* This article is as of writing in March 2021
Click here for "【Part 1】 15 Years of Hitachi’s Internal Employee Network"
Click here for "【Part 2】 The Logic of Transforming an Organization"
Click here for "【Part 3】 Making a Fresh Start from Stagnation"
Click here for "【Part 4】 Challenging the Pandemic by DX of Innovation"
Click here for "【Part 5】 Secret behind the Longevity of Team Sunrise"
Click here for "【Part 6】 Drivers of Innovation"
Click here for "【Part 7】 The Man Who Brought the US Bestseller “The Human Element” to Japan"
Click here for "【Part 8】 Global Mindset and English"
Click here for "【Part 9】 Organization Where Innovation Occurs from the Bottom Up"
What were the Two "Gravitational Forces" that had been hampering Innovation?
In recent years, the concept of "Ambidexterity" has garnered attention. Around the time when the internal study group was formed in 2006, Masahiko Sato had already heard from senior colleagues at Hitachi that "Ambidexterity of both the present and the future is essential." However, he reflects on that time, saying, "When considering the ambidexterity, I believe that Hitachi faced two gravitational forces."
One of these forces is the "competency trap." This involves exploring knowledge beyond one's field of expertise, combining it with existing knowledge, and continuously deepening expertise in specific areas. To foster innovation, "Ambidexterity" which balances both aspects at a high level, is essential. However, in practice, companies tend to focus on deepening expertise in their existing successful businesses, neglecting the exploration of new knowledge.
The other force relates to "two-tiered management," as proposed by Noboru Konno, a management scholar and professor at the University of Tama. Konno describes innovative companies as operating on two levels: the first floor generates revenue from existing businesses, while the second floor explores and experiments with new business initiatives.
"However, at that time, Hitachi faced a dilemma. It was as if gravity weighed heavily upon us, making it easy to become overly focused on daily tasks on the first floor. If we continued down this path, Hitachi would eventually fall behind the changing world. That sense of urgency pushed me."
Around that time, Sato attended a part-time MBA program focused on finance and management at a business school for working professionals. Here, he discovered the field of organizational economics, taught by Professor Kenshu Kikuzawa (currently a professor at Keio University's Faculty of Business and Commerce). The concepts of "bounded rationality" and "transaction costs" he learned in this course had a significant impact on shaping the direction of his initiative.
"Just as I was pondering where these two gravitational forces come from, I encountered the concepts of 'bounded rationality' and 'transaction costs' during a lecture. These concepts perfectly aligned with my thoughts. Human capacity to gather, process, and transmit information is limited, and there are various transaction costs associated with communication. As a result, individuals make rational decisions based on limited information, hence they fail to create anything new. That was not because they lack motivation. To bring about innovation, we needed to create a mechanism for sharing information such as sense of crisis we have and what executives think is our strength beyond departmental and hierarchical boundaries, enabling communication that transcends these divisions within Hitachi."
Building a Network of "Empathy" and "Crossing Boundary"
However, facilitating information transfer beyond the confines of organizational hierarchies and structures, especially in larger companies, is challenging for people with bounded rationality. This is where Sato recognized the potential of using personal networks involving colleagues and individuals from diverse backgrounds. He was inspired by two classical works of economist Adam Smith, "The Wealth of Nations" and "The Theory of Moral Sentiments." In "The Wealth of Nations," Smith discusses how the division of labor was born out of mutual benefit and leads to increased productivity. In "The Theory of Moral Sentiments," Smith argues that human beings are able to sympathize by imagining others' situations, which in turn creates a sense of joy when people empathize with each other. Sato applied these two worldviews, "interest" and "sympathy," to internal human relationships and formulated them as follows:
"Organizations are connected by 'interest.' So do managers and subordinates. When trying to initiate something new across organizational boundaries, you can’t usually freely communicate with other organization; you must ask your boss to request collaboration with other departments. However, it is through these interests that an organization has the power to execute business and deliver results, and interests also serve as a check against wrongdoing. By bridging the gap between the worldview of self-interest and the world view of sympathy, I thought, a mechanism that allows both communication beyond organizational boundaries and execution should become possible."
In fact, Sato noticed that many successful colleagues at Hitachi were "crossing boundaries” of work, such as attending business schools, participating in cross-industry networks, engaging in community service. This led to the idea of cultivating "cross-border talents" within the organization. Individuals crossing over from various units participate in the Team Sunrise (formerly the Global Wakate-kai) network to share ideas - this not only integrates ‘intelligence’ of each member but also leads to "recrystallization of intelligence" as individuals bring back new insights to their own units.
"We not only organized study sessions with invited lecturers but also established a platform where employees with ideas could consult with each other. Members voluntarily gathered for discussions on these matters, submitted proposals to customers and executives, and participated in Hitachi's idea competitions. Ultimately, our aim was to move towards official business development and deliver results in our core business. In essence, we sought to create a platform for practicing ambidexterity, working on the second floor while delivering results on the first floor of business."
Operating Without a Budget
Some may begin to wonder how he manages all the costs involved running Team Sunrise. Hosting study sessions requires space and time, and sometimes external lecturers are invited. How does he come up with the money needed for all these?
"Since we cannot guarantee results from our activities, no budget is allocated to our activities, naturally. However, fortunately, we have individuals in various Hitachi units who support our activities. In other word, we find sponsors, and we collaborate with their units, utilizing their meeting rooms and other resources to operate events. Occasionally, we invite distinguished individuals as lecturers. Some of them graciously speak without compensation; for others, some business unit provide financial support. There are people who understand and identify with the nature of our grassroots activities. They are the ones that have allowed Team Sunrise to operate without a budget."
For information-sharing among members and communication within Hitachi group, they used "COMOREVY," the internal social network site used by nearly 30,000 employees at that time. It became a platform where employees could easily seek advice, find like-minded collaborators for specific initiatives such as creating new businesses, finding potential clients for the new business, or inviting a public figure as a lecturer, and work together to make them a reality.
Team Sunrise's (known as “Global Wakate-kai” at that time) activities spread through word-of-mouth, attracting inquiries not only from within Hitachi, Ltd. but also from employees of group companies. As a result, the community grew slowly over time.
Before joining Hitachi, Ltd. in 2001, he worked at a non-governmental organization as a system engineer. He earned an MBA while working for system engineering of information & telecommunication, incorporation of a company, and M&A projects. He also worked at IT Strategy Division at Hitachi Headquarters and currently works at the Global Center for Social Innovation at R&D Group as Chief Researcher. Head of Team Sunrise (formerly known as Global Wakate-kai founded in 2006), a network of employees across Hitachi.
He is currently enrolled in a Doctoral Degree Program at Tokyo Institute of Technology in Innovation Science. *
* As of the writing of this article