Oral-History:Tsuneo Nakahara

About Tsuneo Nakahara

Tsuneo Nakahara

Tsuneo Nakahara is a communications engineer and executive vice president of Sumitomo Electric. He was educated at the University of Tokyo and wrote his Ph.D. dissertation on video signal transmission. He began work as a production engineer at Sumitomo in 1953 and worked his way up from senior engineer to manager of the research department to general manager of R&D, then managing director and eventually to the executive vice- presidency. His engineering background and understanding of the need for diversified research and production contributed to the development of his management skills and the prosperity of Sumitomo Electric.

The interview begins with a discussion of Nakahara's education, including his coursework in communications engineering and his early scientific and mechanical interests, then moves to the beginning of Nakahara's career at Sumitomo in 1953. After describing his training at Sumitomo and his dissertation research, Nakahara discusses his experiences in Sumitomo's research department and the development of research laboratories within the company. Discussing his position as general manager of R&D groups and his involvement in higher levels of company management, Nakahara reiterates the company's policy of combining established business with diversification and development of new technology. He then discusses his organization of the R&D function within the company and the issues involved in establishing basic research laboratories and the moving of personnel between research and business operations. He discusses issues relating to innovations in manufacturing and the extent to which Sumitomo has become vertically integrated. Stressing the importance of diversification and globalization for Sumitomo and industry in general, Nakahara lists his many professional and public activities, national and international. The interview concludes by discussing the possibilities and problems he sees in IEEE's functioning as an international association.

About the Interview

TSUNEO NAKAHARA: An Interview Conducted by William Aspray, Center for the History of Electrical Engineering, May 20, 1994

Interview #205 for the Center for the History of Electrical Engineering, The Institute of Electrical and Electronics Engineers, Inc.

Copyright Statement

This manuscript is being made available for research purposes only. All literary rights in the manuscript, including the right to publish, are reserved to the IEEE History Center. No part of the manuscript may be quoted for publication without the written permission of the Director of IEEE History Center.

Request for permission to quote for publication should be addressed to the IEEE History Center Oral History Program, IEEE History Center, 445 Hoes Lane, Piscataway, NJ 08854 USA or ieee-history@ieee.org. It should include identification of the specific passages to be quoted, anticipated use of the passages, and identification of the user.

It is recommended that this oral history be cited as follows:

Tsuneo Nakahara, an oral history conducted in 1994 by William Aspray, IEEE History Center, Piscataway, NJ, USA.

Interview

INTERVIEW: Tsuneo Nakahara

INTERVIEWER: William Aspray

DATE: 20th May 1994

PLACE: Sumitomo Office, Tokyo

[Note: Professor Yuzo Takahashi of Tokyo University of Agriculture and Technology was present at this interview]

Background and Education

Aspray:

Could you begin by telling us when and where you were born and what your parents did?

Nakahara:

I was born in August 1930 in Tokushima Prefecture, on Shikoku Island in Japan. My father and mother were teachers. He was the principal of the middle school at that time. He graduated from Tokyo Higher Normal School, an old school, which is now the University of Tsukuba, and my mother graduated from Nara Women's Higher Normal School, now Nara Women's University.

Aspray:

It was somewhat unusual in those days, was it not, for both of your parents to have attended college?

Nakahara:

Yes at that time rather few females went into the university.

Aspray:

Because of both of your parents being well educated and being teachers, there must have been a considerable emphasis on education in your family. Is that correct?

Nakahara:

Well, it's partly correct for my elder sister and brothers. Because I was the youngest son, my parents never paid much attention to my education. Mostly I studied for myself.

Aspray:

I see. As a child and teenager did you have interests in science and engineering?

Nakahara:

Yes. When I was in primary school and middle school, I liked making model airplanes driven by rubber bands, and I made quite a number of them. Sometimes I won prizes for flying them. Later, in high school and in the university, I bought many components such as vacuum tubes. I made radios and record players.

Aspray:

As you were growing up, what did you envision you would be when you became an adult? What were your career hopes?

Nakahara:

When I was very young, a schoolboy, I wanted to be a designer of airplanes. Later, when selecting my university course, I seriously thought whether I should take a science course such as physics or an engineering course such as electrical engineering. In my younger days I liked mathematics very much, so I wanted to take a theoretical course.

Aspray:

I understand that you finally chose electrical engineering. How did you make that decision, as opposed to doing physics?

Nakahara:

It was a very difficult question, but a selection I made. At that time, Japan was in a rather confused state after the war. Society was very poor. I had to consider both my interests in science and the state of the economy, so I selected electrical engineering.

University of Tokyo

Aspray:

How did you choose the University of Tokyo, as opposed to some other university?

Nakahara:

When I was a schoolboy, the educational system was old-style. After World War II, the Japanese education system changed from the conventional system to a new one. The new system is very similar to today's United States system. The standard is: six years of primary school, three years of junior high school, three years of high school, four years university, and two years for a master's degree, and three years for a doctorate. But in the old system we had six years of primary school, five years of middle school, three years of high school, and then three years of university. In the old system, at middle school one could take the entrance examination for the First Higher School after finishing four grades. Until middle school I was located in Shikdu Island, but after that I took the entrance examination for the First Higher School in Tokyo, which was equivalent to today's cultural faculty of the University of Tokyo. I passed the examination, so I moved from Shikdu Island to Tokyo. At that time, the First Higher School took 400 students from all over the country, 200 in science and engineering courses.

Aspray:

At the University of Tokyo, what was your electrical engineering course of study? What kinds of things did you learn as part of that program?

Nakahara:

I took a standard selection. We had a choice of a power-engineering course or a communications-engineering course, so I took the communications-engineering course. During the three years of education, in the first half of the time we took a basic course, and then I selected a communications course. Then during my dissertation I selected television — video signal transmissions. Because TV broadcasting had just started in Japan at that time, I was interested in video signals rather than conventional signals.

Aspray:

I notice in your published papers that a fair amount of mathematics is used. Did you get a strong education in mathematics as part of your university studies?

Nakahara:

Not especially. Mostly I had learned by myself by reading books or practicing.

Aspray:

Were there particular professors at the university who played a special role in your career and your development?

Nakahara:

I had several. For example, at the graduation of the bachelor’s course, my professor was Professor Utsunomiya, who is now Emeritus Professor of the University of Tokyo. He taught advanced electronics, and later taught a course in medical electronics. He has a pretty wide expertise over the field of electronic engineering. After finishing school and entering Sumitomo Electric, I wrote a paper for my dissertation. At that time the main professor was Professor Okamura. In connection with my jobs in the company, such as research contracts with universities and scouting students, I have many close relations with professors.

Takahashi:

Professor Okamura is the teacher of Professor Okoshi.

Nakahara:

Yes. In addition, Professor Oyama, Professor Yamashita, Professor Sakamoto, Professor Taki, Professor Yanai, and Professor Inose are all very intimate professors.

Aspray:

Yes, I see. Are there other things that occurred that had a particular shaping force on your career?

Nakahara:

During my course of study, I made some advanced radio sets and record players, and that helped give me some practice in engineering.

Aspray:

So you got the theoretical training in the university courses and the practical hands-on training from building these?

Nakahara:

Yes. I compared many components and mechanical designs, and fabricated them using solder and other tools.

Joining Sumitomo

Aspray:

I'm sure your friends were very pleased to have those radio sets you fabricated. I understand that it was in 1953 that you joined this company. How did you make that choice?

Nakahara:

It was based on Professor Oyama's recommendation. At that time there was a senior Managing Director at Sumitomo Electric named Dr. Kitagawa. He asked Professor Oyama to recommend some student, and Professor Oyama asked me whether I was interested in the job.

Aspray:

I see. When you joined the company, what were your responsibilities?

Nakahara:

I had nine months of general training, and three months of special training in engineering.

Aspray:

Was this typical of all new employees at the company?

Nakahara:

Yes, at that time it was standard.

Aspray:

What kinds of things did you learn?

Nakahara:

For nine months I got lectured by top executives about the philosophy of the company and by middle managers about the practice, rules, and regulations of the company. Then we took a special course to learn what kinds of products were made in our factories. We visited all the factories in our company and made special "flow charts" about how the product was being made at that time. We also studied certain procedures such as how to get orders and how to give instructions to produce. After that we had real experience to make a product and to operate the equipment. We then had some engineering education and we were trained as engineers in the factory, as production engineers, for three months.

Sumitomo Corporate Background

Nakahara:

Our company was making the first international standard coaxial cable in Japan, licensed by a British company. This was for the standard Japanese long-distance communication network. The first product was made by my company, using technology introduced from England, and I was in charge of making this kind of cable, the first in Japan. After finishing my training course, I was a production engineer for the communication cable for one and a half years. During that time, I designed the cable and established standards for production and quality control. For this type of cable we had to guarantee the uniformity of signal transmission performance along the cable using the pulse-echo test. It was a very difficult technology. After finishing our first product, it was installed in the Hiroshima area from the microwave station to the telephone station.

Aspray:

Purchased by the telephone company?

Nakahara:

Yes, by the NTTPC, the public telephone corporation in Japan. I had to learn how to install the cable from a British cable installation engineer, not only in the city but also in mountainous areas, which need some special armoring because of very strong tension. In a flat area we merely wrapped this. There was also a type of tape-armored cable. I could learn all the types of cable with the new coaxial cable.

Aspray:

Did the product work very well?

Nakahara:

Yes, perfectly. We bought and introduced this technology from STC, a British company. An English installation instructor stayed here during installation, so I had to learn English to do my job! I must confess that my English was very poor because during the war no teacher taught good English.

Aspray:

Well, it's very good now.

Nakahara:

No, no, no, not very good!

Aspray:

Oh yes! Just as a background question, what had Sumitomo Electric's business been before you joined them? What had its history been?

Nakahara:

Sumitomo Electric was the second biggest wire and cable manufacturer in Japan. In addition to that they had a sintered alloy business group, a special steel wire business group, and some small rubber products. About 75 to 80% was wire and cables, and the rest of the 20 or 25% was diversified. There were main areas of focus at that time.

Aspray:

How had the war and the early post-war years affected the company's business?

Nakahara:

Our company was heavily bombed, so we lost manufacturing. There were no orders from the customers because they were so confused. Some people made boots using rubber technology, and things like that. Soon the Japanese government recognized it was necessary to rebuild the infrastructure, such as power cables and telephone cables, so our business re-started at that time.

Diversification & Managing Research

Aspray:

Please continue to tell what happened to your career from this point.

Nakahara:

Company top management, especially Dr. Kitagawa, thought the landscape of Japan was getting much smaller than before. We had lost Korea and Taiwan, so he thought infrastructure business such as telephone or power would be saturated. The company's future growth would wane, so he thought it was necessary to have some diversified business in addition to wire and cables. He roughly set the target as 50% wire and cables and the other 50% other products. He saw that in order to motivate all of the people, electrical engineering people must consider some new diversified product. Since then I always have considered both the wire and cable business and new business. I said that just being a production engineer of communication cable was not enough for me; I needed to be at research and development laboratories.

We needed a research division, and needed to create a new technology so we would have a new diversified product line. Since then I have developed various kinds of high-frequency transmission lines, such as leaky coaxial cable, wireless wired communication systems, TV broadcasting antennas, and various waveguides, including dielectric surface field guides and millimeter circular waveguides. That led to the development of fiber optics. The concept of systems and computer science would become very important in the future, so I got the company to create such a business section.

Dissertation & Engineering Accomplishments

Aspray:

Before talking about your time as a manager, let us talk about your contributions while you were still an engineer in the company. What do you regard as your most challenging problems and greatest accomplishments as an engineer?

Nakahara:

I think it was the basic theory of transmission of electromagnetic waves. I made many analyses and created various types of new transmission structures with or without leaky waves. My dissertation related to the dielectric surface waveguide, which in theory is exactly the same as fiber optics. As a practical development I think fiber optics is one of the biggest achievements in engineering, that and waveguide over open lines, which is now continuously used for the bullet train. Every bullet train has a continuous installation of this type of coaxial cable, a two-coaxial array.

Aspray:

Are these installed by Sumitomo?

Nakahara:

Yes, initially mostly, but later some other company participated in that. We still have the biggest share.

Aspray:

Did you get your Ph.D. while working for the company?

Nakahara:

Yes.

Aspray:

Was that commonly done?

Nakahara:

Not very. The new education system has a Ph.D. course, but the old system did not. After graduation, one must learn at least two languages and submit a dissertation. Several professors make a test and then administer a qualifier exam. I did all this while running the laboratory at Sumitomo Electric.

Aspray:

So you could do this part-time while you were still working?

Nakahara:

Yes. My dissertation paved the path of my work for the company.

Aspray:

During this period of your career you also spent some time at Polytechnic Institute. How did that come about? What did you do there?

Nakahara:

That was 1961. Before that, I submitted a paper called "The Thin Dielectric Surface Waveguide" to the IEEE. Later a senior research engineer at General Electric, a man named Kiyo Tomiyasu, visited Japan. He noticed my paper and said, "You should submit a paper to some U.S. organization." So I sent it to Brooklyn Polytechnic. The company encouraged me because it thought having some experience outside Japan was very useful for the company in the future. There were some senior people in Brooklyn Polytechnic, such as Dr. Oguchi, who became chief engineer of NTT. He was a research manager at the NTT laboratories and was spending some time at the Brooklyn Poly. I thought it was a very good place to have experience. I sent an application, and later on they sent a letter to me accepting my visit to the research staff.

Aspray:

Did you get to know Dr. Ernst Weber while you were there?

Nakahara:

Yes. Dr. Weber was president and Dr. Markuvitz was a director there.

Aspray:

What did you work on for that year you were there?

Nakahara:

I worked for a research group with the Navy, and did research on millimeter waveguides that can provide lower attenuation waves than today. I invented several better structures at that time, wrote two or three patents for them, and also wrote several analytical works about them.

Aspray:

Are there other things you want to tell me about your time as a worker in the research laboratory rather than as a manager, or about your technical contributions, before we move on to your management career?

Nakahara:

I did research on the millimeter waveguide. It was supposed to be the next generation of technology in Japan, next to the coaxial cable, so people were very interested in that. I attended some joint research in that field for fifteen years, so this is also very important technically. Unfortunately, the millimeter waveguide was not used on a big scale, — just one-meter sections or so because of the later introduction of fiber optics.

Aspray:

Would it have worked if optical fibers hadn't been available?

Nakahara:

Yes, I think so. I had visited Bell Laboratories many times in order to exchange information. They bought our waveguide and we bought their waveguide, so they recognized that as far as a millimeter waveguide is concerned, our contribution is the best. Later they had a session for the IEEE international convention. They organized a millimeter wavelength session. Because it was international, I was asked to represent the wave-guide portion. The rest of the presenters were all their people.

Systems and Electronics Department

Aspray:

You became the general manager of the research and development group in 1976. Had you had an interest in being a manager?

Nakahara:

Yes. In 1963, I began as senior engineer, which is categorized as a management position within the company. In 1964 I was appointed to manager of the research department. I initiated the new program of systems and electronics within my department in addition to just transmission.

Aspray:

What was the responsibility of Systems and Electronics? What were they supposed to examine?

Nakahara:

I set up three projects at the time I was in the department. One was computerized vehicular traffic control. The second was automatic identification of freight cars. Third was train communications. The vehicular traffic control was the first application of computer simulation electronics for the company. Eventually we got an order for the computer control system of metropolitan Tokyo. We have the largest computer controlled system in the world at this moment. About 8,000 intersections are connected to that central computer in Tokyo. Originally I initiated that program in 1964. Wire and cable transmit energy and signals, and vehicular traffic transmits automobiles and trains. I thought there might be some similarity. So I set up such a project within the company, and that led to the industrial success later on. My second project was automatic freight car identification. It proved almost successful, but JNR was in very bad financial conditions.

Aspray:

This is Japan National Railway?

Nakahara:

Yes. So eventually that failed, but since then we have developed the first laser identification system. We have developed our optical system, using a helium-neon laser, rotating mirror and refracting transmitter detecting and coding system. Each technology became useful to develop various products later on. It is one of the reasons for developing optical communications systems right now. The third system was a railway communications system including obstacle detection. One of the by-products of that system was communications for control of the bullet train.

When I was manager of the department, I initiated three projects that were entirely new at that time, and within maybe three years the department became a small division within that research and development group. All the work was then done in the Osaka laboratory. Later I asked to be moved to the Yokohama area. There was a new communications cable plant. The NTT public corporation was one of the biggest customers and also a very good financial achievement for the company. NTT recognized that they had to use all the products available at that time, from the paper insulated to the plastic insulated, and to some new armoring processes, so they set up their various new development projects at that time. We had to reorganize the company a bit, so I asked to be a project leader of all the projects necessary for NTT at that time. I moved from Osaka to Yokohama. I had perhaps ten or twenty projects, and had to manage all of them. We made considerable achievements in the field of communications.

Aspray:

Could you list a few of those?

Nakahara:

Yes, for instance, this is the video pair. [Showing exhibits] This is a so-called clover — it's aluminum tape, which has very stable glue holding it to the polyethylene. This type of armoring process is very difficult for the mass production base. This must endure a very wide range of temperature changes, and some stress. At that time digital communications was coming, and we had to develop more stable automatic splicing equipment. It's a kind of very precise robotics. Similarly, we had to build extruding technology. This is polyethylene, but with an air bubble in it. We had to develop extruding technology with a uniform bubble in it. For the CATV coaxial cables we also had to develop a highly blown polyethylene extrusion. Previously it was 50% blowing rate — the ratio of pulling strength to air bubble. Now we have developed one with a 80% ratio. We hold patents, and all the CATV cable in the United States today use our patents, I think. This is one of my projects we had at that time. Most importantly, we started the development of the optical fiber and invested a lot of equipment to finish optical fiber cable. We really needed that advanced research laboratory in the Yokohama area. It took many years after I left the Yokohama area, but we eventually managed to build a research laboratory in my area. They now do advanced research in opto-electronics.

Aspray:

When was that opened?

Nakahara:

The building was completed six years ago and the laboratories were officially opened five years ago. I felt its necessity for the future, especially when we developed optical fiber. At that time we anticipated fiber to the home. To do that, we needed to have opto-electronic integrated circuits in the future.

General Management of R&D

Aspray:

What happened next in your career?

Nakahara:

I was asked to return to Osaka to be the general manager for R&D groups. Of course, the general manager's task covered my previous work: the research and development work in Yokohama. So I considered the philosophy of company management, what should be the resource allocation, and how to manage it.

Aspray:

That is the resource allocation within research, or the amount of resources that should come to research as a proportion of everything?

Nakahara:

Both. I also considered the best way to have such an innovative project that was a diversified project, a venture within the company. The first goal was to finish the opto-industries, optical fiber and also the related components, passive or active, of the system. [Showing diagram] This shows the target of emphasis for future research and development.

Aspray:

It says "Opto-electronics, new materials, systems, energy, analytical characterization."

Nakahara:

These are infrastructures for investment for research and development as well as for already existing business. We had several laboratories, one in the Osaka area and one in Itami. I especially promoted compound semiconductors because they will be the basic material for the optical integrated circuit as well as the microwave. At that time measuring equipment and analyzing equipment within the company were not at a high level. It was a second-class level. The company was not able to immediately procure the highest level of equipment. I considered the strategy. If we participated in a national project, we could procure such equipment step by step. So we participated in many national projects, such as fine ceramics, optical electronics, some new organic materials, and later the superconductor. That way our level of analyzing equipment became higher and higher. Now we are top-class in that sense.

National Projects & Company Growth

Aspray:

When you say a national project, could you explain what that is? I think that in Japan and the United States those are different kinds of things.

Nakahara:

For instance, Science and Technology Agency and MITI, the Ministry of International Trade and Industry, have large-scale projects. They have a target, and they listen to proposals from industries. To be selected as one of a consortium, we must be number one in Japan in that particular technical field, and we must propose some new idea. If it's not a new idea, it can't be a large-scale project. We made some proposals using our best technology, and gradually we became regular members.

Aspray:

I see. I assume that there are some government funds available, but is the company also expected to use a fair amount of its own financial support?

Nakahara:

Yes. I set up the guidelines within the company; if we participate in such a national project, we can get only the seeds of the new industry. So to finish the new products, we must spend at least the same amount of money and must develop by ourselves all that is necessary to set up a new product. One of the merits of national projects is that many people are investigating and considering the important technology of the future. If you participate in such a product, it's proof of technical reliability.

Aspray:

What portion of Sumitomo's new business comes about through this process?

Nakahara:

Since then we developed various new products. Our sales have become a little bigger than electric wire and cable, so our original target of 50/50 has been achieved. This is for not only the parent company, but also for several affiliate companies. If the product is entirely different, it's better sometimes to set up a new affiliate company that we control. In such an affiliate company, more than 60% is non-wire and cable business now. In that sense a wider range of science and technology is helping our business activities very much. So I can give some examples. [Shows a chart]

Aspray:

Tremendous growth!

Nakahara:

That is what I said.

Aspray:

Let me just read this into the recorder. This says "Policies of the R&D Groups" — there are four of them. The first is that R&D is essential to the continued survival of an enterprise. The second is: "original technological development based on corporate management or fostering new business and improving existing product." The third is: "positive participation in national projects for searching for seeds of new technologies and challenging technological frontiers." Finally, the fourth is "higher efficiency of R&D and encouragement of workers' motivation through participation of all employees."

This other chart shows a very rapid growth of the business from six million to fifteen million U.S. dollars over a course of only five years. That's really remarkable.

Nakahara:

We do have many product candidates for the next generation of business.

Organization of R&D

Aspray:

Yes. Do you want to tell me how you have organized the R&D function within the company? For example, how does it relate to product development, to marketing, to corporate strategy? How are all of those interconnected?

Nakahara:

Generally speaking, it's a difficult problem to have suitable organizations. While I was general manager of R&D, I changed several times, but never established so-called basic research laboratories. If we consider the process of a new product, starting from research, it's not linear. In principle we need basic research, then application research and development, then production, and then sales and distribution. But sometimes we need various types of feedback. When delivering our new product, a customer might say "This is not convenient, so you should improve it." Sometimes they create some complaints, some trouble. So we must analyze that phenomenon based on a very basic knowledge — almost like basic research. It's a theory; it's mixed, and sometimes a research engineer has to go to the customer and explain or persuade the customer that our new product is good. Innovation is something like that. A basic researcher must also play the role of a sales engineer. So it's quite mixed. Originally we had a very simple organization with only one general manager and many young subordinates, but no intermediate step. Gradually we had to have some organization. Eventually we had several laboratories.

Aspray:

Ten or twelve. Was each of these in just one location?

Nakahara:

Usually, but sometimes two places. The important thing is that each laboratory has some basic research function and development function, and also a technical service function to the related business divisions.

Aspray:

Oh, that's really interesting. If a particular researcher was working on one project that looked fruitful for product development, would that person be carried through into development, and maybe into the product stage?

Nakahara:

Audio File

MP3 Audio
(205_-_nakahara_-_clip_1.mp3)

Yes, mostly. This is a significant difference between U.S. and Japanese customs. In the U.S., a researcher always stays in the laboratory, never moving with the product. In the case of Japanese industry, many people are interested in managing the product or the business. Research leaders who develop new products or new technology often move to the business division to practice their business and hopefully get some profit out of it.

Aspray:

Yes, I see. Do the individual engineers feel good about doing that? In the United States, one would have to force them to go on to the product side because they wouldn't want to leave the laboratory. What is the attitude here?

Nakahara:

I don't know about other laboratories, but in the case of industry, especially in Sumitomo Electric, most people are willing to move because they want the practical experience. Some people want to stay in the laboratory, and in such cases we let them continue research. It is very important to leave some people in the laboratory for the next phase of a project or for back-up research and development work for the new business group. So I never move entire groups of engineers. Ten or twenty persons stay there, 70 to 80% move, and we get some other people to form a business group.

Aspray:

I'd be very interested in your comments about allocating resources to the various research groups and research projects. Could you just give a general idea about this?

Nakahara:

Resources for research and development are generally limited, so in principle we must have some allocation. But if we are just cutting the budget and allocating it, people might feel unhappy. We usually ask them to make some proposal. For basic research, the required funding is very little because the researchers are not using bigwig equipment and they work by themselves. For the later stage of development, sometimes we need big money because we need production people and sales people, or quality assurance people. Sometimes we need big money and many people. In such a case we ask them to submit a prospective plan, of five years for instance. They give their expectations in terms of sales, or profit, kind of plant, and how many people are necessary. They make a plan, just as in an ordinary company. It's very small scale, but they give us a long-range plan. Every half-year management people have a discussion with the project leader, about what happened during the last year, and the differences between last year's plan and this year's. Some projects always have the same plan, just shifting. Sometimes a product is developed earlier than in the original plan, so then a project leader recognizes that their planning was not accurate.

Aspray:

What you have described to me is a bottom-up approach, where the researchers are suggesting ideas that are filtered out somewhat. Is there also a top-down function working here, that certain kinds of areas have been suggested as emphases?

Nakahara:

Yes. In that sense, a manager must be very interested in a project. If the manager is strong enough to persuade his colleagues, it's top-down. Another method of top-down strategy is that we have a corporate level committee called the RIC, the Reliability and Integration Committee. The directors have a chairman of that committee. If they want some very strong policy, such as stopping the project or making a big financial investment, the corporate managers get together and discuss matters seriously.

Aspray:

Suppose a researcher comes up with a really promising idea, but it's outside of your business areas that are current. Would you consider it?

Nakahara:

Our business is broad enough to cover almost everything, except the amusement business. Some business is out of scope. But mostly we are able to cover their proposal.

Aspray:

In the area of new products, would you say that your work is more applications or technology driven? That is, are people encouraged to look at opportunities in a particular applications area and innovate within that, or are they simply working from basic research principles and then seeing what application there is and what customer opportunities there are?

Nakahara:

Mostly in parallel I think. Some people are interested in a very basic area and some people in applications. Even the same person is sometimes very much interested in basic principles and at other times in application.

Aspray:

You have people doing research on the manufacturing side. How does that relate to basic research activities?

Nakahara:

Our guidance of research activity is about 50% for the supporting existing business field and 50% for new business. These are not necessarily separate people, two groups. The same person can do both. In that sense we have several laboratories. Near the laboratories we have the business people, the production. This is how they communicate. They make presentations about their research, and invite all the production people, or facility-arranging people and managers, not only from their district but also from other districts. They have an opportunity to have discussions with each other. Business groups invite the laboratory people in order to explain their business plan, or what kind of technology is really necessary for their growth.

Aspray:

To what degree are you vertically integrated? Are you producing the fiber optic cable that you are also using in various kinds of applications?

Nakahara:

If we take the optical industries, we are first producing optical fibers and secondly making optical fiber cables. We also have some component groups, such as connector splicing, light-source detectors, or electronic devices, which is necessary for the component. Then we have a system group, such as optical CATV, including ordinary CATV, and local area networks. We also have a power cable group. They are using a composite of power cable and optical cable. We have a development group that is manufacturing a new type of optical detector, and some other people are doing research related to that field. So we are vertically integrated, very much so. We also have a construction business considering how to install the cable.

Aspray:

So at the low end of this vertical chain it seems that the manufacturing capabilities are especially important. My question is, do you have a group of people who are not so much interested in new processes themselves, but in advanced manufacturing techniques?

Nakahara:

Yes, we have a group of people within research and development engaged in developing new processes, and the trial manufacture of new equipment. For instance, in the case of optical fiber we have such a group within a research laboratory. In addition to that we have a similar group within the business division, and a specialist group for the development of production in general. Usually people from these three groups get together and discuss, "So we want to set up a new type of process. We must make a lot of process experiment in the factory, and design some equipment so we can satisfy the old environment protection program." Eventually they reach some pilot plant, which they make as an experiment. If they are satisfied, they must make some real plant. In such cases, professional plant engineering people do the business.

Funding of R&D

Aspray:

I don't mean to ask proprietary questions. What percentage of your revenues is spent on R&D, and how have they changed over time?

Nakahara:

If the company gets some reasonable margin, we divide it into three parts. One portion is less than half, the dividend to the shareholders or the cash deposit in case of emergency. Another portion is for investment and future production, the depreciation of production equipment. The third portion is our investment for the future in research and development. It is not divided exactly into thirds, but it is not very much different from that. If we get more profit, the research and development fund will increase, but a very rough guideline is that around 4% of entire sales is allocated to research and development. We have a variety of business divisions, but some portion is making the bare wire for the wire and cables. It's an old area; they don't need the big research and development. But the high technology area needs more.

Role as Managing Director

Aspray:

Could you describe the different positions you've held and what your responsibilities were as a senior manager?

Nakahara:

As the general manager of research and development I was in charge of research and development activities for the entire company. Later on I initiated several new projects, so at the same time I was in charge of creation of new business. I was in charge of the communications business, and also generally in charge of the wire and cable business. The automotive component is a very big portion of the company, and we continuously had strategic meetings on automotive components.

Aspray:

As you moved from general manager to managing director, and then to executive vice president, and so on, what were the changes over time? How do you spend your time today? What are your responsibilities? What takes most of your attention? You live in a different world than I do, and I don't quite understand.

Nakahara:

The managing director has two tasks. One is the allocated business area. R&D is allocated business, but in addition to that, the managing director must consider the entire company. Relationships among various divisions are also his responsibility. It is a matrix system. One is the director's responsibility; the other is a horizontal responsibility that covers the entire company in principle. So in some companies the managing director is entirely responsible for a certain sector, but is not responsible for other sectors. In the case of our company, the managing director is in charge of some allocated business portion. His responsibility becomes more general, not only focusing on business but also on the morale of the company, relationships among people. Relationships outside of the company itself are becoming more and more important. At this moment my responsibility is something like 50% inside and 50% outside, and the outside covers not only Japan but also the international scene.

Aspray:

How would you spend a typical business day? What kinds of issues would come across your desk? Would you be at a desk, or would you be traveling all the time?

Nakahara:

When asked that, I always say I spend one-third of my time in headquarters in the Osaka area, and one-third in the Tokyo area. When I am in Tokyo I am mostly attending various kinds of meetings, including committee matters and issues like that. We have some operations in the Yokohama area. I sometimes visit there. One-third will be somewhere else, including outside Japan.

Aspray:

Over the past ten years, what have been the most persistent and difficult challenges you have had in your job?

Nakahara:

We have several tasks, but one of the difficult things is to keep a constant financial condition for the company. Getting better people from outside of the company is also very difficult. Scouting people.

Aspray:

Is all the recruiting done at the college level? Entry-level people?

Nakahara:

Yes, mostly. It's very much related to competition among some other companies. Also, we have several projects with a target, and it is always difficult to satisfactorily reach such a target. For instance, for a long time we were pursuing fiber to the home, but it is very difficult to achieve. I know we need another ten or twenty years.

Market Share and Competition

Aspray:

A very expensive thing to complete, also. As a senior manager, in what way do you feel you have been most successful? How would you describe the mark you have made on the organization?

Nakahara:

We have, as I said, 50% of the wire and cable business. That is a very professional business group within the wire and cable field. At the same time the new diversified business comprises the other 50%. This is the world ranking at this moment.

Aspray:

Oh, so you're number two at this moment, behind Alcatel?

Nakahara:

Number two. Alcatel is buying a lot of companies, as you might know. It bought a company in the United States, many in France, many in the rest of Europe, so it is always increasing. We are not spending our money that way. We mostly spend on technical matters. Some of our customers evaluate our product technically, and we are raising our share. When I joined Sumitomo Electric, we were the number two electric cable company in Japan. Now it's obvious we are number one in Japan. At the same time, many wire and cable companies in Japan are following our process. Counting both, we are establishing a number one position in Japan. We are not satisfied because many measures are counted only in Japan, but we must consider our international position. So we have established such measuring systems.

IEEE and Sumitomo 3M

Aspray:

You have been involved in a very large number of professional and public activities. Would you choose two or three that you think are the most important and tell me about them?

Nakahara:

At this moment, as you know, I am working for the IEEE as a regional director.

Aspray:

That's a full time job on its own!

Nakahara:

In addition to that, serving as the Sumitomo 3M director is important. 3M has 50%, we have 25%, NEC has 25%, and Sumitomo 3M can be considered one of the most successful experiments in Japan for this company. Sometimes the United States and Japan help each other. I am a member of the Engineering Academy of Japan. In 1991 I became vice president. I helped establish the Engineering Academy after becoming a member of the Science Council of Japan. We discussed the necessity of an engineering academy, and its membership is now about 500 to 600. We became a member of an international group called CAETS and its partners with the National Academy of Engineering in the United States. We are putting emphasis on international relationships. So I have attended so-called U.S.-Japan High-Tech discussions for ten years. One of the most important tasks of the Engineering Academy of Japan is maintaining good relationships with the United States. I also work as vice chairman for the Japan Research Industries Association. This is partly sponsored by MITI, and we are discussing what kind of new technology is necessary for the next generation, for research and management. I also contributed to establishing such a Japanese industry research association for a long time. I'm a member of the Industrial Technology Council in the Ministry of International Trade and Industry. It is the highest level of technology council meeting in MITI and through their R&D management.

Aspray:

What sorts of issues do they discuss?

Nakahara:

The kinds of research and development projects that should be established within MITI, and through their R&D management. And IEEE related work, which is always important.

Aspray:

Can you tell me about the Emperor's Blue Ribbon medal?

Nakahara:

This was unexpected. I got the medal just two weeks ago.

Aspray:

How very nice.

Nakahara:

Thank you very much. But it is not very important, you know. [Laughter] A symbol of status, especially for the company.

Role of Engineers in Management

Aspray:

I want to give you a chance to talk about other things in your career that we haven't spoken about yet, things that I didn't bring up that you would like to talk about. We hope that researchers who are interested in careers of distinguished people from Japanese industry will come to our center and look at these interviews, so we like these to be fairly well rounded and complete records of people's careers. What haven't we talked about today that you would like to make sure researchers know about?

Nakahara:

I think that if you look at this there is a variety of technical fields. As a general manager I have to run a very broad range of technologies, for instance polymers or metallurgy, or some other field, and it's important to understand the wide range of technology. For industry it is very important to integrate such technologies, not only to integrate technologies but also to organize research and then development to a commercial product. There is also production quality control and distribution. We must have a broad scale of knowledge, not only knowledge of science and technology, but also economics, politics, and people's demands. I am an advisor of the Japan Research Institute. This is one of the newly established think tanks, the majority owned by Sumitomo. It wants to become one of the biggest Japanese think tanks, such as Nomura or Mitsubishi. It started from the bank business, so its advisors are ex-government officials from the Ministry of Finance, the Bank of Japan, the Economic Planning Agency, or MITI. I am the only advisor in a technical field. Every month we have a discussion, so mostly we discuss monetary problems, both domestic and international. Such experience is very useful for research and development management.

Aspray:

As a senior manager in the company, how do you feel that your engineering background is important?

Nakahara:

I am not sure, but if we consider a science background, it might be slightly different from an engineering background because engineering itself is very practical and pragmatic. Company management must stand on reality and feedback based on experience. In that sense, an engineering background is one of the most suitable backgrounds to bring to the company management.

Aspray:

Do you think that somebody who had come up with only a financial or legal background could do the job that you do today?

Nakahara:

Well, that's difficult, because usually Japanese companies have several corporate officers who have different experience, so together they have all the knowledge that is necessary. If a company lacked engineering corporate officers, they might have trouble, especially in the long-range program.

Aspray:

So some corporate officers need to have that kind of intimate knowledge of the engineering field?

Nakahara:

Yes, at least some.

Globalization & International Organizations

Aspray:

Perhaps we can talk about the company for a couple of minutes. Can you tell me about its current business philosophy, what its challenges are, where it looks like it is going in the future? I should understand better its place right now and its place in the future.

Nakahara:

The purpose of a company is to make a reasonable return to the shareholders, employees, or local society. And we are doing that. But as I said, suitable diversification, especially diversifying into entirely new business which nobody considered doing, is especially important. At the same time, we have globalization because we can share benefits as a result of company management, such as to provide products and jobs, if we produce in a different country. Diversification and globalization are the basic two items we should consider for the management of the company. Since the end of the Cold War, business is becoming more and more global, and the economy is becoming borderless. So, we must consider what kind of industry is most appropriate in each country. In that sense, depending on basic conditions, we must create new industry because our GNP per capita becomes higher and higher, and wage and welfare costs grow higher and higher. In the mid-industrializing or pre-industrializing countries, the wage is much lower, so if we do similar production in such countries, product cost will be cheaper there. Advanced countries like the United States and Japan should create new businesses and transfer the old businesses step by step to the other countries. Generally speaking, if the original industry becomes uncompetitive in terms of cost, we must consider the new location in a different country. At that time we will need a technology transfer. But if we simply do that, people in the original country might lose their jobs, so we must consider a new industry for them. That is a vertical direction.

Aspray:

I see. Very interesting.

Nakahara:

It becomes essential to create new industries based on research and development in advanced countries. If we want to stop that, using political power, then eventually the product in the original country will lose competitiveness. So we must consider some multinational operations in the future.

Aspray:

Would you care to make some remarks about the differences in technological businesses in Japan and the United States? Maybe a three-tiered comparison, if you would like, with Europe as the third part.

Nakahara:

Business in the United States is basically very similar, technology oriented. They have a very good infrastructure such as electric power supply or water supply. The labor and welfare costs are at a similar level, and very basic business groups are similar. Roughly speaking, we are very similar, but if we look at it in detail, we must carefully consider differences in custom or law. The basic rule is very similar. But if we consider other countries, sometimes it is very different. For instance, China is entirely different. It still has socialism, and it has rules, but they are never practiced as written. We know there are a lot of issues between the United States and Japan, but issues caused by imperfect investigation or too shortsighted decision-making.

Aspray:

I'd like to give you an opportunity to talk about IEEE and give me your views on this as an international organization, especially from the perspective of Japan and Region Ten.

Nakahara:

The IEEE is the biggest professional engineering organization in the world, with more than 300,000 members. IEEE recognizes that it should be a global organization rather than a U.S. organization, and they have set up a target. IEEE is practicing toward that right direction. Last April we had a series of meetings, and one of them was to discuss the cooperation within IEEE and Japan's national societies. We have about six institutes, not unified as in IEEE, but we get together and are talking about an umbrella agreement with IEEE and Japanese societies. After that, probably each society within IEEE is going to have a more specific agreement with the appropriate Japanese national societies. I think such globalization is going on not only in Japan, but also in Europe and some other areas. The United Nations has some umbrella organizations, and each has their own organization. Some people are arguing that IEEE gives very precious know-how very cheaply to other countries, sometimes competitors. On the other hand, some of the competitors, such as IEE in the UK, are saying that IEEE is invading IEE. So we must be confined between two nationalisms. But in many cases we really need international standards for communications and computers. Otherwise we cannot communicate with each other.

Aspray:

Your comments are fairly optimistic. You feel that there is a way for change to take place, for IEEE to have an appropriate international role. It seems so much like a struggle right now.

Nakahara:

I think it's something like language. Every country has its own mother language, but when we get together we speak English. Likewise, IEEE can play a role, just like English, for international conventions in the future.

Aspray:

Very good. I think that is all the questions I have.