Lessons from Hitachi: Why Digital Transformation is Essential for Every Business

Many businesses believe digital transformation doesn’t apply to them. For industries that don’t feel inherently “digital,” it’s easy to dismiss emerging technologies as irrelevant. However, the story of Hitachi—a company that has redefined its future through bold transformation—proves otherwise. Companies resistant to change are often the ones sitting on untapped opportunities to grow, evolve, and outpace their competitors.

The Remarkable Reinvention of Hitachi

In 2009, Hitachi was on the brink of collapse. With over 1,000 subsidiaries and a presence in everything from washing machines to microchips, the company had become fragmented and outdated. Burdened by its legacy operations, Hitachi was struggling to find a way forward. Today, it stands as one of Japan’s most valuable companies, with a market capitalization that has tripled in just two years.

How did Hitachi achieve such an extraordinary turnaround?

• Strategic Focus: Hitachi sold off unrelated divisions and streamlined its business to focus on its core strengths. Divestments generated over ¥3.3 trillion ($19.5 billion), which was reinvested in high-potential areas like power grids and industrial software.

• Data-Driven Solutions: The company launched Lumada, a division dedicated to harnessing data science and digital solutions for infrastructure, energy, and industrial clients. Lumada has become a critical growth engine, driving 41% of Hitachi’s core earnings.

• Innovation Across Industries: Rather than inventing new products, Hitachi transformed existing infrastructure by applying digital tools. Whether optimizing power grids or improving factory automation, the company integrated technology into its operations to create smarter, more efficient solutions.

This strategic pivot wasn’t just about adopting technology—it was about using technology to elevate existing capabilities. Hitachi’s transformation demonstrates how even traditional businesses can unlock new value by reimagining their approach.

Why Digital Transformation Matters for Every Business

Hitachi’s success underscores a larger truth: digital transformation is not reserved for tech giants. It applies to businesses across industries, from manufacturing to logistics to retail. It’s not about replacing what a business does—it’s about enhancing it.

For example:

• Manufacturing: Predictive tools can identify maintenance needs before they disrupt operations, reducing costly downtime.

• Retail: Analyzing purchasing data can help personalize customer experiences and improve inventory management.

• Logistics: Optimized routing and scheduling can cut fuel costs and improve delivery times.

• Service Industries: Automating routine tasks can free up teams to focus on delivering better customer experiences.

Digital transformation is about addressing real-world challenges, such as inefficiencies, data overload, or bottlenecks in operations. By starting small and targeting specific pain points, businesses can begin to unlock the potential of these tools without disrupting their core operations.

Hitachi’s Lessons for Business Leaders

The transformation of Hitachi is about more than just technology. It’s about vision and leadership. The company embraced the opportunity to challenge assumptions and reinvent itself, proving that businesses in even the most traditional industries can evolve.

Three key lessons emerge from Hitachi’s story:

1. Focus and Simplify: Streamlining operations and prioritizing growth areas create room for innovation and agility.

2. Leverage Existing Strengths: Hitachi didn’t abandon its industrial expertise. Instead, it applied modern tools to enhance its capabilities and better serve its customers.

3. Adopt a Growth Mindset: Transformation requires rethinking how problems are approached and being open to new ways of working.

   
   

The story of Hitachi raises a simple but powerful question for every business leader: Are you fully leveraging the tools and opportunities available today to grow your business?

Digital transformation is not about overhauling an organization overnight. It’s about taking that first step—whether that means analyzing data, optimizing operations, or automating a routine process. The possibilities are vast, but the benefits are clear: increased efficiency, better decision-making, and a stronger competitive position.

Writes Stefanos Kyprianou, Business Systems Analyst @ Capacitor Partners