Creating New Value by Maximizing Digital Transformation-- Human Centric Innovation: Digital Co-creation

[Fujitsu Forum 2017 Keynote Report]

As the world rapidly becomes digitized, the pace of new collaboration efforts centered around data is accelerating. What transformations will be brought about in business and society driven by collaboration beyond the boundaries of sectors, industries, and business types? On May 18, the first day of Fujitsu Forum 2017 held at the Tokyo International Forum, Tatsuya Tanaka (Fujitsu President) and Hiroyuki Sakai (Corporate Executive Officer, EVP, Head of Global Marketing) delivered keynotes. During their speeches, they introduced digital transformations realized through new collaboration by inviting Fujitsu customers and partners to the stage. Then, they outlined Fujitsu's initiatives and direction to lead the concept of Fujitsu's Digital Co-creation.

Collaboration that Creates New Value

Tatsuya Tanaka
President, Fujitsu Limited

Fujitsu President Tanaka opened his keynote by saying, "Fujitsu is attempting to transform agriculture with ICT. We have launched new initiatives by collaborating with people in a wide range of fields, which is exactly the theme of this year's Fujitsu Forum: Digital Co-creation."

Next, he invited Takeshi Sudo, President of Smart Agriculture IWATA, Co., Ltd. in Shizuoka Prefecture, also known as SAC iWATA, to the stage. Established as a joint investment by Fujitsu, Orix Corporation, and Masuda Seed Co., Ltd, SAC iWATA is committed to using ICT to transform agriculture.

Takeshi Sudo,
President of SAC IWATA Co., LTD.

"SAC iWATA started business in April 2016. Iwata City's abundance of sunlight, the most on the Japanese mainland, makes it no exaggeration to say that the city is the sun's "power spot." Using beautiful water pumped up from an underground stream 230 meters below and agriculture facilities managed by Fujitsu's sophisticated ICT systems, we produce highly functional vegetables, including kale, tomatoes, and coriander leaves. We sell these vegetables as B-Food, with the B meaning "beautiful." Starting in 2017, we are taking on a new challenge: incorporating AI (artificial intelligence) into smart agriculture. By applying Fujitsu's Zinrai AI at SAC iWATA, we will create new business," said Mr. Sudo.

Mr. Sudo also boldly declared: "SAC iWATA's initiatives will change agriculture." He then described the business prospects: "By taking on co-creation with Iwata City, Masuda Seed, and other co-creation partners, we will use ICT to connect various ideas and technologies beyond the boundaries of sectors and industries. Then, with the resulting added value, we hope to move forward to create new business models that we can expand from being regional to being international--in other words, from Iwata to the world."

Expectations for Regional Revitalization under the Theme of Food and Agriculture

To achieve high productivity and grow the agriculture business using ICT, it is also necessary to work with local governments as well as with partners who can take on the challenge of business model transformation together. Mihoko Nakamura from Iwata City, where SAC iWATA was established, and Hidemi Masuda from Masuda Seed, together with whom SAC iWATA created the smart agriculture business model, joined the stage. First, Ms. Nakamura reflected on that time.

Mihoko Nakamura, Senior Manager, Facility Management Department, Waste Treatment Division, ex-Industry Department Industry Policy Division, City of Iwata

"The city's role was to support SAC iWATA in securing land and to help with completing various procedures. However, for Iwata City, it was unprecedented to invite a large farming project or to develop a new business model like that of SAC iWATA. So, we faced many hurdles, such as persuading landlords. Today, however, after the SAC iWATA initiative, we receive many inquiries from people who want to do farming in Iwata City. SAC iWATA is not only a farming business, but also an influence on various industries in the region.

Now, while bringing together the vegetables harvested at SAC iWATA with local industries, we are also trying to match advanced production equipment to local manufacturing industries. We continue to tackle the challenge of revitalizing the entire industry as well as the agriculture business.

We are also making branding efforts to sell characteristic vegetables such as salad kale under the Iwata brand. Our efforts in the SAC iWATA project resulted in employment for 100 people in the local community. The ratio of job openings to job seekers has increased from 1.0 to 1.4 over the past year. We will continue to disseminate information on Iwata City to the world in order to make agriculture a more attractive industry and to revitalize the economy with more workers here."

New Development of Agriculture Businesses by Co-Creation

Next, Ms. Masuda of Masuda Seed Farm, a seedling producer specialized in cruciferous vegetables with a 92-year history, talked about the significance of co-creation with Fujitsu and her hopes.

Hidemi Masuda, Executive Director

"Because we have a long history of breed development, we have been awarded five times by the Minister of Agriculture, Forestry, and Fisheries. We were also among the first to focus on functional vegetables. By making the most of our high level of expertise, we have been helping beverage companies and food companies by developing new varieties of vegetables for their original products.

"In the field of agriculture, there is a saying that those who dominate seeds dominate the world. Seeds play an extremely important role in the agriculture business, and a breed's potential offers a competitive edge. Thanks to Fujitsu embracing our beliefs, we were invited to join the SAC iWATA project.

"Japan's seed breed development is very competitive globally, and its quality breeds are the strength of the country's agricultural industry. At SAC iWATA, we achieved farming industrialization centered around new breeds as a new business model. Based on the breeds and vegetation know-how we provided combined with stable vegetation and information accumulated using SAC iWATA's ICT, we look forward to building an outsourcing business. I hope this project will contribute to the industrialization of Japan's strong agriculture by performing cross breeding through co-creation and thereby demonstrating a power not achievable by individual industries alone."

Fujitsu President Tanaka expressed his hopes: "These efforts at SAC iWATA may change the future of the region, the industry, Japan, and even the world." A large round of applause for those who took on the challenge of creating this new business model followed.

The Three Things Fujitsu Strives to Accomplish by Digital Co-creation

Next, President Tanaka described the theme of Fujitsu Forum 2017, "Digital Co-creation," as follows.

"Right now, technology is about to change the world in a big way. Digital technology has provided connectivity, which I believe is the biggest benefit. Overcoming differences among organizations, sectors, and physical distance, we can now connect data and wisdom of various parties. Because of this, it is possible to create new things that were impossible in the past. This has the power to disrupt industries and economies.

"We are pursuing the concept of digital co-creation so that we can contribute to the growth of everyone's businesses. To that end, Fujitsu is striving to accomplish three things, which I would now like to talk about.

"First is the fact that Fujitsu wants to contribute to society through technology as we always have. In the light of technology's capabilities, changes occur as time passes. However, with technology at our core, we continue to compete. This is Fujitsu's un-changing essence. Going forward, even in the digital era, we will continue to pursue innovative technological developments.

"The second point is that we will continue to endeavor to build a better platform. We want to make the most of the outcomes of our R&D efforts to provide the latest functions to our business platform. In addition to using our own technologies, we will collaborate with outstanding partners from around the world to provide a connected platform and security.

"The third point is about Fujitsu itself. We want to collaborate to contribute. Thus far, Fujitsu has helped numerous customers, and we have co-created and operated a large number of various systems. As a result, we have accumulated know-how about systems in a wide range of industries. By harnessing this know-how, we aim to become a company that will be invited to serve as a member of your team in your core business."

"To maximize digital transformation, we want to create a new set of values with you. This echoes our brand promise, which is shaping tomorrow with you. To do so, we want to further improve our expertise and nurture talents in people who have practical capabilities so that you will select us as your indispensable partner to make a contribution," stated a determined President Tanaka.

What Are the Cutting-edge Technologies and New Approaches for Realizing Co-creation?

Hiroyuki Sakai
Corporate Executive Officer, EVP, Head of Global Marketing

Next to the podium was Hiroyuki Sakai, EVP, Head of Global Marketing.
"We conducted a digital transformation survey with global business leaders, and I want to share the results for Japan. Of all respondents, 68%, or two-thirds of companies, answered that they are already undertaking digital transformation. Fujitsu is also co-creating digital transformation with customers, and we want to share several case studies with you.

"In our initiative with Kawasaki Geological Engineering Co., Ltd., we conducted cavity detection underground using AI technology in order to prevent some of the 3,300 road collapse accidents that occur in Japan annually. By using Fujitsu's image recognition technology, we could find cavities quite quickly, reducing the time taken to analyze cavity results to one-tenth that required by the conventional method.

"Nomura Securities Co., Ltd. is also using Fujitsu's AI technology to develop a system for detecting errors during transactions. The major securities house processes hundreds of millions of data items per day; even utilizing IT, it is very difficult to reduce the number of errors to zero. Fujitsu's machine learning technology has been introduced to develop an algorithm that is applied to ten business systems and then deployed across the company in the future. (During the speech, a video message was provided from Yoshihiko Hirose and Ryoei Hirano of Nomura Securities, who are in charge of the project.)

"Indonesia's KPPPA, the Ministry of Women Empowerment and Child Protection, has also incorporated Fujitsu's technology. In Indonesia in 2016, there were more than 250,000 cases of abuse of women, which is a major social issue. Due to the country's vast amount of land, it was challenging to get basic information such as where incidents occurred. So, they decided to develop a system together in collaboration with Fujitsu. The system enables them to centrally manage calls from civilians, reports from personnel, and information from social networks on violence and to visualize such information to establish preventive measures."

New User Experiences Achieved by Combining Audio Technology with ICT

Next, Sakai introduced Yukio Tada from Yamaha Corporation, the leader of a joint project between Fujitsu and Yamaha. In this project, Yamaha's know-how in audio unites with Fujitsu's IoT and cloud technologies to create inspiring new user experiences.

Yukio Tada
Leader, FSM Project, Musical Instruments & Audio Products Development Group,

"Our engineers and designers from both sides worked together in workshops, training camps, and field research on many occasions to come up with new ideas. The system can understand the user's context, and we aim to provide an emotional experience through audio.

"Personnel from both companies thoroughly discussed what is required for Yamaha in the future based on Yamaha's corporate slogan of "Sharing Passion and Performance. They spent about a year on this project and shared an extremely meaningful time."

AI, Blockchains, Design Thinking―Co-creation Accelerated by Advanced Technology

In addition, Sakai introduced specific initiatives with respect to the three things Fujitsu is striving to accomplish presented by President Tanaka.

"First, I would like to introduce an AI initiative as a leading-edge technology topic. Combining our supercomputer K technology co-developed with Riken and an advanced semiconductor technology, Fujitsu is developing a unique AI processor for deep learning. Targeting ten times greater performance in terms of power used compared with other companies and shipping in 2018, we are moving forward with development. We are also developing unique Fujitsu technology we call 'Deep Tensor.'

"In addition, Fujitsu has been developing unique technology to apply blockchains to business. Also, to contribute to the open source community, we are participating as a premium member in the Hyperledger Project, which consists of more than 30 companies.

"As to the second objective, provision of co-creation platforms, we provide a digital business platform, MetaArc. MetaArc supports the speedy construction of SoEs, which are new systems that use digital technologies such as IoT and AI. It also strongly supports the transition to cloud of SoRs, which are existing mission critical information systems.

"For MetaArc, we actively incorporated services from alliance partners including Oracle and Box. We are also looking into providing industry-specific platforms. By incorporating into platforms the knowledge that Fujitsu has acquired through our long years of initiatives with customers, we announced the Finplex financial platform and COLMINA manufacturing platform.

"As to the third goal of becoming a co-creation partner, we have established the Digital Transformation Center (DTC) as a place for co-creation in Hamamatsucho, Tokyo. While using design thinking to work with customers in many workshops, some projects have already gotten underway."

Introducing the "Open Innovation" Concept to the World

Sakai concluded his speech by introducing Open Innovation Gateway (OIG), which Fujitsu established as a part of the open innovation initiative in Silicon Valley in 2015. Mohi Ahmed, the leader of OIG who makes the most of Fujitsu's connections to support open innovation initiatives, came up on stage to introduce his activities. He is working on linking customers who are considering developing new businesses and startups, universities, and research institutions in Silicon Valley.

Mohi Ahmed
Senior Director, Open Innovation Gateway, FUJITSU

"Two years have passed since OIG was opened. We have had more than 1,700 customers from both Japan and abroad come to OIG, including advanced startups, companies, universities, NPOs, and so on.

"Stanford University's is famous around the world for its design thinking, and they have selected Fujitsu/OIG as an industry partner, the first time they selected a Japanese corporation. We carried out design projects and conducted sessions on the use of FinTech and fast innovation creation together with various customers to maximize user experiences. Fujitsu/OIG's efforts have also been highly evaluated by Harvard Business School. We invite you to use Fujitsu/OIG to co-create new value."

Furthermore, he introduced Masaru Sogabe from GRID inc., an AI venture, as an example of a Fujitsu co-creation initiative with a startup.

Masaru Sogabe
CEO, GRID inc.

"The core of our AI development is a machine learning framework, ReNom. This AI development platform enables you to build by combining various algorithms like blocks without performing complex programming. ReNom also serves as a data analysis platform." Mr. Sogabe explained the technology's features and also reported on a collaboration agreement with Fujitsu aimed at developing new types of AI services in which the ReNom AI development platform and Fujitsu's Zinrai will be used in combination.

President Tanaka returned to the podium and concluded the presentation: "Fujitsu believes that technology can make people happy. That is the fundamental essence of our thinking. Fujitsu will co-create a more prosperous future with our customers."

Keynote Speech (1:07:43)