‘Turning Dreams into Reality’ read the big screen behind Takahito Tokita, Fujitsu’s soon-to-be president, at the company’s annual forum in Tokyo in mid-May.
Penned in the late ’80s when he first joined the company, the slogan has stuck in Tokita’s mind ever since.
“That was the message back then, and I love this expression even now. I do believe that these words are still part of Fujitsu’s DNA,” he told the audience.
In recent years, Fujitsu’s dream-run has turned into something of a nightmare. In the early 2000s the company was a more than 5 trillion Yen firm, dealing chiefly in hardware from PCs to servers to mobile phones. While still the leading IT provider in Japan, the company is now struggling to compete globally, as hardware becomes increasingly commoditised. The company’s value is now wallowing at around 3 trillion Yen.
In its latest financial results (FY 2018) Fujitsu’s operating profit is down by 29 per cent and margins are tightening.
In 2017 Fujitsu sold a majority stake in its PC unit to Lenovo, in the face of weak global sales. Last year it was forced to ditch its smartphone business – going under the Arrows brand – as sales fell by half from peak levels. Earlier this year, it let its entire workforce in a number of hardware sales focused regions go, resulting in more than a thousand job losses.
“For Fujitsu in the immediate short term we do have to challenge ourselves in the global business market,” Tokita told media via an interpreter following his keynote.
To succeed, Tokita said, the company will have to completely transform itself.
“We need to, as quickly as possible, convert to a service-orientated business outside of Japan,” he said.
“Currently the company is not in balance. It is in imbalance. So we need to focus more and shift to services, and from the profit gained we need to inject that into new services.”
Tokita has been with Fujitsu for 31 years. Most recently he has been based in London as head of Fujitsu’s Global Delivery Group (GDG), leading 14,000 employees working in eight countries. This gives him a global perspective the company hopes he can instil company-wide.
“If we exclude corporate functions, [the GDG] is the only business unit that works across borders,” Tokita told gathered media after his keynote.
To become more ‘service-orientated’ there will also be a major reskilling of the company’s workforce which “will not be an easy task” Tokita said.
The company will also continue launching service and innovation hubs around the world which will be focused on helping customers run co-creation sessions and solve their business problems. It will also leverage its global research lab network, which is spread across the US, Canada, China, Japan, Spain and the UK.
“When it comes to the perspective of services and customers, we can no longer have that enclosed perspective, we have to make sure everything can be seen horizontally,” Tokita explained, in Japanese, although it is understood he speaks good English.
“As we move from technology into services, we will change our formation to serve this as well.”
Tokita did not rule out shutting up shop in other jurisdictions, or jettisoning more unprofitable businesses.
“Along the way we need to close down what we need to close down and do it quickly. We need to take these firm, solid steps,” he said.
The shift to services and closer alignment with customer need will bring with it a change of culture within Fujitsu, Tokita said.
It will be necessary to partner with the likes of Microsoft, Google and Amazon Web Services, which have long been considered competitors. The company is already collaborating with Microsoft on artificial intelligence solutions.
Cosying up to competitors in certain areas will mean overcoming employees’ absolute devotion to Fujitsu products, Tokita said.
“All Fujitsu employees, including myself, just love love, love, our products. So deep down we may feel ‘I do not want to use Azure, I do not want to use AWS’, and on a more subtle note, ‘we even hate SAP’!” Tokita said.
“But we are here for our customers and if our customers want Azure, AWS and SAP, we will give it to them. But we are faced with this dilemma every day. So if you have perhaps a remedy to dissolve this DNA overnight, let me know.”
Nevertheless, he added, the approach won’t “see that Fujitsu spirit disappear”.
Once Fujitsu becomes ‘service orientated’ Tokita hopes profit margins to run at around 10 per cent (they are currently at 3.3 per cent, down from 4.5 per cent in the previous financial year). Those profits will be churned into developing new services.
“When that happens, an adequate business size will follow,” he said.
Tokita is fully aware that he will have to make some difficult and unpopular decisions during his presidency, which officially starts in June.
“Now, I am human, I want to loved by all my employees, I want people to like me. However, the market does not demand that or need that. Obviously if I wanted people to like me I could maintain this imbalance as we go forward and drive safely for the next few years, but I will not do that,” he said.
“I will make the necessary bold decisions that have to be made and I’m committed to accepting the role that has been bestowed upon me, to make these decisions and see them through,” Tokita added.
Whether Tokita can turn his dream into reality remains to be seen.
The author travelled to the Fujitsu Forum as a guest of Fujitsu.