Blending Silicon Valley with a 150-year-old Japanese Conglomerate – A Conversation with Abhijit Dubey, Global CEO of NTT Ltd.

Blending Silicon Valley with a 150-year-old Japanese Conglomerate – A Conversation with Abhijit Dubey, Global CEO of NTT Ltd.

Abhijit Dubey has been the Global Chief Executive Officer of NTT Ltd since April 2021. NTT Ltd is an industry leading $10B infrastructure services and communications company. As of Oct 1 2022, NTT Ltd merged with NTT Data global business to create a global $30B IT Services powerhouse, delivered by 180,000 employees in 50+ countries. NTT Data is one of the leading internet infrastructure and IT services player in the world. Abhijit has recently been announced as the CEO designate for NTT Data Inc., the global business of NTT Data outside of Japan, with $18B revenue and 150,000 employees.

For over 20 years, Abhijit served on the front-line of the fast-moving Silicon Valley mindset, as part of the Global Tech, Media & Telecom (TMT) Practice at McKinsey & Company. Today, nearly 3 years into his NTT journey, Abhijit has led a significant transformation of NTT Ltd, which involved the bringing together of 39 different companies, and is currently leading the $30bn merger of NTT Data and NTT Ltd. His unique transformation and leadership approach blends the pace and culture of Silicon Valley with the heritage and roots of a 150-year-old Japanese conglomerate.

In this interview I speak to Abhijit Dubey, Global CEO of NTT Ltd. We discuss how he’s combining Silicon Valley and traditional Japanese leadership styles to bring together 39 companies in a $30bn merger process. We also look at the importance of leadership learning, and how to successfully lead environmental & social governance, and corporate venturing.

Q: How do you combine the management styles of Japan & Silicon Valley?

[Abhijit Dubey]:  This topic is indeed captivating, focusing on the intersection of Eastern and Western management philosophies. To provide some context, I have over two decades of experience at McKinsey & Company, primarily consulting for technology companies in Silicon Valley and other tech hubs such as Seattle. This experience offered me extensive insight into the workings of tech companies of various sizes and their distinct cultures, particularly in Silicon Valley.

However, my interaction with NTT Group, a Japanese conglomerate, which was a client for nearly ten years before I joined them, added a new dimension to my understanding. During my last decade at McKinsey, I engaged closely with CEOs in both Silicon Valley and Tokyo, which exposed me to diverse management and leadership philosophies.

A crucial realization for me is that the management styles of the West and East are not mutually exclusive. In fact, blending the best elements of each can be highly effective. Western management, particularly in Silicon Valley, is often seen as a triumph of capitalism, primarily focused on maximizing shareholder value. Although there’s a shift towards stakeholder capitalism, the primary measure in most Western countries, especially in the Valley, remains shareholder interests.

Contrastingly, my experience with NTT revealed a different approach, one that prioritizes stakeholders, sometimes even more than shareholders. This approach is deeply rooted in Japanese history, dating back over 300 years to a very successful merchant class known as Omi Shonin. They adhered to the Sanpo-Yoshi philosophy (meaning good-3 ways), emphasizing that business should benefit the buyer, the supplier, and society. This philosophy still influences many Japanese companies, including NTT, fostering a broader consideration of stakeholders.

In my role, I assess new investments and innovations not just through financial lenses but also considering their societal and environmental impacts. This broader perspective is a key difference from the shareholder-centric approach.

Another notable distinction is the focus in Silicon Valley on technological superiority, whereas in Japan, there’s an intense emphasis on delivery quality and the customer and employee experience. This doesn’t diminish innovation; for instance, NTT invests heavily in R&D. However, there’s an equal, if not greater, focus on enhancing customer and employee experiences.

Furthermore, the approach to timeframes and decision-making differs significantly. In the West, there’s a tendency for a ‘snacking’ culture, quickly moving from one initiative to another. In contrast, Japanese management often takes a long-term, patient approach. My first encounter with a 7-year business plan in Japan was a stark contrast to the typical 1 to 3-year plans in the West. This longer-term perspective encourages patience and a more considered approach to innovation and economic cycles.

Lastly, the decision-making process varies greatly. Silicon Valley is known for its command-and-control or logical structures, reflecting its engineering-driven culture. In Japan, decision-making is consensus-driven. Melding these approaches involves inclusive decision-making that doesn’t compromise speed and agility. In my experience, involving core groups in decision-making, even if it adds a short delay, is incredibly valuable.

In summary, it’s not about choosing one philosophy over the other. It’s about selecting and integrating the best aspects of both to enhance how you run a business.

Q: What are the key pillars of a multi-billion-dollar M&A process?

[Abhijit Dubey]:  We are currently in the midst of the process of merging NTT DATA and NTT Ltd., leveraging my extensive expertise from my previous consulting career to guide us. There are several key principles we adhere to. Firstly, it’s crucial to safeguard the existing business and its momentum at NTT Ltd. and NTT DATA. This protection of business momentum is our foremost objective as we integrate.

Secondly, clarity in value creation is essential. We constantly ask ourselves how combining forces results in a sum greater than its parts – how does this merger help us better serve our clients, employees, society and the planet. This in turn dictates the priorities and sequencing of our integration efforts. .

The third aspect is to perceive this not merely as a merger of two companies but as a chance to catalyse transformation across the entire combined entity. This is an opportunity to address areas where each company individually may not have excelled and use the integration as a springboard for broader change.

Perhaps the most critical element is the cultural integration. The distinct cultures of the two companies present a significant challenge, consuming 80-90% of our efforts. Our goal is to forge a unified team culture, permeating from senior leadership to the deepest levels of the organization.

Finally, the composition and role of the integration team are vital. It’s important to involve our best talent in this process. Their participation in the integration and transformation team is not only a crucial part of the current transition but also a significant consideration for their career trajectory. We aim for the team to comprise individuals who can truly contribute to and benefit from this transformative experience.

Q: How do you lead transformation across a global business?

[Abhijit Dubey]:  In approaching this task, there are several key strategies to consider. Firstly, it’s crucial to adopt a bold mindset right from the start. I advocate for setting almost unrealistic targets. This approach might seem counterintuitive, but it’s essential for enabling substantial change. If we only aim for realistic targets, our efforts will be limited to minor tweaks rather than significant transformations. So, the first step is about embracing ambitious goals to foster major changes, and I’m confident in our ability to achieve them.

Secondly, clarity on the primary objectives of the transformation is vital. These ‘big rocks’ should be limited to 3-5 key areas. While there are many aspects to address, focusing intently on these crucial points is necessary. This focus involves not only identifying these key areas but also dedicating the best resources, both in terms of talent and investment, to these transformations.

The third crucial factor is ensuring alignment of incentives throughout the organization, from top to bottom. Everyone, from the CEO to those in the deeper ranks of the organization, should have their incentives aligned with the top economic value creation levers. This alignment is key to driving the transformation effectively.

Fourthly, a principle that I hold personally important is radical transparency in communication. This transparency extends from the shareholders to every level within the organization. It’s vital that everyone is aware of what is working, what isn’t, and the actions required for improvement.

Lastly, it’s imperative not to lose focus on innovation during this transformation. This might involve creating a parallel stream dedicated to continuous innovation within our business, ensuring that while we transform, we also keep advancing and evolving in our industry.

Q: What contributes to successful corporate innovation, and corporate venturing?

[Abhijit Dubey]:  Addressing innovation in a large corporation is indeed a complex task with no definitive right answer, as there are various types of innovation to consider. First, there’s incremental innovation, which involves enhancing a specific process or way of working to make it faster, better, and more efficient. This type of innovation is something that everyone in the organization can contribute to and benefit from.

On the other end of the spectrum lies breakthrough innovation. This is about setting ambitious goals, such as developing a new business that could grow from zero to $100 million in two years, or even half a billion dollars in three years. It involves a strategic plan for customer growth and the development of truly innovative and new business ventures.

Our approach to innovation encompasses both ends of this spectrum. For the cultural aspect of driving innovation, we focus on setting the right incentives, rewarding, and recognizing those who contribute. For breakthrough innovation, our strategy has been multifaceted. When I first joined NTT, we established a New Ventures and Innovation organization with its leader sitting on the executive team, ensuring that new business initiatives received equal priority alongside core business activities.

This New Ventures organization is closely aligned with our core business in terms of incentives, but operates with a distinct approach to investment, similar to a venture capital firm. We combine patience with strategic, milestone-based stage gate investments. Additionally, we actively engage with the ecosystem through our NTT venture capital arm, NTTVC, which operates independently but collaborates with us on strategic investments. This approach allows us to be agile partners to startups, accelerating their market entry while also creating new service opportunities for us.

An example of this successful approach was our first enterprise private 5G launch, which we achieved remarkably fast – from ideation to market-ready delivery in just six weeks. This achievement highlights the effectiveness of our strategy in driving innovation at speed.

In summary, while there are multiple ways to foster innovation in a large corporation, our approach has been to blend patience with strategic investment and active ecosystem engagement, creating a win-win scenario for all involved – startups, investors, and our company.

Q: How do you approach decarbonisation in such an energy intensive industry?

[Abhijit Dubey]:  Understanding the environmental impact of our business, particularly in terms of carbon emissions, is crucial. As one of the world’s largest data centre providers, with a significant role in the global internet backbone and infrastructure, our primary carbon footprint comes from these operations. The data centre business, growing at over 20% annually and involving substantial capital investment, is our most significant emitter of carbon.

In line with our overarching philosophy to set ambitious goals, we’ve committed to a bold target for our data centres. By 2030, we aim not only to achieve net zero emissions but also to power these centres entirely with renewable energy. This commitment goes beyond mere greenwashing; we’re not interested in buying carbon credits for offset. Instead, we’re dedicated to a genuine transformation towards 100% renewable energy. Achieving this goal demands a higher level of commitment, substantial investment, and innovation.

This commitment has spurred us to pioneer numerous innovations in our data centres. We’re rethinking how we approach aspects like cooling systems and our reliance on the renewable energy ecosystem. NTT in Japan has even established its own renewable energy company to support these efforts.

So, while some of our environmental philosophies may be similar to others, the specifics of our business – primarily our data centre operations – define our approach to sustainability. Our focus is not just on meeting targets but on fundamentally transforming the way we operate to become a leader in sustainable practices within our industry.

Our environmental strategy addresses both carbon and water usage concerns, particularly considering the demands of AI infrastructure. AI systems require extensive cooling, which traditionally consumes a significant amount of water. To tackle this, we’re focusing not only on renewable energy but also on innovative cooling techniques, such as liquid immersion cooling and direct chip cooling. These methods are designed to reduce both our energy and water footprints.

Indeed, the growing demand for AI, projected to add 5-7 percentage points to a market already expanding rapidly, amplifies the urgency for innovation in this area. As the world’s demand for energy and water intensifies, our role in developing sustainable solutions becomes increasingly crucial. Our approach involves not just meeting current standards but actively pushing the boundaries of innovation to address the dual challenges of energy and water consumption in an increasingly AI-driven world.

Q: As a leader, how do you ensure you stay on top of the rapidly changing world you are in, and with the rapid changes in your business?

[Abhijit Dubey]:  Navigating the current pace of change, with its influx of new variables across various dimensions, is undoubtedly one of the most challenging aspects of leadership. In this rapidly evolving landscape, a leader must possess a strong desire for continuous learning and maintain an unwavering curiosity. I actively seek diverse perspectives, both internally and externally, to inform my understanding and decisions.

Another crucial quality is flexibility coupled with resilience. In an environment where change is the only constant, adapting swiftly and robustly to new scenarios is key.

Finally, an essential part of my leadership approach is openly acknowledging mistakes. I believe in owning up to errors publicly, learning from them, and then moving forward. In this complex landscape, perfect decision-making is unattainable. I estimate that about 50% of decisions might turn out to be incorrect. However, the ability to quickly recognize and learn from these missteps not only improves decision-making over time but also builds greater trust within the organization. This approach of humility, learning, and adaptation is vital in guiding a team through the challenges of today’s dynamic business environment.

Q: What does legacy mean to you?

[Abhijit Dubey]:  Reflecting on leadership legacy involves two distinct yet related aspects: what you will be remembered for and how you will be remembered as a leader.

Firstly, what you will be remembered for hinges on the sustainable and unique impact you’ve made, both personally and professionally. In my current role, leading the global expansion of a Japanese telecommunications company, the goal is to establish an Asian champion in the IT services industry. We observe multinational companies with American heritage like Accenture and European ones like Capgemini, but there’s a gap for an Asian giant, especially from Japan. Our aim is to create an Asian, truly global, multinational giant – a feat unprecedented for a Japanese company. Moreover, our focus isn’t just on growth; it’s about ‘technology for good’, a philosophy that differentiates NTT and our approach to business.

As for how I will be remembered as a leader, that is something only time can reveal. Philosophies and leadership styles often leave a lasting impression, and leaders are typically remembered by one or two defining adjectives. While I have aspirations for how I’d like to be remembered, it’s ultimately the passage of time and the perspectives of others that will shape that remembrance.

Thought Economics

About the Author

Vikas Shah MBE DL is an entrepreneur, investor & philanthropist. He is CEO of Swiscot Group alongside being a venture-investor in a number of businesses internationally. He is a Non-Executive Board Member of the UK Government’s Department for Business, Energy & Industrial Strategy and a Non-Executive Director of the Solicitors Regulation Authority. Vikas was awarded an MBE for Services to Business and the Economy in Her Majesty the Queen’s 2018 New Year’s Honours List and in 2021 became a Deputy Lieutenant of the Greater Manchester Lieutenancy. He is an Honorary Professor of Business at The Alliance Business School, University of Manchester and Visiting Professors at the MIT Sloan Lisbon MBA.