Upon closer inspection, it’s not hard to see how the company might have lost headcount. Over the last century, Hitachi has survived earthquakes, economic downturn, and two world wars, while gaining over 900 diverse subsidiaries and a reputation for churning out innovative products.
The company currently operates on 11 different business segments, including: IT, renewable energy, electronics, automotives, defense, finance, and digital media and consumer products. But while Hitachi built its reputation on making some of the most reliable products you could find, it has lacked the shimmer and appeal that attracts millennials the way younger tech companies like Google, Facebook, or Airbnb have.
Even with a trusted brand and a valuation of $24 billion, Hitachi knows success can be fleeting.
“What got us here the last 100 years will not get us to the next 100 years, so we have to change,” said Levent Arabaci, who is the Executive Vice President of Human Resources at Hitachi.
The challenge Hitachi faced was downright ironic. Arabaci says that Hitachi was founded upon a pioneering spirit, which gives its employees the freedom to start their own projects. This attitude resulted in nearly a thousand subsidiaries and a complicated environment where none of its human capital data communicated with each other – each subsidiary had its own way of managing its people.
“Oh, it was just madness,” said Arabaci. “You would get anything from Excel spreadsheets to someone’s diary book, maybe Oracle, or in some cases, SAP. There was no sharing of talent, systems, or anything, so literally, it was like running one thousand companies separately.”
What spurred a human capital management overhaul was a combination of Japan’s decline in population and Hitachi’s self-realization that its promotion model worked against the innovation it stands for and needed an update.
“You almost had to put in your 40 years in order for you to become a senior manager or manager and so on. That kind of tradition no longer works for Japan,” said Arabaci, who appreciates that Nakanishi publicly announced his plans for Hitachi to revamp its human capital management practices.
“When you publicly announce something, you actually hold yourself accountable. You have to deliver it. I can set goals all day long and if I don’t share it with anyone, no one has to know,” Arabaci said.
Arabaci and colleague Imtiaz Shaikh, who is Senior Vice President of Global HR, set out to find an HR software that would improve the promotion system. In four years, Hitachi went from having an HR team that was 100% Japanese to one with members from eight countries. The company has successfully added 250,000 people to Workday, which accounts for all indirect employees.
Since the internal revolution, Hitachi has gained over 190,000 applicants, seen an overseas revenue ratio increase from 47% in 2014 to 50% in 2015 and ranked No. 38 on the Boston Consulting Group’s most innovative companies list. Forbes also has an annual list of the world’s most innovative companies you can find here.
While other companies are splitting up for more agility (think Hewlett Packard’s four-way split into cloud and SaaS, cybersecurity, big data, and mobile computing), Hitachi is looking within its own conglomerate of subsidiaries for comprehensive solutions. Hitachi has a unique advantage in that it already has nearly a thousand subsidiaries in a wide array of different markets and sectors; it merely has to combine its products in ways that make sense. It has recently been making its foray into still blossoming concepts such as social innovation and smart cities.
For example, Hitachi has leveraged the production of its electrical equipment, pumping stations and water purification systems to guarantee safe drinking water while contributing to water recycling.
The internal transformation has proven to be productive, but the company has seen and expects resistance.
“We see this as a once in a lifetime opportunity to make this huge impact for a company like Japan that is known to be traditional to change,” said Levent.
“Well, they don’t take change easily. They’re slow to adopt. They feel like they have a very proud history of consistency. But when you have pressure from Samsung and China or some other low-cost provider from China and other countries, you’re racing against time.”
Hitachi ranked No. 148 on the latest Forbes Global 2000 List with a market value of $33.5 billion.
This article was written by Rosa Trieu from Forbes and was legally licensed through the NewsCred publisher network.