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In October 2013, former World Bank Vice President Mieko Nishimizu and Yukiko Araki, Executive General Manager of our CSR and Environmental Strategy Division, held a dialogue at Hitachi, Ltd. headquarters on how the Hitachi Group should shape its Social Innovation Business to meet the Group's aim of helping to solve social issues in global markets.
Graduated in economics from Goucher College in the US in 1970. Completed a doctorate in economics from The Johns Hopkins University in 1975 and was appointed Assistant Professor, Economics Department, at the Woodrow Wilson School of Public and International Affairs, Princeton University. Joined the World Bank in 1980; appointed Regional Vice President for South Asia in 1997. Since leaving the World Bank in 2003, she has continued her international writing, speaking, and advisory activities. She has been a senior partner at Think Tank SophiaBank since 2007.
The Hitachi Group Corporate Credo is "to contribute to society through the development of superior, original technologies and products." Since Hitachi's founding more than a century ago, we have remained faithful to that spirit, regarding contributing to society through business as Hitachi's essential identity. The Hitachi Group Vision outlines what the Hitachi Group aims to become in the future. Created in April this year, it states explicitly that "Hitachi delivers innovations that answer society's challenges. With our talented team and proven experience in global markets, we can inspire the world." Our Social Innovation Business translates this mission and vision into action.
Dr. Nishimizu, at the World Bank you were engaged in investment projects supporting sustainable development and social transformation in the developing countries. We define Hitachi's Social Innovation Business as a field that "provides the world with advanced, safe, and secure social infrastructure enhanced by IT," the aim being not just to create social infrastructure but rather to contribute to society through that infrastructure to change people's lives and the way that society operates. In that sense, I wonder if there aren't commonalities with your work over the years?
Could you give me some concrete examples of your Social Innovation Business?
Well, for example, power generation technologies and smart grids that maintain a stable power supply even as energy demand continues to grow; water systems for efficient water use; desalination and water treatment; and public transportation and rail systems that eliminate the traffic jams that go with urbanization in emerging countries. For healthcare, we provide equipment and systems for medical care and checkups, as well as support for disease prevention. Other areas include elevators, construction machinery, and information and communications. We see potential for contributing to society across the whole spectrum of the Hitachi Group's involvement in business.
Ah, so your Social Innovation Business is essentially using Hitachi's technologies to make a direct contribution to society and to resolve various social issues. Rather than those so-called social contributions and corporate social responsibility (CSR) programs that are abandoned as soon as the money runs out, I gather you're talking about long-term corporate activities with a sound business foundation that will continue to benefit both society and Hitachi.
Exactly. Innovation to us means more than just Hitachi coming up with technological improvements that provide superior solutions. We want our products and services to spur on social innovation and transform lifestyles and social systems, creating an unprecedented level of social value for safety, reliability, comfort, and convenience.
If you're using Hitachi's advanced technologies, does that mean that the focus will be primarily on developed countries? If you're aiming to become a global company in the true sense of the word, I think Hitachi needs to view itself as serving all of humanity. More than half of the seven billion people that make up humanity live in the developing countries. And with populations in developing countries continuing to grow quickly in the coming years, their proportion of the world economy will only increase.
One of the structural issues facing the developing countries is the limited number of people with the ability to fully exploit current technologies for social transformation. Most of these countries lag behind the developed countries, starting from very basic areas. So, rather than cutting-edge technologies, you need to start by providing existing technologies and sharing established knowhow. For example, using mobile phones as public phones and sharing information from these devices has meant that rice farmers who once had to accept unfair low prices offered by brokers can now sell at better prices. This has substantially bumped up farm incomes. Areas like this, though, won't make money for Hitachi, nor will they have much to do with Hitachi's Social Innovation Business with its stated aim of using cutting-edge technology to resolve social issues.
Certainly, as a private enterprise, our baseline has to be business viability. However, it's also important to consider the lifespan of a business. While business in the developing countries might not be particularly profitable at the outset, it still becomes a target for Hitachi's Social Innovation Business from the long-term perspective, after laying the foundation.
Hitachi is good at long-term development. For example, for more than 40 years, we've been extending scholarships to Asian students and bringing them to Japan for training or have been providing them with local training. Nurturing human capital like this has laid a number of business foundations for us. Even in countries where we are still only planning to cultivate operations, we believe that investing first in human capital can open up business prospects in the future.
Developing people is always the cornerstone, isn't it? From my experience overseas, I know that Japan's education level is among the highest in the world, and things which we Japanese regard as obvious accomplishments are seen elsewhere as quite amazing. I think more companies, and particularly those aiming to become global enterprises, need to realize this, because it might encourage them to invest in boosting education levels in the countries where they have serious business interests. In particular, for companies like Hitachi, which are expected to provide goods and services with an advanced technological component, it becomes vital to focus on human capital investment from a technological perspective.
Do you have any other expectations for our Social Innovation Business?
Well, of course I'd like to see Hitachi invest in ways that change society for the better, but from what I've just heard, I wonder if the scope of your Social Innovation Business is too wide. As Hitachi technologies have an almost infinite number of potential applications, if you don't refine your strategic focus, you may lessen the sustainability and business value of your projects. A tighter focus may well be on the areas that you outlined earlier, but surely there's major potential even within those limits.
The business of the World Bank is economic and social development, and that too is obviously extremely broad-everything from infrastructure to education and medical care. When the scope is just too wide, no matter how good a job you do, there is the risk of "shooting yourself in the foot." Hitachi too would be better served by not doing everything possible, but instead taking a more strategic approach.
Hitachi does have a wide range of technologies and an incredibly rich pool of human capital, so in that sense our approach could seem a bit too broad. Conversely, though, wouldn't the focus naturally be restricted by the nature of the social issues that present themselves?
I think you'll find the scope almost infinite even then. Basically, it comes down to whether Hitachi itself has a clear vision for 50 or even 100 years from now. That vision will help define both your Social Innovation Business strategy and where you channel your resources.
By your vision, I don't mean something imposed by top management. You need all of the Hitachi Group's hundreds of thousands of employees to put their heads together and paint a picture-a rough one is fine-of how they see the Hitachi Group in 50 or 100 years from now. Then, you have to imagine being in that future and looking back to work out what the Hitachi of today should do to get there. Without that kind of visioning-working backward from the future-you won't be able to see how to change society, and your Social Innovation Business too might end up taking the "long way around."
For Hitachi, 50 or 100 years is not a long time. Companies that are run on the basis of a clear future vision think in units of 100 years anyway, and given that you're dealing with social infrastructure, a long-term perspective becomes absolutely essential.
That's great food for thought. Thank you very much.