“I don’t really like it myself, but there is an expression in the Hitachi group “Gosanke – the three branches” – meaning Hitachi Metals, Hitachi Cable and Hitachi Chemical” – explains Takashi Kawamura, former President of Hitachi. The expression is historical, referring to the three branches of the Shogun producing Tokugawa clan during Japan’s feudal era.
The Gosanke are the largest, and longest surviving of the listed Hitachi group companies. Kawamura caused a sensation in 2010 when he appointed Hiroaki Nakanishi as President and stayed on as Chairman, by also appointing Nobuo Mochida of Hitachi Metals as Executive Vice President. “These personnel moves are a way of showing to the outside world what my intentions are. It was the first time that someone from one of the other listed Hitachi companies had been appointed as an executive of the main Hitachi organisation. Up until there was not even much exchange of personnel even amongst ordinary employees.”
Then in 2011, Kawamura made Hideaki Takahashi, who had been an executive officer in the main Hitachi company, President of Hitachi Cable. This was also a rare occurence, and was followed by the merger of Hitachi Metals and Hitachi Cable in July of 2013. This was to signify the end of Hitachi’s vertical mindset.
“I was most concerned about reforming the main Hitachi company. As I mentioned before, it was a donburi – good businesses covering up bad…. There was no sense of responsibility to the rest of the company in each division – for example, if some entertainment budget was left towards the end of the year, then the division would try to spend it all in a mad frenzy.” So in 2009 Kawamura set up an internal company system. There are now 6 groups, with around 30 independent companies, some listed, some not, which report into the consolidated accounts. If the internal rating of a division fell, then the mothership would not lend it any more money. Kawamura also started an annual “Hitachi IR Day”. “The president of each internal company suddenly changed their spots when they realised that each year they would be accountable to investors for the targets they had set the previous year,” notes Kawamura.
(Continues – the man who turned Hitachi around – the UK rail business)
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