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Hitachi

Hitachi Research Institute

Interview

Interviews with experts and opinion leaders from our research network

Management Strategy for Increasing Competitiveness in a Global Society
― Diversity Management as a Driver of Unique Innovation Creation ―

As globalization of corporate management accelerates, the concept of diversity management is attracting attention as a method of corporate management for responding to and growing in a global business environment where companies are continually changing. With employees of different nationalities, cultures, religion and gender, and in order to promote discussion while respecting different points of view, unique innovation creation offers promising trajectories for the future.

We spoke about diversity management with Ms. Yukako Uchinaga, who has previously served as a Senior Managing Director at Japan IBM and Director and Executive Vice President of Benesse Corporation, and who currently provides support for the participation of women in the workforce as Board Chair of J-WIN, a non-profit organization.

Ms.Yukako Uchinaga

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Board Chair, Japan Women’s Innovative Network (J-WIN) 1999, inducted into the U.S. Women in Technology International (WITI) Hall of Fame/2002, named Harvard Business School Club of Japan Business Stateswomen of the Year/2006, received the Upward Mobility Award by the U.S. Society for Women Engineers (SWE)/2013, received the Chief Cabinet Secretary’s Award as a Person of Merit in Formation of a Gender-Equal Society, Council for Gender Equality of Japan Prime Minister’s Office

Profile


1971 Graduated from Tokyo University, Department of Physics, Faculty of Science
1971 Joined Japan IBM 1995- Held various positions including Director and Senior Managing Director
2007- Served as Director and Executive Vice President, Benesse Corporation
2008- Held various positions at Berlitz International, Inc. including Chairman of the Board, President & CEO, and Honorary Chair
2013- Appointed Representative Director and President of Global Research Institute (GRI)


Change in the Way of Thinking at IBM

Kawamura: Ms. Uchinaga, up until now you have held various executive positions including Senior Managing Director of Japan IBM and Director and Executive Vice President of Benesse Corporation, and at present you are Board Chair of the non-profit organization J-WIN (Japan Women’ s Innovative Network). In addition, you also serve as an outside director in a number of other Japanese firms. From your perspective as a person with such extensive experience, I would like to start by asking what kind of impression you have of Hitachi.

Uchinaga: While I wa s at Japan IBM, I had various opportunities to come into contact with your company, and as I got to know your company in the course of business dealings, I came to believe that in certain respects Hitachi as an organization is very much like IBM. In 2009, for example, after your company found itself in difficult circumstances, it was able to adeptly change its business model in a very short per iod by focusing on social infrastructure. In the past, there was also a time when IBM posted very high deficits. In 1993, however, after Louis Gerstner (honorific omitted) took up the position of Chairman and CEO, there was a significant change in the business model. On the other hand, yours is a Japanese company and an enormous one, so to be able to execute a change in business model, I feel, is quite remarkable and encouraging.

Kawamura: Thank you very much. Up until that point Hitachi had weathered two oil crises with relative ease, and maintained ever-increasing results. Consequently, there was a longs tanding at t i tude wi thin the company that it was an unsinkable ship, so it was quite difficult to introduce reform during normal times. After 2000, however, although there was no outward sign, much needed reform in the company was lagging and its resilience was weakening. In that state, when an event like Lehman Shock hit, we found ourselves having to put out fires here and there. It was at that time that people on the inside began to think, “We have to do something!” More than any thing else, it was this resolve and commitment to rebuilding the company, I believe, that enabled us to achieve a rapid recovery. I believe that when Mr. Gerstner came to IBM one of his first initiatives was to change the way of thinking of staff, but could you elaborate on what exactly he did to achieve this?

Uchinaga: Gerstner formulated a number of new management policies but common to all of these was the principle of viewing matters from the standpoint of the customer. Up until then we believed that we were doing exactly that but our attitude reflected a stance more of, “We will teach you.” The world keeps changing, however, and because the progress of technology in particular advances at an extremely rapid pace, the day came when the business model of large systems turning out high profits disintegrated. Despite this, we had something within our thought processes that might be called an “IBM framework.” From that framework we viewed the market, while everything outside of the frame was screened from this view. Gerstner’ s first step after his arrival was to dismantle that entire frame. At IBM at the time, there was a trend toward dividing areas into groups such as large systems, medium systems, and services. Gerstner, on the other hand, worked on the principle that IBM was a corporation whose mission was to provide solutions for customers and, to do this, he saw integration of the company’ s resources as an important challenge. Therefore, he changed the organi zat ional s t ruc ture to one focus ed on integration. Another point was the principle of “No more backtracking” as an important change in attitude. Until then, there was a tendency among staff to want to review decisions almost immediately after they had been made. For example, someone would come forward and say, “Let’s go over this once more,” making it di fficult for plans to reach the implementation stage. This tendency was replaced with the attitude, “Once you decide on a plan, carry i t out , even i f i t ends up being wrong.” The underlying view here was that more valuable outcomes could be achieved from feedback obtained by going through a PDCA cycle (Plan--> Do--> Check--> Act) than by prolonging discussion of unnecessary matters.

Kawamura: At Hitachi too, we hold the view that it is best to give an idea a go first and, if it does not work, to make adjustments as soon as possible. In that respect, I believe the two companies are alike.

Uchinaga: I agree. IBM’ s slogan until then had been, “Think,” and in various places around the company you could see sign plates with the word “Think” on them. After Gerstner arrived, however, all of those plates disappeared. The unspoken message there was: There has been enough thinking already. What we now need is action. The approach to assessing employees also changed and words such as “win,” “execute,” and “team” featured prominently along with questions such as: Did you achieve results? Did you execute it? Were you successful at teamwork? Until then we as employees had never thought of assessment in those terms, so I remember receiving such a shock.

Kawamura: At Hitachi we have the legacy of the words of our founder: integrity, harmony, and pioneering spirit / challenge. These are words that were framed at the time of the company’ s founding when there were not many more than 10 employees, and yet these values have been actively passed down to us.

Importance of Speed

Kawamura: I heard that IBM is very open with personnel matters, including, for example, when the president was being selected by the board of directors. That is something that Japanese companies would find difficult to do openly. But I do not believe that in the future it will be good for companies to go about deciding various matters behind closed doors.

Uchinaga:I completely agree wi th you. Your company drastically changed its business model in a matter of two years, but Japanese companies in general are extremely reluctant to execute change at such a rapid pace. If we examine the underlying reason as to why they are not good at executing change, we find that many corporate matters are part of the company’ s “black boxes,” and no one is sure where to begin.

Kawamura: The sense of speed that you just mentioned is critical, I believe. I hear so often from foreign companies that when they pitch a ball into Japan, they never know where it has landed. When I returned to Hitachi, Ltd. in 2009, speed was the number one theme. In fact, that is why I was assigned the positions of chairman and president concurrently for my first year only, the principle being that having separate people hold the respective positions would slow down the decision-making. When a lot of people are involved, various nuances emerge, making life difficult for subordinates.

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Uchinaga:That is so true. When a lot of people are involved, even when they intend to relay the same information, their respective ideas come into play, and nuances change slightly. To give priority to speed, it is necessary to do away with a bottom-up approach in favor of a top-down approach. At the same time, it is essential to make what is happening internally “visible” to all to ensure that the top-down approach does not become too one-sided . Making consensus-based decisions in a Japanese corporation where there are many black boxes will be extremely difficult.

Kawamura: While I believe a consensus-based approach is very important, making every decision through consensus building is extremely difficult, due to the excessive amount of time it takes.

Uchinaga:Yes, I agree. This may not be the best way to say this, but when you make a consensus-based decision, the issue as to who takes responsibility is unclear. If at some stage a decision proves to be the wrong one and the question is raised as to what the problem was, no matter how many times you go through a PDCA cycle, the answer will not come to light. It’ s just that Japanese companies are used to a consensus-based approach.

Kawamura: Essentially, they are used to procedures that obscure where the locus of responsibility lies. In the process of consensus building, the sharp edges of a proposal disappear and are replaced with something that is rounded and smooth. This is why we need to limit the occasions for adopting a consensus-based approach to decision-making.

Culture of Innovation Creation

Kawamura: I believe that in modern corporate management where globalization is occurring at present, a sense of speed as well as innovative technologies, products and concepts that cannot be easily commodified will become more and more important. What are your thoughts on innovation in corporate management?

Uchinaga: Business speed is accelerating at a rapid pace as progress in globalization continues. Since the world is changing at a dazzling speed, we must always be thinking about some new business model. The traditional frameworks are no longer suitable. Innovation, I believe, will be born from the way we perceive the market and customers from different perspectives, different values, and different angles. Of course, acquiring the latest technologies is essential but in the monoculture that has supported Japan until now, I think it will be extremely difficult to actually utilize technology to turn on the switch for transforming a business model.

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Kawamura: I fully agree with you there. Up until now we succeeded in doing everything in a monoculture based on Japanese men but this will not work for developing new products and bringing about technological innovation in the future. For example, if foreigners join the dialogue, they will discuss various subjects and introduce new viewpoints. The same is true for technological innovation and business innovation , and making minor improvements to existing processes perhaps can be called innovation. No matter what kind of innovation it may be, discussions in an organization with diversity will facilitate the generation of innovation.

Uchinaga: Yes, I agree with you there. However, there are companies that are unaccustomed to diversity, and if foreigners suddenly come into the workplace in such a company and begin to say things, their input is likely to be perceived simply as “noise.” In that case, I would suggest first utilizing women as a sort of “litmus test.” Women are able to speak in a straightforward manner. In the workplace, I myself was told that I was too vocal (laugh). Moreover, when women give an explanation, they generally do not start from the middle but try to give a complete explanation beginning from zero. Men, on the other hand, are apt to omit details that they assume are already commonly shared among the group, so there is a risk that at the “root” level a misunderstanding will occur. On the other hand, women have no experience in this practice of omitting information on the assumption that it is already known to others. And because they are unfamiliar with what is going on, they begin to ask questions. I believe this perspective is a very important point.

English Communication in the Workplace

Kawamura: When we consider globalization, English skills are essential. There has been a push in some Japanese companies like Rakuten and First Retailing to make English the official language in the company. Even at Hitachi, we have addressed improving employees’ English skills as a key topic for a long time now, and recently staff have a strong awareness of the need to be proficient in English. At all of our research labs, all research presentations - from re s earch pape r s to Q&A sessions - are now presented in English. The other day, even the welcome speech at a friendly gathering after a research presentation I attended was in English, so I feel that the greater use of English has been making progress in an extremely satisfactory manner.

Uchinaga: That is truly wonderful. Actually, Japan IBM in the past was a company where many employees were weak in English, so we established a TOEIC score of at least 600 as the bar that anyone aspiring to a management position had to achieve. However, achieving a certain score in TOEIC does not necessarily mean a person is capable of proficient communi c at ion. I be l i eve l e a rning how to communicate in English is what is most important. For example, knowing how to do a presentation or conduct a teleconference is a matter of techniques. Once a person understands these techniques, there is nothing to worry about. In many cases, people fail on this point because they have not mastered the techniques. The number one reason why Engl i sh became important at Japan IBM, however, was due to the large number of foreigners who joined the company. My superior was also a foreigner. In that case, there is no choice but to speak English. This is true not only in the case of superior who is a foreigner but also when one’s staff includes foreigners.

Diversity as a Management Strategy

Kawamura: Hitachi is also making efforts to change and establish such a workplace environment. As I mentioned earlier, one of our strategies to increase our corporate competitiveness at the moment is to promote diversity. Under our Global Human Capital Management Strategy, we are grading Hitachi staff throughout the world. For example, if an employee is Financial Level 1, this will be a standard for a position in Japan, as it will be in Australia. This is a system to move staff globally, but the number one objective is to introduce foreigners into the workplace in Japan. Ms. Uchinaga, I understand that you are currently promoting diversity as a management strategy, and I would like to hear your views on the recruitment of foreigners and women in the workplace.

Uchinaga: If a company is to use personnel flexibly throughout the world and the position codes differ from country to country, it could result in staff being demoted or receiving an undeserved promotion if the company is not careful. To employ common ability levels for personnel in the way your company is doing is an important aspect of infrastructure for the effective use of personnel throughout the world.

Kawamura: We believe the acceptance of a large number of foreigners wi l l enable us to do away with seniority-based promotions, because this system of promotion on the basis of seniority is firmly entrenched in Japan. We would like to do away with this system entirely and make our assessment system ability-based. On the other hand, I believe that Japan’ s system of lifelong employment is a good system, so I think it would be good to leave this option to the wishes of the individual.

Uchinaga: You are absolutely r ight . In addi t ion to the entrenched seniority-based system, there is also assessment based on working hours. Unless a separate axis for assessment is established, such as assessment based on output or achievement, and staff continue to be assessed on the basis of age or number of hours worked, not only female but also foreign staff will be significantly disadvantaged. When I spoke with various companies through my activities at J-WIN, I often heard the comment that assessment based on output and achievement was very difficult. Initially, I did not understand the reason for this, but I later realized that it is hard to assess staff because the scope of their responsibilities is not clearly defined. The reason this is so is because the parameters of an individual’ s work are not only undefined but also work processes and decision-making proceduresare not open. Consequently, aspects of work duties such as objectives and goals remain vague. Therefore, there is no choice but to assess on the basis of age and length of working hours. I see this as being a rather significant problem.

Differences in Personnel Training Viewpoints Among U.S. and European Companies

Kawamura: I believe there are also differences in views toward personnel training in American and European companies. In Japan, hiring new graduates and training them over a long period is the norm but I think that may not necessarily be the case overseas. At Japan IBM, do you hi re mainly mid- term recruits? Or, is there also a culture to some extent of hiring new graduates on a long-term basis?

Uchinaga: IBM adopts both approaches. For a period, Japan IBM focused on mid-career recruits rather than new graduates but later found that loyalty to the company was much stronger among new graduates and increased the ratio of new graduate recruits. On the other hand, the change in business model is very demanding and a sense of speed is required for work. Therefore, both the training of new graduates and the hiring of work-ready staff suited to the new business model are essential. So, the balance in new graduates and mid-career recruits is something that must be considered case by case.

Kawamura: In terms of past top management, have there been more people who came up through the ranks in the company or those who came from other companies?

Uchinaga: Gerstner is the only one who came from outside the company. Therefore, when Gerstner took up his position, it was as if heaven and earth had been turned upside down.

Skills Needed by Global Leaders

Kawamura: Selecting leaders in a company is a key factor in determining the subsequent life of that company. In a global corporation in particular, global human capital management and development, which discovers and trains future leader candidates, plays a vital role, but what kind of skills are required of global leaders?

Uchinaga: Global leaders must be able to lead people of different linguistic and cultural customs. In other words, they must adapt to diversity. The basic premise in being able to understand different cultures, accommodate differences in culture, and demonstrate leadership among diverse personnel is to respect the identity of individuals. In addition to the abilities of network building and logical thinking, leaders need the ability to abstract. It is not simply an issue of English proficiency or the ability to cope with different cultures. It is different from leadership where assumptions are made on the basis of a perceived existence of common understandings. When I was at Berlitz, I created a “global leaders’ skills template” and designed a training program based on that. For example, the program broke down culture into 36 items divided into 10 categories. Communication was identified as being high context or low context, and thinking was differentiated as being future thinking or past thinking. It was essentially a program for cultivating flexible skills for re sponding by unde r s tanding what kind of communication with the other party would be effect ive. Thi s object ive i s achieved by first understanding in detail the differences between your own culture and the culture of the other party.

Kawamura: Hitachi, too, has prepared various programs for training global leaders but we do not have the kind of training you just spoke of.

Need for Female Role Models

Kawamura: When it comes to men, there are many role models from which to choose and, because of that, it is also easy for them to set specific goals for themselves. I think it would be easy for women too if they had role models above them. What about you, Ms. Uchinaga? Was there someone who inspired you in terms of what you wanted to aim for?

Uchinaga: On occasion, top f emal e exe cut ive s of IBM headquarters came to Japan IBM, and I did come into contact with women that I could truly consider role models. I was able to observe women of this type at close range through presentations and round tables where women of the company came together. On occasion my male colleagues would say to me half jokingly, “Ms. Uchinaga, why don’ t you become a Japanese version of those women?” As a person who takes the words of others seriously, I did make a personal decision to do my utmost to be like those women. There were no real female role models at Japan IBM but, thanks to my immediate foreign superior, who enthusiastically gave me advice on various ways of thinking and my career, I began to form an image of how I wanted to be in the future.

Kawamura: Role models are really necessary, after all. There are both many good and bad role models for men, so I believe it is easy for them to make choices. In the same way, I hope that the number of female management executives will increase in the future.

Uchinaga: Yes, it would be good for a number of women to join the ranks. I think it is also important for women to be represented at various levels.

Kawamura: I agree. At Hitachi two of our outside directors are women although we have no women in executive officer positions as yet. This year in May, however, the company announced that it would recruit one executive from among the female employees of the group by fiscal 2015. I believe the failure to fully utilize female potential is no different from wasting one of Japan’s valuable resources.

Uchinaga: There was someone who likened the utilization of women to methane hydrate. While we know that it is there, we don't attempt to make use of it. I thought this was a rather odd way of saying it nonetheless (laugh).

Kawamura: No, i t is actual ly true. Whi le there are many outstanding university graduate employees, their talents are not utilized. This, despite the fact that there are system in place. Of course, the individual’ s own awareness is also an important factor, but because there are no role models, these individuals are not personally inspired to rise to the top themselves. Not being able to receive the understanding of their superiors or their husbands are also factors that make the utilization of women difficult.

Uchinaga: The problem is that even though there are systems within a company, they are unable to put them to effective use. The c ompany’s culture and relationships with colleagues and family end up becoming barriers. When I was at Japan IBM and became the leader of the Women’ s Council, I spent a year and a half researching factors inhibiting the advancement of women’ s careers, and three key terms emerged: (1) lack of role models, (2) work-life balance, and (3) old boys’ networks. As far as (1) goes, as you said earlier, because there are no women already in management or executive positions, women fail to form a future image of themselves as professionals. In (2), women face the problem of juggling work and private life, and at issue in (3) is the male networks that share culture, customary practices, and conventions that developed in a male-dominated society. In short, they are rather gloomy rules that the conservative mainstream has created on the basis of their experience. Of the three terms, (3) is particularly complex. What I personally found most difficult were the invisible barriers in a male society. I believe that by recognizing these inhibiting factors, women will gradually shift to a direction where it will be easier for them to advance their careers. I also believe that it is very important for positive messages to be continually forthcoming from companies that are truly serious about utilizing women.

Kawamura: I think so too. Just the other day the president sent out a message to female employees, and I intend to create similar opportunities. By relaying to women the importance of aspiring to high positions, and the joy of their vision expanding two-fold upon actually achieving their aspiration, we look forward to seeing female employees play an even greater role in the future.

Private Life

Kawamura: Ms. Uchinaga, you were the first female director at Japan IBM, and you have steadily built on your career. Is there anything that you have set your sights on for your own self-fulfillment?

Uchinaga: I like taking up new challenges. By nature, I am a person who likes to consider all sorts of things by digging beneath the surface. Because of that, challenges tend to appear in my life as a matter of course. I have always been like this. When I reflect on the past, I do sometimes think if I had made a different choice at a certain time, different paths may have opened up for me. For example, when I was at IBM, I was offered the opportunity to transfer to IBM headquarters, where I could have taken on global challenges but I declined the opportunity for personal reasons. That’ s why I always tell women, “If you have the opportunity, be sure to take it.”

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Kawamura: Before we finish, I would like to ask you a personal question. As someone who leads a very busy life, what do you do to relax or re-energize? Do you happen to have any hobbies?

Uchinaga: Yes, I do. I am actually very fond of mountain climbing, and I have already completed climbing 76 of Japan’ s 100 famous mountains. Recently, however, I am not so confident about the strength of my legs, and I am now very much into gardening. I have a small cabin in Tateshina and I enjoy spending time looking out on the mountains and planting and caring for many kinds of flowers that I grow in my garden, such as roses, lilies and tulips.

Kawamura: I also heard that you were very interested in the International Linear Collider (ILC). Could you please say a word or two about that?

Uchinaga: The development of the ILC is not just an initiative that will shed light on the origin of the universe but the elemental technologies underlying the ILC systems have extremely broad and diverse applications including advanced medicine. The country that will serve as the base of the ILC plan has yet to be decided [as of the time of the interview] and there are high expectations that industrial innovation will be among the outcomes of the forefront technology, so I truly hope that Japan will be the country that is chosen. If Japan is chosen as the base for the ILC development, many people from overseas will come here including researchers and scientists from around the world, as well as their families. While it is also important for Japanese to go out of Japan, I feel that “internal internationalization” will occur as a result of the ILC plan.

Kawamura: Japanese companies are beginning to raise their hands, and while I am not in a position to say anything since I do not have details, I believe that we at Hitachi have unique technologies that can probably be utilized in the ILC plan. Thank you very much for your time today.

Editor’s Postscript

Ms. Uchinaga has held a number of key positions in Japanese firms including Japan IBM and Benesse Corporation, and at present is making efforts to promote diversity management in companies by assisting in women’s participation in the work force throughher position as the Board Chair of an NPO. In this interview Ms. Uchinaga shared some very interesting stories about changes in IBM, the importance of diversity in innovation creation, training global personnel, skills required by leaders, and policies for nurturing the development of female management executives including her own experiences. In the course of this interview, we were also able to engage in a very meaningful discussion. In a world where globalization is progressing at a very rapid pace, Ms. Uchinaga argues that innovation will not develop in a conventional monocultural environment. This indication of Ms. Uchinaga’ s has important implications for the Hi t a chi Group, as we set our sight s on accelerating development of our global business.