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In September 1972, a year after the San Diego plant was completed and production of Trinitron TVs began, a US national was appointed president of Sony Corporation of America. The new president, Harvey L. Schein, was from CBS Records, Inc. and had played an instrumental role in the establishment of the CBS/Sony joint venture by suggesting the original idea to Sony. Iwama left the United States the same year that Schein became president, but he remained the company's chairman. When Shigeru Inagaki left the post of vice president, Iwama sent orders for Raymond J. Steiner, sales manager for the US market, to assume the post. With these two appointments, Americans filled both the position of president and vice president.
Actually, Schein was the second American president of SONAM. In 1966, Ernest Schwartzenbach, who was a member of the Smith Barney team when Sony issued ADRs, joined Sony upon his retirement. Morita had insisted that he join and had great confidence in Schwartzenbach saying,  He knows Sony inside out. Unfortunately, Schwartzenbach suddenly passed away in 1968. Iwama succeeded him and spent several years in the United States, as Morita had done years before. After his initial period in the United States, Iwama spent most of his time as president shuttling back and forth between the US and Japan. Despite Iwama's absence, steady expansion within the US market was realized thanks to the efforts of Inagaki, who was then SONAM vice president. Inagaki had been in the United States since the founding of Sony Corporation of America in 1960, providing steady support for thirteen years. Fortune magazine wrote that Inagaki was the force behind Sony's US sales growth from $300 thousand to $100 million in just ten years, and his appointment to the post was one of the most instrumental factors for the company's success.
Morita believed that SONAM needed American management to make it a truly US company. It had to break away from its dependence on Japanese managers. The hiring of Schein, and later Steiner, were logical steps in Sony's localization of management.
Schein's management objective was very clear: to generate profits. He introduced comprehensive American-style streamlining and budget controls. He also believed in short-term profits. It was inevitable that such a firm believer in drastic cost cutting to increase profits would soon clash with his Japanese staff and the Sony management in Japan. Unlike Schein, they believed that investing from a long-term perspective was of primary importance. This included an emphasis on strengthening the company through such means as training personnel, advertising, restructuring customer service systems, and building spare parts warehouses.
Morita had given Schein a free reign, but tried to persuade him of the importance of investing for the future, saying, Chasing short-term profit will consume all we have built-up over the years. Morita tried incessantly to make Schein change his approach.
When Betamax was introduced, the head office in Tokyo gave permission to SONAM to invest as much in advertising as was necessary to promote the new concept to the market, but Schein brushed off the expense as unnecessary. Schein was a truly unique and strong-willed man.
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Harvey Schein (center) in a meeting with Iwama and Kodera |
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When Schein attended budget meetings, raised voices and banging on the table were common. Schein had been attracted to Sony, and he was working to achieve the first mission of private companies, which was basically to turn a profit. He believed that that was the mission he was given by Morita. Thanks to Schein, Sony gained a keen awareness of costs. SONAM's transformation into a modern US company can be attributed to him. US businesses are often run by a chairman also acting as the CEO; this gives the chairman authority over the chief operating officer, who is usually also the president. Iwama had continued to stay on as chairman of Sony Corporation of America after returning to Japan, but there was a movement to appoint an American to this post as well. In July 1977, Schein and Steiner were promoted to chairman and president respectively, and the helm was thus completely handed over to Americans.
Unfortunately, this did not last long. Steiner passed away in January 1978 and Schein retired in February of the same year. However, this was probably one of the first instances in which a wholly owned US subsidiary of a Japanese company was managed entirely by Americans.
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