavo and the team set about convincing the customer that:

• Their decision was wrong; and
• They could address the financial risk jointly by changing the barriers in the contacting terms with consumers and Sony supporting the financial risk.

This would only be done:

• If Sony had an exclusive deal with the carrier to promote Sony’s smartphones over and above others during the busiest Christmas trading period. (In return, Sony would ensure sufficient stocks were there to meet anticipated demand.)

Here we can see the passion, the energy and belief that were all required to challenge the customer. They approached the customer at multiple levels to persuade the customer to change their mind – as Gustavo commented:

Articulating this to the client was not easy – the client was reluctant to admit they had made a huge mistake. They overcame this issue by convincing multiple levels of key influencers within the customer’s organization that the financial model of how consumers bought phones had to be modified.

But what does it take to be bold and to have courage? It requires building a solid case, a compelling value proposition. A number of frameworks and tools to define needs in a creative way have been created. These include cracking the industry code, 3rd Box Thinking, the customer strategy grid, and Gibbs’ reflective cycle. There are a number of additional tools that help build a compelling value proposition.

The first is a way to consider the relevance and value to the supplier and the customer of the solution components being considered. The solution development framework is very simple to use. Its application is for when considering the question, ‘What assets do we have?’, listed in the solution component column (consider both tangible assets and intangible assets).