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Change with a purpose. Thoughts from CEO Morita and the NEC Group's 125 Years of Transformation
In July 2024, the NEC Group began celebrating its 125th anniversary. We have built a proud history in cooperation with customers, partners, shareholders, employees and their families, and all our stakeholders. Today, we continue to move forward with our stakeholders and to be a company that is essential for society. NEC Corporation President and CEO Takayuki Morita shares his determination for contributing to tomorrow, when saying, "We will continue to evolve, together with our purpose" (NEC's reason for being).
Capitalizing on the advanced technologies of each era
Thanks to your support, the NEC Group has reached this milestone anniversary. We would like to express our gratitude to all of our stakeholders with whom we have built our history together.
Since 1899, we have been delivering new value to society by making full use of the most advanced technologies of each era and changing as we go. There is a wide variety of advanced technologies that we are now using. These include biometric authentication, such as facial recognition, AI technologies, including our self-developed generative AI, cyber security solutions, networks that extend from the ocean floor to outer space, and technologies from our global partners. By combining these technologies, we are promoting Digital Transformation (DX) for our customers and society.
Telecommunications technologies have been at the core of our 125 years of history. However, our corporate image has always been evolving. It is precisely because we have continued to change that we are where we are today, and that corporate attitude will never change.
In its early days, NEC was Japan's first joint venture with a foreign company. The company started by importing telecommunications equipment, then adopted advanced technologies from overseas and began to produce a variety of equipment in-house, including telephones. The founder, Kunihiko Iwadare, was recognized by Thomas Edison, the undisputed "King of Invention," and worked hard under his guidance. With the spirit of "Better Products, Better Services," Iwadare contributed to the development of modern Japan in the field of telecommunications.
The second phase of the company's evolution as an information and communications technology (ICT) company began in 1977. Koji Kobayashi, NEC's chairman at the time, introduced to the world the concept of an era in which computers and communications (C&C) will merge, a novel idea at a time when the Internet did not exist. In order to realize a world of C&C, the NEC Group took on the challenge of expanding its business scale in a variety of related fields. From that time on, the NEC Group has been contributing to the development of ICT around the world through technologies that have included personal computers, semiconductors, cell phones, and other products.
At a time when C&C has become the norm, the NEC Group is changing its image dramatically. As mentioned above, we are a company that accelerates DX for our customers and society through various advanced technologies and human resources. This is the reason why we are now in our "third founding period." We are changing into a company that creates social value and must be defined as more than just a manufacturer or system integrator.
The lessons of a business crisis
The trigger was a management crisis we experienced in the late 2000s at the end of the second phase of the company's history. Trapped by our past successes and the old ways of our siloed organization, we were no longer able to change ahead of the times as we had done in the past. At the same time, the business environment was changing rapidly. The Internet was changing business models, manufacturing trends and power structures, and the international situation was changing. We were unable to respond to these changes in the business environment, and our business performance deteriorated. The company experienced a business restructuring and the scale of our workforce was reduced.
In 2012, the management team, including myself, repeatedly asked ourselves the fundamental question, "Is NEC necessary for society?" This led to the creation of our "Purpose". The statement that "NEC creates the social values of safety, security, fairness and efficiency to promote a more sustainable world where everyone has the chance to reach their full potential" was created. In 2013, we promised society and our employees that we would transform ourselves from a product-oriented company to a company that creates social value.
To realize its purpose, the NEC Group has reshaped its organizational structure, accelerated investment in promising business fields, implemented data-driven management, expanded its diversity by bringing in more people from outside the company, changed its internal culture, and promoted its own DX using the most advanced technologies. Over the past 10 years, the NEC Group has become a company with high profits and a healthy financial base with net assets of over 2 trillion yen.
Business model innovation lead by NEC BluStellar
Our various technologies are multiplying and thoroughly leveraged to transform the entire group of more than 100,000 employees. We position ourselves as "client zero," accumulating and amplifying our knowledge and experience internally, then offering it to our clients and society. Through these efforts, the NEC Group has developed the know-how, human resources, and technology for corporate transformation, including DX.
NEC BluStellar is a new value creation model that NEC unveiled in May of this year. It is a model that collectively draws from the knowledge we have accumulated over the years and what we have acquired through innovation. It is more than a single product name. It is a guidepost for our clients' DX, or corporate transformation, consisting of three elements: the management agenda, the technology that supports it, and the organization and human resources. Corporate transformation requires change in every part of the organization, and the road to its completion is a long one. We know this from experience, which is why NEC BluStellar is able to effectively guide our clients on their corporate transformation journey.
Business is a living and changing thing. I often say, "There is no such thing as an 'optimal state' for a company to maintain." Change is the driving force of meaningful evolution, and it is through change that the NEC Group has continued to carve out its history. NEC BluStellar is a result of the transformation that took place after the management crisis, and will become the engine that drives our business going forward as we ourselves and NEC BluStellar continue to evolve.
The culture of the NEC Group has once again harnessed the power of change. Now, as we celebrate our 125th year, we will continue to change. I am convinced that this will lead us to a meaningful period of creation for the foreseeable future.
Please look forward to good things from the NEC Group.
Takayuki Morita
President and CEO
NEC Corporation