IT Headquarters' Policy and Key Points for Promoting DX

At Macnica, each division sets its key policies every year, and the IT Division is implementing measures based on a policy centered on the three pillars of growth, transformation, and foundation, as shown in the diagram below. The IT Division is considering what it can do to support Macnica 's main business of semiconductor distribution and the promotion of new businesses by the Innovation Strategy Business Division, and what the foundation that supports this should be. In this presentation, I will touch on the parts written in red later.

I also believe that the key to promoting DX is not to use digital tools superficially, but to change the company culture. In doing so, the IT department, which is in a position to drive DX, must also change, and I believe that changing the mindset of the IT department is also extremely important. By promoting various measures to promote DX and organizational reform of the IT department together like the two wheels of a car, we aim to create an environment and culture where all Macnica employees can view and utilize digitalization in a positive way.

Macnica 's Digital Transformation Initiatives

At Macnica, we have been promoting DX for about two years, taking a broad view of DX and including digitalization, with the concept of "incorporating DX into the entire day of a Macnica employee." To achieve this, we have taken the following three steps.

First, in step 1, we conducted an internal DX trial. Usually, when you tell employees, "Let's do DX," they wonder, "What should we do?" Therefore, through this internal DX trial, we want them to feel that the things around them have become a little more convenient. As an example, we introduced translation software and a schedule adjustment app (when generative AI had not yet appeared).

 Step 2 was to create a system for promoting DX with each department. The aim was to create a consortium of about 30 people from each department and accelerate DX within the company. Each person brought their own issues and discussed them, decided on a theme, and worked towards creating a final product. As we proceeded with this initiative, the following vision for Macnica was born.

This document is filled with the thoughts of the 30 people who participated in the project, and neither I nor President Hara had any say in the content. The second line from the top says, "We are busy with our daily work," but it seems that the employees were feeling that "we are too busy with our daily work to promote DX," and added this sentence to convey that to the management.

The lower section, "This initiative is...", talks about evaluation. There are also third parties within the company who think that DX promotion initiatives are "busy with their daily work, do they have time for something like that?" However, by eliminating such thinking, the company is appealing to management to create an environment in which the people working on the initiative can thrive. 

On the other hand, projects tend to be short-lived. For example, if you spend six months completing a product, you tend to be satisfied at that point and your enthusiasm will quickly die down. This is why it is important to create an environment that will allow you to continue the momentum of DX promotion, and the concrete measure for this is the development of a DX platform in step 3.

However, when we say platform, we don't just mean preparing the environment, but also intend to provide a mechanism for creating value through continued DX, support for developing apps, and the necessary tools. We named this initiative "DX Factory" and started it together with members of the Innovation Business Strategy Headquarters, which handles Macnica 's new businesses.

Although Macnica has been trying new things in various ways, in the past each department was working separately, and employees did not know who to consult. Therefore, it was necessary to centralize these and accelerate innovation. The purpose and expected effect of DX Factory is to accelerate DX by spreading citizen development. In other words, by in-house system development so that all Macnica employees can create things themselves and quickly materialize their ideas, we will further accelerate DX and lead to innovation.

As a result, promoting citizen development will reduce the amount of system outsourcing costs to outside the company, which should lower total IT costs. In addition, by enabling people outside the IT department to create things with their own hands, we hope that this will lead to the promotion of digital transformation both within the company and outside, ultimately resulting in innovation throughout the company.

For example, let's say you have an idea for an internal business improvement aimed at increasing productivity, or an idea for a new service for external parties. We ask our employees to first bring these ideas to the DX Factory. We then use the four services shown in the diagram - "Product Owner Support," "Development Process Support," "Human Resource Development," and "Governance" - to support the company in turning these ideas into reality.

In addition, in order to properly support people with a spirit of challenge and improve their skills, we are focusing on developing core human resources through the DX Factory, while taking into account the DX literacy standards issued by the Ministry of Economy, Trade and Industry. We believe that by developing people with ideas and motivation as DX core human resources and increasing the number of such human resources in each department, DX will eventually permeate the entire company.

Generative AI Initiatives

We started our work on generative AI in 2023. We formed a cross-organizational Generative AI Working Group and have been developing the apps and platforms shown in the lower part of the diagram while discussing and examining how to utilize it.

The first, "Hakase-chan," was designed to provide a secure generative AI environment using OpenAI, and after its release, we encouraged employees to use it in their daily work. The​ ​second product we released was "Knowledge ADD VNTR." (Knowledge Adventure). This is a system that uses generative AI to utilize all Macnica documents stored in Box. The third, the generative AI platform, is a bit different, but we created it to provide a solution based on our own experience to the challenge of "how to make generative AI easier to use in the future."

The diagram below shows the details of the generative AI platform. First of all, there are various data sources at the bottom, the LLM of generative AI in the middle, and the UI for support at the top. We would like to develop a platform that can flexibly combine these three elements and provide services both internally and externally. One of them is the Macnica.Generative AI Platform, which is also available on the Macnica website. In the future, we will continue to develop various apps so that everyone can easily use generative AI.

IT department organizational transformation

Finally, I would like to talk about organizational transformation in the IT department. In promoting transformation, we began to realize around 2022 that we could no longer remain outdated information systems people, so we started thinking about scenarios that looked 10 years into the future. At that time, the premise was Macnica 's "VISION2030," which sets the goal of "becoming Service & Solution Company by 2030," and we considered how the IT department could contribute to realizing that vision.

　When I thought about where Macnica wants to be in 10 years' time and the surrounding environment, I felt that the IT department also needed to change significantly, and I explained to the members that "it will be difficult to maintain the status quo if we maintain it the way it is, so we ourselves must change." I think that it was difficult for members who had been involved in the information systems department and system development for a long time to understand, especially since they had no real sense of it, but I wanted them to have a healthy sense of crisis.

Achieving organizational change is not easy, but the most important thing is to make everyone realize that it is their own responsibility. Traditionally, top-down organizational change has been mainstream, but instead, I think it is important to think about why we need to change and move forward while adapting to changing circumstances. That's why we decided to implement agile organizational change, as shown on the right side of the diagram.

We first set out the anticipated risks and what our ideal state should be, then decided on an approach for how to change the organization in response to those risks, and then took the specific actions required. For example, when formulating the organizational charter, we had them write down things like "What should we be like in 2030?", "What are the organization's main tasks?", "How should evaluation indicators be set?", and "What are the main skills?". We then used that as a basis to formulate a roadmap, and then created and reviewed a transformation canvas.

This is an organizational change canvas template, in which you can write down your goals for three years from now, current issues in relation to those goals, and actions to be taken. We create this in the categories of work, people, and organization, and after implementing each measure, we conduct quarterly reviews with my participation. We are challenging ourselves to continually promote organizational change while adjusting the content according to the situation.

The members of Macnica 's Innovation Strategy Business Division are highly literate and skilled in new technologies, but when you look at Macnica as a whole, this is not the norm. I think that the mission of the IT department is to make the employees who have been working in the distribution business as a trading company as innovative as possible, and I believe that if we can achieve this, innovation will also accelerate throughout the company, so I would like to continue taking on various new challenges.

A conversation between Professor Iriyama and Ando Macnica

Professor Iriyama: I could see very clearly that Mr. Ando is making great efforts to reform Macnica. On the other hand, was there anything you thought about after listening to the first half of my lecture?

Ando: I have heard Professor Iriyama speak several times in the past, and I feel he is absolutely right. However, it may be difficult for people working for trading companies, including Macnica, to immediately understand and agree with Professor Iriyama's opinion. First of all, I think we need to raise our mindset.

Professor Iriyama: In promoting digitalization, the area where you are probably having the most difficulty is the area of organization and human resources, which is a common point between Mr. Ando and me. I often say that "human resources is not the enemy, but it is the enemy," and we have no choice but to do something about this.
I also often say that "people cannot be changed." At that time, I ask everyone, half jokingly and half seriously, "Has anyone been able to change their wife's heart?" Probably not many. In other words, if you can't change the heart of the person you most want to change in the world, it's difficult to change the heart of a complete stranger, your subordinate. That said, sometimes you can't solve a problem unless you can change the situation. What do you think is important when dealing with customers, Mr. Ando?

Ando: It's important that each employee has a healthy sense of crisis. In Macnica 's case, it's good that employees have pride and confidence in being the company with the number one semiconductor market share. However, at the same time, it is also very important to have a sense of crisis and an awareness that "we have to change like this" in order to create something new, and I tell my subordinates that. Also, the semiconductor business generates overwhelming profits, but it requires a lot of human resources, so it's true that it's difficult to allocate people when you want to do something new, such as digital transformation. I think that both human resources and top management have a dilemma in that it is very difficult to assign human resources in a timely manner.

Professor Iriyama: Mr. Ando, in your opinion, which companies are successfully adopting digital technology?

Ando: To be honest, I can't think of anything. I talk to my fellow CIOs about various things, and I hear that they are struggling with changing culture and mindsets and a lack of personnel, and are finding it difficult to do what they want to do.

Professor Iriyama: I think that everyone's concerns are probably similar in terms of organizational development and human resources. I think that companies like Credit Saison, Toridoll Holdings, and the consumer cooperative Coop Sapporo, where I serve as a director, are doing a good job of this, but there are still not many companies like that.

Ando: Yes. As Professor Iriyama said, I have hardly heard of any cases where it even involves human resources.

Professor Iriyama: I think Macnica does business with many large companies, but in fact small and medium-sized enterprises are more likely to move quickly. For example, at the hot spring inn called Jinya that I mentioned earlier, there were many elderly employees who said, "We've never used digital technology before, we can't do it." However, Board Director Tomoko Miyazaki changed the way employees' attendance was managed digitally. As a result, they were unable to receive their salaries unless they entered their attendance records, and everyone was excited and began to use digital technology. In the end, those who resisted within the company were just scared, and if they tried really hard, they could do it.

Ando:​ ​Step 1, which I explained earlier, aims to achieve something similar. If you experience it, you will understand the benefits. I think some people have already experienced it, but the hurdle to get to that point was high, so we created a system that allows people to experience the benefits of digital use in any way.

Professor Iriyama: Mr. Hideki Hasegawa, who serves as a director of Coop Sapporo, is truly amazing. When he joined Coop Sapporo, he instructed all employees to use Slack, Zoom, Google Workspace, etc. I can also access Slack, and for example, in the fresh fish section of Kushiro, I can instantly see what kind of issues the person currently cutting fish is facing. I think the most important thing is for everyone to try it out, even if it's something simple.

Ando: Macnica is also trying various things to achieve this goal, but when you reach a scale of nearly 3,000 employees in Japan alone, it may be difficult in some ways.

Professor Iriyama: Finally, I have one more question for Mr. Ando. I was surprised to hear that a certain company is making all new employees into engineers for a year, spending 2 billion yen on this. What do you think about this, Mr. Ando?

Ando: It's difficult to say how far we should go, but I think we need to raise the overall level. It's important to develop core DX personnel who will drive DX themselves, but to make it a company-wide activity and build momentum for DX, I feel that it's necessary to raise the DX literacy of all employees. One company used to make all new recruits learn English, but with the expansion of the Chinese market, this changed to Chinese language training, and I heard that Python training is now mandatory. Regardless of whether they actually use Python or not, the aim seems to be to have them acquire the basic mindset and DX literacy.

Professor Iriyama: It seems that there are companies that have all their middle managers learn Python. They don't want them to become programmers, but the aim is to have them understand how difficult and troublesome digital is before they interact with customers.

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