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Uchida Yoko: At the forefront of DX

Interview - February 10, 2022

Japanese companies now see digital transformation (DX) as a way to create new business models or modify existing ones by taking advantage of new digital technologies. And many firms in the real estate and construction center are leading the pack. “The country as a whole has realized the importance of accelerating DX. As Japan moves towards further digitization, this is a great opportunity for our company,” says Noboru Okubo, President and CEO of Uchida Yoko, which has worked with a diverse range of public and private sector clients on a variety of different projects, including ICT and environmental solutions for schools, offices and governmental facilities.

NOBORU OKUBO, PRESIDENT OF UCHIDA YOKO CO., LTD.
NOBORU OKUBO | PRESIDENT OF UCHIDA YOKO CO., LTD.

Can you run us through the history of Uchida Yoko?

Kotaro Uchida, the founder of our company, previously worked for the South Manchuria Railway Company. In 1910, he established what would become Uchida Yoko in Dalian, China as a sales company to handle surveying and drafting instruments, which were essential for the expansion of Manchuria Railways' business and to become independent.

In 1925, he worked to popularize science education in schools with the development of the "Hemmi-type slide rule", a must-have for engineers as an advanced calculator. The Hemmi-style slide rule was developed using bamboo, a material unique to Japan, and then spread around the world. At that time, Japan was under the banner of "a science nation" and proceeded to modernization.

Our company was able to grow because we managed to obtain a license to distribute and sell a slide ruler in Japan that could perform difficult calculations and had been used by talented engineers for centuries. The slide ruler was our starting point, and helped us explore other opportunities.

After the war, in 1946, we entered the school market by selling scientific instruments and other teaching materials. To help schools that had lost teaching materials in the war, we launched the "Science Teaching Materials Catalogue”. This catalogue covered all of Uchida Yoko's products, with a particular focus on science teaching materials. We still hold the top market share in Japan today for those materials.

In 1957, the company entered into an exclusive agency agreement with Casio Computer which resulted in the distribution of the Casio 14-A, the world's first compact relay computing machine. In 1962, we joined the information industry with the development and sales of the USAC, the first purely domestic compact electronic computer. This was at a time when PCs were just being introduced and there was no Internet. In the 1980s, Uchida took advantage of his expertise in the education and information fields to lead the industry in promoting the informatisation of education. That became the foundation of our business, and we continue to be at the core of the education field today.


(Left) 1962 USAC3010 | (Right) 1965 USAC1010


Can you outline some of your key technological capabilities?

In 1998, we established the Uchida Yoko Educational Research Institute. Then in 2004, we launched EduMall, a network-based educational content distribution business, which is currently being used in 7,600 schools in 460 municipalities. In 2008, we started to analyze the learning effects of children using PCs. Later in 2014, we supported the introduction of Japan's first 10,000 tablets to all elementary and junior high schools in Arakawa Ward, Tokyo.

In more recent times, one of our newer technologies is the "Future Classroom," which can be defined as cloud computing, connected, and active-learning classroom. Completed in 2010, the technology has been introduced at more than 400 schools nationwide, including universities.

The Future Classroom has been the subject of numerous experimental studies done in conjunction with educators and academics, including the Minister of Education, Culture, Sports, Science and Technology, as well as the Board of Education. All of them have come to experience this futuristic classroom technology.


Future Classroom


In addition, “SmartInfill" is a system unit for creating an IT space in an office without remodeling or rebuilding the office. It is a fast, easy, and low-cost way to turn your office into a computer networking space. It has been installed in many companies, local governments, schools, hospitals, and so on. It creates a place for collaboration through mobility, cloud services, and data utilization. In addition, we have also released a wooded version that can be flexibly configured by combining cutting-edge IT devices with domestic wood materials to take advantage of the strength of those materials.


(Left) SmartInfill | (Right) Wood Infill


In order to embark on space design and product creation while taking advantage of the comfort of wood, the Uchida Yoko Group began utilizing domestic wood from all over Japan in 2004, including wood from Miyazaki Prefecture and Tama in Tokyo. We have been developing products and building environments in collaboration with local governments. We’re striving to adopt domestic timber for child-rearing support facilities that promote "tree education" for infants and children, and for public buildings such as schools, corporations, and airports. We also want to participate in the Forestry Agency's project to commission domestic timber.


(Left) Office space that actively utilizes domestic wood. | (Right) Domestically produced wood is used for office tables, bookshelves, and many other places.


What effect did the COVID-19 pandemic have on you your business, especially the office environment and construction division?

It was difficult, but with the kind of office environment we create, even if the number of employees were to decrease by 30%, everything can be refigured to fit that number. Because of this, we actually received more demands for such office designs during the pandemic as everyone was looking to transform their office environments into a more flexible design.

Additionally, our "Quie" enclosed soundproof space, can be used as a desk for remote work, and is suitable for private phone calls. This product also became popular during the pandemic.


Quie


We also have “SmartRooms”, a cloud-based conference room operation and management system linked to groupware. This technology allows users to reserve conference rooms from their smartphones or PCs, and to track which spaces in the office are being used. To date, “SmartRooms” has been installed in approximately 14,000 rooms at about 450 companies, making it the largest office meeting room operation management system in Japan.

With the increasing number of remote workers, one would imagine that the usage rate of small conference rooms is decreasing. However, small conference rooms play an important role when employees need to have important conversations. For example, during special meetings such as board meetings, executives would like to have a conference room to discuss in peace. If there are situations where employees who normally work remotely happen to be in the office at the same time, we need to open a conference room for use. With our “SmartRooms” technology, employees can use their smartphones to search for meeting rooms that are available that day and reserve them for the time they need them.

Furthermore, we are developing a cloud service that uses sensors to visualize the usage of not only conference rooms, but also non-reserved meeting corners, lounges, and individual work booths. “SmartOfficeNavigator" instantly links people and locations to help workers choose the best place to work. Can be used with groupware such as Microsoft365 to quickly find and reserve a place in the office suitable for the day's work from a mobile device. It also supports timely contact with employees who are present at the office. From the perspective of office administrators, the accumulated data on facility usage can be effectively used to continuously improve and make changes in the office.

Such services help to creating a company environment that can continue to flexibly respond to the changing needs of the times.


Visualization of “SmartOfficeNavigator"employee location

 

(Left) Cloud-type Meeting Room Reservation Management System "SmartRooms” | (Right) Find out the usage status of conference rooms and meeting booths in real tim


Have you tried selling the Smart Room to coworking companies such as WeWork?

We have not sold this technology to WeWork, but we had helped them building share offices nationwide, in terms of logistics and inventory management for items necessary to build an interior.  We have been servicing several co-working spaces for customers like Panasonic and Fujitsu, who are using it throughout their offices nationwide. Large corporations such as Mitsubishi Motors have installed this technology in their offices as well.

 

When it comes to ICT (Information and Communications Technology), compared to other OECD (Organisation for Economic Co-operation and Development) nations, Japan has a reputation for lagging in the digitalization of its government and major industries. In the 2020 IMD World Digital Competitiveness ranking, Japan ranked 27th in the world, and in response, the now former Prime Minister Suga created a ¥2 trillion fund to encourage digitalization and support companies that provide IT and ICT services. What opportunities has this increased governmental support for digitalization created here for Uchida Yoko, and what future opportunities does it present for IT-focused enterprises in Japan?

Japan has been slow in the incorporation of digital technologies. That is not to say that digitalization has been abandoned; it has just been delayed. Japan’s tardiness was caused by its reticence to quickly transform and adapt to new technological needs.

Today however, the country as a whole has realized the importance of accelerating digital transformation. Both at the governmental and national level, Japan has understood the importance of becoming more adaptable and digitally oriented. Of course, we identify that as a great business opportunity for us.

To a large extent, Uchida Yoko also needs to become more and more adaptable to navigate these changing times. Adaptability is a feature that our firm must continue to prove, and being in the management position, I believe that aspect is crucial to my role in the company.

As Japan moves towards further digitization, this is a great opportunity for our company. As a matter of fact, thanks to the various measures implemented by former Prime Minister Suga, our company's performance in the last fiscal year was very strong. Thanks to a special budget based on the government's digitization strategy, our public sector-focused business performed beyond expectations.

Compared to the rest of the world, Japan's schools are currently lagging far behind in the use of ICT. The Japanese government felt threatened by this situation and began to focus on it in 2019.

This was the "GIGA (Global and Innovation Gateway for All) School Initiative", which provided one digital device per student for 8 million students as part of the development of intra-school communication networks and the development of one unit per student in national, public, and private elementary, junior high, and special schools. We have been involved in the installation of 1.33 million PCs, network system construction, and operational support.

The Board of Education of Konosu City (Mayor: Kazuhisa Haraguchi) in Saitama Prefecture is introducing one PC per teacher and student at all 27 elementary schools and secondary schools in the city from April 2021. The plan, designed by Uchida Yoko, is not only to incorporate computers into the classroom, but also to create a secure network that will allow students and pupils to share almost all aspects of their school life online, including lessons, homework, and grades. The Konosu City Board of Education began studying the renewal of the ICT infrastructure in 2018, long before the GIGA school concept was announced, and began work on the Konosu City School Education Informatization Promotion Plan in 2019.

What we focused on was the development of infrastructure such as networks and cloud applications that utilize advanced technology. One of the features is the full cloud concept, which will allow children to learn anytime, anywhere. In addition, for school administration systems that handle sensitive information used by teachers, Microsoft Azure, which is directly connected to SINET built and operated by the National Institute of Informatics, will be used to provide a robust security environment. This is the first time in Japan that a board of education has taken such an initiative. They also aim to improve the quality of education by having all teachers and staff create more time to interact with children. In order to do so, it is essential to reduce the workload of teachers and staff, and the new system will digitize schoolwork such as grade processing, document management, attendance records and time and attendance management.


Full-cloud educational ICT environment in Konosu City, Saitama Pref


The current social issue is in light of the temporary closure of all schools due to the COVID-19 pandemic. In particular, the use of ICT is required to ensure that no child is left behind during school holidays, or in the event of a disaster or pandemic. It is expected to develop an environment where children can continue to learn at home even when schools are closed by utilizing ICT. We need to address this issue and realize a system that enables learning and evaluation inside and outside of school.

Our Institute for Education Research is participating in the Ministry of Education, Culture, Sports, Science and Technology (MEXT)'s project, which is the research and study on the introduction of an online schooling system that will ensure learning, as the coordinating company representing a consortium consisting of education-related companies and organizations.

In this research, Uchida Yoko is developing and evaluating a prototype online learning system that will provide a platform that makes available learning and evaluating functions using computer-based testing (CBT) in and out of school. And, through our evaluation of the components in this system, we are considering and building a system that will allow children to keep up with their studies.

The Japanese government has made enormous investments to develop Japan's future human resources. Those of us who have participated in these efforts are truly proud to have contributed to enhancing Japan's adaptability.


L-Gate e-Portal for Learning

 

Access to the CBT system (MEXCBT) from students' PCs (Konosu Central Elementary School)


The COVID-19 pandemic saw governments promote ‘stay-at-home’ measures that decreased the utilisation and popularity of office spaces. On the other hand, the popularity of digital communication platforms, such as Zoom, surged. How do you foresee the future of the office space and physical academic classrooms moving forward?

I believe two or three years from now, a hybrid combination of remote- and in office-work will be incorporated both for corporate and educational facilities. To turn that vision into a business opportunity, we released the Future Classroom, a connected educational space that can be physically and remotely attended. I believe that classrooms and offices similar to our Future Classroom will become the norm. When we created this concept, some people involved in the project argued that office furniture would completely be out of the market soon, but we deemed that it would not become obsolete, and that this business was still viable. In the Future Classroom, we combine our knowledge of digital technologies with our expertise in the production of functional furniture.

With Japan's declining birthrate and ageing population, the working population is rapidly shrinking. This is by no means a problem unique to Japan, but it is most severe here. As ‘decreasing demography’ becomes a global problem, I believe it represents a great opportunity for Japan and for Japanese firms to show the world how to cope with an ageing and shrinking population.

To return to the topic of "work from home measures”. In Japan, homes are incredibly small and not necessarily suitable for a work environment. We believe that what will happen in Japan is an environment where a centre office is connected to various satellite offices. In that sense, I believe that this hybrid workstyles is already being incorporated, and this kind of flexibility is something Japan has embraced.

Thanks to our interior design and architecture capabilities, the office spaces that we design can be reconfigured to meet these new needs. If you were to have that kind of service at hand, then you can continually change the environment according to what is most required. And when you do so, you start to have more and more IT installation needs.

Although the office business targeting the private sector did not perform well due to the macroeconomic situation in Japan, the IT and ICT business targeting the private sector is going strong. We are already active nationwide with respect to IT, furniture, and education. In the IT business, software license sales and other sales reached a new record high. Uchida Spectrum Co., Ltd., a member of the Uchida Yoko Group, formed a partnership with Egghead Software (later acquired by Insight Enterprises, inc. of Arizona, USA), the largest software reseller in the U.S., in 1995 and changed its name to Uchida Spectrum Co., Ltd., the current name, in 1996.

In 2000, Microsoft Japan also invested in Uchida Spectrum, and the company is now continuing these businesses as well as expanding its business framework to the SAM/ITAM (IT asset management) managed services market. The company was the first pioneer in the software licensing business in Japan. The need for digital security has increased and, large Japanese companies have started to make large investment in software. As a direct result, software licensing has increased, and also helped increasing of our revenue.

When it comes to system and work support system integration, other companies like Fujitsu and NEC are much stronger than us and are catered to the enterprise market. But for us, we are looking at implementing both furniture and space and IT to support the work environment, not to support a specific task, and that is our business focus and goal.

 

Your company unites interior design and architecture, with an IT edge. At first glance, these seem to be completely different fields, but what kind of synergy can be achieved by combining the expertise of each?

For about 30 years, we already knew that these two areas, ICT and environment design/creation, were our strengths, but with three companies in the group, we have been trying to integrate them. From both a management and business perspective, it was very difficult to figure out how to begin a seamless integration, which is something our investors have told us constantly.

It was kind of like Japan's bureaucracy, with lots of red tape in different fields, but gradually, we increasingly started to see that they have different services in common. When I became the president, I decided to change the organization structure to enhance each other’s business.

It is a slow and steady process, but it has allowed us to create more and more synergies between different businesses, and I would say that we are now able to offer these integrated solutions to our clients. Something that we emphasise when it comes to our headquarters is to create a site where the office itself represents this kind of structure, where different business units are coherently united seamlessly and propose a solution tailored to  the customer’s requirements.  This will be better understood by our clients and staff. That is something I have been promoting, and we have made a lot of progress in the last three years.

 

Uchida & Yoko's ICT business is doing well, with consolidated net income for the fiscal year ending July 2021 up 75% from the previous fiscal year. And last year, you achieved an overall sales increase of 45%. How do you account for this recent boom?]

I think this is because we have been able to better utilize and manage our IT resources. Our "Giga School Project" team is made up of people who worked in different business lines, but by allocating staff from different segments to this project, we were able to successfully complete such a large project that accounted for a third of our profits in recent years. We are now looking to leverage this strength in other areas of our business.

For example, until now, the largest market for our tablets and PCs has been schools, with little supply to other areas, but we hope to expand the supply of tablets and PCs beyond educational facilities in the future.

We already had tools and resources under our belt as a company, but now we need to combine and configure them to best utilize and integrate them to meet the needs of the current market. I think this is something that many of the major Japanese companies are focusing on. In other words, it is about how to continue to leverage their strengths and use the expertise and know-how that they have been able to accumulate over the years. I think this is true for Fujitsu, Hitachi, NTT, and many other companies. We want to make that happen so that we can supply resources to companies not only in Japan but also around the world.

 

Investment in ICT-focused education is increasing in the US and Europe. Looking towards the future, do you plan to take the "Future Classroom" model abroad and collaborate with international governments?



Yes, we are looking to expand overseas and have many clients, from places like South Korea, Taiwan, China and even the US, who have been highly impressed with our Future Classroom. But in terms of concrete numbers, when it comes to supplying them overseas the amount is still quite small.

 

It seems that Uchida Yoko really has a vision of what they want to create. When it comes to small towns in rural areas where the population is aging, there are major problems in education, such as the lack of teachers in schools. But a digitally connected system like Uchida Yoko's will be truly transformative for people in rural areas. What do you think education will be like in 10 years’ time, and what value do you think digital technologies like the Future Classroom will bring to people around the world?

Both schools and offices face similar problems in the use of ICT technology, but what both need is the ability to create a more flexible environment that can meet their needs, whether they are together or apart. When we are together, we create an environment where we can brainstorm and discuss together. If this is done in the school environment, then it is only natural that we will bring this into our society when we start working in a company. In that sense, the business we provide is both a working environment and a learning environment, which leads to our vision of being able to transform both working and learning.

Our corporate vision is “Creating value from data and collaborating in the design of knowledge”. In 2015 the Uchida Yoko Group released a new management policy predicated on harnessing our historical strengths to transform the way we work, learn and create spaces, with a view to the major changes in the social structure from 2025 onwards.

We aim to be a company that designs blueprints for the future together with our customers in order to promote the collaborative creation of information and value-added knowledge. Since 2015, we have been advocating the transformation of the way we work, transformation of the way we learn, and transformation of the place and the city in order to concretely promote this.

This is the vision that I structured and put forth six years ago, and this management policy, which I put in place in 2015, has transformed the company. Before then, our businesses were very separate. But prior to the pandemic, we accelerated the pace at which we integrated these different elements. In that sense, I consider our company lucky; we are finally entering an age in which we can begin to draw on the strengths that we already had.

That's why I think more and more private companies are interested in the “Future Classroom”. American IT companies such as Cisco, Microsoft, and Google call their companies "campuses," and I think this precisely shows that they are beginning to become "learning environments”. Nowadays, Japanese companies are starting to use this type of phrasing as they are investing in human resource development as well, so it seems we are in the right space.

About ten years ago, we changed our conference room to a "Future Classroom" style, and everybody wanted to adopt it. We are lucky because we already have a 112-year experience of being in the B2B business.  From the beginning, our foundation is based on buying, selling and supplying value added goods to the customers, including public sector institutions.  We have established this business model for more than 112 years ago, and it was a great opportunity for us to go back to our roots and actually incorporate it and offer it to the world.

As for overseas business, we are currently focusing on the domestic market, but overseas information is important because the world is heading in the same direction. We had been making five to six overseas educational visits and interviewing business partners every year until 2019. Now we are trying to expand overseas again with a completely new business model. We would like to increase our ratio in the year 2025 onward.

 

You have a rich history of becoming more adaptable and creating new environments for collaboration, both in education, alongside local governments in Japan and other countries, and with IT and ICT firms. A common theme that emerges in our interviews is the importance of collaboration and co-creation. What specific role do they play in your business model?

Importing and exporting products is not easy. But when it comes to things like systems, you really need to consider not only the differences in nationality, rules, and regulations but the culture of the user and the different rights that come into play, so it is harder. There are many different complexities that need to be considered. One is the declining birth rate, which is affecting not only Japan but also European countries and is accelerating rapidly in China.

COVID-19 has created many opportunities for growth. Similarly, we believe that the challenge of the declining birthrate – something that is going to impact all developed countries and will come to the fore as a shared challenge – will also provide an opportunity for greater collaboration and cooperation. In order to take advantage of this, it is important to maintain great relationships, connections and partnerships. For the past 30 years, that has kind of stalled in our company, and we want to change that. We strongly believe that now is the time to embark on more collaborative business.

Large companies are already active in collaboration and co-creation, but I think there is still room for growth for medium-sized companies. In a sense, Japan is the world’s laboratory for “shrinkonomics”.

 

If we were to come back and interview you on the last day of your presidency, what goals would you like to have achieved by then and what would you like to share?

The name of the company, “Yoko,” means "foreign store" in Chinese, but it also had the meaning of a frontier spirit, challenging unknown territory at that time. It was my goal to understand the needs of our customers from close proximity, and as an expert in the field, to constantly contribute with new technologies to the market.

It has been 112 years since the company was founded, and although times have changed, especially in this age of shrinkonomics, I would like to share that our company has been able to transform and adapt even more to the new environment.

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