A Conversation with Our CEO
Q: What kind of group does the Ricoh Group aspire to be?
The most basic concept guiding the business activities of the Ricoh Group is The RICOH Way, which incorporates The Spirit of Three Loves—our Founding Principles—and our Management Philosophy (Mission, Vision and Values). The RICOH Way transcends time, leading us in a clear direction on the decisions and actions we should take to deal with the complex, high-level issues that we face as a corporate group. Mission, Vision and Values describe our mission to customers and our mission to society, and these act as a compass, setting us on the path toward the place where we want to be as a corporate group.
In recent years, the issues that challenge society have become intricately intertwined and increasingly diverse due to continued trends in globalization. The business environment that surrounds the Ricoh Group is also constantly changing, and the speed at which these changes occur keeps accelerating. In line with the trend, we seek to expand corporate value over time and be an effective force in efforts to solve the various problems that trouble society. Toward this end, we will of course be quick to respond to changes in society, but it is also important for us to clearly define our future ideal—the kind of group we aspire to be—and to transform now by embracing this ideal.
Turning to the society of tomorrow, it will look much different due to evolving trends, including digitization and networking, urbanization, lingering environmental problems, and diversifying lifestyles and personal value perceptions. Focusing on 2020 and beyond, following our next mid-term management plan and given the changing business environment (megatrends), we see our VISION 2020 as an environment-friendly corporate group that makes customers feel “confident, comfortable and convenient” beyond expectations in supporting lifestyle transformations. This presence will be underpinned by an ability to draw on technological strengths and the close relationship we have built with our customers.
Q: What approaches will you take?
Broadly speaking, there are two.
First, in our core office business, we will reinforce the current business model and promote business growth.
In the office market, customer needs are rapidly shifting from “possessing” equipment to “using” it. That is, a progression to “products” + “services.” Also, the exchange of information in offices has been paper-based but, increasingly, the process is involving digital data, including voice and images. Such information is used not only in an office environment but also in the ubiquitous approach of today’s networked, information-based workstyles. I see this as an opportunity for us to really demonstrate our strengths. I think that by providing various one-stop products and services to customers as they adopt new workstyles, the Ricoh Group will be able to reinforce its earnings platform. Also, the use of multifunctional printers (MFPs) and other imaging equipment is becoming more prevalent in emerging markets. In these regions, interest in mobile phones began to spread all of a sudden, and like this, the nearly concurrent spread of imaging equipment will undoubtedly require leading-edge services and communication systems. Being quick to respond to these market needs should enable us to achieve considerable growth in emerging markets.
The second approach is to establish new pillars of business.
As society goes through changes, business opportunities will appear that allow us to utilize our strengths and provide new value to customers outside the office market. To capitalize on these opportunities, we will take the expertise accumulated by providing products and services to address customer issues in the office market and apply this expertise to the industrial business market and the consumer business market and then branch out to public sector and infrastructure markets to cultivate new business pillars.
Ricoh’s Direction for 2020 and the Future Beyond
Q: The 17th Mid-term Management Plan (MTP), integral to the realization of Ricoh’s future ideal, is over. What was accomplished?
Before looking back on the 17th MTP (April 2011–March 2014), a point that must be revisited is the global financial crisis of 2008, the year we embarked on the 16th MTP. We were exposed to challenges in a business environment characterized by sudden yen appreciation and reduced demand. In 2011, just as brighter prospects were emerging, Japan was struck by the Great East Japan Earthquake, which had a huge impact on product manufacturing and supply. Later that year, Thailand was inundated by large-scale floods. We had only just welcomed the start of operations at a new production facility there, right after the 17th MTP went into force. If I may say, I don’t remember a time when there has been a succession of events of such unprecedented magnitude.
Amid these turbulent times, we pursued the two fundamental strategies outlined in the 17th MTP—business creation and integration, and establishment of highly efficient management—and we executed the required investments to build for the future. However, market recovery failed to materialize as expected, delaying returns on our investments and inevitably leading to an operating loss. I know this situation must have been very disconcerting to our shareholders. But I believe the investments we made have achieved a certain degree of success that will translate into growth down the line.
Now on the theme of business creation and integration, we were able to shift to a new profit model that provides customers with greater value by transforming a traditional product-based business into a new model composed of both products and services—solutions that address our customers’ needs. In addition, we were able to expand business in emerging markets, grow our new production printing business, and create new businesses, with an emphasis on industrial products.
As for the second theme, which highlights the establishment of highly efficient management, we made progress on our transformation, achieving a reduction in expenses, implementing changes in the development of human resources and re-engineering business processes. With these improvements, we have built the foundation for a robust management structure with the capacity to achieve performance targets even when the business environment presents challenges.
The 18th MTP sets the three years from April 2014 through March 2017 as a time to ensure the Group’s long-term growth and achieve higher corporate value. During the 17th MTP, we were not able to reach our financial targets, but we determined that the main reason we fell short was a lack of the speed necessary to respond to customers’ changing needs in the wake of several unforeseen events.
Given our results and the underlying reasons for them, we will use the next three years to enhance a robust structure that will not buckle even if external factors change and we will thereby achieve our ultimate goals. We aim to create a platform as an innovative group that constantly delivers new value to society.
Toward this end, we will pursue the combined effects of reforms in three areas: actionable strategies, management systems and transformation.
We have laid out two basic business strategies: reinforce and develop earning power of core businesses, and achieve growth by creating new profit generators. In addition, we identified business domains emphasizing our objective to provide customers with value. We will pursue activities in four domains—the office business, commercial printing business, industrial business and consumer business—and expedite decision making to facilitate growth in these domains.
Three Fundamental Transformation Initiatives of the 18th MTP
Q: Please describe the business strategies under the 18th MTP.
The first of the two basic strategies is to reinforce and develop earning power for core businesses. To do this, we will first enhance the performance of products, such as MFPs and printers, and sharpen cost competitiveness to increase market share. At the same time, we will cultivate sales through new channels to expand market presence. In addition, we aim to establish a new profit model for growth in our core businesses, by enhancing our value of managed document services (MDS) and IT services, and by enriching our visual communication offerings. Meanwhile, in emerging markets, we will acquire a larger earning capability by reinforcing our sales and marketing structure and accelerating investment in products and services geared to regional requirements.
The second basic strategy is to achieve growth by creating new pillars of business. Here, our focus will be on three growth domains—commercial printing business, industrial business, and consumer business—and we will strive to anticipate customer needs and create new value for them. We will steadily pursue new business opportunities and develop then into complementary pillars of corporate growth.
In addition to these efforts, we are keen to tackle three more areas in new markets where our strengths can be put to good use. These markets are based on megatrends that prevailed when our future ideal was envisioned. Specifically, we will undertake strategic investment in smart sensing, which keeps society safe and secure, visual revolution, which extends the range of human senses, and additive manufacturing, i.e., commercial 3-D printing. These investments will fuel the development of new business pursuits and build businesses for the future.
Q: What is happening with the management systems and organizational improvements?
The goal of management systems reform is to accelerate management and business decisions, make management and business practices more efficient, and reinforce on-site support. Toward this end, we are emphasizing the following three measures. First, we will reorganize the divisional structure, enhance our capabilities to feed customer requests back to marketing, design and R&D with more speed and accuracy. Then, we will restructure the role of the head office, strengthen strategy-formulating capabilities, and create a better structure that is easier to support sales on a global basis. And finally, we will rebuild the technology management structure and bring resources together to permit a better read of not only customer needs but also technology trends and to facilitate progressive technology development.
Meanwhile, the goal of transformation is to establish a more robust management structure. We will continue to build a better structure so that greater efficiency and business process reforms unfold autonomously and continuously. Toward this end, we will first meticulously eliminate waste in resource allocation and expedite a shift toward growth fields.
In addition, we will develop and utilize the skills of people with a trailblazing spirit, who will take global management and new businesses to a different dimension of growth. We will raise the expertise of each and every employee and maximize capabilities. We will direct concerted efforts into the creation of a structure that puts the right person in the right job by promoting global mobility so that everyone is in a position where they can demonstrate their full potential.
FY2017 Financial Targets
Q: Why are you so enthusiastic about the future?
The last year—2016—of the 18th MTP will mark Ricoh’s 80th anniversary. Looking back over the last few decades, I know the changes that have shaped today’s society. They have zoomed by at an alarming pace. The fact that we—the Ricoh Group—have grown and developed amid this crushing pace of change is proof that our products and services provide solutions for our customers. The enduring support of customers is what fuels corporate sustainability. We have that kind of customer loyalty, and we are truly grateful for it.
Going forward, we will not rest on our laurels but rather work toward growth, for ourselves and for society, by articulating the type of company we want to be in the future and constantly changing to reach that status.
Looking even further ahead, to our 100th anniversary, we will strive to demonstrate our own full potential as “One Global Ricoh” so that we may contribute to the realization of a sustainable society and be seen by society as a vital corporate citizen.