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Business

Japan Display turns to seasoned 'disrupter' for revival

Ex-Aqua president brings speed and creativity to troubled panel maker

Chief Marketing Officer Yoshiaki Ito outlines JDI's internal reforms at a news conference in Tokyo on Oct. 25.

TOKYO -- The time is ripe for disruption at Japan Display, and the man to shake up the ailing panel maker is new Chief Marketing Officer Yoshiaki Ito.

What the company lacks, Ito told a news conference in Tokyo, is "fast decision-making."

"Compared with other global companies, we are slow," he said. We have "world-class technologies, and it is important to think about how to combine them." 

Ito has been chosen to spearhead internal reform under Chairman Nobuhiro Higashiiriki. He took the stage as the head of the newly established marketing and innovation division to outline the progress made so far. 

The company, known as JDI, was formed by combining the display units of three major Japanese electronics makers in 2012.

At just 48, JDI's new "disrupter" has a wide range of experience under his belt, mostly at non-Japanese corporations. Born and brought up in Bangkok, Ito earned his MBA in the U.S. He then worked for the likes of Coca-Cola (Japan), Adidas Japan and Sony Pictures Entertainment (Japan) before heading up Aqua, the white goods unit of China's Haier Group that was previously owned by Japan's Sanyo Electric.

At JDI, Ito is eager to create new businesses. On Oct. 1, he established the marketing and innovation division. "Not only will we make things but we will also create services, including business solutions, as part of our new business model," Ito said.

Cross-functional

Ito has also set up cross-functional teams, made up of people from various departments -- a practice that has gained popularity in various Japanese industries since it was introduced at Nissan Motor by then-CEO Carlos Ghosn.

Ito has established 10 such groups, each comprising 10 people of different of levels of experience, for various purposes, such as product development, sales operations reform, production reform and inventory reduction. The aim is "to strengthen the company's basic structure over the medium term," he said.

According to Ito, the goal of the reform is to achieve 800 billion yen ($7.04 billion) in sales and 40 billion yen in operating profit by March 2020.

Those projections are somewhat conservative when compared with the respective targets for fiscal 2018 of 1.1 trillion yen and 88 billion yen announced by the previous management in late 2016. Higashiiriki, who took the helm in June, is clearly wary of aiming too high -- a mistake that landed the company in its current difficulties.

In a medium-term business plan published in August, Higashiiriki stated the basic policy would be to "refound" the company through a process of "creation and destruction."

In other words, it will undergo structural reform to reduce its high costs and then work to grow new revenue sources as soon as it can -- with Ito positioned as the key man.

The plan calls for a drastic review of the current business model, which is heavily reliant on smartphones. JDI drastically needs to boost sales of panels for vehicles and industrial equipment, as well as enter new markets, and the company is counting on Ito's cross-industry experience to help deliver these goals.

JDI plans to diversify its lineup of panels for use in vehicles.

The auto sector business is especially important. Thanks to advances in autonomous driving technology, the number of panels installed in cars is growing.

To meet the range of customer demand, JDI plans to diversify its lineup. In addition to gadgets like speedometers, it plans to manufacture electronic mirrors, which show a vehicle's blind spot captured on camera, and high-resolution panels for onboard entertainment displays.

The company hopes to increase sales from the business by 60% in the next three years to about 150 billion yen. In the year to March, by contrast, the segment brought in about 90 billion yen in sales, accounting for just 10% of the group total.

Demand for smartphone panels, which account for more than 80% of overall sales, is highly volatile, and that has put JDI in trouble. The market for panels for cars is more stable -- something JDI hopes will translate into a steady source of revenue.

Moderate disruption

Ito is also no stranger to failure. While at Aqua, he drew plenty of media attention with a series of creative ideas, such as a handheld washing machine and a refrigerator equipped with a display.

But "the employees and the parent company in China increasingly turned against his way of running the company," according to an industry official, and Ito left Aqua when his two-year contract was up. The company has since switched gears and stopped developing the unique products Ito had pushed for.

Whether the shock therapy initiated by Ito and Higashiiriki succeeds will depend on how carefully it is implemented. Younger employees in their 30s are said to be largely in favor of the reforms. Veterans, however, seem less enthusiastic.

The company has been cobbled together from parts of traditional Japanese companies -- Hitachi, Toshiba and Sony -- and many staff can be somewhat conservative.

Yet JDI has also brought in engineers from Panasonic, Sanyo Electric and Seiko Epson. Having been exposed to the fierce competition in the panel industry, these "employees are flexible in adapting to changes," a former JDI official said.

As Ito made clear at the news conference, there is no time to waste.

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