Mitsubishi Heavy Industries Technical Review Vol. 57 No. 1 (March 2020)
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MHI FUTURE STREAM“MHI FUTURE STREAM” – Creating Group’s Future

YO AKIYAMA*1

TAKAAKI FURUYA*2

KOJI HORIZOE*3HISASHI TANAKA*3

MASAYUKI MORIHARA*1 HIROYUKI YAGITA*1

To continue to contribute to society and humanity through the provision of machine systems,
it is necessary for Mitsubishi Heavy Industries (MHI) Group to be a company that can sustainably
grow with the capability of responding to rapid changes in the social agenda, value, technologicalinnovation, etc.
MHI FUTURE STREAM is an activity for setting our business direction according to theseveral possible scenarios that are formulated based on the big picture of changes in the political,
economic, social and technological situations surrounding our business from a medium- tolong-term perspective. This report introduces our MHI FUTURE STREAM activity and presents
the future vision obtained through it.

|1. Introduction
MHI Group has contributed to the progress of society through the provision of machine
systems that make up social and industrial infrastructure. In recent years, we have been facing
complicated social agenda (as represented by SDGs*), diversifying perception of value andaccelerating innovation of technologies such as digital, biology and etc. To continuously contributeto society and humanity under such circumstances, we have to create a deep insight into what ishappening in relation to these challenges, perceptions of value and technologies, and as a company,
be responsive to these changes in a flexible manner. (*SDGs: Sustainable Development Goals)
MHI FUTURE STREAM (MFS) is a project that will enable MHI Group to continuously
and diligently transform itself in such a way that it will stay in demand by society for many years to
come.

|2. MFS framework and management process
2.1

Exploration and exploitation management processes to create new value for
uncertain future

When it comes to today’s market and technological changes, as characterized by VUCA (i.e.,
volatility, uncertainty, complexity and ambiguity), looking through the future is difficult. It istherefore not always easy for the business divisions/departments of our company group (Business
Function) to shift to a new business territory. This is because when performing agile reformation of
the business foundation and organizational climate, which have been optimized through theongoing businesses, while managing them effectively at the same time, we have to take a fairamount of risk and cope with considerable difficulty.
The “Exploitation Process” , which is a conventional process, denotes the optimization ofbusiness management efficiency. When shifting the business direction, in addition to this process,we need a new process called the “Exploration Process” to gain insight into the future from a
broad, comprehensive perspective, generate hypotheses in relation to business and technologicalinnovation and verify them on a trial-and-error basis(1).
The Shared Technology Function plays a leading role in the “Exploration Process”. While*1

Manager, Business Intelligence & Innovation Department, Marketing & Innovation Headquarters*2

Deputy Head of Marketing & Innovation Headquarters, Marketing & Innovation Headquarters*3

Group Manager, Business Intelligence & Innovation Department, Marketing & Innovation Headquarters

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collaboration with relevant divisions/departments of the Business Function is maintained, businessand technological innovations are tested from a medium- to long-term perspective without any
constraints by the ongoing businesses. The business ideas that have passed these trials advance tothe next stage (i.e., “Exploitation Process”) and are shared as growth strategies by all the groupcompanies. During the transition between these two processes, some mismatches incompatible withthe existing business foundation or organizational culture may be found. It is therefore important
for the manager and the innovator to have a close dialogue and provide leadership that can makethe transition work organically.

2.2

MFS’s three approaches: Mega Scan, Shift the Path and Technology Scouting

To make both the “Exploration Process” and “Exploitation Process” work, three approaches
are taken in MFS: “Mega Scan”, “Shift the Path” and “Technology Scouting” as shown in Figures
1 and 2.

Figure 1

Three approaches of MHI FUTURE STREAM

Figure 2 From MFS, business model shift/new business conception to development of growthstrategy(Blue: led by Shared Technology Function. Red: led by Business Function)

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In “Mega Scan”, society in 10-20 years in the future is predicted from a broad,comprehensive perspective, and based on the obtained image, possible change pattern scenarios areformulated considering wide-ranging possibilities in the market and technology to suggest possible
business opportunities. Through this approach, many dialogues are held with experts andinnovators both inside and outside our companies, and insight into the future and vision are createdwith multiple perspectives in terms of the market and technology.
In the approach of “Shift the Path”, the insight and vision obtained by “Mega Scan” are used
to construct possible scenarios for changes in each of the business areas. The market andtechnological innovation hypotheses are then generated (such hypotheses are difficult to conceive if
the perspective available is only from a single division/department of the Business Function),
followed by the stage to develop them into action. In MFS, this “Shift the Path” approach serves asa junction between the “Exploration Process” and “Exploitation Process”. While cross-sectoral
communication between the divisions/departments of management, technology and business isconstantly carried out, the process of trial and error proceeds and action is taken accordingly.
“Technology Scouting” has two key concepts. One is a technology that has the potential tohave a significant impact on the medium- to long-term insight and vision obtained in “Mega Scan”.
The other pertains to a technology needed to realize the innovation hypotheses generated through“Shift the Path”. These two technologies will be invented together with external partners.
Although highly uncertain, the disruptive technology would have a significant impact if
realized. Mainly through the newly-founded Innovation Accelerator LLC, the creation of new
knowledge that had not been possible before proceeds at the discretion of the research development
leader.

|3. Medium- to long-term future vision
Described below are some examples of the market and technological insight and vision into
the future obtained by “Mega Scan”.

3.1
(1)

Environmental and energy perspective
Electricity-based energy system and changes in market
Energy can be likened to the flow of blood in society, and safety is a prerequisite. In
addition, it is also necessary to supply energy in a stable manner (Energy Security), improve theefficiency from an economic perspective (Economic Efficiency) and achieve environmental
compatibility (Environment) all at once. To realize this 3E+S, it is necessary to implement
multifaceted initiatives based on a comprehensive understanding of relevant issues ranging
from energy supply to demand, including the national/regional energy situations,socio-economic structure, environmental regulations and policy discussions behind them.
When considering this from the perspective of the electric power system, we need tounderstand not only changes on the supply side such as power generation andtransmission/distribution, but also those on the demand side of the industrial, civil andtransportation sectors. In particular, rapid advances in technological innovation such as
renewable energy, energy storage and digitalization may bring about dramatic changes in themarket structure because of the gradual shift to a new electric power system throughsimultaneous development of the following: (a) realization of highly-efficient large-scale
thermal power plants and low-carbon centralized power source systems through carbon capture,(b) changes in the function and usage of centralized power source systems mainly for the
purpose of system stabilization, (c) extensive introduction of renewable energy to meetcarbon-free demand and cost reduction, (d) new green-fuel such as hydrogen with the use ofrenewable energy, etc., (e) expansion of energy storage for system stabilization to shore up theextensive introduction of renewable energy, (f) structural changes in the power distribution
industry owing to the introduction of renewable energy to the power distribution grid systemand the use of distributed power source systems, (g) advanced energy management thattransfers the energy value and network balancing systems to power demanders such as
factories, buildings and households, and (h) sophistication of VPP* aggregation through digitaltechnologies (Figure 3).
(*VPP: Virtual Power Plant)

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Figure 3 New electric power system and changes in market(2),(3)(2)

Carbon neutral society and market needs from perspective of carbon cycle
Since the Industrial Revolution, emissions of greenhouse gases such as CO2 have rapidly
increased because of fossil fuel consumption involved in the economic activities of humanbeings. It is understood worldwide that the risk of climate change is consequently increasing.
Further increased emissions of greenhouse gases as a result of population growth andeconomic expansion in the future are concerns. To realize the carbon-neutral society proposedby the Paris Agreement, innovation is required to make it feasible to reduce CO2 emissions andelevate the amounts of CO2 absorption and fixation with economic reasonableness. Specifically,for example, innovations in relation to expanded energy-saving features and renewable energy
applications, electrification, the use of low- or zero-carbon fuels, recycling of resources, andcarbon fixation and cycle through CCUS*, etc., are considered necessary. (*CCUS: Carbon
Capture, Utilization and Storage)
People’s perceptions of value change and diversify, new social systems and technologicalinnovations may bring about changes in the market structure, which can deliver a new businessbased on a totally different value as shown in Figure 4.

Figure 4

New market needs for carbon neutrality

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3.2
(1)

Perspective of machine system advancement
Changes in the value of machine system production
In “Mega Scan”, we pay attention to changes in the value of machine systems in addition
to changes in each of the markets such as the environment and energy.
Since its foundation, MHI Group has contributed to the progress of society through theprovision of the machine systems that make up social and industrial infrastructure. However,
the technological innovation taking place in recent years is gradually changing its value.
Conventionally in machine system production, the realization of the value offunctionality through sophisticated adjustment of many parts had been highly valued. Recent
advancements in materials and micro fabrication technology, however, favor a compact modulethat is equipped with many functions, thus reducing the value of sophisticated adjustment inmachine system production while increasing the value of compact modules. Modern
development in digital, communications and control technologies has enabled the autonomy
and automation of machine systems, having machines interconnected with each other to work
as a single unified system and fulfill the designed purpose. The intelligence of machine systems
is of increasing value (Figure 5).

Figure 5(2)

Changes in value of machine systems

Intelligent machine system
The intelligence of machine systems does not simply mean the system’s autonomy andautomation, but denotes machine systems that can collaborate with people using added
knowledge about business and operations, as well as related services. With this evolving
intelligence of machine systems, the following things are expected to happen: (1) machineautonomy will transfer some functions from humans to machines and lead to collaboration
between humans and machines, (2) as a change in e system operation, unattended operation will
be made as a standard mode or segmented functions will be controlled as a group and (3) someof the human/organic functions will be integrated with those of machines and humancapabilities will be enhanced. MHI Group is also considering the possibility of turning suchchanges into an opportunity to create a new business style (Figure 6).
Since the Industrial Revolution, labor has been divided between humans and machines by
allowing machines to take on some of the tasks that humans conventionally conducted bythemselves (e.g., carrying heavy objects and simple/routine work). Under such circumstances,
the sophistication of machine intelligence through added knowledge about business/operations
will enable machines to be partly in charge of the recognition, judgement and manipulation
processes. The relationship between humans and machines will become collaborative. As an
example in the industrial field, machine maintenance and operation (the execution of which has
been dependent on the expertise and experience of skilled professionals) will be conductedMitsubishi Heavy Industries Technical Review Vol. 57 No. 1 (Match 2020)
6autonomously, improving business efficiency. Moreover, such autonomy and automation basedon operation data will facilitate operational transparency. The clarified asset value of machines
in the business will make flexible investment activities possible.
The further development of human-and-machine collaboration in accordance with theevolution of intelligent machine systems will make the relationship between humans andmachines closer. In a society like this, people’s capabilities can be improved by machines(human augmentation)(4) and people use autonomous machines to satisfy their wants such as
physiological appetites and desires for safety and security. Moreover, other types of desires
such as self-fulfillment are expected to be realized through collaboration with machines. When
this altered relationship between humans and machines becomes more common, it will benecessary to design machine systems in consideration of people’s experience and emotional
value. MHI Group will contemplate what the machine system should look like and how people
and machines can collaborate with each other to bring happiness to people. Forming an imageof how things should be, we will provide these new systems to society.

Figure 6(3)

Evolution of intelligent machine systems

Consolidation of functions into compact module and electrification of machine systems
When looking at power source technologies for machine systems, technologicalinnovation has changed the machine system configuration as well as the industrial structure.
Since the practical application of external- and internal-combustion engines, the efficiency ofthermal engines as a power source has been improved in line with the development ofheat-resistant and pressure-resistant materials, rotating system technology, etc. The recent
advancements in power electronics technology such as innovative materials and micro
fabrication technology are facilitating the realization of higher density and higher efficiency inthe element parts of electric drive systems and the consolidation of functions.
Through these changes, machine power sources will evolve from external- orinternal-combustion engines to electric drive systems (or hybrid drive systems), improving
environmental performance, maintainability and controllability and reducing the size withconsolidated functions and high-speed rotation. The improved compactness and electrificationof machine element parts will increase the degree of freedom in machine design, which willtransform the shape of the machines themselves. In this type of evolution of power sources, it isimportant to create innovation by combining old and new technologies. The key is theutilization of existing technological foundations such as rotating machines and etc (Figure 7).

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Figure 7

Evolution of power sources and future vision|4. Challenge for innovation through “Hardtech”, a new place forco-creation
The changes in the market and technology described so far are taking place at an
unprecedented speed and on an unparalleled scale. It is indispensable to take in knowledge fromoutside the company and funnel it to the creation of innovation. MHI Group has actively taken partin collaboration with universities and other companies. We will further develop such projects to theextent that they can be conducted beyond existing business frameworks or mindsets so that
innovative technologies and business ideas can be combined together in a flexible manner. It is also
necessary to provide opportunities for the co-creation of innovations.
“Hardtech”(5) is pivotal in the evolution of machine systems, and is a combination ofdigital technological innovations such as AI/IoT and physical technological innovations such as
quantum, material design, micro fabrication and biotechnology. For the co-creation of such
“Hardtech” innovations, laboratories to build prototypes and test digital applications through trial
and error are required. Currently in Japan, however, only a limited number of such laboratories areavailable to ventures, etc. It is therefore necessary to provide them.
In response to these needs, MHI Group will establish the “Yokohama Hardtech Hub” within
the premises of the Yokohama Dockyard & Machinery Works in spring 2020. This place forco-creation will function as a special area that is independent of MHI Group’s businesses and beequipped with a laboratory for prototyping and trial-and-error application testing. It will be a placeof opportunity, where anyone with enthusiasm, whether from a university, venture or manufacture
in Japan or any other countries, can meet with colleagues and where free business activities can be
carried out by bringing together the business competencies and technologies of MHI Group and its
partner companies for co-creation.
Furthermore, through the co-creation of innovation at the “Yokohama Hardtech Hub”, thenetwork between Yokohama City and the rest of the world will be activated, facilitating acontribution to the region and contributing to the cultivation of Japanese “Hardtech” innovators
including those in MHI Group (Figure 8).

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Figure 8 Conceptual image of “Yokohama Hardtech Hub”, a place forco-creation|5. Conclusion
Our challenge in MFS will never be finished. By continuing the activities of “Mega Scan”,“Shift the Path” and “Technology Scouting” we will identify the needs of future society and fostera corporate culture to meet these needs.
Through our MFS challenge and co-creation of innovation, MHI Group will diligently
continue to transform itself so that it can contribute to a future society where humans and machines
live together.

References
(1)
(2)
(3)
(4)
(5)

Charles, A O’ Reilly Ⅲ, et al, Lead and Disrupt : How to Solve the Innovator’s Dilemma, Toyo Keizai
Inc., (2019)
International Energy Agency, World Energy Outlook 2019, (2019)
Bloomberg New Energy Finance New Energy Outlook 2019, (2019)
Junichi Rekimoto et al, HUMAN AUGUMENTEATION I, (2018) , p.7
MIT Admissions, Lessons on How to Start a Hard Tech Startup, with Sam Altman, (2016)
https://mitadmissions.org/blogs/entry/lessons-on-how-to-start-a-hard-tech-startup-with-sam-altman/