Many companies claim that innovation is part of their DNA, but Panasonic has a legacy of innovation that is far above average.
At the beginning of the last century, Panasonic Founder Konosuke Matsushita decided to address the huge untapped market for convenient, high-quality household appliances. Over the decades, Panasonic has changed every aspect of people’s lives with new inventions, from promoting safety with bicycle lamps and eliminating the drudgery of household chores with washing machines to providing entertainment and information through state-of-the-art radios, televisions, and other modern devices.
The interesting thing about traditional companies is their ability to reinvent themselves over and over again to succeed in times of change. Panasonic has proven its ability to do so, surviving and thriving through wars, economic depressions, and workforce changes. But traditional companies can have downsides as well.
Tackling the Legacy
“After excelling and reinventing ourselves for over 100 years, we’ve now reached a plateau,” said Hajime Tamaoki, executive officer and group CIO at Panasonic Holdings. “Our founder believed that enterprises should contribute to society by enabling material prosperity and helping people live fulfilling lives. If we cannot grow, we cannot contribute to society. Our goal now is to jump-start a new period of growth through the PX: Panasonic Transformation program.”
The PX symbolizes the company’s determination to not only improve its IT infrastructure, but to position IT at the core of its management strategy and utilize IT to trigger major business and management changes. This is not the company’s first transformation; the big difference today is the magnitude of change. “This is the biggest change the company has ever seen and the most challenging in our history,” said Tamaoki, explaining that operational excellence is the core theme. “Panasonic is a major conglomerate, a collection of many different businesses, each with its own legacy. Supporting the digital transformation of each business and collectively raising the level of IT across the entire group are among the most pressing issues for our company today.”
One of the main issues is waste in the supply chain. Some of that waste is caused by processes that the company deemed necessary in the past, such as responding to urgent customer demands that might deviate from product specifications and require logistical activities such as delivering in half-empty trucks. “We are standardizing our supply chain processes to drive efficiency and putting those changes into an environmental context, so people can better grasp the need for change,” he said.
Aiming to expedite the transformation of its entire value chain, Panasonic selected RISE with SAP to support its intelligent, sustainable enterprise vision. The project endeavors to transform Panasonic’s business models and processes and includes strategies to improve the employee experience – all of which are directly connected to growth of the group’s overall business.
Engaging Employee Hearts and Minds
“We want to create sustainable happiness for human beings. That requires constant communication about our goals to increase value to customers and refine internal operations,” he said, adding that he had just returned from a company-wide meeting. “This time, change is being driven from the top down by our CEO. But no matter how brilliant the leader may be, we all know that the shop floor is where change really takes place.”
According to Tamaoki, it’s not enough to simply tell people to “change the process.” Employees are busy doing their jobs. It’s the company’s job to simplify and standardize processes, and then help people learn how to work differently. “No one wants the company to go bankrupt. They want to get back on the growth track, they want to do the right thing. That’s why we’re connecting operational efficiency to the bigger picture of the environment.”
With over 1 billion customers worldwide, Panasonic has a very broad reach. The company is very serious about reducing greenhouse gas emissions. Back in 2017, Panasonic embarked on a program to reduce energy use and expand its power generation and storage businesses to ensure that, by 2050, the energy it creates exceeds the energy it uses. To hasten this process, the program has been revamped as Panasonic Green Impact and is contributing to society and the environment by taking a head-on approach to scope 1, 2, and 3 emissions generated by the Panasonic Group and its stakeholders. As part of this effort, the company is creating new technologies and businesses in hydrogen energy, for example, and expanding its portfolio around battery-based, eco-conscious vehicles and products related to air quality and air conditioning.
Rising to the Next Level
The Economist recently published a special report on the state of the economy in Japan, stating “It’s not bad, but could be better.” A mainstay of the Japanese economy for more than a century, Panasonic symbolizes the wealth of the nation. When Tamaoki was a college student back in 1989, Panasonic was ranked among the world’s top 20 companies by market capitalization; as of January 2022, it ranked around 750th. Joining the company to help rebuild the electronics industry, which has long been in decline, is his contribution to making the world a better place. Like many Japanese, Tamaoki grew up watching television on sets from National, one of the older Panasonic brands.
“I’m very attached to Panasonic. It is no exaggeration to say that the company and brand created by Konosuke Matsushita holds an important place in the hearts and minds of Japanese people. If the company loses its luster, the Japanese economy will not be revitalized,” he said.
Such a turnaround cannot be achieved without a massive digital and cultural transformation. In this context, technology plays a key role. SAP is helping the company to reinvent itself once again to remain relevant for the next 100 years – and beyond. “SAP is a management and business operation platform centered on the latest cloud-based ERP, and it is a very important solution for realizing our strategy and vision,” said Tamaoki.