Working Backwards to Lead Digital Transformation at a 100-Year-Old Organization
- Thank you so much for joining us today for this discussion. - Thank you very much for having us. - Delighted to have you with us and we're going to have a conversation about your experience with innovation and transformation. But maybe to kick us off, could you please give us a quick introduction to yourselves and your roles at Mitsubishi Electric. - My name is Nobuo Asahi.
I'm a General Manager of Digital Transformation Innovation Center of Mitsubishi Electric. So my mission is to bring new culture based on this digital transformation onto the Mitsubishi Electric. It is a very old 100 year company. So this is my purpose, and our organization purpose. - So much experience and wealth in that organization as well.
And Mr. Tanaka-san? - Hi, my name is Shoji Tanaka. I'm a Deputy General Manager of Digital Transformation Innovation Center and my role is to facilitate new business development with many different business groups and also talent development and cultural transformation together with Asahi-san. - Amazing. Thank you very much, both
of you, to being here again. So you mentioned the a hundred year history for Mitsubishi Electric, which I'm sure has been a huge journey for the organization. - Yeah. - How have you seen some changes for the teams and the mission statement of the organization in your time with Mitsubishi Electric? - Yeah, I've been working for Mitsubishi Electric for 35 years, so a long time. I feel that our company is currently nine business groups, so they're operating basically independently. - Okay.
- Some customers they share, but basically technology and product are the independent operation. So the top management of Mitsubishi Electric had a long discussion about that such a conglomerate management is good and whether we can take advantage of conglomerate management for the future, or we cannot. The kind of along this discussion we had. And one and a half years ago, we announced that new strategic word, circular digital engineering enterprise, which shows that using digital technology, even that we have nine business unit, but we can have some kind of integrated solution for our customers. That's the key point of changing our business style.
- So a small job. - Yeah. - A very small job. - Yeah. - Small job, but very, very powerful. - Yeah. - Yeah.
- Yeah, no, it's a huge job. It's a very, very large job and one I'm sure that you have lots to plan for. And within those nine silos, what has been the response of the teams to the new mission or or to the new challenge? - Last year we formed the nine business groups into a four business area, and we assigned the four business area owners. And their mission is basically that form integrated solutions. But the way they do such an integrated solution is that there is no methodology in the Mitsubishi Electric, because we are 100-year purely manufacturer company.
- And very good at it as well. - Yeah, so circular cell engineering, the concept is that the collective data from our customers, customers using our product and systems. And analyze that, and then make solutions for the customers... - Okay.
- ... And bring them. This is the best concept. But we don't have any common database of our customers, and we don't have even the common customers database itself. So we started to prepare for the basic technology platform background for pursue that change of the culture. - And to your opening statement, there must be so much synergy and learning between these nine organizations, hence why you've set up the digital transformation innovation office and you know, trying to work out that strategy moving forward will be important.
And we're very fortunate as AWS to have been doing some work with you recently. How did that start, how did we get involved? Like what was the problem or the opportunity that you were looking to tackle? - Before we started the Digital Transformation Innovation Center, I have been working for Living Environment Appliance Business Group and start to do some kind of IOT type product and try to collect the data. At that time I worked with the AWS and selected the AWS platform. And we made some kind of IOT platform onto AWS whose name is Linova. And also, a smartphone application platform named MyMU, also on AWS.
And gradually, we can collect the actual working product data on top of that. Also, we developed that data analysis platform named KOTOLiA. So those three platform were so powerful because we adopted that serverless architecture. At that time still it was new, even in the AWS. So applying that, the platform will continue, not collapse, and also collect the data, were easily analyzed onto the BI tools, or AI tools of the AWS.
So, I tried to bring that kind of activity to corporate wide. So this is a kind of story. - Well, thank you very much, and also building those products and those solutions to gather data has been a fantastic collaboration. And how did you start, how did you get to those solutions? Because you've mentioned a lot focusing on the customer and finding synergies amongst the businesses for the customer. How did you approach that with your AWS team? - Since we are manufacturers, data analysis and find out solutions is kind of...
we didn't have any internal methodology for that. So AWS Japan staff suggested to me, "Why don't you use Working Backwards?" That is Amazon, inside Amazon, are always using to make some new business planning. So jointly with Kaneko-san of AWS Japan, and planned the Working Backwards program and make several two-pizza team inside Mitsubishi, and try that. Finally, we come up with the one idea, that is name MeAMOR, which is looking at parents living apart from relatives and the children and monitoring the lives of them in using our product.
So this is a new trial, because at the now we launched the software for paid service. So usually we sell product just that, but we now combination of the product sales and recurring service revenue. So this is a new trial. This is the first experience of me to understand the customers, and catch up at the solutions.
And Kaneko-san is a good friend of mine, so hearing you talk about some of the Amazonian ways of working is very nice to hear. And for you, what was one of the biggest takeaways from Working Backwards? How did it differ to maybe other processes or methodologies that you'd used in the business before? - Well before, even if we make products, we hear the customer's voice. The customer voice may be, for instance, room air conditioners, that are many, many customers.
So in old days, people like to have warmer device or cooling device, but now, the needs and the insights is varied in the market. So what we are mainly doing that the competitor's price, our competitor's functions, so maybe more than half time is looking at that. - Yeah. - And also, no way to collect the data without having IOT type of technology.
But now we have the direct connection to end customers, and when they use the heater or when they use the cooler and when they use the timer, that kind of data we collected. So we are now the very good status of understanding the customer insights. - That's amazing. And we, you know, the Amazon organization as a whole has always thought about trying to invent or build on behalf of a specific customer. And you mentioned there, taking your words, you spent a lot of time in the past looking at competitors or a product or a price.
And shifting towards customer gives a different dynamic of how we can build future products. And I'm sure now with you at the helm of the transformation office, there'll be a great chance to build that across the business units. And as we think about the future, you know, it's important for leaders to, you know, cast their eyes ahead and try and understand two or three years where the business may be in horizons and how it may evolve. And clearly now with, from April, your remit to look across those nine business units, what is your approach to how you think you will look to instill some of this thinking into the culture across the organization? - Well, actually based upon the experience of realizing the MeAMOR, we learned two things.
One is the importance of the having a broader perspective of what the customer needs. Also, the thing is, we have to come up with the actual true value based on the fact. The first one is that whenever we have a customer interviews, we got a lot of requests from the customers, and we just focus on the very tiny needs of the customers. We can't see what exactly the customer want, so then we find that the not directly respond to the customer need. We have to recognize, or analyze, to understand what exactly the customer need from the very broad way. So then, when we think of the solution for the customers, if we don't have the very objective data that is a fact, we have to rely on our imaginations.
So when we discuss the solution ideas, most likely loud speakers will take over everything, When we have a meeting and there's some hierarchy of the people there, even though younger employees saying that, "I would think this one is good". But the other guy, who is maybe a manager, "No, I don't think. This is not good". So that's being taken over by his option. But nobody knows what the opinion is right or not. But if we look at the actual data and see what's going, everybody can share the same understanding of what exactly happened. - We have a phrase for that.
It's called the Hippo Problem. The highest paid person's opinion, and typically that individual is the one that makes the decisions across the organization. But the Working Backwards process that you went through is a great way of leveling that conversation because the data is all in the one document and everybody gets to voice their opinion about the value, or the opportunities, or the obstacles of going forward with that idea.
And I noticed that you're both representing your Working Backwards t-shirts. - Yeah, always work backwards. - We have to take this off. We have to take the jacket off, yeah. - Brilliant, look at that, thank you very much. I didn't make you wear that either. That was your own choice.
So we believe at AWS that a customer's journey to the cloud is fundamentally a cultural transformation that is enabled by technology. So two questions on that. The first one is, how are you going to evolve the culture aside from getting everyone's voice? What will be some of your tips and tricks to instill this innovative thinking across the whole organization? - I think that the most obstacle is rule.
Because we are the hundred year manufacturing company, and we have accumulated internal rules that doesn't make sense. Some of them, or most of them have become very outdated. And even though everybody doesn't understand everything, and some of them don't know why this rule existed, but very conservative people just follow the rule. That's the huge obstacle to accommodate new things like new technologies, new methodologies, something like that.
- That rule exists mainly in the factory. - Yeah. - So we are manufacturers, so what we are doing, the procurement department people using the procurement rule, and design people, designing rule, and the production department, production rule.
So we tried to pick up several person, younger person from the factories and make some small team, like a two-pizza team, and put in our office located in Yokohama and prepare for some kind of scrum style, the discussion room. We did firstly see that the actual data and showed that data on the graph, a big screen using the data analytic tool. So gradually the people separate from the factory side, they gradually changed their mindset.
- Mm, yeah. - That was so successful because at only two weeks we could catch up with some new idea. But before that, tens of years in the past looking at the same data, but they didn't come up with that new solution. - And typically in an organization like yours that has a hundred years of great success and huge amounts of knowledge, there can become some complexity in that organization. And so to your point, finding ways to be able to build agility throughout the company is very important.
And that comes to my second half of that question is how do you think technology might play a role in that? What technologies or how might you embrace that technology in the future? - So in order to facilitate digital innovation related business, definitely we have to understand what is the latest technology like cloud computing and generative AI. So we have to catch up with the technology and we have to accommodate those technology into our product and the services vary rapidly. So, in order to do that, having the very traditional waterfall development style, have transformed to the agile style. Also, the architecture, the product architecture is quite monolithic, so we have to change that architecture to the microservice based architectures, in order to quickly mash up the functionalities and deploy to the customers. If it doesn't work, quickly update it, that kind of things.
But a monolithic system architecture, we can't do these things in such a speed. So that's very, very important to know that. - I'm really excited to see what you both do with your team of 30. I'm sure it will become bigger as you look at taking on this challenge across the whole of Mitsubishi Electric. And there are many other large established organizations that are about to embark on or go on exactly the same transformation that you are about to lead across your organization. So as a final takeaway from each of you, what would be sort of a mindset suggestion or something to think about for other leaders who are about to embark on a similar transformation? Mr. Asahi-san?
- My 35 year career in Mitsubishi Electric, I did some new project, totally 11. So from that experience, patience is very important, because any new trial, new project, there would be some resistance group. It's kind of healthy. Pros and cons exist in the one organization is healthy. But if that new project is very important and they need to pursue, maybe we have to persuade the resistance group. But the best way to persuade that resistance group is to show the result.
But then showing the result takes some time. From my experience, three years is the key period. - Magic number. - Magic number. - Magic number. After three years, strangely, resistance group disappear. (chuckling) - We have a phrase for that in our business called "Being stubborn on the vision, but flexible on the details".
So it sounds like your long-term thinking is what's important to get into the organization. Mr. Tanaka-san, what's your takeaway for as you think about transformation? - So far, I was involved in the automotive equipment divisions and we respond to the customer demand exactly. And so far,
customer say specifically what they want and need, they want to have. But recently, automotive, mobile industries become, so to say, VUCA things. So customer also don't know what to do, so then we cannot get the exact request or demand from the customers. So as the Working Backwards, we have to think beyond our direct customer to the actual car owners.
But everybody think that what the car makers want, so I think the stories we have to follow, what is the exact customers who have to provide the value, actual value, to that. So this is pretty challenging, because our organization style is doing exactly that things. So we gradually change the mindset, and embrace the cultures to allow many, many challenges without fear of failures. Like a two-way doors concept. - Fantastic, and you've now gathered so much data that you will work backwards from that data on behalf of those customers.
You'll be data led in your decision making and stubborn on that long term vision. Mr. Asahi-san, Mr. Tanaka-san, thank you so much for your insights. - Thank you very much for having us. I very much enjoyed it.
2024-07-24 22:19
