Get out of the lab and talk to clients

16 Oct 2008

Research teams have to get out of the lab more to become better connected to the day-to-day business to create innovation quickly and keep up, said NEC senior executive VP Botaro Hirosaki, responding to a question on how the innovative process is working in your organization at a session on the 'Networked Generation' at the ITU Telecom Asia in Bangkok last month.
He explained that at NEC fundamental research staff join sales people to meet with customers' high-level management executives. 'Our research people with deep knowledge of the technology as well as the future possibilities join in discussions with the top management of a customer with the understanding that NEC can be a long-term partner.'

He told Telecom Asia later that changing the internal culture of an organization is often more important than technology innovation. 'We enter the conversation at the beginning as the customer develops a business plan and discuss new business models. Otherwise, we just get involved at the procurement phrase, where there is intense cost pressure.'

He noted that business models change rapidly in the real world and the company couldn't continue with its old sales style, adding that 'engagement on the product side isn't enough.'
With 160,000 employees at NEC, Hirosaki admitted that changing behavior is very difficult. 'It's a cultural issue.' To change the fundamental culture of an organization, you have to prepare long-term targets for staff and customers.

'Thirty years ago, in 1977, our leadership defined a new business model where communications and computing converged. After five to ten years, there were a number of people who wondered if it was the right direction. Everyone now believes that direction was correct. This changed the culture from being just a supplier of equipment.

He admitted that the company now has another fixed legacy culture and the market is changing from being network centric to being P2P centric. 'We now have to clearly define the new direction for the next decade. We have to provide new direction every one to two years, and that way we can change the culture.'

With the huge increase in network traffic, he said revenue growth is not proportional to the required infrastructure investments needed to keep up with the traffic growth. Referring to NEC's ISP unit, he said 'they are looking for a new business model, perhaps with the content owners. We're also looking at SOA and utility computing.'

In today's business environment many companies are becoming bigger through M&A. He said this may be the right way to achieve scale. But when a company passes a certain critical mass, he said it will have a hard time changing its business culture. 'M&A may not be able to continue to create value over the longer term.'

But almost all companies that experience M&As have a challenge in changing and aligning the internal culture, he said. 'This is more important than technology innovation.'

Asked about the specific factors for the rapid uptake of the mobile internet in Japan compared to other countries, he attributed the huge success to local conditions.

'It comes down to culture. Population density in Japan is a big factor stimulating market demand. We're a small island with 100 million people moving and working together in close proximity. This gives Japanese the opportunity to meet people frequently and to share ideas. We also have a relatively high per capita income level, which enables people to take part in these mobile exchanges, which wouldn't be as common in countries with a lower GDP per capita. Both these conditions are required.'

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