To achieve SX management that balances the promotion of sustainability and corporate growth, our company is accelerating organizational transformation.
Our aim is for employees, customers, partners, and other stakeholders to contribute to SX across society as a whole, enjoying challenges and happiness. President Morita and Peter D. Pedersen, who has supported Japanese companies' environmental and sustainability strategies for many years, discussed future prospects from a global perspective.

Thinking in terms of "trade-on" rather than "trade-off"

Morita:　Today, we are joined by Peter D. Pedersen, a leading expert in sustainability strategy support. I would like to have an open exchange of opinions about the current state of SX management and future challenges from a global perspective. Mr. Pedersen, you are engaged in various activities under the themes of sustainability and innovation, but what are you most interested in these days?

Pedersen:　For the past ten years or so, I have been focused on management innovation, in other words, transforming organizational operations. I see this as the most important issue for Japanese companies, and I support corporate transformation by providing unprecedented methods, techniques, and processes.

Morita:　We also began full-scale organizational transformation in 2021 to promote sustainability management.
We launched the SX project and, as a first step, renewed our corporate philosophy. After that, we formulated our materiality, and even now, we are advancing various initiatives such as ideathons and business expansion projects to create new businesses through SX.

Pedersen:　I think these are initiatives that accurately capture the trends of the times. I have long argued that, in addition to the 20th-century business competition axes of self-transformation ability, market share, quality, and price, environmental and sustainability strategies will become new axes of competition for corporate management in the 21st century. However, in Japan, the view that promoting sustainability and corporate profits are in a trade-off relationship still persists, and I believe we must first change that way of thinking. I propose that, rather, the two are in a "trade-on" relationship, complementing each other.

Morita:　The Hitachi Group aims to realize a "Harmonized Society" in which the environment, well-being, and economic growth are in harmony. The trade-on concept truly resonates with that vision. The reason we have positioned SX promotion as a management issue is that we wanted to overcome the previous trade-off mindset and redefine all business activities as contributing to SX for society as a whole.

The "three A's" are essential to realizing SX management

Pedersen:　I think it was a wonderful decision. Moreover, Hitachi Solutions is inherently highly compatible with SX. Not only is the environmental impact of the business model itself low, but you also have numerous solutions to address social issues.

Morita:　That's exactly right. The ability to create solutions from scratch is what we consider our core value. In addition, we have a bottom-up culture that values the opinions of young employees on the front lines, which enables speedy decision-making within the company. By leveraging these strengths and organizing the Sustainability Committee, we aim to make 2025 our "first year of sustainability implementation" and further accelerate the integration of SX and management.

Pedersen:　To build a flexible and strong organization that promotes SX, the three A's—Anchoring, Adaptiveness, and Alignment—are essential. Among these, anchoring and adaptiveness can be said to have a yin-yang relationship. In a rapidly changing business environment, companies must constantly transform themselves to survive. On the other hand, if that's all there is, employees may lose sight of their mission, and the organization's centripetal force may be weakened. That's why companies must present a common goal that serves as an "anchor" for employees' hearts.

Morita:　Our renewal of MVV (Mission, Vision, Values) with the involvement of employees, especially younger ones, also seems to be connected to anchoring.

Pedersen:　I completely agree. On top of that, what will be required of companies in the future is "alignment with society." In other words, companies must anticipate major social trends, build partnerships with external stakeholders, and put environmental and sustainability strategies into action. To sum up, I believe that companies equipped with these "three A's" are the ones that will be able to realize SX for society as a whole.

Anchoring initiatives foster a culture of challenge

Morita:　Listening to your story, I am once again reminded of the importance of anchoring. In the past, even at our company, departments competed for performance, and there was a time when the sense of unity as a whole was lost. That gradually began to change when we, as the Hitachi Solutions Group, adopted the concept of Social Innovation. By setting SX as a major shared goal, I feel that the organization has become more integrated.

Pedersen:　Since starting the SX project, what kind of changes have you noticed within the company?

Morita:　I believe that a mindset of tackling challenges, which is also linked to the ability for self-transformation, has steadily taken root. We have also been working on creating mechanisms to support challenges as an organization, which is a part of our MVV. For example, since 2023, we have been implementing a program called the Startup Incubation Program. This program aims to develop global human resources who can tackle social issues from the SX perspective, launch services in the United States, and commercialize them. Using our Silicon Valley office as a base, we collaborate with venture capitalists and aim to start businesses locally.

Pedersen:　Aiming to start a business ultimately means leaving the company, doesn't it? I think it's a very unique initiative.

Morita:　Through this project, one company has already become independent from us. If a project does not end up as a business, the people can return to the company. The challenge is also one of nurturing robust human resources.

Pedersen:　I feel that in Japan, the psychological hurdle to entrepreneurship is still quite high. That is why, in recent years, I have been emphasizing the importance of intrapreneurs (in-house entrepreneurs), but I think the experience of seriously aiming to start a business could be an effective approach to developing such human resources.

Morita:　In terms of in-house entrepreneurship, we have also started a project called the Domestic Service Business Creation Initiative, which solicits business ideas from divisions and provides support all the way to commercialization. Unlike a simple ideathon that only provides funding, a major feature is that we back up commercialization as an organization while collaborating with experts from various fields.

Balancing motivation and ease of work through a bottom-up approach

Morita:　When it comes to changing mindsets, a visual approach is important. We were the first in the Hitachi Group to introduce a dress code-free policy. That alone made the atmosphere within the company much more flat, and above all, I feel we were able to clearly express the company's stance of wanting to create a more comfortable working environment. We have also implemented initiatives to improve EX (employee experience). One initiative that has received a great response is an in-house project aimed at balancing work and caregiving. Preventing productivity decline and unwanted resignations due to caregiving has now become an essential management issue for companies.
I believe that the fact these initiatives have emerged bottom-up from employees, rather than from management, is an asset to the company.

Pedersen:　Listening to you, I get the impression that bottom-up and top-down approaches are well balanced and integrated.

Morita:　We are always conscious of that as well. For example, we regularly hold town hall meetings to create opportunities for direct dialog between employees and management. The facilitators are young employees, and speaking honestly, if I were young, I would have avoided that role (laughs). But encouragingly, so many people volunteer that we have to hold a lottery each time. Recently, several in-house communities led by employee volunteers have naturally sprung up. I think these movements are possible precisely because the bottom-up culture has taken root.

Pedersen:　Working in an organization where you can take on challenges from the bottom up should also help fulfill what Maslow calls the need for self-actualization. Maslow also says that beyond self-actualization lies self-transcendence, that is, the desire to contribute to society. Hitachi Solutions, which promotes SX while balancing ease of work and motivation is becoming an organization where employees can aspire to such self-transcendence.

Building a foundation to support global co-creation

Pedersen:　Toward the latter half of the 21st century, humanity will face major challenges in four areas: food, water, resource ecosystems, and energy. That is why companies are being called upon to innovate in these fields more than ever before. What becomes important here is the presence of emerging and developing countries in the Southern Hemisphere, known as the Global South. From my own experience, countries in the Global South are very favorable toward Japan. How can we join hands with them and build sustainable relationships? I believe this is a challenge full of possibilities for Japanese companies.

Morita:　Global co-creation will become increasingly important, won't it? As a foundation for that, what we are working on is creating an environment where human resources with diverse backgrounds can work with peace of mind. Since 2009, our company has established a dedicated organization to promote diversity. By further accelerating these efforts, we hope to create a workplace where everyone can thrive, regardless of race, age, gender, nationality, or religion.

Pedersen:　Mr. Morita, You have extensive business experience in global environments by yourself. Is there anything you were conscious of when collaborating with people from different backgrounds?

Morita:　I was stationed in the United States twice. There was a book I often reread at the time, and what I learned from it was to always stay positive. Greet people energetically and speak while looking them in the eye. And always think from the perspective of the local people. It may sound simple, but I believe this is the foundation for co-creation worldwide.

Pedersen:　That's a wonderful story. I now have a much better understanding of your approach as a leader. On the topic of co-creation, I am currently involved in building a regional base in Omihachiman, and what I keenly feel is the importance of "place." If you create an attractive place, people will definitely gather. That doesn't change, whether it's global or local. That's why I want to devote all my energy to creating an innovation hub in the heart of Tokyo, where people, goods, money, and data from around the world gather. It's still in the conceptual stage, but I would be delighted if we could do something together with Hitachi Solutions there.

Morita:　Co-creation is also an important theme in our SX project. We have worked together with a variety of stakeholders, including companies and NPOs, to create value. I hope we can co-create with you in various ways in the future.

Reframing is what changes society

Pedersen:　With technology such as AI advancing at an accelerating pace, realizing DX is essential for promoting SX. I feel that Hitachi Solutions will play an increasingly important role as a hub connecting both of these wheels. On top of that, I would like you to adopt the method called "reframing."

Morita:　Reframing means reviewing the very framework that underlies our thinking, right?

Pedersen:　That's right. For example, when talking about sustainability, it's still common for people to immediately say, "But what about the cost...?" How can we reframe that mindset and achieve a trade-on? Thinking about that is the job of future leaders. One of my favorite phrases is "Reframing is social change." Change can only be born from reframing. I hope Hitachi Solutions will be a company that leads that change.

Morita:　Thank you very much. Talking with you has helped me clearly articulate things that had only been in my head until now. Using the insights gained from today's dialogue as guides, I want to actively practice reframing.