Mitsubishi Corporation

Steps for the BETTER FUTURE:DX Driving Decisive Changes and the Rise of New Societies

DX Driving Decisive Changes and the Rise of New Societies

The need for digital transformations (DX) is being keenly felt in many industries. This article is the second in our series of interviews with employees of MC Digital, a wholly owned subsidiary that is responsible for the shosha's DX strategies. This time, they sit down with Professor Keita Nishiyama of the University of Tokyo's Institute of Future Initiatives to discuss the essence of DX and how it can be stimulated to evolve.

Roundtable Participants

Keita Nishiyama is a Visiting Professor at the University of Tokyo's Institute for Future Initiative and Senior Executive Fellow at Industrial Growth Platform, Inc. After graduating from the University of Tokyo in 1985, he joined the (former) Ministry of International Trade and Industry. He is also a graduate of Oxford University's Philosophy, Politics and Economics Course (1992). His other former positions include Executive Officer of the Innovation Network Corporation of Japan, Director of Tokyo Electric Power Company (TEPCO) Holdings, and Director-General of the Commerce and Information Policy Bureau at Japan's Ministry of Economy, Trade and Industry (METI). He retired in 2020 after a career spent at the forefront of economic and industrial systems development in Japan. He is also the author of "DX way of thinking: The strongest strategy for reviving the Japanese economy." Rei Kubonaga is MC Digital's Chief Technology Officer. Yusuke Nakata is a data scientist at MC Digital. Mihiro Nomura is a project manager at MC Digital.

—— What is the essence of digital transformation, and why is it so important nowadays?

NishiyamaWe now live in a world where decisive changes are being driven by things like digital technology and artificial intelligence (AI). For example, when we use our smartphones to find out how to get somewhere, the software does not need to send our requests to engineers or technicians. It lets us know the route automatically. Today's software can do the work that we used to rely on people or even entire organizations to do, so it is reshaping not only businesses, but also governments and societies in general. We are transitioning into a new and unprecedented era for the human race.

—— How are advances in DX impacting Japanese companies and businesses?

NishiyamaUntil now, most Japanese organizations have undertaken their businesses or provided their services in a stovepiped manner, meaning all of the data pertinent to those operations has been vertically sequestered within the organizations in question. This is true of both corporate business departments and government agencies, however it runs contrary to the "data-sharing" logic of today's digital world, which is driving the global economy. An example familiar to many of us is online meeting technologies. Because those technologies already exist and are used worldwide, the proprietary systems of each organization are no longer needed, and superiors can access the data and content they need without having to ask their subordinates to look things up for them. These kinds of shared software have made solutions more readily available or discoverable, so the stovepiping culture of certain organizations has to change. We are in the midst of a major revolution that presents very serious challenges for Japanese enterprises.

—— I understand that Mitsubishi Corporation launched MC Digital three years ago to handle its DX strategies. Can you tell me a little bit about your organization?

KubonagaThe MC Group is involved in a wide range of industries and corporations, from upstream to downstream. This has helped the company to gain a huge amount of varied know-how, which it is now leveraging to tackle DX internally. That aim to make DX an "in-house" project is the reason why it established MC Digital, a subsidiary that is now dedicated to realizing such transformations throughout many industries that include companies both inside and outside the MC Group. I think that MC Digital has a number of strengths, one being its ability to optimize not only individual companies, but also entire supply chains. It also has the wherewithal to adapt or cross-develop successful transformations in one industry so that they can work in other industries as well.

NishiyamaOne thing that I focus on when implementing a DX strategy is "abstraction," meaning that which draws out the value the business provides and manner in which it does so. In other words, abstraction identifies how we should conceptualize things like logistics or human resources. Perhaps the best way to think of it is as a process of smoothly translating operational elements into digital data. MC Digital appears to be quite proficient at this. It is using abstraction to connect MC's business domains and digitalization, all the while taking best advantage of the shosha's diverse business expertise. What have you noticed so far, from your perspectives as data scientists?

NakataNowadays, many industries are struggling with things like managing productivity, forecasting demand and optimizing logistics resources. At first glance, each industry might appear to have its own unique problems, but a certain degree of abstract thinking shows us that they essentially the same. That makes it easier to come up with solutions.

NomuraTo explain abstraction, I would liken today's shared software to a Japanese kimono, a traditional type of clothing that differs from most western attire in that it conforms to the wearer's body. The very purpose of the kimono is to wrap the wearer in something that will provide him or her with warmth and beauty, but it is a universal garment that can adapt to each person without needing to be tailored.

NishiyamaThat is an interesting analogy. Personally, I look at abstraction from an AI perspective. For example, an AI system used by a chemicals plant does not think, "Okay, first I will make ethylene from crude oil, and then I will use the ethylene to make film." It simply uses its software and the data provided to control the chemical changes. I think that in the future, abstraction will also change how we perceive industries.

NomuraIn implementing our DX strategies, we often visit the front lines of MC's businesses to speak with those in charge. At times, their attitude is that certain things are so obvious that they do not need to be communicated, but that can be problematic. This is why we encourage them to explain things in as much detail as possible, and we use that information to identify the issues that need addressing. We always try to deliver solutions to our clients that are unbound by common practices or assumptions.

KubonagaIt is so important to start from the beginning. I think the greatest value of our company's software is that it allows each entity or industry to set its own abstraction goals and then works in line with those goals to optimize operations.

NakataThe role of a company's Chief Technology Officer (CTO) is vital to achieving its goals, because its organizations and frontline operations need to be led by a tech-savvy professional.

NishiyamaDX is an exercise in translation. First you translate the frontline problems and then you think laterally to translate the solutions. I look forward to hearing more about MC Digital's creative growth and new value creation.

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