The main thing would be to clear house from the top down in the Playstation management. There's too many activists placing champagne socialism above catering to their audiences desires. Every studio also needs their HR departments replaced and diversity hires fired.
Secondly, stop chasing every trend and trying to compete with third parties. Stick to making games the third parties aren't prepared to put a decent budget behind, that complement the COD's, Fortnite's and GTA's. Astrobot and Stella Blade are great examples, as are their usual third person narrative titles, but bring back the oddities like Hohokum, Folklore, Concrete Genie and Puppetee.
Get budgets under control. Smaller teams with specific visions, shorter games and smaller scopes. If they could make Uncharted for $20m then they could make similar bangers for that today.
Remember that power is not what makes a great console. The PS2 was the second weakest system of it's generation, and the Switch handed the PS4 it's arse. Affordability is more important than pixels.
Finally, stop porting games to PC. Yes, PC players will piss and moan about not being given everything they feel they deserve, but giving your customers a reason not to buy your product is stupid. Beyond that, it means competing with third parties and making every game have to be profitable.
They need to return to their first party games being adverts for their hardware, not needing to make profit on every one, or even most of them, and just being as good for whatever niche audience they're trying to get into the Playstation ecosystem as possible. These games were good because they got to exist outside the normal competitive environment multiplats exist in. I'm sorry, but that's just why exclusives came into being in the first place, and is the only way they can be good to this day.
I know
@Stilton Disco mentioned this also, but I don't agree. To me that's like throwing the baby out with the bathwater. America is the biggest market, and the Yen is super weak (hence the Japanese price rises this month). Nintendo doesn't compete in the same space, not really on a tech or ideological level.
It's not about the money, it's about the people they'll be employing, and the state policies that they will have to be complying with. It is a den of vipers and no coincidence that the rot set in after the department was moved there.
Moving control out of the US entirely would be ideal, but even just moving it to Texas would be improvement. As long as they fire everyone first.