With confidence in the Corporate Motto which has guided us since our founding,
we will achieve
“Technology for the well-being of all people.”
TDK launched Value Creation 2023, its latest Medium-Term Plan, in fiscal 2022, declaring that it would achieve both a sustainable society and corporate growth. April 2022, the second year of that plan, saw TDK’s first change in presidents in six years, as Shigenao Ishiguro passed the baton of leadership to Noboru Saito.
Here, Ishiguro looks back on fiscal 2022 and summarizes the six years of his term, while Saito leads a discussion of TDK’s vision for the future.
Evaluating the first year of Value Creation 2023, the Medium-Term Plan
With the prolonged impact of COVID-19 and the ongoing tensions in the wake of the situation in Ukraine, our lives, economy, and society remain under the pressure of enormous changes. Against this backdrop, in fiscal 2022 the TDK Group completed the first year of Value Creation 2023, achieving record-high net sales and operating profit.
While all four business segments (passive components, sensor application products, magnetic application products, and energy application products) were profitable, I found the turnaround in the Sensor Application Products business particularly inspiring, after its period of struggle. Our conviction that the business can truly benefit society has been validated, as the challenges in developing market-ready products recede into the past.
Meanwhile, batteries and other Energy Application Products, which have led TDK’s growth in recent years, are facing a turning point. With demand in the smartphone market, which has continued to expand worldwide, appearing to have hit a ceiling, we need to look to the future and take the next step forward.
Both the Passive Components and Magnetic Application Products businesses remained strong. In a society where all types of goods and services are being digitalized and new energy devices are constantly emerging, the demand for our technologies and products continues to grow.
Looking back, I feel that fiscal 2022 was the year in which the Digital Transformation (DX) and Energy Transformation (EX) trends became mainstream, and the direction in which society will move going forward became clear. Ironically, the trigger for that evolution has been the spread of COVID-19, a critical situation for humanity that at the same time accelerated the pace of change and led to a radical shift in the nature of society.
Even in an era of massive change, our values for sustainability remain constant
When we take a step back and examine the business environment that surrounds us, we realize that the world is now passing through the final stages of an era of integration, and entering the early stages of an era of fragmentation. Since around 1980, the world has seen a trend toward integration and globalization, with China’s reforms and open-door policies, the end of the Cold War, and the birth of the European Union. As international, horizontal specialization expanded, TDK grew by leveraging its global platform.
That said, the situation is beginning to change. The world is once again choosing the path of division, with trade friction among major economic powers, the rise of a new nationalism, and military aggression. Still, no matter how geopolitical lines are drawn, TDK remains resolutely committed to our values and to the aim of realizing a sustainable and happy society for all people through its unique core technologies and solutions. Our business is to advance DX and EX and contribute, without borders, to society.
Over the past six years, there has been progress within the company in a variety of areas involving the promotion of sustainability. Since the Sustainability Promotion HQ was launched in 2019 and accelerated its efforts as a key organization reporting directly to the president, I think we have seen a clear change in employee awareness. Where social rationality and economic rationality were once seen as being on completely opposite vectors, today at TDK they are viewed as perfectly aligned. One example is a mechanism that has taken root by which employees at development and manufacturing sites think about how to use the company’s technology to solve SDG issues, and then incorporate those ideas into their business plans.
Exceeding the expectations of customers and society with a market-in perspective
Fiscal 2023 marks the second year of Value Creation 2023, our Medium-Term Plan. We must seize on the powerful tailwinds driven by DX and EX and leverage the foundation for growth we have cultivated to date to make the next leap forward. As customer expectations increase, the question will be how to offer value that exceeds those expectations.
The key lies in a market-in perspective. This goes beyond the conventional product-out approach of saying “We hope you’ll use this great thing we’ve created,” and instead requires paying constant attention to what the world’s people consider issues and the expectations they have, and incorporating those issues and expectations into product development.
This is precisely the Customer Experience and Consumer Experience (2CX) we set out in launching Value Creation 2023. It is not enough to look only at TDK’s direct customers; it is essential that we recognize what end users are looking for and even beyond that, to think through how best to respond to social issues and market needs by utilizing materials and technologies.
In that sense, while Kotozukuri (integrated solutions) can be called a key word in TDK’s business today, it is completely different from neglecting Monozukuri (manufacturing excellence). It is extremely important to create products based on an understanding of the needs behind them, and to work together with outside partners to manufacture excellence and create value, while having a concrete vision for what we want to achieve and the kind of society we hope will develop.
The value creation of each individual employee is the sum total of TDK’s value
From my vantage point as top executive, I am often reminded of the truth that “people are everything.” TDK’s value is the sum total of the value created by each and every highly motivated employee, whether those developing technology, or manufacturing products, or bringing those products to a wider market. In fiscal 2022, we set a new record of 166.7 billion yen in operating profit, but that number would not have been possible without the accumulated small efforts of those on our front lines.
This sentiment grew more profound the other day when I attended a conference in Akita Prefecture, where TDK was founded, where the results of small-group activities aimed at improving the level of manufacturing were presented. Listening to the presentations by members from all of our 21 factories in Japan, I was deeply impressed by the overflowing enthusiasm our people on the front lines showed in pursuing how best to increase quality and improve efficiency. And this is not limited to Japan—small-group activities that go back to the basics of Monozukuri are emerging spontaneously at sites around the world. There is no end to growth among those who are dedicated to what they want to do, and this is what makes Monozukuri, and TDK, strong.
I believe that in one sense, TDK is like a jazz band with outstanding solo players. My job as the manager of this ensemble is to develop the strengths of individuals and individual companies while encouraging mutual understanding and connecting organizations, so that we can create value through teamwork as the highly individualistic collective called “TDK United.” Management’s role is to create an ecosystem in which a richly diverse fusion of organizations is tightly connected.
Toward a society of happiness for all stakeholders
In recent years, as attention has focused on “purpose management”—a rethinking of a company’s reason for being—TDK’s Corporate Motto, to “Contribute to culture and industry through creativity” has taken on added significance. That motto, which has been handed down since our founding, is the very definition of our purpose, and has remained unwavering for the past 87 years. I want our employees to have confidence in this point, and I would like all of our stakeholders, including shareholders, customers, suppliers, and society at large, to feel a sense of trust in our company.
With our sights set on our next major milestone in 2035, the 100th anniversary of our founding, we must chart our next growth step by backcasting from our ideal vision for the future. As stated in the TDK Group Sustainability Vision, “Technology for the well-being of all people,” what we are pursuing from a long-term perspective is the realization of a sustainable and happy society for everyone. Happiness is a dynamic and multivalent concept, with a breadth of meanings for different people. We hope to operate with an active awareness of this rich diversity as we take on the challenge before us. Under our Corporate Motto, our goal will be to leverage the strength of the Group’s approximately 117,000 employees to deliver well-being to people everywhere as the world’s “happiness supplier.”