Sumitomo Electric Industries: Accelerating Collaboration with Outside Interests to Promote “Kotozukuri” (Value Creation) (1/2)

Expectations for SME Design Capabilities and Technologies to Complement the Strengths of Large Companies
Calling for Creative Dialogue on Shared Themes

Within Sumitomo Electric Industries (SEI), a company that manufactures electrical wires and cables and communications equipment, is an organization called the “NEXT Center.” Its mission is to conduct surveys and analyses and make business forecasts from long-term and global perspectives. Its manager, Mr. Masaharu Mogi, explores next-generation models for the manufacturing sector that look 20 to 30 years into the future.

Mr. Mogi says, “Can the manufacturing sector stay as it is? Isn’t it the case that the sector will fail to survive if it does not change in ways that include ‘soft power’ as it is broadly defined? I’ve thought about this from a variety of angles. Our center’s mission is to propose ideal forms that the sector should take today in preparation for the future.”

Interviewee
Sumitomo Electric Industries, Inc.

Manager, NEXT Center
Masaharu Mogi

Sumitomo Electric Industries, Inc. Manager, NEXT Center Masaharu Mogi

An innovative company that began with copper refining

SEI was founded in 1897. However, its roots reach back to the 16th century. At that time, Japan was one of the world’s foremost copper producers, but its industry was limited to copper exports. Then an “innovator” arrived on the scene. A coppersmith in Kyoto named Soga Riemon developed a technology for extracting silver during the smelting process.

Riemon’s wife’s younger brother was Sumitomo Masatomo, a man who ran a shop selling books and medicines, and his eldest son, Tomomochi, was Sumitomo Masatomo’s son-in-law. When Sumitomo Tomomochi later moved to Osaka, he showed his Riemon’s revolutionary and innovative technology (called “Namban-fuki”) to his colleagues. This set off a chain of events that resulted in the Sumitomo family’s switching its business from medicines to copper and moving to Osaka, a leading area in the copper refining business. (Reference: The Sumitomo Group Public Affairs Committee website “Sumitomo no Rekishi to Jigyo Seishin” [Sumitomo’s history and business spirit]; http://www.sumitomo.gr.jp/history/index.html.)

Since then, SEI?a company that carries on the “Sumitomo spirit”?has harnessed technical innovation as the driving force of its own business.

“Today we do business in five main categories: automotive products, environmental energy, information and communications, electronics, and industrial materials. For all of these categories, the basis is copper. Making copper wire requires dies, and eventually our technology for manufacturing precise dies led to synthetic diamonds. We developed conducting technologies for copper wires into superconductive wire material and insulating technologies for covering materials into plastic products. We also developed harnesses and ECU (engine control units) from the standpoint of using copper in automobiles. As a company, we are always thinking about how to use copper from myriad angles.”

Today, one field that has grabbed SEI’ attention is materials for renewable energy and electric vehicles. However, as Mr. Mogi says, “It’s difficult for us to do everything ourselves, so we want to actively join hands with other industries.” For this reason, it is involved in numerous R&D projects implemented through industry-academia-government collaboration. To cite a couple of examples, it has started initiatives to develop a new type of storage battery with Kyoto University and medical equipment with Wakayama Medical University.

“I think the keyword in the process of industry-academia collaboration is ‘open innovation.’ I think it is best to promote innovation comprehensively and on a company-wide basis by receiving help from outside the company.”

  • A molten salt electrolyte battery developed with Kyoto University. The battery has a superior cycle life and, with an operating temperature range of between 20 and 90°C, does not require broad exhaust heat specifications.

    A molten salt electrolyte battery developed with Kyoto University. The battery has a superior cycle life and, with an operating temperature range of between 20 and 90°C, does not require broad exhaust heat specifications.

SME “edge” plus large company “support” = uniquely Japanese innovation

“Outside the company” refers not only to universities?it also includes SMEs. Originally a member of the research department, Mr. Mogi has taken notice of the free design capabilities and experience-based technical capabilities that SMEs possess. For this reason, he has high interest in joint development with SMEs.

“Traditional manufacturers must develop products with more emotional appeal. We say that we want to emphasize “kotozukuri” (value creation) over “monozukuri” (traditional craftsmanship). However, there are times when products with an “edge” cannot get approval in the development meetings of large companies, as participants are likely to say, ‘That design will cost too much’ or ‘Now is not the time to make such a bizarre product.’” On the other hand, sometimes there are sexy designs that are right up SMEs’ alley. Accordingly, I think a great way to move forward would be to have SMEs present their proposals and then for us to provide financial support. If large companies support SMEs in areas where they face challenges?for example, in the areas of financing or intellectual property and standards?more products created through uniquely Japanese innovation would make their way to the world.”

Thus far, various products have resulted from joint development between SEI and SMEs, among them optical communications-related products, endoscopes and diagnostic imaging devices, process inspection devices, and fiber laser systems.

“Even if they have general knowledge gained from university study, researchers in large companies do not have a detailed understanding of monozukuri, nor do they possess the technologies needed for product development. Their knowledge is limited to their own particular specialties and processes within the product development value chain. However, there is an optics manufacture in Itabashi that joined us in developing diagnostic equipment for endoscopes. This company possesses technologies for downsizing, assembling power circuits, and employing power-saving in this equipment. This helps, because we don’t have so many people in our company who can handle engineering (downsizing) and electrical (power circuits) systems and thermal design together.”

Mr. Mogi says that SMEs possess experience-based product development technologies that do not exist in large companies.

  • Mr. Mogi: “I’m looking forward to seeing the unique designs that SMEs are capable of.”

    Mr. Mogi: “I’m looking forward to seeing the unique designs that SMEs are capable of.”

Timing influences the success of matching

SEI tries various approaches in its effort to expand new undertakings with “outside interests.” According to Mr. Mogi, the company gathers its information primarily by conducting Internet searches, utilizing research organizations, and participating in academic societies and exhibitions in Japan and abroad. It also participates in national projects of the New Energy and Industrial Technology Development Organization (NEDO) as well as the Council on Competitiveness-Nippon (COCN), which is a voluntary policy study group created by large companies that focuses on industrial competitiveness, and utilizes their human networks.

This past summer, SEI organized a “caravan exhibition” for SMEs with mediation provided by the Organization for Small & Medium Enterprises and Regional Innovation, JAPAN (SME Support, JAPAN). This undertaking involved “matching” for “full use of human capabilities.” Here, SME Support, JAPAN held a “preliminary hearing” with SMEs and presented to them the technologies that SEI’s research department seeks. It then selected those enterprises that possess applicable technical capabilities and presented them to SEI.

Thus far, SEI has participated in matching on numerous occasions. At such times, SEI has used special overseas matching websites and then traveled to actual matching sites to engage in business negotiations. However, Mr. Mogi points out from this experience that “Matching is only the start; timing plays an important role in determining whether it leads to actual business.”

Matching can bring a flood of information to large companies; however, those companies do not require information all of the time. Consequently, there is a tendency for business negotiations to become delayed despite the achievement of actual matching if the matching does not take at precisely the right time.

This is where the kind of Internet matching offered by J-GoodTech allows large companies to get the information that want when they want it. This is because information is always provided on the website.

“If the timing is right, I think matching will proceed smoothly. For this reason, I would like to see SMEs continuously and persistently send in information.”

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