Interview with CTO Suzuki on Hitachi's R&D Strategy: "The Challenge of Radical Innovation"
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In April 2022, Hitachi, Ltd. announced its Mid-term Management Plan 2024 (MTMP2024). One future direction under this new plan will be to early investment in innovation, with the company planning to spend 100 billion yen (about 732 million USD) over three years on advanced research and development.
What kind of innovation is Hitachi investing in? Chief Technology Officer (CTO) and a key figure in the company's research and development department, Norihiro Suzuki talked about that.
Innovation is the deepening of and search for knowledge
--Firstly, please state your background and position at Hitachi.
Suzuki : Hitachi's mission is "Contributing to society through the development of superior, original technology and products," and I recognize that I am in a position of responsibility to lead this mission.
As for my background, I joined the Central Research Laboratory of Hitachi, Ltd. in 1986, and was mainly involved in research and development of image processing technologies for televisions and other consumer products. At that time, the transition from analog to digital was in full swing, and I have fond memories of working on standardization of the technology.
I have been stationed in the U.S. three times and served as CTO of Hitachi America, Ltd. for two and a half years. After that, I was appointed as the General Manager of the Central Research Laboratory, and in 2016, I became the head of the Research & Development Group.
--As a researcher, you lived through a dynamic period of change from analog to digital. What are your thoughts on the current era, which is also a period of change?
Suzuki : In the ‘80s and ‘90s, the focus was on products, and manufacturers competed delivering the highest performance. Today, however, the focus is more on how to provide solutions that resolve customers’ issues. Also, as a researcher, I feel that we are living in an exciting and challenging era with new technologies such as NFTs, the metaverse, and Web 3.0 emerging, and customer needs becoming increasingly complex.
On the other hand, looking at the world at large, we are being asked to pursue well-being (good state of mind, body and society) while taking into consideration planetary boundaries (global environmental boundaries). In this context, I believe that Hitachi is being asked how it can contribute to society through technology and innovation.
--So, contribution to society is a keyword for the meaning and position of “Innovation” within MTMP2024?
Suzuki : I believe that it is the Research & Development Group that has carried on the hopes of our founder and pursued the development of original technologies. The Research & Development Group has reached its centenary and we are now at a stage to take on the challenge of new innovation. I am also very excited about this.
However, I do not believe it is enough to simply pursue knowledge. I came to feel strongly about this when I had a conversation remotely with Professor Charles A. O'Reilly of the Stanford Graduate School of Business. Professor O'Reilly said: "Innovation in the new normal requires a balance between expanding existing businesses and developing completely new businesses."
In other words, I understood this to mean that a company should focus on supporting the growth of its customers because a company should grow together with its customers. For Hitachi, this means creating a digital services business based on Lumada, a generic name for solutions and services that leverage Hitachi's advanced digital technologies, so as to solve the problems that customers are struggling with. This is a "deepening of knowledge" based on existing technologies and services.
Further, in order to achieve carbon neutrality by 2050, we need to backcast (an ideation method to determine what measures we need to be implementing now based on an understanding of a future state) to drive "radical innovations." This could be described as a "search for knowledge."
In other words, pursuing both the “deepening of knowledge” and “search for knowledge” is the meaning and significance of innovation in MTMP2024.
Anticipating and resolving customers’ issues
--What are the specific business strategies and areas of focus for the “creation of digital services businesses” and “radical innovation”?
Suzuki : Firstly, the creation of digital services businesses boils down to further strengthening digital talent. Since the previous Mid-term Management Plan (MTMP2021), we have been training top-class human capital, particularly in the field of AI.
Hitachi is now able to show its strengths to the world as we have received recognitions through numerous awards prestigious competitions in fields such as speech processing, video analytics, machine learning, and data analysis. At the same time, receiving such recognitions boost researchers’ confidence in themselves, and apply the knowledge they gain from participating in these competitions to their customers' projects, creating a positive cycle.
For radical innovation, we see it along three axes. The first is carbon negativity where CO2 emissions fall below absorption; the second is healthcare in which we are looking ahead to an age when people will live for 100 years; and the third is the co-evolution of humans and digital technologies.
For carbon negativity, we are focusing our resources in two areas: the storage and transportation of hydrogen energy that does not emit CO2, and CO2 capture and removal technologies, which include artificial photosynthesis. For healthcare, we will focus on two advanced, next-generation medical treatments — particle-beam therapy and cell therapy — to reduce the number of people dying from cancer and incurable diseases. And in regard to co-evolution, we intend to aggressively move into the area of silicon quantum computers.
--What do you think are the challenges to realizing such business strategies and what actions will you take to solve those challenges?
Suzuki : Regarding creating digital services businesses, the key point will be how effectively we can resolve the challenges facing customers.
The difficulty is that the speed of change in society and business is so rapid that it is difficult to predict the future. Thus, we have no choice but to gain a deep understanding of our customers' current situation, to be sensitive to the "signs" of what will happen in their industries and anticipate the challenges that they will face and work towards resolving them. If we do this, I am sure that many of customers will choose us as their partner and that we can grow together.
For “radical innovation,” I believe that empathizing with various stakeholders and building relationships with them will be key as it is Hitachi's role in the future society to provide the foundations for an ecosystem where various values will be distributed. And in so far as it will be a foundation, Hitachi cannot do it alone. We will need to collaborate with regional communities in addition to industry, government, and academia.
A society in which everyone can live comfortably and safely
--Finally, please present the world that Hitachi would like to realize through “Innovation”
Suzuki : People have been talking about globalization for a long time, but in reality, prerequisites and cultures are completely different in different countries and regions. Naturally, in innovation as well, there must be optimal solutions for each region.
Therefore, while we will globally share the technologies that will form the base of the solutions, Hitachi researchers located in research centers around the world will work to deeply understand the culture and customers in each region, and drive innovation that brings true value to the people living there. I believe that this is what is required of Hitachi.
Pursuing innovation with the planetary boundaries in mind is also important. In addition to CO2 emissions, there are other issues such as marine debris and resource depletion which cannot be truly resolved unless we take a comprehensive approach, optimizing only one part is not enough.
There is no end to this pursuit. It may look good for both humans and the planet, but from a different angle, is it actually a good and balanced solution? I believe it is important to continue holding that perspective of questioning whether it really good or can we do better.
This will require a broad range of knowledge. We should not stay within our industry but step out and hold dialogue with a wide range of stakeholders, increase our mutual understanding, and from the innovation born out of that engagement, I would like us to contribute to the realization of a society where everyone can live in safety, comfort and good health.