The Japan News by The Yomiuri Shimbun
Partnerships help to tackle GAFA giants
Systems integrator Nihon Unisys, Ltd. is transforming itself into an enabler for resolving social issues amid the digital revolution. For this installment of Leaders, a column featuring corporate management and senior executives, President and CEO Akiyoshi Hiraoka explains his growth strategy to The Yomiuri Shimbun.
The main business of Nihon Unisys used to be to develop and deliver systems at the request of our clients including banks, manufacturers and retailers. We have responded to various customers’ demands to make their businesses more efficient.
Meanwhile, information technology has drastically evolved along with the growth of the internet. However, the speed of progress has been so quick that customers have become unsure about what to do, or what to request of us. When this happens, a systems integrator misses business opportunities.
Around 2002, I submitted a report to the company, acting with a sense of urgency. After having discussions with entrepreneurs from Silicon Valley, I thought I had to make a move. It turned out to be a bit premature.
The company president said to me at the time, “If that’s the case, do something about it.” So I established a new business division to cooperate with other companies from different industries. I was trying to launch a one-stop moving service, which would provide a full package of assistance for customers such as selecting a place to move to, purchasing furniture, taking care of procedures for changing children’s schools and for water and gas, and opening a bank account.
At that time, however, information technology infrastructure, including the internet, was not good enough for this service. There were also the regulations and business practices of related industries to overcome. The participating companies had their worries about the extent to which we could actually bring the idea into being. After all that, the business division was dissolved after a year.
I believe that the orientation of that business was not wrong. The evolution of communications technology and the advent of the digital revolution thereafter have been breaking down the old order and divisions of business industries.
If we could connect different businesses, we would see new services come out of it. We would not only improve business efficiency, but also enhance the values of products and services, change our way of doing business and refine our lifestyles. I realized that my company could play the role of catalyst in the process of connecting different businesses.
My company has advocated this idea by calling it a “business ecosystem” — comparing the interdependence of corporations to ecological systems in biology.
In Japan, there remains among companies a strong sense of preferring to do business independently. However, it is difficult for a single company to compete with Google, Amazon and other tech giants collectively known as GAFA. Although there is a limit to each company’s efforts, we can resolve social issues by working together. In this context, I believe the concept of a business ecosystem will become more important.
The business ecosystem that has progressed furthest is the cashless economy. Nihon Unisys made prepaid cards for online shopping available to purchase at convenience stores nationwide. People can purchase the prepaid cards for online shopping on Amazon and iTunes, among other services.
Prepaid cards of this kind have become popular in the United States as gifts. We thought to connect companies looking to sell their products and services on the one hand, and companies wanting to attract more customers by offering those cards on the other.
The system of offering prepaid cards at convenience stores was launched in 2011. Nihon Unisys provided the platform for the system.
Although the sales of prepaid cards were sluggish at the beginning, they started increasing rapidly in 2012 when high fees imposed by mobile game operators became a social problem. Children could not play online games because they didn’t have credit cards even though they had some pocket money and New Year’s allowance. We provided kids with a means of online payments using a prepaid card. This also serves to prevent them from racking up expensive bills.
Customers buying or charging prepaid cards at convenience stores also purchase additional items, and the stores receive commission fees for handling the cards. The service has proved beneficial to the companies and all other parties involved. Today, the variety of such prepaid cards exceeds 100.
In the area of mobility, we started a new business to build a network of charging stations for electric vehicles in 2009. We have provided business operators with the know-how to manage membership services and billing systems, and enable customers to find the locations and availability of the charging stations.
The number of networked stations has increased to about 5,300. I believe that we have thus contributed to dealing with the climate change issue.
This business model is about searching, making reservations, using, paying and leaving. That is the essence of the sharing economy. We have adopted the method in other fields including office sharing — using available spaces in office buildings — and car sharing.
We have also connected Japan Post Co. — which was looking to utilize vacant storage space due to a decrease in postal mail — with a laundry company in need of storage facilities. This service has enabled the company to store customers’ out-of-season clothes and comforters or futons at the post office until clients need them again. The business prospects for connecting different businesses seem limitless.
My business ideas come from my experience in the sales department early in my career. I was posted to Sendai and took charge of financial institutions located in Aomori Prefecture. Back then, the Shinkansen line was not yet in operation in the prefecture and it took 4½ hours to get there. But as there were only two banks I was in charge of, I could finish my job and come back to Sendai the same day. I asked my boss for permission to stay overnight so as to visit companies in other industries as well.
When I visited retailers and wholesalers, they liked to listen to my stories of business transactions and financing that I heard from bankers. On the other hand, the bankers were interested in stories I heard from wholesalers about what they wanted to do, or what they were looking for. As a result, my sales record improved and I was honored for this achievement by the company. I learned that we can create something new by connecting businesses.
Hiraoka emphasizes that the experience of making a mistake itself is the key to creating new business.
Companies that provide systems for corporations are managed by a corporate culture that aims to eliminate mistakes. We repeat checks over and over again for risk management. However, if a company is excessively controlled by such a culture, employees will get cold feet even when told to take on a challenge. We have to build a culture that tolerates employee mistakes.
Even if a senior executive says, “Go for it, don’t be afraid of mistakes,” some employees will wonder if they should take those words at face value. For that reason, we added these questions to personnel evaluation forms: “Have you taken on new challenges?” for employees, and “Have you allowed staff to take on challenges?” for managers.
I have told employees, “Remember your mistakes and learn from them.” Someday, these mistakes will become our teachers. In other words, keep your mistakes in a vault and use them when needed as an asset. I have a vault full of mistakes.
An organization can become stronger if it is changed by people’s will, rather than by making new rules. My company has not established a special organization or unit for innovation, because all of us should work together to innovate the company as a whole.
Nihon Unisys first introduced and supplied commercial computers for business in Japan in 1955. I envisage that the company will become a pioneer again for Japan and the world.