Co-innovation and social innovation: Hitachi takes the lead in the industrial revolution

On a worldwide basis, Hitachi is a unique company because of how it positions (and continues to reposition) its IT and social infrastructure businesses.

The company’s new Social Innovation Business resolves issues faced by society and customers through innovation that combines both IT and social infrastructure, thereby contributing to improvements in people’s quality of life.

PACE managing editor Branko Miletic spoke to Hitachi’s CTO/Vice President & Chief Engineer Global Solutions, Strategy & Development IT Platform Division Michael Hay about how the company’s ideas on repurposing IP is leading the way to a better understanding of how innovation can be managed more usefully.

PACE: What does co-innovation actually mean and how is this being realised in industry?

Michael Hay (MH): Co-Innovation means working profoundly in partnership between two organisations to realise a dramatic new capability or efficiency improvement. Co-Innovation starts from merely engaging with prospective partners to disclose current capabilities and retained IP that could be used by them to identify and solve a game-changing problem. It then moves into one of many potential exits. In the shallowest form, customers are able to make their mark on soon to be released products, goods and services by supplying their feedback. However, the deeper form two (or more) parties work together to realise a dramatic outcome that will lead to a new good, service or product.

PACE: Is repurposing IP another way of saying ‘open source’ or does it have a deeper meaning?

MH: Open source is an example of IP reuse, but it is indeed deeper as it includes both closed and open variants. It may also be Hitachi subsidiary providing IP for another Hitachi subsidiary to do something different. The combination of Hitachi’s rich industrial heritage and our deep domain expertise in both operational and information technology uniquely positions us to address many of society’s most pressing issues, while creating new business opportunities. We are repurposing of IP beyond Hitachi to/from other companies. Here is an example of that: the repurposing is Hitachi’s consumption of Nissan’s backup camera for our Mining Haulers. As a result the notion of repurposing obviously would include both open and closed IP assets and could include both between Hitachi companies and beyond Hitachi.

With Innovation moving from “behind the black cloth” to being more publicly transparent (whether limited or fully open) companies need to be prepared to test early and often to achieve first mover status in their existing or new markets.

PACE: Lets talk about Social innovation: you said it was the ‘intersection of technology and society’. How does this look in practical terms and how does it help industry?

MH: In the case of the National Health Services in the UK  we’re using works around diet and information technology to assist with the management of diabetes. While the above example isn’t about manufacturing per se it is related to the food industry. Further in the area of healthcare HDS is working with University Technology PETRONAS (UTP), one of Malaysia’s most prominent universities, to improve clinical support for traumatic brain injuries. The partnership will bring together Hitachi Cloud Services Connection (HCSC) – Healthcare, a first-of-its-kind open healthcare cloud platform for analytics, with UTP’s biomedical image analysis and analytics. The study will initially be focused on traumatic brain injuries, integrating magnetic resonance imaging (MRI) scans, blood panels and intensive care unit (ICU) data to deliver precise and instant clinical support that can benefit both patients and healthcare professionals. Because HCSC – Healthcare is based on industry standards, any additional medical data can easily be integrated and analysed throughout the study. In other cases we’ve used our technologies (both emerging Artificial Intelligence and Robotics) to improve logistics for shipping and picking. In this system the aim was to put AI in the role of an assistive co-pilot to the warehouse work staff so that they can achieve higher productivity. So the human being, the robot and the AI were all acting as mutual partners to achieve the final result. So it is the intersection of these three things that resulted in a real business improvement. Other areas that the AI system could help with include non-seasonal improvements revenues for retail venues. For all of these cases it is the intersection of the humans in society with technology, or perhaps better said is that the technology is joining society. Further in many of these cases the usage of these digital tools could be used to improve efficiencies, etc.

PACE: With a global economy that seems to be patchy in terms of growth, how do the above-mentioned notions help with growth? Are we talking about creating new opportunities or is this all about extracting the maximum value out of existing projects?

MH: Both are possible. For instance I’m aware of an innovation at a financial services company where the challenge provided to their partner was to reduce costs by 10-fold. This cannot merely be done by reducing staff and must employ the usage of novel digital technologies. In their case a new expense system was used which added the idea of gamification to the equation. As a result when an employee saves over the required threshold a percentage of the savings is returned to them. So this is on the extracting value side. For the idea of growth, the thinking would be to enable the genesis of new services or capabilities that lead to new revenue streams or enhanced competitiveness. Here we can talk about Subaru’s usage of the Hitachi’s technologies behind the Subaru EyeSight system. Our partnership with Subaru provided them with a competitive advantage in assistive breaking (https://www.youtube.com/watch?v=t7uVShyHBhk).

PACE: What about disruption? While uncertainty and disruption are related, how does this play out in industry and in particular for the IoT?

MH: Disruption frequently replies to a known and certain state that is being challenged. My point about the current economic condition is that there isn’t a known state to disrupt so disruption isn’t relevant. In fact were entering the ‘Era of Uncertainty’ whereby our current approaches to business don’t necessarily apply. For example today’s customers are tomorrow’s partners, today’s competitors are tomorrow’s customers, today’s customers are tomorrow’s competitors, etc. So whether it is IoT or another vertical you may find that with changing laws there are new competitors where you had not seen them before. For example in the US the laws around personal investing and lending have changed. The result is that services like KickStarter and Lending Clubs have emerged to challenge VC investing and loans from traditional banks respectively. This is not something that the Financial Services industry would have thought possible in previous years.

The combination of Hitachi’s rich industrial heritage and our deep domain expertise in both operational and information technology uniquely positions us to address many of society’s most pressing issues, while creating new business opportunities.

PACE: You mentioned the term ‘perpetual beta’: what implications does a ‘perpetual beta’ phase actually mean for companies?

MH: With Innovation moving from “behind the black cloth” to being more publicly transparent (whether limited or fully open) companies need to be prepared to test early and often to achieve first mover status in their existing or new markets. For example, if a new service is somewhat imperfect in the beginning, because it uses beta technologies, but enables them to move into a new space then it provides longer time in the market and the ability to “make the market.” This however means there is potentially a need to race something to market faster with less completeness. The notion of running in beta is tied to getting services, goods or products out to market faster and then being willing to prune when they aren’t viable.

PACE: Are there local practical examples of ‘perpetual beta’ ?

MH: When it comes to specific actions in ANZ, there was an announcement last year about geo-farming. The details of this announcement are here . I’ve included the first paragraph and a list of ANZ specific organizations involved. “Hitachi Zosen Corporation, Hitachi, Ltd., and Yanmar Co., Ltd., have been commissioned to conduct a study on the effective use overseas of advanced positioning signals from Japan’s Quasi-Zenith Satellite System (QZSS), organized by the Ministry of Internal Affairs and Communications of Japan. The study seeks to verify that advanced positioning signals transmitted from the QZSS can be used in precision farming in Australia. Specifically, demonstration tests will be conducted using the advanced positioning signals to control a self-steering robotic tractor and perform actual farm work in a paddy field. At present, technical validation is in progress for three high precision positioning methods: 1) RTNet, 2) RMIT, and 3) MADOCA . The demonstration tests aim to determine the optimal positioning method for precision farming in Australia.


PACE: By focussing on transition IT, you mentioned this was the next phase of growth for Hitachi. Just how much of your business will this make up in say 2020?

MH: HDS is focused on growing its Social Innovation as a business over the coming year, evidenced by increased investment in resources and focus. While today the bulk of our revenues comes from traditional and emerging infrastructure technologies, such as flash and data protection storage, we expect to see these traditional product lines experience flat or diminishing growth by 2020. We are currently seeing an increased appetite for virtualised, cloud-based and hyper-converged technologies, and are increasing our share of market and revenues in these areas. Finally, our Social Infrastructure is expected to grow rapidly, particularly in the areas of analytics and Internet of Things. By 2020, we expect these last two technology areas to contribute significantly to the overall revenues for Hitachi Data Systems.

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