Discussion Paper No. 52

Growth trajectory of a firm:
A Case of Fanuc from venture within Fujitsu
to a leading company of Factory automation

Tomoatsu Shibata

Data Science and Service Research
Discussion Paper

Center for Data Science and Service Research
Graduate School of Economic and Management
Tohoku University27-1 Kawauchi, Aobaku
Sendai 980-8576, JAPANGrowth trajectory of a firm:
A Case of Fanuc from venture within Fujitsu to a leading company ofFactory automation

Tomoatsu Shibata, Tohoku University

1

Introduction: in-depth longitudinal case study of Fanuc １This case presents and analyzes the longitudinal process of Fanuc’s growth from small
business born as a venture within Fujitsu until becoming the world's leading factory automation(FA) company. It shows the mechanisms behind Fanuc’s sustained growth past more than 40
years.
1. Overview of Fanuc and the machine tool industry
In the period of more than a quarter century since 1982, the Japanese production of machine tool kept
its top position in the world, as depicted below in Figure 1. It is to be contrasted with the Japaneseelectronics industry including the LCD TV industry, which spectacularly emerged as the world top
player in late 1980s, but whose dominance in the world market was short-lived in retrospect.

（million dollar）

20,00019,000GERMANYCHINA（include non-CNC）
TAIWANITALYUNITED KINGDOM

18,00017,00016,00015,000JAPAN
KOREA
AMERICASUISSERUSSIA

14,00013,00012,00011,00010,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
81

83

85

87

89

91

93

95

97

99

01

03

05

07

09

11

13ｐ

Source：American Machinist, Gardner Publications, Inc.'s data was used to make this graph by Japan machine tool builders’ Association.
Footnotes:
1. Before 1990s,<Russia> means [Soviet Union], and <Germany> means [west Germany].
2. Modeling tool is not included.
3. The data of 2013 is estimated in February, 2014. And the data of 2012 is a revised edition.

Machine tools are often referred to as “mother machines” because they are machines thatcreate other goods such as automobiles and electrical appliances. Automobile companies have a
lot of machine tool to manufacture cars in their factory. Accordingly, competitiveness in themachine tool industry is intimately tied in with the competitiveness of other entire
manufacturing industries.
The Japanese machine tool industry came to have such competitiveness because it wasunderpinned by the superior functionality of its NC machine tools, i.e., machine tools controlledwith NC (Numerical Control) devices. In Japan, compared to Germany or America, the share ofNC-type cutting machine tools was extremely large in the cutting machine market, and one of
the chief factors that enabled Japan to produce many superior NC machine tools was theexistence of NC device supplier Fanuc. Japanese machine tool manufacturers left the design andproduction of NC devices completely up to Fanuc, which enabled them to pour their efforts into
innovating the machine tool itself other than NC devices.
2

The “Made in America” report from the MIT Commission on Industrial Productivity survey
states the following: (Dertouzos, 1990)“NC and NC machine tools give businesses the flexibility and automation needed to provide
small amounts of, and a wide range of parts for the automotive, electronics and machineindustries etc., just-in-time.”“NC design and production for NC machine tools in Japan is all done by Fanuc, a single
company. This is not so that Japan can gain an economic advantage of scale, but to solve theproblem of compatibility that has troubled American machine tool users.”
Since gaining independence from Fujitsu in 1972, to date Fanuc has achieved close to 50% of
the global market share, and has sustained an extremely high business profitability of around30%.

Figure 2 Fanuc History in Performance Indicators

2 Tracing the growth of Fanuc
It’s possible to conceptualize Fanuc's growth as 3 historical phases (see Figure 3). Phase 1, from1956 to 1972, is the phase beginning with the company's inauguration as a venture within
Fujitsu to its separation from Fujitsu. Phase 2 corresponds to the successful technologicaltransformations the company achieved with implementation of DC servo motors and MPU(microprocessor unit), leading to the establishment of its present-day technological systems.
This meant the establishment of dominant design of NC device (Anderson and Tushman, 1990)
corresponding to the period up to 1980. Phase 3 is then the following period of dramatic market
expansion in which the company brought about bestselling NC device, called series 0.

3Following, we described each phase of Fanuc's growth trajectory in sequence.

Figure 3 Stages of Growth at Fanuc
1956 Numeric control (NC) discovered by Seiuemon Inaba

1959 - 2 important discoveries(algebraic pulse distribution system, electric hydraulic pulse monitor)
Phase 11969 - Fully modularized NC (FANUC 260) completed

1972 - Company separates from Fujitsu

1974 - Partnership with Gettys, DC servo motor completed

Phase 21975 – NC with MPU (FANUC 2000C) completed

1978 - NC with Intel 8086 (System 6) completed

Phase 3
1985 - Global bestseller NC (Series 0) completed

2.1. Phase 1 (1956 to 1972)(1) Creation of an internal venture businessTo understand Fanuc's history, we have to look back as far as 1956. Technical director at Fujitsu
at the time, Hanzo Omi, made the decision to break into the new field of computers andcontrollers beyond communications, and appointed Toshio Ikeda and Seiuemon Inaba as those
respective project leaders. At the time, Fujitsu was only involved in communications equipment,
and Ikeda and Inaba were simply instructed to find out what could be done in the new fields.
However, there were many options for control related technologies, and the NC development
theme eventually put forth by Inaba was not a simple discovery. In particular, Inaba, amechanical engineer who had graduated from the school of precision engineering at Tokyo
University, had to search for a field dealing with machine controllers that was not the same as
the process control field which already had an established market at the time. In the midst oftrial and error in which a development theme had been difficult to determine, Inaba discovered
the NC theme when looking at a copy of the MIT report (Dertouzos, 1990).
The first time that Inaba had heard of the MIT report was in October of 1956 at a conference
held on automatic control at Waseda University. At the conference, the then California
University Professor, Yasuto Takahashi, showed Inaba a copy of the Scientific Americanfeaturing an article about NC milling machines. Inaba said the following about his sentiments
when he first saw the MIT report.
“Since my background are in the mechanical engineering, I remember a sense of strong
interest in servo mechanisms the moment I first heard about the MIT report, and I immediately
got consent from my boss, Director Omi, to set the R&D theme as NC for the machine control
4

team.…Then, the MIT report introduced to me by Professor Yasuto Takahashi became like abible for our research for sometime… ２.”
In this way, Inaba discovered the new field of NC, finished his trial-and-error efforts to findout what could be done, and went on to execute a new business strategy. At that time, Inaba’s
development project team was a completely separate organization within Fujitsu from thecompany's existing communications equipment departments, and top management at Fujitsu had
given the team a certain level of autonomy and freedom.
(2) The invention of the algebraic electric hydraulic pulse motor
Numeric control began at the Fujitsu Nakahara Factory laboratory with a project teamconsisting of four or five engineers from both the electric and mechanical fields. At the time,
Inaba, a team leader who had only just reached his 30s, pushed forward with development. The
first prototype was then achieved in 1957. As previously stated, the critical areas in NC are thecomputing and servo mechanisms. This prototype adopted a new element called the Parametron
invented by Eiichi Goto of Tokyo University, and was an NC system that employed electric
servo motors for its servo mechanisms ３.
In 1958, Makino Milling Machine Co and Fujitsu jointly exhibited an NC milling machine at
the Osaka International Trade Fair, however it wasn't a machine that could withstand practicalapplication. Then in 1959, Hitachi Seiki and Fujitsu delivered an NC milling machine to
Mitsubishi Heavy Industries’ Nagoya Aircraft Works. This could have been said to be the firstcommercialized NC product, but it had a problem in that it blew an average of 1 electronic
vacuum tube every day.
In this trial-and-error process, Inaba brought together his own knowledge of mechanicalengineering, and Fujitsu's know-how about digital circuitry with the knowledge in the MIT
report, and through repeated prototyping experiments with NC machine tools, all of thisknowledge accumulated and became embodied as the tacit knowledge of the Inaba team.
All of this came to fruition with the following epoch-making invention. In 1959, Inaba and his
team invented the revolutionary “algebraic pulse distribution system” and the “electric hydraulicpulse motor.” These two technological innovations enabled dramatic improvement in NC
performance which was recognized both in Japan and internationally with a number of awards.
The organization responsible for this invention was the project team in Fujitsu that the company
referred to as “Inaba’s NC Brigade” or the “Inaba Family.” The algebraic pulse distribution
system was brought about through joint research with University. Inaba said the following:“Aiming for devices that can be put to practical use, we would like to produce stability andreliability in both the circuitry and the servos. We were fortunate to have been greatly inspiredby electrical engineering Assistant professor Tatsu Motooka of Tokyo University Engineering
Department, and his assistant, currently Tokyo University Institute of Industrial Science
Professor Kusuo Yamaguchi. We dispatched an engineer from the Automatic Control
Department as it was called at the time, which effectively became the brains of the developmentfrom where we received guidance ４.”
As a result of this joint research, the invention of the “algebraic pulse distribution circuit” 5technology that could calculate the combinations of arcs and straight lines that make up theforms of mechanical parts - came into being. Since its establishment, Fanuc has been extremely
proactive in bringing in knowledge from universities .
Fanuc's adoption of open loop electric/hydraulic pulse motors was opposite to the closed-loop
DC motors adopted in the United States ５. Electric hydraulic pulse motors consist of an electricpulse motor and a hydraulic servo, in which the output from the electric pulse motor is
amplified by hydraulics enabling significant power. Later on, when Fanuc was established, thistechnology was invented and patented by Inaba himself, although he got the idea from theautomatic exchange equipment that were being built by Fujitsu at the time. Inaba reminisced on
those times as follows:“I couldn't ask the professors about the servo, so I had to think up something myself, but then I
recalled the automatic exchange equipment that Fujitsu had been manufacturing ６.”
From that idea, Inaba imagined driving a motor by inputting pulses, and went on to prototype
the electric pulse motor. However, this pulse motor alone was unsatisfactory in that was not able
to deliver much torque, so Inaba imagined amplifying the torque by combining the pulse motorwith a hydraulic motor. This was the bones of Inaba’s invention. Inaba commented as follows:“The department of precision engineering from which I graduated was known as the school ofarmory before the war, and as the name suggests, it was artillery that I studied. The gun turrets
on warships were driven by hydraulic motors. Using these hydraulic motors with NC servo
mechanisms, I tried controlling flow with the electric pulse motor ７”.
As described above, Inaba did not only start out with closed innovation R&D initiatives in an
organization within Fujitsu, but also made concerted efforts to bring in technical know-how
from outside the company (Tokyo University and the MIT report) and thus promoted open
innovation (Chesbrough, 2003).
(3) Creating the NC market
In 1959, through the process of prototyping, experimenting and assessing the 2 inventions, theperformance of NC was dramatically improved, however market demand did not increase withspeed and uncertainty of NC market continued. It was not until 1965 that the NC Department
got profitable. In other words, it took nine years from Inaba’s discovery of the NC technology in1956 until the NC business turned a profit, but from then on, Fanuc's shipments of NC productsrose dramatically from 388 units in 1965, 483 units in 1968, 1184 units in 1969, to 1684 units in
1970.Following is the process of creating NC market.
With the two inventions in 1959, the standard had already been set for NC performance andstability to meet the demands of practical application. Inaba said the following thecircumstances at the time:“We had great confidence in the NC technology, but unfortunately the NC machine tool
market was still quite small, and it wasn't easy to achieve sales. Therefore, our huge efforts went
unrewarded and our monthly accounts remained in the red ８.”
6

The NC machine tool market had not yet matured, but Inaba understood the nature of themarket well. In other words, there is some critical point in a market, and until that critical pointis reached, demand does not rise very much, but when it is, market demand expands rapidly.
Inaba had the following to say about the growth of new market.
“At a certain time, markets grow explosively. There are many companies that can't wait forthat and give up, ending in failure. We endured that period patiently, and once 1966 camearound the market for Japanese NC machine tools suddenly took off… (abbreviated)… Thatmeans we waited 10 years from 1956 when we first embarked on the development. That
explosive growth continued afterwards, but those kinds of issues are things that a company must
face ９.”Even though he was unable to see growth in the market initially, Inaba continued with the NC
development and proactively brought in new technologies. In actual fact, Fanuc shipped
FANUC 220 using transistors in 1962, FANUC 260 with total integrated circuitry, and by 1969
had succeeded with complete modularization, which accelerated growth in the NC machine tool
market - the number of completely modularized units shipped in 1969 was three times that ofthe previous year. Fully modularized NC meant that the company could respond to a wide rangeof customer demands at low cost.
The main reason for the losses the company experienced up to 1965 was custom orders.
Custom orders grew vigorously as the sales department took any orders to extend ordervolume １０. However, custom-made products cost more than standardized products, and when thecompany investigated they found all of these orders were making a loss. To bring costs down,
companies have to make a wide range of standardized parts, but to respond to the diverse
demands of the market, custom-made items are also required, and the way to combine andovercome these contradictory aspects is full modularization. In other words, all the modules that
Fanuc produces are standardized, but combining them as required enables the company torespond to various market demands.
For example, the FANUC 260 is a range of functional modules created by analyzing thedetails of specifications demanded for a variety of machine tools. By mass-producing andstocking these, modules can be assembled to build an NC device to meet the specific needs ofindividual users. The modules are electronic circuits with specific functions created by
combining a range of logical elements such as transistors and memory elements, which aremounted on separate printed circuits and units. See Figure 4 for an example of the FANUC 260
configuration.
FANUC 260 has three types of basic control units, about nine basic options, and about 20
additional options, which means that more than 60 million combinations are possible. Moreover,modules can be connected with screws and cable connectors, enabling completely solder-free
assembly using only screwdrivers and spanners. This makes it extremely easy to add functions.
Thus, required functions can be added easily without having to do any rewiring on-site with theuser. By adopting this completely modularized NC product architecture, Fanuc can respond to awide range of market demands at low-cost, which in turn greatly contributes to further market
expansion.

7

Figure 4 Structure of fully modularized NC (FANUC 260) (Phase 1)

ModuleModuleBasic
Options
Options

Additional
lockerBasicControl
Unit

Control unit

Drive unit

(4) Breaking away from Fujitsu
When the NC Department moved into the black in 1965, the number of NC units produced withthe expansion of the NC market stabilized, and the department was growing as high earnerwithin the company. In fact, Fujitsu's profit ratio in 1970 was 6%, although the NC Department
had achieved more than 20%. It was at this point that the investments made into the NC
Department over more than 10 years began to bear fruit.
However, in April of 1972, management at Fujitsu decided to separate the NC Department
from the Fujitsu and form a new company, Fanuc. At the time, Fujitsu was facing enormous
funding requirements needed to develop the Japanese-made computer. Therefore, since thelong-term investments in NC had begun to bear fruit, it seemed like a rational judgment for
Fujitsu to take the income from the NC Department and put it in the Computer Department. But
Judging from the results past 40 years, it was obvious that separating Fanuc from Fujitsu would
be right decision for business growth.

8Figure 5 Organizational changes in each phase of Fanuc’s transformation[Phase 1]
R&D Department-based
Ambidextrous Organization- NC technology discovered- 2 important NC inventions
・Algebraic system
・Electric hydraulic pulse motor- NC (FANUC 220) commercialized- Fully modularized NC with ICs(FANUC 260) commercialized

Fujitsu top managementComm.
equipment
department- Exploitation process

Dr. Inaba’s
project
team- Exploration process

Ambiedextrous management[Phase 2]
R&D Department-based
Ambidextrous Organization
Supervisor (Dr. Inaba)
EH pulse
Motor
Dev. Dept

andDC servo
Motor Dev.
project

Technical transformation fromelectric hydraulic pulse motor to
DC server motor andcommercialization
Technical transformation from
hardwired to soft-wired andcommercialization

Supervisor（Mr. Kobayashi）
Hardwiredlogic
Dev. Dept- Exploitation process

Soft-wired
logic Dev.
project- Exploration process

Ambidextrous management[Phase 3]

R&D Department-based
Ambidextrous Organization- High reliability, fully automatedproduction system- New software architecture achieved- Global bestseller NC (Series 0)commercialized

Fanuc top management

Existing
NC Dept.

- Exploitation process

Series 0
Dev.
project- Exploration process

Ambidextrous management

2.2. Phase 2 (1973 to 1980)(1) Technical change from electric hydraulic pulse motors to DC servo motors
The year after breaking away from Fujitsu in 1972, Fanuc was facing an unforeseen challenge.
That was the first oil shock of 1973. As an opportunity, user assessment of the electric hydraulicpulse motors that Inaba had had absolute faith in began to change. There was a hydraulic pump
was required to drive the electric hydraulic pulse motors, but the pump was extremely
inefficient - for instance it took a 100 hp drive to get a 50 hp output. However, the electric
hydraulic pulse monitor was the chief technology that had given Fanuc its unique position, andas mentioned, was invented by Inaba himself. For those reasons, in those circumstances, there
was unusual attachment to Inaba’s electric hydraulic pulse monitor. In fact, Inaba said thefollowing to his friend at Siemens at the time.
“Taking the electric hydraulic pulse motor away would be the same as taking away my life１１.”
But at the same time however, Inaba had been carrying out various experiments to try to find a
new type of motor, which he recalled as follows:“At the time, I ordered two things, firstly I told Koyama to develop a new electric pulse motorin four months, and secondly I told Endo to investigate American company, Gettys motor １２.”
In other words, firstly Inaba ordered Koyama to develop an oil-free high-power electric pulse
motor in January of 1974. The electric pulse motor uses the same open loop method as the9electric hydraulic pulse motor, and even though it did not use oil, Inaba was still heavily
committed towards the open loop-type pulse monitor. In addition to Koyama who wasdeveloping the electric pulse motor, Endo conducted a thorough survey of closed-loop DC servo
motors as the alternative approach.
Inaba prepared, just in case, to negotiate for technological partnership on the closed-loop DC
servo motor with Gettys. Then as instructed, Koyama completed the electric pulse motor
development within the allotted 4 months, in May of 1974. However, because the noise of thismotor was extreme, Inaba decided it couldn't be used practically, and decided to do away withthe open-loop technology of the pulse motor and switch over to the closed-loop DC servo
motor.
Once Inaba had made that decision, Fanuc engineers obtained schematics for the DC servo
motors from their now technological partner Gettys in the United States, and completed a DC
servo motor in a mere two months. Then in September that year, the company exhibited an NC
device using DC servo motors at a machine tool fair in Osaka. This was actually a very
important decision for Fanuc. Switching from the pulse motor to the servo motor, and from theopen-loop to the closed-loop systems means the change of basic design concepts. Looking backon those times, Inaba said the following:“If my decision had been even just a little bit later, the share we now enjoy would probably
have ended up with another company.… (abbreviated)… at the time, if I had stuck with theelectric hydraulic pulse motor, the Fanuc we see today wouldn't have existed １３.”Inaba recalls those times as difficult ones. As the inventor of the electric hydraulic pulse motor,
Inaba had a strong attachment to the technology, but also as a manager, he was caught between arock and a hard place of having to look squarely at the limitations of his own technology. And it
was from that experience that Inaba began to think that “Technology does have a history. Howeverfrom the engineers’ point of view, there is no past, only creativity.”(2) Technical change from hard-wired to soft-wired by adopting MPU
Later in 1975, Fanuc developed the FANUC 2000C NC equipment with Intel's 3000 series MPU.
This was the world's first NC equipment with built-in MPU. Adoption of the MPU meant a shift
from control using circuitry built with transistors and diodes, to control using software. In otherwords, this was a huge shift in NC architecture from the hard-wired to the soft-wired. NC device
using MPU is called computerized numerical control (CNC), and is often distinguished fromconventional NC.
Technical issues that confronted the development of CNC were performance and reliability.
“The biggest issue was whether a computer running software could process interpolation. We
performed various simulations and actually tried things to find out what was possible and what
could be known, but the interpolation issue was the biggest issue.… (abbreviated)… we used
semiconductor memory, but the technology hadn't been properly established, and the
manufacturer couldn't provide us with the right advice. For example, when using ICs, but wewere groping for answers because we had no idea whether ICs could be mounted on printed
circuit boards and connected together by etching the copper on the board, and we weren't sure
how to increase reliability in terms of noise １４.”
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To deal with these technical uncertainties, the company formed a new computerized NC
design section in addition to its existing hardwired NC design section, and operated both
departments simultaneously. The hardwired NC section was involved in developing NC formass production using technology that had already been established, and its aim was to develop
highly reliable NC at a low cost. On the other hand, the goals of the computerized NC section
was to pay attention to the trends in cutting-edge semiconductor technologies and whether they
could be incorporated into NC systems, and whether performance and reliability could be
improved. Thus the technological and design objectives of both departments were completely
different, so the organizations were separated. Director Kurakake said the following about thatsituation.
“We completely split the organization into separate hardwired and computer sections. There
was a manager overseeing the both sections at that time, and I was put in the computer section
but had no lingering attachment at all to the hardwired section. I don't know what would have
happened if we had tried to do it together. For my part I had absolutely no regrets about that,
because we were able to do something new and get involved with the potential of computers １５.”
In this way both sections worked in completely different directions, but were overseen by one
person, director Kobayashi, and organizational consistency was sustained by him.
“The manager oversaw both sections, so he knew the limitations of the current version of NC,
and thus was able to see what needed to be done next, but there was a serious problem in trying
to figure out how to develop beyond the current products which were creating revenue １６.”
Then around 1978, the NC systems using semiconductor technologies had improved to thepoint where they would surpass the hardwired NC in terms of performance and reliability, andso the hardwired NC design section was absorbed into the computer NC design section. Until
that time, the two technological systems of hardwired and soft-wired had existed in parallel, but
it was in 1978 when the company technologically integrated the two into the computerized NC
only.
In 1978 Intel developed the MPU 8086, a single chip-type IC similar to those that we can still
see today, and Fanuc developed its System 6 using the 8086 in 1979. The success of the System
6 made Fanuc the first company in the world to adopt the 8086 for mass produced goods. After
that, Intel went headlong into the PC business. However, for Fanuc, the success of
implementing the 8086 was a decisive moment for Fanuc's triumph in the NC market.
Compared to Fanuc, American NC manufacturers were not as proactive about implementing
semiconductor technologies such as MPUs, which was a fatal move on their part.
As described above, phase 2 did not only involve Fanuc maintaining business by sales
activities and improvements and upgrades to existing NC systems with the total modularizationof hardwired business that grew out of phase 1, but Fanuc also engaged in serious strategy
change to deal with structural changes brought on by the oil shock and MPU.
2.3. Phase 3 (1981 to present)(1) Developing Series 0, bestseller NC
11

By shifting technology from hardwired to soft-wired in the second phase, the new NC withproduct flexibility and expandability caused the market to grow significantly. This section will
illustrate developing process of the Series 0, bestseller NC. The Series 0 went into mass
production in September of 1985, and at the end of July 2004, 350,000 units had been shipped,becoming the #1 global bestseller computerized NC product.
The Series 0 failure rate is 0.008 per month per unit with its extremely reliable technology.
When using industrial goods like NC, the importance of reliability is higher than consumables,
since if industrial goods breakdown, for example in an automobile factory, the production line
has to be stopped. The concept behind the Series 0 was to use technologies accumulated up tothat time, and to optimally equip the product with the most compact NC possible. Rather thanredesigning to produce cutting-edge technologies, that meant polishing existing products, andfinding new ways to assemble them.
High reliability can only be achieved by the continuous accumulation of technology, and will
never be achieved in a short space of time. Making new functions and adding them to existingproducts is one way to go, but products that are highly reliable are not brought about by adding
something new, but by unceasingly rethinking the entire product, and in some cases, adding new
functions can cause misalignments in entire systems, thus reducing the reliability of a product.
It is also difficult to assess reliability. Functions and performance can be easily evaluated byactually trying them out. Similarly, the cutting speed and precision of NC machine tools can beeasily measured by actually using them. However, malfunctions are often caused by on-site
unplanned use of equipment, which is why it is difficult to evaluate product reliability.
To improve reliability of hardware, it is important to reduce the number of components, andreduce the interdependency between components. For that reason, a range of parts such as
custom LSI, hybrid ICs, printed circuits, power sources and display technologies were rapidly
developed for the Series 0. And by using a thin display, the depth required for the display was
reduced to about one third of that required for a CRT. As a result of these measures, the Series 0
has twice the processing speeds of older equipment with about half as many parts. Highreliability is the result of rethinking design based on accumulated technologies.
There are 2 main factors behind the success of Series 0, both of which are innovations in asense, the first being the total automation of Fanuc’s factory for high reliability, achieved byrefined manufacturing and design, and the second being the development of new softwarearchitecture to promote “user innovation” (Hippel, 2009). We describe these 2 factors insequence.
(2)Design for Manufacturing
One reason for the success of the Series 0 was the accomplishment of a fully automatedfactory. One of Fanuc's strengths is its ability to substantially reduce costs with factory
automation. The Series 0 was the first time the company achieved full automation. For thatreason, the Series 0 hardware design had to be reconsidered from the point of view ofmanufacturing. In short, to achieve fully automated manufacturing consideration must be given
from the beginning at the design stage.
With NC manufacturing, firstly components have to be mounted onto printed circuit boards,
which is a job done by automated machines. Then, once the components have been mounted
onto printed circuit boards, each board must be tested, which is done automatically by a12

specialized testing machine to raise efficiency. Once testing is complete, several boards areassembled to create a single NC device, which is also done by a robot. Finally, the assembled
NC devices are tested in another machine for overall performance. The Series 0 was the first
product created with this type of full automation. Kurakake said the following:“The new thing here was the automated mounting, and automated assembly. Whereas
previously factory workers had mounted circuit board components by hand, this was the firsttime we have achieved 100% automated mounting. The boards are assembled automaticallyusing robots. This was also a new idea １７.”
To achieve fully automated manufacturing like this, design concepts considering
manufacturing are needed. Even with aligning components onto printed circuit board, design
has to consider everything from component selection, how the robot can grab them, through to
how to tighten screws. How big the screws need to be, where should the screw holes be…
design has to consider everything down to the tiniest detail. That means right from the initialstages of design, the demands from manufacturing must be taken up, and meetings with
manufacturing staff have to be held frequently. Kurakake had the following to say about design
considerations.
“For a robot to grab an object, it is necessary to include a hole on the device for the robot to
grab. It's only a little modification, but if time is not given over to consider how the robot can
grab component in the design, and the robot can't pick things up once the equipment has been
built, then you are already losing the race. That the type of equipment deployed was designed inconsideration of how to make something １８.”
In this way, the success of the Series 0 was brought about by carefully accumulating
technologies up to the time, improving reliability, and cooperation between design department
and manufacturing department.
(3)Meeting customer needs by transforming software architecture
The second factor was the change of software architecture. The change in softwarearchitecture was to separate the area of user application software from basic software area
controlled by Fanuc. Why this separation was useful? Because, this type of architecture enables
both users and vendors to innovate independently of each other. This architecture enables users
to satisfy their own demands by themselves, and concurrently vendors to satisfy their own needs
independent of the user. In this sense, Fanuc changed software architecture from integral tomodular. Here, we describe the background of this change of software architecture.
One of the drivers that brought about this bestselling computerized NC system was to provide
customized functions called custom-made macros to meet the diverse needs of end users. Using
these customizable functions, machine tool manufacturers, or end users could freely makenecessary function independently from Fanuc, which was enabled by Fanuc rebuilding its
software architecture.
Fanuc holds a 70% share of Japanese NC equipment. Therefore, for machine tool
manufacturers, the big challenge is how to bring about product differentiation while using
Fanuc's virtually ubiquitous NC equipment. Conventionally, in order to give machine tool13

manufactures customized characteristics, they have to ask Fanuc to develop new functions. With
this method, machine tool manufacturers would often demand further modifications, additional
functions and once again ask Fanuc to make corrections or developments, which meant that allof the work ended up back at Fanuc. In short, machine tool manufacturers could not modify or
add functions by themselves. Not only was this a huge inconvenience for both the machine tool
manufacturers and Fanuc, but it also cost money. Regarding this situation, Kishi (Executive
Director, November 1996), said the following:“Trying to get individual characteristics like that, machine tool manufacturers asked Fanuc todevelop functions to certain specifications, and when those requests came we had to provide
quotes for them, including how much time it would take. It meant that if the machine tool
manufacturer wanted to add or modify a function to create their own features, there was no waythat they could do it without us helping them１９.”
The main reason for this was that the basic software involved with control hardware andapplication software involved with the user were blended together in the conventional NC
software, which meant that basic software and application software both had to be modified tomeet customization requests.
Figure 6 Evolution of software architecture

NC software (Phase 3)(Series 0)

NC software (Phase 2)

Blending

ChangeApplications(user modules)
C language library(toolkits)

Users

Fanuc
controlled

Basic software(vendor modules)

Fanuc NC Hardware

To overcome this, Fanuc divided NC software as a whole into application sections that could
be controlled by the user, and basic software section that could be controlled by the vendor as
shown in Figure 6, and set up a C language library between them. The C language library is a
software toolkit that for instance contains functions to display characters on screen or read
keystrokes, and a range of internal NC input-output control functions for parameters and current
cutting tool position and so forth. Machine tool manufacturers were thus able to freely assemble
functions with the C language library to create their own screens, and display their own uniqueinformation. Without having to rely on Fanuc, they became able to add functions as they14

pleased.
Reconfiguring architecture this way enables the machine tool manufacturers as NC users andFanuc as the NC vendor to independently innovate in parallel with each other. Fanuc wasreleased from the diverse demands of machine tool manufacturers and end users, and was able
to focus on improving its core technologies such as hardware and basic software. While on theother hand, machine tool manufacturers and end users were no longer affected by hardware andbasic software changes made by Fanuc, and gained the ability to create unique functionality
themselves.
As described above, in phase 3, Fanuc achieved change of software architecture as well as fullautomation in its factories, and successfully made Series 0 bestseller CNC.
3. Conclusion: searching for New Growth Opportunities with global partner
In 1986, GE and Fanuc set up a full equality joint-venture, each with 50% capital investment towork on CNC and PLC called GE Fanuc Automation Corporation (GE Fanuc). Headquarteredin Charlottesville, Virginia in the United States, the company oversees 3 subsidiaries in North
America, Europe and Asia. The extremely broad scope of this partnership extends acrosscooperation in development, manufacturing and marketing. To make it known that this was apartnership of full equality, Inaba suggested that the company should be called “GE Fanuc,” for“GEF” would not have sufficed. For this he gained understanding from GE. Anybody could
easily guess what the initials GE stand for, but the F for Fanuc would be completely unknown.
Obviously, personnel would come equally from both companies, and one person from GE andFanuc each was sent to preside over the new company in a joint chairmanship system.
Fanuc's globalization concepts are clearly apparent in this partnership with GE. Rather thanrelying purely on the company's own resources, its partnerships with trusted local companies for
R&D, manufacture and marketing are horizontal cooperative relationships. For such
relationships to be enabled, partners must be fully equal. Accordingly, mergers with local
companies must on principle be based on 50-50 capital expenditure, regardless of whether
they're in the West or in Asia. In building a cooperative relationship through a fully equal
partnership with another company, Fanuc is able to help out with local production training, andaims to go beyond simple exporting as part of its globalization concepts.
Notes
１This case study was created with reference to interviews with persons involved, books, papers
and published materials. In particular, we received a lot of help in the form of informationand interviews provided to us by Fanuc. We would like to express our gratitude here.

２

Refer to Inaba (2003). The yellow robot, Japan Industrial Journal, (in Japanese).

３

Inaba (2003)
Inaba (2003)

４

５

The pulse monitor is characterized as follows: Firstly, it has applications in a wide range of15

areas including large-size machine tools, and a diversity of NC control applications.
Secondly, the electric hydraulic pulse monitor can be combined with machine tools by cogs
and feed screws to create NC machine tools extremely easily.
６
Inaba (2003)
７
Inaba (2003)
８
Inaba (2003)
９
Inaba (2003)
１０
Inaba (2003)
１１
Inaba (2003)
１２
Inaba (2003)
１３
Inaba (2003)
１４
Interview with Mitsuo Kurakake on 7 December 2000 (Executive Director at that time)
１５
Interview with Mitsuo Kurakake on 7 December 2000
１６
Interview with Mitsuo Kurakake on 7 December 2000
１７
Interview with Mitsuo Kurakake on 7 December 2000
１８
Interview with Mitsuo Kurakake on 7 December 2000
１９Interview with Hajimu Kishi on 7 December 2000

16