How serious are giant companies about “mindset reform”? Mitsubishi Electric CDO Takeda talks about the big changes in “customer needs”

Mitsubishi Electric is a huge company with a history spanning over 100 years, with approximately 35,000 full-time employees (fiscal year 2022) and 150,000 employees across the group.

The company has set a goal of expanding its DX talent base to 20,000 by fiscal 2030, roughly three times the number in fiscal 2023, and is working on a “mindset reform” regarding manufacturing.

“In manufacturing, it takes many steps to create something without making any mistakes. The organization has section managers, leaders, and a chain of command that is optimized for manufacturing.

On the other hand, in the digital world, projects are organized on a project-by-project basis, then disbanded when they are finished, and the next project moves on. This was something that did not exist in the past at Mitsubishi Electric.”

Satoshi Takeda (Director, Executive Vice President, CSO and CDO), who is in charge of promoting digital transformation across the Mitsubishi Electric Group and steering employee mindset reform, spoke about the “sense of crisis” that has led Mitsubishi Electric to begin working on mindset reform:

It is no easy task for a giant company that excels at traditional manufacturing to transform into an organization suited to the new era. But why does Takeda say, “We have to see it through?”

(Interviewer: Business Insider Japan Editor-in-Chief Yu Ito, Text: Yuriko Ota, Photo: Toshiharu Takei)

Changes in customer needs that drove a century-old company

A certain “force of inertia” is at work in large organizations. A difficult mission like changing the mindset of employees doesn’t move forward smoothly just by issuing commands.

In this context, Takeda launched the DX Innovation Center in Yokohama in April 2023 as one of the organizational transformation devices.

In a sense, it is an in-house digital transformation team that spearheads mindset reform.

This team took the lead in launching “Serendie,” a common digital platform that connects each business division across the board through data.

Why is a group-wide digital platform necessary in the Reiwa era? Takeda explains.

“Mitsubishi Electric provides hardware products and services in a variety of fields, including power, elevators, air conditioning, and factory automation (FA). Until now, each business unit has been developing its own business, and there has not been much need for horizontal collaboration.

However, for example, in the case of a building, new value can be provided by combining air conditioning, elevators, and electricity.

The basis of this value is our newly launched shared digital platform, Serendie.”

By combining digital data generated by Mitsubishi Electric’s hardware products through Serendie and analyzing and utilizing the data, new business value can be generated. Takeda says this can also contribute to solving social issues.

In fact, there has been an increasing demand in recent years for “new proposals” such as combining equipment delivered by Mitsubishi Electric. As client companies have begun to seriously address sustainability, they are now seeking solutions that combine a variety of equipment and data.

“What’s important now is how to operate buildings and factories efficiently and in a carbon neutral manner.

For example, while Mitsubishi Electric has the technology to optimally control and distribute electricity, it also supplies the power that runs various machines and equipment on the demand side, such as in factories.

We also own the air conditioning, which is one of the biggest consumers of electricity in buildings, and the elevators. If we combine those, we can make even better proposals.”

He also says this.

“(In recent years) it’s not just about delivering equipment; it’s becoming more important to consider how to use data to upgrade it and what value we can add to it. In the past, customers’ departments that decided on the delivery of equipment and the department that carried out maintenance after delivery were separate and different.”

Takeda says that both service creators and customers need to “broaden their perspective and change their mindset,” rather than limiting themselves to their own areas of expertise, such as by considering other business divisions, or in some cases combining their own company with other companies.

Mitsubishi Electric plans to open a new facility called “Serendie Street YIMP” in the Minato Mirai district of Yokohama in January 2025, with about one-third of the space planned to be an open co-creation space.

The facility aims not only to create business across the company’s business divisions, but also to accelerate co-creation by providing a space that other companies (partners) can enter and exit relatively freely, something that was previously difficult to do from the perspective of protecting confidentiality.

Plan to have 2,000 DX talent in Minato Mirai by FY2024

How serious Mitsubishi Electric is about its in-house DX team can also be seen from the number of people involved in the DX Innovation Center.

The DX Innovation Center started with around 30 people, but by fiscal 2024, the plan is to have a workforce of around 500 in-house employees and around 2,000 people, including DX personnel from each business division, including affiliated companies, concentrated in the Yokohama Minato Mirai area.

The measures that Mr. Takeda took to establish the DX Innovation CenterThe “organizational innovation” was to have employees who gathered in Yokohama gather from the “DX teams of each business unit” in a business trip-like format.is.

Takeda believes that it is important at this stage not to change departments.

Takeda emphasizes that the reason for this is that hardware is at the core of Mitsubishi Electric.

“The reason hardware is important is because it is the source of data. Data alone cannot create true added value. We want to feed the results of data analysis back to the hardware to enable better control and better use.”

In addition, the company has devised a system for finding hidden talent within the company, taking advantage of its talent pool of approximately 35,000 employees.

“Our company also holds internal events in collaboration with various vendors. For example, if we take AWS (Amazon Web Services), we plan something like an ‘AWS Day’ and gather employees together. This brings together hundreds of employees who have skills that even their superiors didn’t know about, such as studying data analysis or having AWS certification. This is the first time we are able to visualize the hidden digital transformation talent within the company.”

It is often said that even if you identify DX talent, it is difficult to transfer them.

However, Takeda says that Mitsubishi Electric has a unique personnel system.

“Mitsubishi Electric’s personnel system has a mechanism that allows employees to be transferred without the permission of their superiors if they say they want to and the receiving side agrees. In fact, the number of transfers using this mechanism is starting to increase.”

However, won’t this lead to a scramble for talent within the company? Takeda says he expects some debate.

“Of course, we do get complaints from our former departments. But I always say it’s better than having (young employees) quit. ‘Hidden DX talent’ are people who have a desire to work in the digital world. If they can’t achieve their goals at Mitsubishi Electric, they’ll eventually go to another company.”

“Seriousness” that changes values

Mitsubishi Electric’s “DX STRATEGY 2024,” published in May, sets an ambitious goal of expanding its DX talent base from 6,500 in fiscal 2023 to 20,000 by fiscal 2030.

In an era of labor shortages, there are limits to how much DX talent can be secured through regular recruitment activities and employee reskilling. Naturally, corporate acquisitions and other methods are also on the table.

“I think it’s necessary to bring outside forces into the company. The incorporation of a completely different culture stimulates the organization and has the effect of encouraging a change in mindset within the company.

Of course, one reason is to gather 20,000 people, but I think that “buying” talent from outside is necessary, especially in the digital field, to promote reskilling and cultural change.”

Although 2030 seems like a long way off, there isn’t much time left in terms of a company’s timeline.

In order to ensure that mindset reform and the expansion of DX talent progresses, we must visibly demonstrate our seriousness within the company.

“At Mitsubishi Electric, we have traditionally discussed strategies in detail, and been very cautious about everything. But in times of change, that’s no good.

Especially in the fields of digital transformation and sustainability, I have a mindset of, “Let’s give it a try” and “We can tolerate a certain amount of failure.” However, not everyone is used to this kind of culture. That’s why I also back people up (to support those who take on challenges).”

Takeda concluded that the most important thing is to bring out employee initiative and diversity.

“Diversity is bad in terms of efficiency, because it brings out a wide range of opinions. But homogeneity alone means that discussions will only lead to the same conclusions.

We need to change the culture so that good ideas are born from diverse opinions. It’s a very difficult challenge, but I think we have to get it done.”