Hu Yoshida

Digital Transformation Drives Co-Creation

Blog Post created by Hu Yoshida Employee on Oct 11, 2017


Digital transformation is impacting business and society on a worldwide basis. In the past most enterprises focused on the new technologies which were supposed to make us more productive. In reality according to the office of Economic Cooperation and Development, productivity in most countries, even in the most technologically advanced countries like the U.S. and Japan, has declined. In the past few years we have come to realize that technology alone cannot make a positive change in business and society if we did not change the way in which we used technology. This is what digital transformation is about.


In order to drive greater efficiencies and transform business models we must progressively change in response to the wave of innovation created by digital technology. Today it is more about business outcomes rather than products. Companies like Uber and Airbnb have shown us that transformation is more about “usership” rather than ownership with everything as a service. Closed and proprietary has given way to open interfaces in order to exist in a sharing ecosystem. Enterprises are beginning to realize that individual optimization may not contribute to overall optimization. While IT departments have become very efficient with advances in data center technologies, that has not always resulted in increased revenue and growth for the enterprise. Now enterprises are integrating IT with the lines of business in Agile teams to drive overall efficiencies.


Digital transformation is also redefining the relationship between producers and consumers in the creation of value. We are witnessing a shift in value creation away from producer centric, solution value creation to a co-creation paradigm of value creation. Professors Prahalad and Ramaswamy, who wrote the book on co-creation, defined co-creation as “the joint creation of value by the company and the customer; allowing the customer to co-construct the service experience to suit their context.”


Traditional business thinking starts with the premise that the producer autonomously determines value through its choice of products and services. Consumers were consulted through market research but were passively involved in the process of creating solutions and value.  Producers and consumers can no longer survive in the digital world with this traditional approach to value creation. In the digital world the pace of change is relentless, problems span across multiple domains, with a blurring of industry domains and boundaries. Producers cannot take years to develop a solution and consumers cannot plan their business on multiyear roadmaps that may not deliver what they need. If consumers and producers are to innovate they must be active participants in the value creation process as co-creators.


Hitachi sees co-creation as the process of collaborating with customers and ecosystem players in order to innovate and create new value for business stakeholders, customers and society at large.  Several years ago, Hitachi restructured their research division. For years Hitachi research was ranked among the top ten research organizations in terms of the number of patents that were granted. So why reorganize? Hitachi realized that they needed to focus on business outcomes and not patents, and they needed to organize around co-creation with their customers in order to drive innovation. Hitachi research was reorganized into three parts: A vision driven Center for Exploratory Research (CER) to pioneer new frontiers through exploratory research, a technology driven Center for Technology Innovation (CTI) to generate innovative products by focusing on strong technology platforms and their deployment, and a customer driven Center for Social Innovation (CSI) designed to co-create services and solutions with customers. The center for Social Innovation has behind it the full research capabilities of the Center for Technical innovation and the Center for exploratory research while working with customers and ecosystem players.


Centers for Social innovation are located around the world. One is located in Sunnyvale California which is located only a few miles from Hitachi Vantara headquarters in Santa Clara. In this center, there is a Financial Innovation Laboratory that is working with FSI companies, Fintech companies with original ideas, other non-finance innovation labs that share the same site and other research institutions like Stanford University. CSI labs are also located in Brazil, Europe, China, Singapore, and Tokyo.


Hitachi Vantara with its Lumada platform will facilitate co-creation by providing a platform for agile and collaborative creation. Lumada is designed for ease of operations and management for faster deployment, configuration, and modification. Lumada uses open source software for its individual components to enable quick adoption to new fields of IT that may be developed by the community, more frequent interaction with other industries and business categories, and ease of connectivity and sharing with other companies.


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Hitachi Vantara services and support are ready to work with customers who are willing to invest in co-creation. Not all customers are ready for co-creation. Co-creation requires an investment of time and resources and a transparency and dialogue with your co-creator. The first step is to engage each other to define a use case. Then develop a model which we put through a proof of concept and finalize a solution through a proof of value. After that we operationalize the solution by deploying it at scale and integrate with the business. The customer can then operate and manage the solution or Hitachi can provide this as a service to deliver business value. While this process sounds simple, there will probably be many iterations. Along the way there may be POCs and POVs that fail, but even the failures will help us both gain more skills and insights into the outcomes that we are targeting.


Digital transformation will drive co-creation, and Hitachi would like to be your co-creation partner.