COO Message

Creating a Growth Story for the Next 10 Years
with the Lumada Business at the Core

You were appointed President and COO in
June of this year. Can you tell us about
your aspirations for this position?

26

Hitachi Integrated Report 2021

Q

In closing, please tell us President
Kojima’s guiding principles, andgive us a message for stakeholders.

Hitachi’s core principle of contributing to society throughthe power of technology remains unchanged. W iththat in mind, I will continue my unwavering efforts tomaintain a bird’s-eye view of all technological innovationas it unfolds—not only Hitachi’s technologies but also
technologies in completely different fields—and toconstantly monitor those trends. This approach has been
shaped by my own pride as a researcher.
I can declare without fear that we will undoubtedly
achieve our goal of recording “10 years of growth”
moving forward, and I will embody in my actions themotto “Always follow through on your promises,” which
I once saw displayed at the Central Research Laboratory
and which has become a central part of my philosophy.
During this coming decade of growth, one major theme
will be to enhance returns to all stakeholders, including
shareholders, investors and employees. My goal is to gain
people’s understanding and support by communicating
my own thoughts on matters such as growth strategies
and to comment on the progress of those strategies in atransparent and easy-to-understand way.

Data

President & COO

The markets where I expect to see the most growth areNorth America and India. North America—particularly theUnited States—is investing aggressively in infrastructure,and various domestic industries are seeing a recovery, so I
see this as a growth market with huge potential. India, which
has become the world’s largest source of digital talent, isalso a key area that we approach alongside North America
as we work to expand the Lumada business. Japan also
has many companies that create outstanding products, so I
think this market has great potential as well.
The sectors that demonstrate the greatest growth potential
include the Industry sector and the Smart Life sector,
especially the field of genetic engineering, which includes
regenerative medicine and iPS cells.

Governance

Keiji Kojima

To guide future growth, we must tie the assets acquired
through large-scale M&As into a comprehensive plan tosteadily increase corporate value. The key words in thisregard are simplicity, digitalization, and globalization ofmanagement.

To me, the starting point for Lumada is co-creation withcustomers aimed at resolving social issues. When we began
Lumada, we said that researchers would share social issues
with customers and undertake co-creation to resolve thoseissues, and then transfer the insight gained from theseframeworks and systems to the business side, to provide themin the form of the Social Innovation Business. Up to now, wehave expanded co-creation-style SI with a particular focus
on the IT sector and have used this approach to vigorously
promote the Lumada business. The IT sector has grown tothe point where it currently generates about half of Hitachi’s
income, but it only accounts for about 20% of sales. Our nextmanagement goal is to accelerate the digitalization of projectand design/manufacturing assets, which account for most of
the Hitachi Group’s sales. Digitalization is moving forward inbusinesses that demonstrate a strong affinity with the Lumada
business, such as the Building Systems Business Unit.
However, from this point onward we will go one step further,placing all of Hitachi’s businesses on the Lumada platform toaccelerate growth. In addition, we need to promote full-scale
globalization, mainly through Hitachi Vantara, which drives theLumada business on a global scale. In that sense, I would
say that right now, we have achieved 30% or 40% of our“aspirations.”
Hitachi ABB Power Grids, which we acquired last year, ispositioned not as a business in the Energy sector but rather
as a core business that supports the environment, one ofMoving forward, what are the main markets
and fields where you expect to see the mostgrowth in the Lumada business?

Sustainability

Q

Please tell us about the direction and key
initiatives driving the creation of the next
Mid-term Management Plan.

QYou said that the Lumada business holds
the key to growth. How much progress do
you think has been made toward realizing
the future vision for this business?

QValue Creation

For about 10 years following the financial crisis that began withthe collapse of Lehman Brothers, successive management teams
implemented drastic structural reforms to transform Hitachi into
a global company. They took a number of steps to accomplish
this, one of the most prominent examples was the restructuringof the company’s business portfolio. Now that these structuralreforms have had time to take effect and serve as the foundation
for growth, we are approaching a business portfolio that is wellequipped for future success. My mission is to create a path for
Hitachi’s continued growth over the next 10 years based on thisfoundation. This is very satisfying and meaningful work.
Back when I was serving as CTO, Mr. Nakanishi, the former
Executive Chairman, communicated a strong message to me
when he told me that “the Social Innovation Business is Hitachi’score.” This stuck with me and ever since I have worked to
execute reforms at research laboratories worldwide to strengthen
Hitachi’s innovation capabilities. First, I undertook a major change
in direction as I prioritized creating an R&D structure close tosociety and the customers. Specifically, rather than using theconventional approach of creating products as an extension of
fundamental research and elemental technologies, I encouraged
an approach of identifying social issues and back-casting fromfuture forecasts to define our key research themes. Ever since webegan the Lumada business in 2016, we have invested immense
energy into expanding this business. Since my first encounter
with database research, I have been confident that data was animmensely valuable resource which would be a driving force that
could change the world. Now that we are approaching the final
form of the business portfolio, we will create and follow a pathin which the Lumada business serves as a driver for Hitachi toachieve the next stage of growth.

the three fields where we can demonstrate growth throughLumada. As we move forward toward our goal of carbon
neutrality for the Hitachi Group as a whole, Hitachi ABB Power
Grids has an important role to play as a crosscutting businessthat creates synergies with all sectors. GlobalLogic is similar inthat its business demonstrates great value and synergies withall sectors. We will link these newly secured resources with all
our businesses while working to accelerate global expansion
and growth in the Lumada business.

VisionQ

Hitachi’s business can be separated into three maincategories: IT, projects, and design/manufacturing.
Management must be simple to ensure the efficient useof assets characterized by different risks and growthmechanisms. Acting with speed is also crucial in achieving
continued growth that keeps pace with changes in the world
at large. Finally, the effective use of digital technologies inmanagement is key to increasing speed.
The structural reforms that Hitachi has implemented havebeen executed to achieve global growth. We are promoting
integration with overseas companies that have recently
joined the Hitachi Group, including Hitachi ABB Power Grids
and GlobalLogic, and we are making a full-scale shift toward
management from a global perspective. We are building
an operational structure that will enable us to demonstrateeffective Group synergies, while at the same time preserving
the speed and culture of a top global company. To do this,even as we press forward with the globalization of existing
Head Office functions, we will further accelerate growthby establishing smaller global corporate functions in eachregion to complement those Head Office functions.

27