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Hitachi Chairman Hiroaki Nakanishi feels that the new wave of disruptive technologies will prove ultimately to be more of a boon than a bane to society.
Looking ahead 2018

With technological change, the good will outweigh the bad: Hitachi's Nakanishi

Disruptive innovations should ultimately benefit society

| Japan

TOKYO -- As artificial intelligence and the internet of things are increasingly viewed as beneficial, some industries are voicing concerns about disruption. If -- or more likely when -- disruption occurs, certain sectors will be hard-pressed to avoid going extinct. The Nikkei interviewed Hitachi Chairman Hiroaki Nakanishi about the current wave of technological innovation and its impact on society. 

Q: Technological disruption is occurring across a number of industries. What is your take on this?

A: Change is inevitable. Take, for example, the headwind of thermal power generation facing heavy electric equipment makers. Global perceptions as regards the environment are changing faster than advances in renewable energy.

People seem opposed to massive facilities, even if they are equipped with cutting-edge technologies that keep emissions to a minimum. However, demand [for these technologies] still remains, unlike during the 2008 global financial crisis, which left many parts of the world cash-strapped.

One prime example is the retail industry, where Amazon.com is expanding its "economic zone." In the power industry, the shift from centralized systems to distributed systems will proceed, so small thermal power plants will create business opportunities.

Q: Japan has named technology as a core economic driver. How do you feel about this?

A: We can certainly boast about our technology, but technology alone does not necessarily provide business opportunities. We can no longer lead the market by relying on technology as our primary advantage.

In particular, trying to corral customers is exactly what they dislike. This is the age of digitalization, where obsolescence follows close on the heels of new technology. The more you try to be exclusive, the more likely customers will go somewhere else.

Q: Many Japanese still believe we can successfully compete with global rivals if we hone our technological skills. Is this true?

A: During the era of high economic growth, everyone was content to simply offer new products with improved technologies. But those years ended 20 years ago. Hitachi is still struggling [to adjust], but we must. By dialoguing with clients and markets, we can create technologies better suited to them. 

Q: While AI could enrich people's lives, some argue that it will lead to loss of jobs. Will we ultimately be happy as technology advances?

A: I think we will be. Technological innovation will certainly lower prices and make products more accessible, such as is happening with computers and smartphones. Benefits from the increase in work and leisure options will outweigh any disadvantages of AI and robots.

Q: The internet of things (IoT) -- a network of smart devices generating massive amounts of data -- is developing at breakneck speed. Will this give rise to a surveillance society?

A: The IoT was initially intended as a method of large-scale surveillance. Moreover, there is the possibility that entities based on artificial intelligence could eventually rebel against humans. Cloning technology raises important ethical issues. Ultimately, any innovation should be used for the good of society. 

Q: Japan faces an uncertain future, burdened with serious domestic problems, such as an aging population and falling birthrate, as well as pension problems. How should these issues be addressed?

A: Japan's aging society and declining birthrate are issues that plague us more than most other countries. Both are challenges that we are doing our best to address. How we handle these challenges can provide useful examples for other countries with similar problems.

Japan is well-positioned to transform itself into a superpower by offering proven solutions for social issues. Our country is still blessed with high levels of education and technology. Moreover, many of our companies are highly competitive in world markets.

By leveraging our advantages, we are likely to remain unbeaten on the international stage. Many Japanese regard Silicon Valley with envy because it produces one innovative business after another. The truth is, the area has become a vibrant place because it has attracted many different talented people from around the world. As for Japan, some of our entrepreneurs complain that today's young people lack ambition.

Q: Regarding Japanese businesses looking to expand globally, is there anything you would like the government to do?

A: One of the biggest advantages of Prime Minister Shinzo Abe's government is its ability to nurture friendly relations with leaders of other countries, which leads to open discussions. Abe has already visited as many as 70 countries since taking office. I'm always impressed by his superb diplomatic dexterity. His approach can contribute to enhancing Japan's credibility and provide domestic companies with great opportunities for growth. Therefore, I think the face of a national leader should not change very often.

Hiroaki Nakanishi, 71, graduated from the University of Tokyo in 1970. He joined Hitachi after graduating and in 2006 became the corporation's vice president. In 2009, he was transferred to a U.S. subsidiary. A year later, after returning to Japan, he became president, and would go on to put the deficit-ridden company on track for a V-shaped recovery. He was named chairman in 2017.

Interviewed by Nikkei staff writer Tetsuya Abe

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