It is time we would now like to start our briefing on the change of Executive Chairman and President. Thank you very much for joining this briefing. In such large numbers on short notice out of your busy schedules. Today's briefing will be delivered by the new Chairman and the new President resolved at the Board of Directors meeting held today as announced earlier in the news release. 1st, statements will be made by the new Chairman and then by the new President upon their appointment.
And then we will take your questions. And because the meeting was called at such short notice, we apologize that we were not able to arrange for simultaneous interpretation in English. We'd like to let you know that the video of this briefing will be uploaded on the video site, both in Japanese and in English. We plan to end the event at around 5:30 p. M.
We thank for your cooperation. We now begin the briefing. Let me introduce the briefers. Executive Chairman, President and CEO effective today, Mr. Toshiaki Higashihara.
Next, President and COO, effective June 23, Mr. Kenji Keiji Kojima. The 2 will give a briefing. Handing it over to Mr. Higashihara first.
I would like to thank you all for attending this conference today despite the short notice. I wanted to hold a conference in front of you and explain in person instead of online. But since the state of emergency was extended in Japan due to COVID-nineteen, I decided to hold a conference online. As described in the news release, the Board of Directors has resolved to make changes to the management structure of the company at a meeting held today. First of all, Mr.
Nakanishi resigned from Director and Executive Officer today to focus on his medical treatment. And the Board of Directors has appointed him to Chairman Emeritus as of today, May 12. It is with great regret that Mr. Nakanishi had to step down midway through his term due to illness, and we wish him a speedy recovery. It was resolved at the Board of Directors meeting that I will succeed Mr.
Nakanishi as Chairman, President and CEO as of today, May 12. Furthermore, on June 23, Doctor. Kojima, who is currently Executive Vice President, will be promoted to President and COO, and I will continue to serve as Chairman and CEO. As I mentioned in my recent presentation on the progress of the midterm management plan, The future growth of Hitachi will be driven by the social innovation business using digital technology centered on Lumada. Doctor.
Kojima joined Hitachi in 1982 as a researcher in the information field and has been engaged in world class research and development of digital technologies. In 2016, he launched Lumada as the Head of the Services and Platform Business Unit, together with the members of Hitachi Vantara, building the foundation for Hitachi's current Lumada business. In addition to his 4 years in the U. S. As a researcher, he has also had a global career having launched Lumada.
With Hitachi Vantara's global colleagues, he is ideally suited to accelerate Lumada's global expansion. In recent years, as a leader in the Smart Life sector, Doctor. Kojima has strengthened the business by steadily promoting structural reforms in a wide range of areas, including making Hitachi Hi Tech a wholly owned subsidiary, transferring the diagnostic imaging related business, establishing a joint venture in the home appliance business outside Japan and establishing Hitachi ASTEMO. The Board of Directors highly evaluated Doctor. Kojima's deep knowledge of digital technology and the Lumada business as well as his ability to carry out structural reforms and decided that he would be best suited for the President and COO of Hitachi, which will grow through digital technology.
I am also convinced that he is the best person for the position of President and COO as we accelerate Lumada's further global expansion. It should be noted that the nominating committee regularly discusses the succession plan, which is a plan for the selection and development of the next management leaders. And the new structure announced today was smoothly decided by the Board of Directors based on the discussions at the nominating committee. I look forward to working together with Doctor. Kojima to make Hitachi a global leader in the social innovation business, and I ask for your continued support.
Thank you, Mr. Shigashihara. Next, Doctor. Kojima. First of all, I am very sorry to hear that Mr.
Nakanishi is stepping down. I wish him a speedy recovery. My name is Kojima, and I will be assuming the role of President and COO as of June 23, following a resolution by the Board of Directors. Frankly speaking, I am surprised by this sudden appointment. But together with Mr.
Higashihara, I will do my utmost to make Hitachi a global leader in social innovation business. As Mr. Higashi Hara just introduced, I joined the Central Research Laboratory of Hitachi in 1982. Since then, there has been one theme that I have consistently worked on, and that is creating value from data. I started my career with the research of acceleration of database, including its manufacturing and commercialization at Kanagawa Works.
After that, I was stationed in the U. S. For 4 years and had various experiences. And then after 2000, I was engaged in the development of a data storage system for storing and utilizing data at high speeds, which is now the main product of Hitachi Vantara. Furthermore, in 2016, as CEO of the Services and Platforms business unit, I was engaged in launching Lumada as a platform for creating new value from data.
Since 2019, as the Head of the Smart Life sector, I have been leading structural reforms to improve the profitability of businesses such as automotive systems, home appliances and medical systems. In parallel, I have been focusing on establishing Lumada business model in this sector. Even after assuming the position of President and COO, I will consistently pursue to create new value from data and to deliver it to our customers and society. In this business of turning data into value, I believe Hitachi's strength is possessing information technology or IT, operational technology or IT and products in the company. Because we provide a variety of products, we are able to understand the data and operational technologies that are actually used in the field.
Hitachi's strength lies in its ability to provide total solutions to solve the problems for customers and society through the use of IT based on the understanding of actual data and operational technologies. Since the financial crisis, Hitachi has been working to transform itself into a company that specializes in social innovation businesses by leveraging its strengths of IT, OT and products. In particular, in the 2021 midterm management plan, we have made major changes to our business portfolio, and we believe that the necessary assets for further global expansion of the social innovation business are largely in place. Hitachi has set environment, resilience and security and safety as business areas where we create value. Going forward, we will boldly take on the challenge of solving various social issues in these domains and aim to become a global leader in the social innovation business.
Lastly, I would like to share with you my thoughts of what kind of company Hitachi should be. We are now in an era where digital technology, which I have been working on since I joined the company, is rapidly and drastically changing the world. In this era, I think Hitachi's mission is to support people's happiness in life by innovating social infrastructure, by fully using data and technology. We want to become a company that is more open and dynamic than ever before where people from all over the world would who resonate with our mission can come together and make what they want to do a reality. In my work, my creed is to walk the talk.
And together with Mr. Higashihara, I am determined to do my utmost to create such a company by doing exactly as I say. I look forward to your continued support. Thank you, Doctor. Kojima.
Now we go to Q and A. If you have a question, please press the raise hand button on the Zoom screen. We will first take questions from the members of the media and then from institutional investors and analysts. Now for the members of the media, if you have a question, please press the raise hand button. The first question is from Thank you.
I am Hiraoka from Newsbix. Can you hear me? Yes, we can. I have questions for both Mr. Higashihara and Doctor.
Kojima. You talked about succession planning. Normally, whenever there is a press conference given by a newly designated president, he or she would often say that they were called into office and were told that they will be the next president totally out of the blue. But in the case of Doctor. Kojima, you did say that you were surprised, but you had been making preparations.
Especially in succession planning, what is critical is that the position of President is not the pinnacle of one's career, but that it is a role given to that person, then Mr. Higashihara has been making major changes to the business portfolio all along. And I do believe Doctor. Kojima has a role to play in that context as President. Given the stage that the company is in right now, how do you consider the role for Doctor.
Kojima to be? And also for Doctor. Kojima, I suppose that you were not expecting to be President, but in a succession planning, if you were shortlisted as one of the candidates, what kind of awareness of issues did you have in pursuing your work? Let me first answer that question about our approach to the succession planning. Basically, at the nominating committee, there is deliberation as to what kind of management leader we want to develop.
That discussion is constantly taking place. And as you said, Mr. Hiraoka, the notion is not that the position of President is the pinnacle, but rather what kind of person would be best suited to be President. That is the view we take. In that regard, right now at Hitachi, we are to develop our business globally with our digital technology centered on Lumada.
As we announced the other day, we acquired GlobalLogic. Obviously, it's important to grow GlobalLogic on its own, but we need to be creating synergies with other areas, including energy or industry. That is where the position of President and COO becomes very important. How global logic in different areas can be connected, How synergies can be created, that becomes very important. Obviously, as CEO, I have been developing the future vision for the entire company.
And this time, we acquired GlobalLogic. So those things are the ones that I have been doing. But going forward, what is important is how we can strengthen the nexus with Energy and Industry and Smart Life Businesses. So for Doctor. Kojima, I would like him to take on the role of strengthening the nexus with those areas and to create synergies with them.
That is the thinking behind our expectation for him to be successful as President and COO. Thank you for the question. As was discussed by Chairman Higashihara, roughly speaking, the Chairman is responsible for the what and the why, what we will do and why we do it. Those are the decisions for him to make. As for me, I will think about where and what resources to be assigned when and think about how to do it.
My role is to make those decisions and to execute it. That is the function I am expected to perform. So in that sense, as I touched upon earlier, in the 2021 midterm management plan, various assets and structures have been put into place by Mr. Higashihara. So what I will do is building upon that, I would then solidify that foundation and move faster through and through.
Furthermore, promoting digitalization or digital transformation or increasing the value of global logic, doing all that at much faster speeds thoroughly. That, I believe, is my role. And the question about succession planning. What kinds of things have been discussed thus far? It's not that we know that you have been shortlisted as a candidate, but with the members of the nominating committee or with the members of the Board, including many non Japanese directors, I was given many opportunities to discuss what to do about Hitachi's future on a 1 on 1 basis or in a group meeting.
I had many chances to engage in wide ranging discussions with them. So this time, I hope to implement and put to good use what I was able to digest out of such discussions. One more question about the direction of Hitachi going forward. This is for Doctor. Kojima.
Thus far, Doctor. Kojima, you have been playing a central role in various business divestitures or in acquisitions. Previously, you have said that one criteria in making such decisions is how much that piece of hardware can be digitalized. Going forward, can I assume that your thinking will not change much? Correct.
The thinking remains totally unchanged. In terms of divestitures and acquisitions, I think that exercise is mostly done. In a nutshell, what remained with us are the areas where we will make a major shift toward digitalization to be information enabled and to be software enabled. And since we have a relatively large IT team, including GlobalLogic, so with digitalization, we want to be ahead and move faster. That is going to be our focus.
Now that we have a portfolio that is in place, we want to work with that. Thank you very much. Next, Hiroi san. Please unmute your microphone. My name is Hiroi from Nikkei.
Thank you for the opportunity. I have three questions. First is for Mr. Higashihara. In a word, what do you consider Doctor.
Kojima's strength to be? And my second question, you talked about moving faster and creating synergies. Doctor. Kojima, your style of going faster and creating synergies, do you have any anecdotes of having done something like that in the past? 3rd question, it was mentioned that Doctor.
Kojima was a key person in launching Lumada, which is now the foundation of Hitachi today. Back then, when you first developed Lumada, General Electric and other overseas competitors were moving ahead in developing platform businesses, and people said that the chance of success was not that great. How were you able to make that decision? And how is it that the business is now on track? What were the factors behind?
If you could look back on the initial days and talk about your thoughts, please. Let me start about the strength of Doctor. Kojima. In a word, I value highly his ability to execute. In the 2021 midterm management plan in the smart life sector, making Hitachi Hi Tech a wholly owned subsidiary, transferring the diagnostic imaging related business.
These are very difficult operations, but he executes them without fail, and I evaluate that very highly. And some anecdotes of Doctor. Kojima, What kinds of things I have done in the past to move faster? You asked for some anecdotes. As the Chairman said just now, I have done quite a number of acquisitions and divestitures.
Actually, there were many that we have once tried at Hitachi, but we were not able to gain speed and couldn't execute. So there was that history. And the mission that I was assigned from Mr. Higashihara was to get it done. So in that sense, the thing that I am consciously paying attention to be able to move faster is to align the thinking of the leader level people.
We engage in intense discussions about what is the best way, especially when we are to divest the business, people hesitate. But sometimes the business can grow when placed outside of Hitachi or should it stay inside. We engage in such discussions. And once the leaders are aligned, then the rest can go very quickly. I consider this to be the most important thing in gaining speed.
And GE's critics, it was very topical back then as we launched Lumada, whether we had a chance of success. I think that was your question. Back then, I would have discussions with people from the media and with analysts. And the cases that go well is when the assets that the company has today can be leveraged well. And I thought that, that was the key.
In the case of Hitachi, we have quite strong resources in IT systems integration. So I thought we should enter from there. I saw that systems integration was becoming more or less competitive bidding type passive business. But rather, I thought we should be more proactive and be making proposals such as data utilization. We call it co creation.
With the concept of co creation, we should change the SI business. I thought we should start from there, data utilization. This Lumada concept, that is where Hitachi has a fighting chance. This is what I thought. For example, in the case of GE, they had engines and plants.
They had these things connected to networks. So I think they decided to enter from there with Predix. And in the case of Siemens, they had various equipment for factory automation, so they decided to start from that periphery. Each had their own strategy. Going forward, since Hitachi has various product businesses, we should grow our business in that direction.
That is what I would want to do to move to the next level. Next question? Senboni san. Please unmute your microphone and ask your question. My name is Senbon Gi from Diamond Inc.
I have two questions. One is for Doctor. Kojima. After the Lehman crisis, there was Mr. Kawamura, Mr.
Nakanishi, Mr. Higashihara, and now you are taking over. Each one of your predecessors were strong characters, each different in their own way in implementing reforms. Doctor. Kojima, when you think about yourself, what kind of leadership do you want to exercise to lead?
What is your capture like? Is it top down or bottom up? If you could talk to us about your thinking on those things. The second point, you've been talking about moving faster and about the Lumada business. Mr.
Higashihara said the other day that he wants to see this business grow to the size of 2,000,000,000,000,000, several 100,000,000,000 yen by 2025. To do that, I believe you need to move substantially faster. What are the challenges? There are concerns, I suppose, about the possible recurrence of the large company disease when the size of the company becomes nearly 10,000,000,000,000. What are the challenges?
How do you intend to address them? Can I hear your current thoughts, please? About your first question, what style leadership do I have? I think that was your question. It's not that I have charisma.
It's not that I excel in any particular area. But as I touched upon earlier, what I try to pay attention to what I try to do is to have communication. Hitachi has successive presidents. Each has implemented substantial reforms one after another. I consider that the greatest asset that I am to inherit is human resources, especially global talent, for example, Alistair of the rail business or VISS, who is overseeing Hitachi Asdemo, they are first rate reliable global talent and that number is growing, including women.
Recently, Lorena has become Vice President, having thorough communication with those people to shape the future of Hitachi. That is what I want to do and what I consider as my mission. So it is in this way, with Communication Center's leadership, to fully harness global talent of Hitachi. That is what I intend to do. The second question was also for me.
To move faster, what is the biggest bottleneck, I think was the question. There are 2 things that I want to bring about major change. 1 is research and development. As I said earlier, we have the assets in place mostly. So going forward, we need to grow stably and organically with our own strength, and that speed becomes crucial.
And the most important thing is, again, research and development. So far, we have done various things, including M and A, and we have acquired big resources and assets. But when it comes to the core technologies, we must develop them with our own capabilities. That is my strong conviction. So once again, I want to put a lot of effort into research and development.
Chairman Higashihara is also stressing that we should increase our investment in R and D. That is what I want to do together. So that is one. Another is going back to our origin, Hitachi's basic philosophy is harmony and sincerity and pioneer spirit. In my view, that is classic venture spirit.
I want to bring it back. Yes, it is getting better, but I want to encourage that enterprising spirit once again. I want to heighten that challenging spirit because in the end, to move faster, that is the quickest way. Once again, I want to encourage people to take up challenges, not to be afraid of failures, demonstrate our enterprising spirit. That is the kind of company I want to see Hitachi become.
That's my wish. Did that answer the question? Thank you very much.
We will take the next question from Koide san. Please unmute yourself and ask your question. This is Koide from Masuhai Shimbun. Thank you for taking my question. I have two questions.
My first question is regarding the relationship between the CEO and COO and how you separate the role between the 2. Mr. Higashihara, you will continue to serve as the CEO, which is the same approach for your previous appointment, taking the leadership role together with Mr. Nakanishi. So are you going to take the same step?
Meaning, are you going to hand over the role of CEO to Doctor. Kojima in a few years? I'd be interested to understand why you took this approach in the appointment of the CEO and COO. My second question is around the issues and challenges that was raised by someone else previously. Mr.
Higashihara, you served as the President for a number of years, and the current midterm management plan covers the period until spring next year. I also understand that this change in management came at a short notice due to the health matters of Mr. Nakanishi. So in your view, do you feel like you have issues that you wanted to address but are going to be left behind? As the CEO, I acknowledge that you will still be managing the business, but can you share your thoughts around this, including expectations going forward?
This is Hikajihara. I will take that question. Earlier, there was a discussion about the difference between CEO and COO. Doctor. Kishima responded that the CEO takes a matter of what and why, and a CEO is in charge of the house and execution.
I can draw on my own experience. I served as the President and COO from 2014 and President and CEO from 2016. I can say that I first handedly experienced the difference of the roles between the CEO and COO. CEO must have a clear future vision of Hitachi and strive to achieve the goals under the vision. CEO should coordinate closely with the COO, in our case, Doctor.
Kojima, to understand the gap between the vision and the status quo and what needs to be done to close that gap. Building the road map through an intimate discussion will be a joint work between the CEO and the COO. If I were to draw a line between the missions of CEO and COO, CEO crafts the vision and COO will take responsibility over execution. Having said that, we need to be a united team and share information in order to carry out the business plans and manage the company. But I think that will be the key difference between the CEO and the COO.
On your second question regarding the issues and the challenges, I believe the world continues to change in a very dramatic way. Therefore, as a company, we always have to be attentive to the changes happening around us and think about the worst case scenario and do our best under such circumstances. Nobody could foresee COVID-nineteen to emerge as a global challenge. But with Fluka, an uncertainty is looming over our surroundings. Something like COVID-nineteen could happen in reality.
And we always have to think about what is the worst case scenario that must be averted from a risk management perspective. And we always have to be ahead of the curve to take measures. Sharing this with all the employees is also important, meaning that the risk must be shared in thinking about the future for Hitachi. We must share these ideas with everyone in the group. It's neither top down nor bottom up approach.
We have to be a united team, and I believe it's critical to share the same awareness. If we can share the awareness of risks, various issues will not be perceived as something that will be dealt with by somebody else, and individuals will take ownership in addressing them. I'd like to embrace this as an important idea, and I believe this trigger I believe this will be the trigger in trying to share the awareness with the social innovation business. If each individual take ownership in thinking about the social issues, it's no longer top down or bottom up. It's about how individuals care about the environmental issues, how individuals think about the infrastructure resilience.
If they always think about what needs to be done by each one of them and how they can contribute through shared awareness, then I believe we can avoid the risk of large company syndrome that was pointed out earlier. Thank you for the answer. We have a few more people with questions. But given the interest of time, we would like to take one more question from the press. And then after that, we'd like to open up the line to take questions from investors and analysts.
Thank you for your understanding. Now we will take the next question from Yamabata san. This is Yamabata from Nikkei Computers. I have two questions, and I'd like to address my first question to Mr. Higashihara.
It may partially overlap with the previous questions, but I understand that the management structure had been discussed in the nominating committee. But with Mr. Nakanishi stepping down to focus on his health matters, that have any impact on the timing of the change in the president role? My second question is for Doctor. Kojima.
As a person having launched the Rumada business, how do you see the challenges with the Rumada business today as well as the growth strategy for the business going forward? Let me take the first question on Mr. Nakanish's decision to focus on his treatment. To date, he participated in various meetings, including the Board of Directors' meetings remotely from his hospitalization using online tools. While dealing with his sickness, he served his responsibility as a Director and the Chairman of Hitachi.
He was also the Chairman of Hidane, so there was a very heavy load on his shoulders. When Mr. Nakanishi decided that he would like to concentrate on his treatment, we felt that we should release him from the responsibilities requested for a discussion to be held. And requested for a discussion to be held. As a result of that process, the changes have been decided, and they will come into effect as of June 23.
I will take the second question. I believe your question was on the current status of Lumada business and the direction going forward. As I mentioned earlier, I believe we have made a remarkable progress in shifting to a co creation approach for the system integration business. The next step will be how we can expand this to product oriented businesses such as railroads or power grid. To date, we have built up such assets globally.
So now it's how we make use of the assets. For the Lumate business, the top line is generated largely in the domestic market. So we'd like to further globalize the business. In sum, strategy going in corporations with various product offerings who are trying to digitalize, yet struggling with the challenge due to the lack of skill sets of resources. GlobalLogic supports such companies, and they excel in digital engineering.
With GlobalLogic, we can digitalize the product offering with some Hitachi Group. And as they have global resource, the deal will also enhance our global strategy. So in a way, it's like the sport of bouldering in which you try to climb up the wall using the footholds in the handholds. Just like that, global logic is a critical piece for us to proceed to the next stage. Now we need to think about how best to capitalize on the asset so that we can execute our plan for adopting the know how to our product business and for addressing the global market.
That is going to be my big mission. Thank you for the question. Thank you. Now we'd like to open up the line to take questions from the investors and the analysts. Would anyone like to start?
We will take the next question from This is Yasui from UBS. Thank you for taking my question. I have three questions. My first question is for Mr. Higashihara.
This may sound like a blunt question, but I would like to ask a question on the tenure of the President. This time may be slightly different because of changes taking place this time, mainly due to Mr. Nakanishi's health reasons. But if I look back the company's history, the average tenure for the President of Hitachi was 4 to 5 years. And I believe for you, Mr.
Higashihara, the original tenure was also 5 years. With Doctor. Kojima in any leadership role, what is your thoughts around his tenure? Is it going to be 4 to 5 years? Or considering the changes happening around this, could his tenure be as long as 5 or even 10 years?
I'm sure there are a lot of moving pieces around this, but I'd appreciate it if you can share your thoughts on this. My second question is for Doctor. Kojima. I want to understand your policy on investment. Recently, the equity market has been strong and rising, and everything seems to be expensive.
And companies will be under fire for any deal that's executed in the market. You have a GlobalLogic transaction, and I understand that you will pursue organic growth. But should any investment opportunity pop up, how would you deal with such opportunity? And what would be the requirement for any given deal? So this is my question around the investment.
My third question is on something that may be a never ending endeavor, but in your business portfolio, there are still businesses where the business model is rather vulnerable. You don't need to dramatically transform businesses with a good fit to strategy immediately, such as the elevator business. But do you see any business that needs fundamental overhaul on the business model in the next 2 to 3 years? You've also executed many M and As. And due to any challenges in the PMI process over the next 2, 3 years.
This is Higashirara, and I'll take the first question on the tenure of the President. As I alluded to earlier, a person does not become a President or Chairman by wishing to become 1. At any given point in time, we try to identify who is the most appropriate person to fulfill that role. In the past, there were discussions on the President position considered to be just one function in a company. The thought process of shifting to that approach, Hitachi's nominating committee, and the idea is to select the most appropriate person for the job.
I was appointed as the President in 2014 and served as the COO for 2 years. Now I'm in my 6th year as the CEO, but the timing of the management change is not determined by the number of years. The policy of nominating committee is to understand what needs to be done and who is the most appropriate for the position of Chairman or President. Therefore, number of years is totally irrelevant in the management appointment. I will take a second question on investment.
As you said, when you look across the market, be it IT, bio or medical companies, everything seems to have a very high multiple, which implies that if our multiple as an acquirer is not higher, M and A execution will be rather difficult. In that context, I see 2 immediate challenges that need to be addressed going forward. The first one is to enhance our own multiples. To that end, we have to work on the corporate structure so that we can get a good valuation from the investors. Shareholder return should be conducted in a timely manner as well.
2nd issue is the leverage on our R and D capability, and I know that I'm repeating this word again. When we look at the market in bio sector, we see companies with technological capabilities that could be internally developed by Hitachi, and many of those companies enjoy high multiple. On that note, Hitachi has ample R and D resources, and I believe we have a very capable talent pool. We'd like to leverage on this capability more. So instead of looking for acquisition opportunities in the market, we want to do more with our own internal R and D capabilities.
By the combination of the 2, we'd like to pursue further growth. And on your question around which business models are vulnerable and the challenges confronting those businesses, In my view, all the businesses have some vulnerability. And I say this because everything is in the midst of transition to digitalization. So all the businesses are now in the transition mode. For instance, you mentioned your elevator business earlier.
Without doubt, we have to accelerate our shift to digital services such as offering in building solutions with the elevator business. Autopress will be another typical example as there will be more software components to that business. And therefore, in my view, digital transformation is a pressing requirement for all the businesses. And in other words, we only care businesses that will be fit with digital transformation. We want to facilitate the speed of digitalizing our business portfolio, and we are confident in delivering that because we have a huge internal IT team.
So the basic strategy is to speed up our digitalization efforts by striking synergy and aggregating various capabilities, reaping the benefit of a conglomerate in a creative way. Next, we will take a question from Harada san. My name is Harada from Goldman Sachs. First, I would like to I have one question. Earlier, Doctor.
Kojima pointed out that speed and organic growth are important. As Hitachi moves forward to a new stage, I also believe that organic growth with speed rather than divesting business or buying business is going to be more important. Now you have Global Logic, System Integration capability in product businesses whose business nature and business environment will be completely different. Through a number of deals, your geographical footprints have become global and more complicated. I believe this is a totally new phase for Hitachi, something that you have not experienced in the past.
And so this is very new for you. How do you plan to manage the operation with very different business natures? How do you intend to execute different businesses with greater speed and efficiency to pursue growth? Under the new leadership of Doctor. Kojima, what are your thoughts around this topic?
Thank you very much for your question. As you rightfully pointed out, the biggest challenge for Hitachi is to manage the business in a very simple way and how we can achieve that. We basically have 3 businesses of different nature. The first bucket will be IT service, including system integration and global logic, where the work is labor intensive and people are going to be the most important asset. 2nd category is businesses like railways or power grids, where the size of the contract is large scale with the project spanning over a long time.
This type of business would also include EPC. And in this business, risk management will be very critical. 3rd is the quasi mass production or mass production business, such as the automobile related business and Hitachi Technology that was recently turned into a wholly owned subsidiary. For this business category, the access of business management would include speed, CCC and how to control the business, among others. We would like to shape the business organization in a clever way by focusing on the axis of business management so that the business will be managed in a very simple way with an alignment in the various axis.
On this point, I will coordinate closely with the Chairman and the Vice President so that through an intensive discussion, we can decide on the formation of the Hitachi for the next stage. Thank you for that answer, but may I ask a follow-up question? Simplified business management structure is important, but with different KPIs and time lines to evaluate the business, simplification is going to be very challenging in my view. So how do you intend to manage that? What measures will be effective?
For instance, with GlobalLogic, sense of speed must be different. And if the employees are not satisfied after a certain period post merger, you may lose good talent. So what are your measures against these risks? As I explained, from a business management perspective, we will segment the business by using the access of business management. That will help to significantly simplify the structure within the business segments.
Within that framework, we would have business with a totally different concept or sense of speed, and Global Logic will be a typical example. We need to fully leverage on such speed by allowing some independency. So it's a matter of striking a fine balance through careful deliberation so that by allowing a certain level of stand alone operation, the maximum speed of respective businesses would be realized. By doing so, I believe we would have a very simple organization that is very transparent and easy to understand in the eyes of the outsiders. We will engage in intensive discussion internally so that we can come up with an ideal structure eyeing next year.
Thank you for your thorough answer. And last but not least, congratulations on your promotion. Thank you. Any other questions? We will take the next question from Aoki san.
Please unmute and ask your question. This is Aoki from Yomiuri Shimbun. Thank you for taking my question. I would like to address my first question to both gentlemen. What would you say was the biggest achievement or contribution of Mr.
Nakanishi who is stepping down? I understand that he was busy with his responsibility at Kaiden recently. That was his biggest contribution to Hitachi. Please share with us his contribution that has left the strongest impression in you. My second question is for Doctor.
Kojima, and apologies in advance for asking a very detailed question. But when exactly were you notified about this appointment? Earlier, you said that you were taken aback, but did you accept the offer immediately on the spot? What went through your mind when you heard about the offer? This is Higashi Ara.
Let me start. Looking back, Mr. Kawamura was appointed as the President in 2009, and Mr. Nakanishi took over from April 2010. This was a time when Mr.
Nakanishi made tremendous efforts in globalization and transformation. And the various reforms were carried out with a strong emphasis and with a very global perspective. I would say that this was one of his major contributions. In addition, as was the case on the Nishita Kawamura's leadership, Mr. Nakanishi worked very hard on governance issues.
As of today, we have 13 Board of Directors, of which 10 are outside directors. He led the way to augment the governance structure. And with many non Japanese Board members, he built a framework so that business management can be discussed with a global perspective. I would say that this is one of his many major contribution he made for the company. I will be echoing much of what Mr.
Higashihara just said. Mr. Nakanishi is a businessman who can truly step up to the global stage. I accompanied him to the World Economic Forum in Davos several times. Every time I made the trip with him, I had the strong impression that he was the face of the Japanese business community.
Many global business leaders would come forward to see and talk to Mr. Nakanishi. In that way, he was always coaching us about the perspectives of a global business manager. In fact, our Board structure is very global with non Japanese Board members who are attracting new talents. Earlier, we talked about non Japanese leaders in various business lines serving in some key roles.
Mr. Nakanishi has the power to attract people. He taught us about the global perspective and set forth the major direction for Hitachi as we stand today. And on your second point, if my memory is correct, I think I first heard about the offer at the end of April. However, at that point, the news of Mr.
Nakanishi stepping down struck me more. I was told that with Mr. Nakanishi leaving his role, the nominating committee and the Board may discuss and appoint me to take up the position as the President. I responded that if such discussion and appointment really takes place, then I will accept at that point. That is how I responded.
But honestly speaking, initially, the news about Nintendo Kuneshi stepping down came as a bigger shock to me. We are almost at the end of the scheduled time, but we have 2 more people in the queue. We'll take the next question from Yukawa san. Please go ahead. This is Yukawa from Denkii Shunbon.
I would like to address my question to Doctor. Kojima. As the person who launched Lumada, I would like to ask the potential of Lumada in the energy sector. I believe it will help alleviate environmental burden and will be useful. How do you see the opportunity of Lumada in the energy sector?
And what would you like to achieve? Thank you for the question. When it comes to leveraging Lumada in the energy sector through digitalization and data usage, the low hanging fruit is definitely the power grid. We now have ABB Power Grid within the Hitachi Group, and a very close observation tells us that there are a lot of software assets at ABB Power Grid. This implies that there is a very good affinity with Lumada, and we can strike many synergies.
Going forward, also involving global logic, we would like to augment our initiatives in this field. I believe we now have all the pieces and assets necessary to augment our capability. So this is not just something that I aspire to achieve, but I am convinced that we have the capability to execute this and make it bigger. Now we'd like to take the last question from Takahashi san. This is Takahashi from Toyo Keisai.
Thank you for taking my question. If possible, please answer to the extent possible. This time, the announcement on the management change was Doctor. Kojima's appointment as the new President. But are there any other changes in the executive management structure?
I understand that you have already made meaningful change effective April 1, so there may not be any immediate change in the future. But if I can check on that point, I would be appreciated. In addition, do you have any plan to promote younger personnel to the key management positions? This is Hikajihara. I will take that question.
Nothing is decided in our plan, and we have now decided what kind of change will be implemented for April next year. What's important to note is that we need to conduct a deep dive in shaping our next midterm management plan. And part of that deep dive discussion will also cover how we are going to structure our organization in the future. In that process, we will also discuss who will be the right person who will be fit for certain roles to decide on the assignment. Thank you very much.
Thank you very much for all your questions. With this, we would like to close the conference. Thank you very much for your participation today despite the short notice. With the new management team that was announced today, Hitachi will strive for further growth. Also, please uphold your expectations.
Once again, thank you very much for your participation.