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Value Co-Creation Center

May 16, 2019

Value Co-creation Center
Kazuo Fujita
General Manager
Value Co-creation Center

Promoting the Incubation and Acceleration of Research from a Business Standpoint

― What is the role of the Value Co-creation Center?

The Value Co-creation Center is an organization that forms project teams focused on commercialization within laboratories and handles the production aspects of commercializing these projects. We were founded in 2016 as an organization that takes charge of the business side of research and handles incubation and acceleration. We take on the role of promoting new business development, which is a difficult task for researchers to accomplish alone.
Our activities start with identifying high-potential seeds from among the research technologies available. We then select the personnel we deem optimal from a commercialization standpoint from each research laboratory and begin accelerating the commercialization process. Furthermore, we aim for additional improvement and the creation of markets.
We also strive to cultivate entrepreneurial personnel through these types of activities. Our fundamental approach is to maintain openness. Rather than sticking to NEC technologies, we also consider creating value propositions by combining them with technologies possessed by other organizations. For our development framework as well, it is essential that we avoid the waterfall model and instead adopt an agile approach that stays ahead of the times.
Our organization's vision is very clear: maximizing business value—that is, our market capitalization in the stock market. Laboratories are not profit centers like business divisions are. While there are no KPIs such as daily sales, if we can announce promising world-class research technologies and services, I'm sure we can significantly increase the value of NEC's businesses. In addition, if we can ultimately create new companies out of the laboratories and launch IPOs, this will earn major profits for NEC. These kinds of carve-outs should also provide appealing career paths for researchers.
To accomplish this, we will create business models by gaining an understanding of the research themes being worked on at NEC Laboratories around the world, researching the markets in which these technologies can thrive, and planning out which countries and regions they can be used in, the launch timing, and appropriate products and partners. At NEC Laboratories both here and overseas (Japan, North America, Europe, Singapore, China, India, etc.), over roughly 100 research projects are currently underway, including those that we cannot yet disclose publicly. They are all divided into seeding, early, and middle development stages, and we mainly focus on commercializing the themes that fall into the seeding and early categories. Of course, because our ultimate goal is scalability, we identify those themes with high potential for growth and profitability and give them our support. Our goal is developing businesses that can create their own market out of nothing, which is something unique to laboratories.
The conventional laboratory model, in which technology born from research and development is handed off to a business division, is already incompatible with the new era. We will strive to create new businesses that change the world by having the researchers themselves take the lead and interface with customers, adopting an agile approach and accumulating PoCs to allow for speedy productization.

Kazuo Fujita General Manager Value Co-creation Center

― What do you think are the strengths of NEC's research and development?

If I may begin by speaking a bit about myself, I joined NEC in October 2018. Before that, I earned my MBA and worked at several foreign-owned IT companies. I think that being able to take charge of new businesses here has been a valuable experience. At the time, while I felt that advancing my career as a company employee was fine, I also considered starting my own company. I narrowed things down to about four or five ideas for business models, and one of them was AI. At the time, while researching technologies, I happened to learn about HEROZ, a company started by a former NEC employee. I kept an eye on this company for a while, and when it went public, its market capitalization rose to over 160 billion yen just like that. This piqued my interest in NEC and made me realize that it has some impressive technologies. Plus, I figured that with a research laboratory, there was still potential value of about one trillion yen, far surpassing the 160 billion yen figure. Afterwards, I had the opportunity to join the company, and that's how I ended up at NEC.
The first thing that surprised me upon joining was the advanced level of the research. I had experienced AI research at the foreign firms I'd worked at, but this was on the same level, and there were a lot of talented personnel. Researchers keep working steadily day after day for months in the shorter cases or years in the longer cases before receiving the first assessment of their work. This is precisely why it is so important that we discover the social value hidden within this excellent research.
Also, this was my first time working at a major Japanese firm, and I had a very negative image before I joined. I thought we'd have to sing the company song every morning, or that power harassment would be pervasive throughout the company and that we'd be humiliated if we failed, haha. But of course this was not the case, and there is a high degree of freedom, with higher-ups, junior employees, and colleagues all interacting on equal terms. There was no totalitarian culture at all, and the opinions of superiors or the organization weren't absolute. This was surprising in a good sense. I think that there's a good environment in place.
Going forward, I want to link technology and services and further enhance the generation of social value. The level of NEC's technologies is just as high as that of those companies and services that have revolutionized the world these past few years. In fact, I think we can consider them to be on a high level globally as well. However, there's still the issue of creativity in coming up with new services that can change individual users' lives, and I believe this is the most important point of all. In terms of the supply chain, even B to B businesses ultimately adopt a B to B to C stance and are connected to each of their end users. By working together with researchers to go further in figuring out how to make each user happy and comfortable and their lives convenient, I believe we can create innovative services that contribute to society.

Kazuo Fujita General Manager Value Co-creation Center

― What is your vision?

Carve-outs are what I'm ultimately aiming for. I want talented researchers to create innovative technologies and services and become progressively more independent. I want us to actively invest in these efforts and provide support. Actually, in April 2018, Fujimaki, one of the personnel working at a research laboratory, founded dotData using financing from NEC, and it continues to succeed from its base in Silicon Valley. I want there to be two, three, and more companies just like this. I want our researchers to make the most of their research abilities and become star business managers. I believe our job is to support their efforts from behind the scenes and handle the overall production.
And this requires having an entrepreneurial mind. I want each of our researchers to approach their work from the perspective of an entrepreneur. Of course, it is important that they proceed while focusing on the details of their research, and there is also basic research that is essential to long-term research. But today's world calls for a speedy approach that involves working together with customers and partners to continuously pursue PoCs and correct the course one is taking. Moreover, in every field of research, there are rivals trying to produce results first, so speed is already becoming an essential skill. For instance, if you're taking a test, you won't get any credit if you need an additional hour to figure out the answer.
Just as Darwin's theory of evolution asserts, I believe the ones that will ultimately be left standing in our market are the ones that adapt to the environment. While convictions are important, narrow-mindedness is the enemy. Famous actor and martial artist Bruce Lee once said in an interview, "Be water." Pour water into a cup, and it takes on the shape of the cup; pour it into a teapot, and it takes on the shape of the teapot. This means that we should become adaptable like water. I think this kind of mindset is extremely important in business as well. Particularly when creating something new from scratch, all biases must be done away with lest all frameworks and equations be rendered ineffective. This is because there are no precedents. Actually, while I was proud to start working at a foreign firm after graduating from business school, almost none of the formats and equations I learned at business school were applied. It's much more important to confront the voices in the market and occasionally question your own biases and control yourself.
We must pay attention to society and our users and continue to respond flexibly to the market environment and users' needs while pursuing our research. I think this stance is what is required of laboratories nowadays. To achieve this, laboratories must enter the market themselves and rapidly generate new businesses and services. I want us to lend these efforts our full support going forward.