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Kanasugi, Akinobu 1941–

Akinobu Kanasugi
1941

President, NEC Corporation

Nationality: Japanese.

Born: 1941, in Kanagawa Prefecture, Japan.

Education: Keio University, BS, 1964; University of California, Los Angeles, MBA, 1967.

Career: NEC Corporation, 19671977, marketing and planning; 19771987, Systems Integration Business Division; 19871991, general manager in EDP Process Systems Division; 19911993, vice president and executive general manager in 4th C&C Systems Operations Unit; 19951999, associate senior vice president; 19992000, senior vice president; 20002003, senior vice president; 2003 president.

Address: NEC Corporation, 7-1, Shiba 5-chome, Minatoku, Tokyo 108-8001, Japan; http://www.nec.com.

Based on his development of information-technology systems while overseeing NEC Corporation's systems-integration sector in the late 1990s, Akinobu Kanasugi was appointed company president in 2003. NEC, a Global 500 company, manufactured, installed, and serviced the technology supporting global IT infrastructure, such as cellular phones, navigation systems, consumer electronics, and semiconductors. With $47 billion in 2004 salesfor one-year growth of 18.2 percentand over 145,000 employees worldwide, NEC was the largest of Japan's personal-computer manufacturers and ranked just behind Toshiba in semiconductor sales. Biglobe, NEC's Internet service provider, had the second-largest subscriber base in Japan. Under Kanasugi's direction NEC Corporation increased the reach of its services and took an active role in national-security debates, weighing in on Japan's use of identification technology and the strengthening of national information security. As chairman of the Japanese Association of Health-Care Information Systems Industry, Kanasugi proposed solutions to the storage and bandwidth demands required by an increasingly digital health-care system.

LEARNING MANAGEMENT

Like many people who chose to enter the burgeoning field of computer technology during its infancy, Akinobu Kanasugi believed that computers would revolutionize daily practices for businesses, governments, and consumers alike. Knowing that the United States would play a major role in this technologically rooted change, Kanasugi sought to gain an understanding of U.S. culture and management style by pursuing an MBA at UCLAwhich was then restructuring its education system according to the needs of the information economy. This experience in California in addition to the contacts he established there served him well: he honed his intuition with regard to the direction in which computing technology would proceed and how to keep track of that direction; he learned to set aside Japanese reserve in favor of audacity when interacting with foreigners, especially Americans; and finally Kanasugi developed a lifelong commitment to customer-friendly business practices, which entailed the inclusion of friendly user interfaces within computing systems.

Kanasugi joined NEC Corporation during a period of expansion. The company had just entered the U.S. market, in 1963, diversified its interests, and achieved listings on Swiss, English, and Dutch exchanges; the company would go on to develop more than a dozen core divisions and develop nearly 150 key subcontractors by 1991. This expansion was built on the past company president Koji Kobayashi's vision. In the 1950s Kobayashi instilled two beliefs at NEC: first, that long-term convergence in communication and computing technology would inevitably make the two fields inseparable, and second, that by mastering the necessary competencies in those two core areas, NEC would be guaranteed a crucial global market share. Together the two beliefs comprised NEC's "computing and communication"or C&Cvision. In mastering such areas as digital switching, NEC largely achieved its goal of supplying innovative industry leadership. Unfortunately NEC bet on Honeywell instead of IBM and suffered when Honeywell computers failed in the late 1970s.

Already a leader in the computer industry at the time, NEC announced its C&C vision to the public in 1977. Most industry experts scoffed; they could not imagine a global economy dependent on distributed computers tied to mainframe computers. In 1980 NEC began articulating the advantages of distributed computing to corporations with multiple sites and global reach. When Tadahiro Sekimoto took over at NEC, he developed the company's vision further. Altering the meaning behind C&C to the verbs "compute and communicate," he made the firm's vision human-centered instead of technology-centered. Accordingly NEC would lead the technological development of distributed computing that would enable humans to compute and communicate through networks. Thus, as described by Martin Fransman in his book entitled Japan's Computer and Communications Industry, Sekimoto said globalization would occur as "mesh-globalization" (1995). In place of a hierarchy supported by mainframe computers, democratically distributed personal computers would support globalization using network technology. At NEC management set forth the vision, but the decentralized divisions realized the goal.

Kanasugi achieved a management position in 1987 due to his work in furthering the C&C vision and his ability to realize advantages. He had proven himself in an area vital to C&Cnetwork solutionsand by 1995 had worked his way up to a partner-level position in management. Likewise his company's success knew no bounds; as described in Ulrich Jürgens's book New Product Development and Production Networks, in the Japan of the early 1990s NEC "had a stronger position on this market than any other company at any time on any market in the world" (2000). In the global arena NEC was a key player and led the industry in many areas of digital-technology development.

In the late 1990s, however, NEC suffered two major setbacks in the United States. A severe blow to corporate health occurred when the U.S. Commerce Department ruled against NEC on a complaint lodged by its U.S. mainframe-computer rival Cray Research. The U.S. firm claimed that it could not fairly compete against the speed of NEC's SX-4 supercomputer, and the U.S. Commerce Department agreed; in 1997 a 454 percent tariff was placed on NEC supercomputers. While NEC's dominance of the supercomputer sector evaporated, Microsoft's release of Windows nearly banished NEC's own personal-computer platform from the global marketplace. In Japan NEC's market share dropped from 53 percent to 40 percent, and, embarrassingly, the company was forced to sell IBM PCspackaged with Windowsin order to make ends meet. NEC's planned reprisal through control of Packard Bell led only to financial losses. In 1999 NEC's outlook was bleak.

NEC SOLUTIONS

In order to salvage NEC, the new president Koji Nishigaki began to restructure the company from a decentralized collection of operations into a consolidated series company of three divisions all focused on one strength: network solutions. In keeping with an NEC tradition begun by Kobayashi, the division heads were virtually autonomousas long as they produced profitable results in line with NEC's vision. As one of Nishigaki's first moves, Kanasugi was placed in charge of NEC Solutions in 1999; he was given wide latitude to develop what would become the core of the company. NEC Solutions constructed information-service systems and attached software platforms to special contract assignments for government agencies and corporations. The division specialized in ecommerce solutions for online businesses and set up corporate computers to tap into networks. Kanasugi made NEC Solutions a vital profit-making division of NEC by implementing Sekimoto's traditional visionbut with greater emphasis on user friendliness.

No matter how competent NEC became in the general technological convergence of computing and communications, Kanasugi knew that use by human beings had to be more greatly facilitated. NEC Solutions succeeded under Kanasugi because he accomplished that user and customer friendliness in distributed data networks regardless of national culture. Building network solutions involved the invitation by one corporation of another to access proprietary data. Due to the sensitive nature of the situation, the delivery of information solutions would depend on trust; in order to succeed through such a service, businesses needed reliable personnel and management. With Kanasugi in charge of NEC Solutions the company built a positive reputation in the areas of business-solutions software and network construction, based on success in Europe, North America, and Asia. Kanasugi became vital to NEC's future.

Kanasugi's international experience and his understanding of the U.S. business world contributed to his success. During the time of the Internet stock bubble, NEC Solutions management brought Kanasugi into contact with entrepreneurial hopefuls in the United States. He soon befriended John Kelly, who had sound ideas about a particular aspect of Internet technology. Kanasugi judged him to be a capable manager as well as an innovative designer; when Kelly's Zefer company went bankrupt, Kanasugi saw an opportunity for both Kelly and NEC to benefit. He created the New Yorkbased NEC subsidiary Niteo and placed it under the management of Kelly. Kanasugi was familiar enough with American operations to know that Niteo would function best without his involvement or meddling on the behalf of NEC Solutions. In this series of decisions Kanasugi acted less like a Japanese manager and more like a Californian. For a Japanese-owned subsidiary Niteo was peculiar; Japanese companies normally kept close tabs on subsidiaries, but Kanasugi did away with such intervention by seating himself on Niteo's board, such that Niteo had no direct contact with NEC save through Kanasugi himself. Niteo thrived, and NEC became able to compete profitably with IBM.

Meanwhile Kanasugi launched NEC Solutions America in 2002 to give NEC a more direct foothold in the U.S. solutions market. This subsidiary combined the resources of several U.S.-based NEC subsidiaries in line with Nishigaki's overall restructuring plan. Kanasugi not only realized savings for NEC through this consolidation but was able to improve business-to-business products by ending internal NEC competition and streamlining NEC Solutions' supply chain.

CRISIS AT NEC

Nishigaki's restructuring plan as well as the speed with which it was implemented had upset Sekimoto, who though merely chairman regarded himself as NEC's soul. Sekimoto publicly criticized Nishigaki, calling for his resignation. In Japanese business culture public denunciation of corporate leadership was rare, and a president being sacked by his board of directors was unheard ofresignation being the preferable mode of removal. Shareholders and NEC board members decided that they could not stand by as the civil war between the chairman and president shamed the company; Sekimoto was forced into retirement, as he refused to support the restructuring of NEC as a solution to its loss of profitability and stature. Nishigaki, who had worked himself to exhaustion in his attempts to save the companyand was hospitalized for stress-related ailmentsbecame board chairman.

Nishigaki's restructuring plan had focused NEC on software and information systems as well as on its traditional strength in mainframe computersthus leaving behind the personal-computer business, reflecting the severe losses NEC had suffered through investment in Packard Bell and often violent fluctuations in the home-PC market. The restructuring trimmed NEC's workforce by 11 percent, or 16,000 jobs; Nishigaki also sold off chunks of the corporation, including its chip-making and plasma-display branches, as he had recognized that Taiwanese and South Korean companies had long since surpassed NEC in chip production. This last decision had set Sekimoto against Nishigaki; Sekimoto had insisted that chips were vital to NEC's corporate identity.

Kanasugi was tapped to lead the corporation on the path set out by Nishigaki; he was selected to be the next president because of the training in international relations and management skills that he had received at UCLA. He was also the most obvious candidate because he had headed NEC Solutions, the company's most profitable divisionand the one that according to Nishigaki's plan would essentially become the whole of NEC.

NEC lost ¥312 billion in 2001 but regained a profit margin in 2002 thanks to the restructuring. Having spun off its NEC Electronic Devices into two companiesa chip maker and a flat-screen makerNEC remained with two divisions: NEC Solutions and NEC Networks. The appointment of Kanasugi as president affirmed the company's direction toward business services and software related to Internet-supported information systemsKanasugi's specialties. NEC Networks, maker of the physical networks necessary to the software and information-service industries, remained a vital support for NEC Solutions. Integration of the two divisions into one company in order to create technology and management synergy became Kanasugi's top priority. As the business-solutions market slowed down, Kanasugi increased NEC's attention to China, where corporations were still catching up in terms of information-technology infrastructure.

SPEAKING BOLDLY

Though NEC was still viewed as a lost cause simply trying to stay afloat, Kanasugi went on the offensive. Like past CEOs Kanasugi showed facility for the corporation's vision. Fully appreciative of the recent restructuring, in the Business Times Singapore Kanasugi identified the areas of competency on which NEC needed to focus in order to maintain its vision: "NEC is still regarded as a mainframe maker, but we have had to shift to more open platforms to create a new core competence" (February 3, 2003). Despite such bold statements, a solid record at NEC Solutions, a comprehension of NEC's vision history, and an ability to identify new areas of focus, Kanasugi's ascendance to CEO of NEC did not satisfy industrial analysts. While no one wrote unkindly of Kanasugi, analysts expected him to oversee the final dismantlement of NEC.

At a 2003 forum Kanasugi outlined NEC's new vision. The company would still work on the convergence of computing and communication but with a more concrete understanding of the contribution C&C would make to the world. Kanasugi placed C&C at the heart of future growth, supporting "globalization," "market-oriented business," and a "ubiquitous environment" (December 3, 2003).

With respect to globalization, NEC promised to increase the mobility, speed, and ease of network access in order to foster better supply-chain management as free-trade areas continued to be built. Increased free-trade agreements, Kanasugi argued, guaranteed increased use of network solutions as companies sought to lengthen their supply chains and tap into the best skills and resources at the most affordable prices. In this way businesses, suppliers, and customers would achieve their marketplace goals more quickly. NEC's approach to globalization was clearly oriented toward the market, or customer, as defined by Kanasugi.

Kanasugi also predicted an increasingly "ubiquitous environment" around the world, with Japan at the head of the movement. Based on its one- to two-year lead in digital and network infrastructure Japan had nearly become a computer-embedded environment, wherein digital technology would completely surround and enhance human life. As society approached this point of saturation, Kanasugi noted, customers would tend to make purchases according to their values. In other words, customers no longer purchased goods priced according to, say, quality of materials used; instead humans purchased goods because they needed them or valued them for other purely subjective reasonsand they only wanted to buy cheap. In such a market speed and ease of network access would be paramount, and NEC would support all efforts to further perfect and enhance such a "ubiquitous environment."

Analysts predicted difficult times ahead for NEC. They pointed out that while the restructuring had been positive, the company's debt-to-equity ratio had remained high. By 2003 the consensus was that Nishigaki's restructuring would be deemed successful only if NEC accomplished several years of exceptional profit levels regardless of the market reality. Such a tight debt-profit ratio seemed impossible, said commentators, because NEC's core profit division existed in the slowing sector of solutions. Still, Kanasugi stuck to the plan, selling off NEC's plasma-display-panel manufacturing segment to Pioneer Corporation in 2004.

CREATING A GLOBAL OUTLOOK

Under Kanasugi's leadership NEC reorganized its management structure in 2003 to facilitate continued prosperity as Japan's economy racked up its seventh consecutive quarter of growth. Kanasugi then made NEC proactive in the debate over network security. NEC subsequently focused on establishing standards for the securing of data networks nationally and within the Asian-Pacific Economic Community (APEC). Such security measures were coordinated with efforts in the public sector in order to iron out laws regarding technology and data transfer. NEC's strategy and philosophy were outlined in a paper presented by Botaro Hirosaki, a member of the Intellectual Asset Operations Unit. Through the establishment of secure networks in cooperation with the work of legislative bodies, the APEC region would be prepared for the continuation of prosperity.

NEC's global outlook stipulated that for NEC and Japan to prosper, the region of Southeast Asia and by extension the rest of the world would also need to prosper. This global view necessitated the creation of a mechanism for keeping tabs on the health of the planet. To this end NEC implemented the Japanese Ministry of Education's Earth Simulator project. No single computer could ever contain all the data and program memory necessary for the modeling of the Earth; however, with NEC's network technology many computers linked together would have the capacity to undertake this simulation.

The Earth Simulator project realized the NEC vision a half century after its invention. A distributed network of people engaged in the monitoring and stewardship of the planet epitomized the company's dream of using technology to resolve the detrimental divisions among humankindthe network was the ultimate illustration of humans using technology to compute and communicate.

Kanasugi's leadership skills derived from his ability to further NEC's vision by adapting it to the needs of the global business environment. His commitment to a collaborative style of management enabled NEC to complete necessary reforms in its structure and supply chain. Under Kanasugi NEC offered a new vision of global best practices that was dependent on dynamic networking and the company's own experience.

See also entry on NEC Corporation in International Directory of Company Histories.

sources for further information

"Analysis: Burned-Out NEC President Steps Down," Nikkei Report, January 21, 2003.

Fransman, Martin, Japan's Computer and Communications Industry: The Evolution of Industrial Giants and Global Competitiveness, Oxford University Press (London and New York), 1995.

, Visions of Innovation: The Firm and Japan, Oxford University Press (London and New York), 1999.

Guth, Robert A., "NEC's Nishigaki Steps Down as PresidentSplitting Computer Giant into Separate Companies May Be Successor's Role," Asian Wall Street Journal, January 21, 2003.

Hirosaki, Botaro, "Prosperity of the APEC Region through Law and Technology," ABAC Symposium, May 16, 2003, http://www.mofa.go.jp/policy/economy/apec/symposium/sympo0305/session1-4.pdf.

"How NEC Is Gunning for IBM," Chief Executive, April 2003, http://articles.findarticles.com/p/articles/mi_m4070/is_2003_April/ai_99982403.

"Incoming NEC Chief Eyes Reforms," Business Times Singapore, February 3, 2003.

Jürgens, Ulrich, ed., New Product Development and Production Networks: Global Industrial Experience, Berlin: Springer, 2000.

Kageyama, Yuri, "Japanese Electronics Giant NEC Picks New President," Associated Press Newswires, January 20, 2003.

Kanasugi, Akinobu, "Management Innovation in the 'Ubiquitous' Age Advanced by the IT/Network Integration," keynote address, C&C User Forum, December 3, 2003.

Nakamoto, Michiyo, and Barne Jopson, "NEC Changes Guard Earlier Than Expected," Financial Times, January 20, 2003.

"Pioneer Corp.: Accord Is Reached to Acquire NEC Plasma-Display Business," Wall Street Journal, February 4, 2004.

Jeremy W. Hubbell

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