May 20, 2022

Corporate News / Feature Story

Company

Interview with Group CEO Kusumi: Panasonic Group's Medium- to Long-Term Strategy

Yuki Kusumi, CEO of Panasonic Group, outlined a new medium- to long-term strategy as the Group shifted to a new company structure and became Panasonic Holdings Corporation on April 1, 2022. We asked CEO Kusumi about his thoughts on the strategy and the path that Panasonic Group is taking toward realizing an ideal society with both material and spiritual affluence.

Exceeding our targets with unrivaled work

Can you tell us more about the new medium-term management targets known as the key goal indicators (KGIs)?

We have established three KGIs through to the end of FY2024: achieving cumulative operating cash flow of 2 trillion yen and cumulative operating profit of 1.5 trillion yen from FY2022 to FY2024, and reaching a return on equity (ROE) of 10% or higher by FY2024. Using our earned cash to invest appropriately is essential for the Group to get back on a growth track and we therefore place the greatest emphasis on achieving the KGI on cumulative operating cash flow. The target of 2 trillion yen may seem high considering the current level. However, I believe there is significant room for improvement in our operational and cost capabilities after looking at ways to enhance our competitiveness in the last fiscal year.

It is important to realize that simply reaching these targets is not enough. We must adapt to our environment and reach for excellence as outlined in our Basic Business Philosophy. All of us - our operating companies and other workplaces - can improve and break records at a fierce pace by working to the best of our abilities. If we aim higher and go further, we could look to exceed the high targets we have set for the KGIs.

Can you explain how you would invest the cumulative operating cash flow? You mentioned you would invest a total of 600 billion yen: 400 billion yen in growth areas and 200 billion yen in technology pillars.

I would like to point out that the 600 billion yen is not all for investments in the medium- to long-term strategy. Each operating company will identify and invest in its own areas of growth and improve competitiveness from the cash flow generated. However, when the operating companies are not able to generate enough funds in time for investment, the Group will use the 600 billion yen on these investments. We have currently identified automotive batteries, supply chain software, and air quality and air conditioning as areas in which we will invest for growth as a group.

For the next generations: Panasonic GREEN IMPACT

Panasonic GREEN IMPACT is an initiative concerned with tackling environmental issues and one of its main aims is to reduce CO2 emission by more than 300 million tons, or about 1% of total global CO2 emissions, by 2050*. Please tell us about the reason why you have set this target in particular?

*CO2 emissions from energy use in 2019: 33.6 billion tons (source: IEA); 300 million tons is calculated using 2020 emission factors.

In 2017, the Panasonic Group committed to using less energy than the energy created in our Environmental Vision 2050 but the effects of climate change have become increasingly apparent. We re-examined our goals and recognizing the urgency of tackling climate change, we have presented our goals for 2050 in terms of our contribution to CO2 emissions reduction.

In May last year, the Panasonic Group committed to achieving virtually net-zero CO2 emissions at all of our operating companies by 2030 under Scope 1 & 2 emissions (GHG Protocol-based classification). We are doing everything in our power to reach this goal.

We set an ambitious goal for 2050: reducing CO2 emissions by more than 300 million tons. This is what we aspire to contribute to our future together and is closely tied to the Panasonic Group's principle of striving toward realizing an ideal society where we live in material and spiritual abundance. I do not know whether I will still be alive in 30 years' time but the advancement of climate change must be halted considering its potential impact on our children and grandchildren. With most of our businesses focused on electrical products and the switch to renewable energy sources already gathering momentum, it may seem like there is little we need to do. However, we intend to take our future and our responsibility against climate change seriously. We have therefore specified our goals in terms of our CO2 emissions contribution by 2050 and will examine every way to achieve these.

 

Creating an environment where employees can take on challenges and implementing "improvement upon improvement"

Please tell us more about the group-wide measure to strengthen the competitiveness of your operating companies. Why do you think it is important for management to adopt an approach that is based on individual personalities?

In the words of our founder, Konosuke Matsushita, "Each and every one of us must take on challenges." By encouraging employees to take on new challenges, management ultimately enables each employee to thrive. Rather than overburdening our managers, we can look to implement this as an organization by enhancing the quality of communication between managers and their teams and creating an environment that supports and empowers individuals through maximizing the use of IT. A company is ultimately about its people. If each employee can take on challenges without hesitation and anxiety, it will be rewarding for them, and this is the best source of competitiveness from a company's perspective.

You have established an Operational Strategy Department and presented concrete ideas for the Gemba (operational frontlines) Innovation initiative. Can you tell us more about this?

It is important to have a strategy that is unique to each business to strengthen competitiveness and the Operational Strategy Department has been set up to work on this with the businesses. It is equally critical to enhance operational capabilities. We intend to eradicate any waste and stagnation and implement a process that builds upon the improvements made yesterday to advance forward.

The Gemba Innovation initiative seeks to identify where waste exists in the workplace. We are combining our Group's strengths in sensing, AI, image recognition, and other digital technologies in this process and expect to see significant benefits. We have already begun trials at the Tsuruga Plant of Panasonic Automotive Systems Company. The other area we are working on is the optimization of our entire supply chain. We will look for bottlenecks and promote improvements utilizing Blue Yonder, which is under the umbrella of Panasonic Connect Company.

The bottom line is to quickly identify areas for improvement and put them on track for "improvement upon improvement" as quickly as possible. We believe it is important to firmly establish this philosophy and activity.

Panasonic Group's mission of stabilizing happiness and new slogan, Live Your Best

What are your thoughts on the new brand slogan, Live Your Best?

Our founder had been pondering the place and responsibilities of a company in society for a while and at the company's founding ceremony in 1932, he spoke of the company's true mission and the tap water philosophy - where a manufacturer's mission is to overcome poverty by providing goods as plentiful and cost-effective as tap water, as well as laid out his vision in a 250-year plan. Our new brand slogan is based on Konosuke Matsushita's words, "Only when there is spiritual peace of mind and a limitless supply of material goods will happiness be stable in life. This must be our true mission as an industrialist." Stabilizing happiness in life has been our company mission since those words were spoken at that ceremony 90 years ago. The phrase can be understood to mean "sustainable happiness" or "sustaining well-being" in English. The Panasonic Group has always been a company that strives to achieve this goal, and with our firm resolve to help individuals achieve sustainable well-being, we have decided to use this phrase to return to our roots and incorporated this concept in Live Your Best.

Final words

What do you hope to achieve by FY2024, the milestone of the medium- to long-term strategy you have announced this time?

Sales and profits as represented by the KGIs are important, but more than that, I would like our customers and society to recognize that the Panasonic Group's employees are dynamic and fearlessly take on challenges to reach exceptional standards and that our work is second to none.

I'd like to see all of us look back at our improvements, aim to do better and reach our potential. As our improvements accumulate, I have no doubt we will be able to carry out work to a quality that is recognized by our customers and lead to good results.

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