Message from Outside Directors

Hitachi’s Central Research Laboratory
twice. The majority of its research efforts
have business potential, and I look forward
to seeing the commercialization of these
R&D results at an early stage.

Globalization of Management
Hitachi has strengths in advanced technologies and in the broad scope of its businessfields, and the Company is rolling out initiatives in the Social Innovation Business ona global scale. The members of the Boardof Directors have visited major offices andPhilip Yeo

facilities in India, the United States, andthe United Kingdom. In addition, weparticipated in the Hitachi Social Innovation
Forum 2015, which was held in Las Vegas,Nevada. Working together with customers

Impressions of Hitachi’s Corporate

value through sustainable growth and to be

and partners, Hitachi provides a wide range

Governancea corporation in which all employees canof technologies and solutions globally.

work in a comfortable, secure environment.

Based on my experience at these events, it

In my view, Hitachi’s corporate governanceis clear that Hitachi enjoys a wide range ofis excellent. I joined the Board of Directorsof Hitachi as an outside director in 2012.

business opportunities.
Changes for Hitachi

Currently, outside directors account for 9 of
the 13 directors. In addition, 5 directors are

To accelerate the Social Innovation

goal is to derive more than 55% of its rev-from outside of Japan. I am most impressed

Business, from fiscal 2016 Hitachi made aenue from overseas markets in fiscal 2018.

that Hitachi is one of the few leading

major shift to a new system that emphasizes

Here the diversity of its human capital talent

corporations in Japan in the promotion offront businesses, which will implement

pool is key. It will be necessary to enhancediversity. In terms of their experience andmarketing while maintaining close contact

the capabilities of individual employees

cultures, the directors have a wide range ofwith customers. In addition, the Company

while effectively utilizing human resource

backgrounds and offer diverse opinions.

has clarified its market-in approach. For

rotations across Japan and overseas markets.

There have been many opportunities forexample, the President & CEO and other

These efforts should include the active

me to learn, and I believe that meetings ofexecutives will take a lead role in stepping

utilization of overseas global talent in

the Board of Directors are conducted in aup sales and marketing initiatives. Thatpostings at Hitachi headquarters in Japan.

manner that is highly meaningful.

approach is also clear at meetings of theMoreover, global markets are currently

Board of Directors. Outside directors havecharacterized by increasing uncertainty. In

the close communication between thebeen included in opportunities to meet withaddition to strengthening services anddirectors and the executive officers, who

local customers and partners. These haveproducts, Hitachi must take additional

communicate freely and openly. At meetings

included meetings of the Board of Directors

steps to improve profitability, such asof the Board of Directors, there are detailedin Delhi, India, in 2012; Washington, D.C.,

reducing costs through further diversifica-business briefings by each Business Unit

United States, in 2013; and London,tion of its procurement of parts and com-

CEO and executive officers. In response,

United Kingdom, in 2015. These meetings

ponents. Customers are managing theiroutside directors offer a broad range ofwere highly significant opportunities.

operating expenditures within limited bud-

Another distinctive feature of Hitachi is30

Hitachi is accelerating reforms to promote
globalization of management. The Company’s

opinions and views from their independent

Hitachi also implements a market-inviewpoints. The President & CEO openly

approach in regard to R&D, which will beup the global provision of solutions andwelcomes the comments of the outside

the source of sustainable growth in theservices that help customers resolve these

directors and works to reflect those com-future. A new organizational system thatchallenges. I believe that this will provide

ments in management. The executives ofsupports front operations has already been

opportunities to create new businesses andHitachi are aiming to increase shareholder

placed into operation. I have visitedlead to future growth.

gets, and accordingly Hitachi needs to step

Hitachi, Ltd. | Integrated Report 2016

But with great strengths like these, thechallenges can also seem not a few.
Maintaining margin growth with a
340,000-person workforce is no small feat.
Hitachi has a wealth of talented, innovative
human resources around the world, but it
will be necessary for each individual to further enhance and leverage his or her skills.
No matter how a company reduces waste
and increases efficiency, it is a continuous
theme that the company must keep constantits efforts to overcome the competition. In
this difficult environment, Hitachi needs tolearn how to make quicker management
decisions or completely change if theCompany wants to lead rather than follow.

Louise Pentland

Expectations for Hitachi
Hitachi’s Meeting of the Board

the Board itself has broadened to become

Hitachi needs to focus on steadily deliveringof Directors

more diverse in culture and experience.

on goals in the 2018 Mid-term Management

One example is the increase in the number

Plan while increasing the speed of decision

I became an outside director of Hitachi inof outside directors who are not Japanese.

making and changing risks and challenges

June 2015, and my overall evaluation ofThere is a good degree of debate and mul-into opportunities.

our corporate governance is that it is very

tiple points of views from the diversity ongood. At Hitachi, executive officers aggres-the Board, which includes these directors

continue to occur and could sometimes

sively incorporate the opinions of thewith different backgrounds.

affect the business of Hitachi. It will be

Board of Directors into management activi-Maintaining a focus on the next three toAlso, there are geopolitical changes thatnecessary to focus not only on geopolitical

ties. Hitachi has demonstrated a consistent,

five years and seeking to ensure Hitachirisks but also on cultural risks. In preparation

forward-looking approach that aims forremains competitive are the most important

for these risks, Hitachi needs to further

further progress. Many Japanese compa-themes that the Company is dealing with.

strengthen its cost competitiveness. Tonies have problems with rapid decision

If the management policies and organiza-

expand operations while reducing risk, itmaking, but one of Hitachi’s distinctive

tional reforms that have been discussed inwill be necessary to utilize overseas humanstrengths is the extremely fast pace of its

meetings of the Board of Directors over theresources, who have abundant knowledge ofmanagement. For example, when I ask apast few years take firm hold, and Hitachi

local markets, for top management positions,question about a particular issue at a meet-moves forward on that basis, then I believe

as in the case of British executive Mr.

ing, the answer to that question is always

that the Company is certain to be successful.

Alistair Dormer, who was appointed as theprovided at the next meeting. The

CEO of the Railway Systems Business Unit.

Company does not simply listen to theopinions of outside directors. They have aAs a legal specialist with experience in
Hitachi’s Strengths and Challenges

clear focus on actually incorporating thosethe management of global corporations, I
will do my utmost to contribute to Hitachi.

opinions into actions and drawing on them

Hitachi has numerous strengths and thoseThrough meetings of the Board of Directors,

in management activities.

that are always top of mind for me are theI would like to utilize my knowledge in a

global reach of the Company, the diversifi-

wide range of fields, such as corporate

many diverse industries. This means thecation of industries, the highly talented

culture, organizational reform, and cost

Company needs a board with a diverseand skilled workforce, and the longevity ofreductions, in Hitachi’s management.

makeup to enable both the skills andthe talent pool within Hitachi as well as thespecialized focus that are needed to govern

leadership, including the Chairman of theover a company like Hitachi. In that regard,

Board and the President & CEO.

Hitachi has a global business involved in31