Hideo Okuda, Director and Managing Executive Officer, General Manager of Digital Solutions Division, West Japan Railway Company

A boiled frog undergoes a major transformation! Utilizing digital technology to create a "new station"

Director and Managing Executive Officer, General Manager of Digital Solutions Division, West Japan Railway Company　Hideo Okuda(Okuda Hideo)

■ Profile

Joined the company in 1992. After working in the real estate department, he led management strategy, capital investment, M&A, etc., mainly in the planning department. After serving as president of JR West Innovations, he formulated the group's digital strategy during the COVID-6 pandemic, and at the same time established the Digital Solutions Division, serving as deputy general manager. He has held his current position since June 2022.

Hideo Okuda, General Manager of the Digital Solutions Division at JR West, is developing businesses that utilize digital technology and data. Driven by the decline in railway passenger numbers due to the COVID-19 pandemic, he is working to develop fields beyond railways. We spoke with him about the collaboration between railway operations and digital technology, including the development of technology to expand stations into digital spaces in line with the changing times.

■ I want to change the dilapidated station with my own hands

I joined JR West just as the bubble economy was ending. Students at the time enjoyed a relatively flashy yet free-spirited lifestyle. The job market was also a seller's market, so I didn't have much opportunity to think about my future. So, as I began my job search, I asked various companies, "What was the most moving experience you've had while working?" Popular companies at the time, such as finance and trading companies, told me grandiose stories like, "I secured a large loan" or "I worked with foreigners on an overseas business trip." But for some reason, they didn't resonate with me. On the other hand, JR West was the most attractive. At the time, other private railways had introduced automatic ticket gates, but JR West was the only company that still handed out tickets by hand. There was nothing around the station, and it was just old. At the time, an employee told me, "You can transform this dilapidated station in any way you like." I decided to join the company, thinking I could do what I wanted. Over the 30 years since then, the station has undergone significant changes, and I've been able to be a part of those changes, so I'm glad I trusted those words.

■To the urban development projects that interest you

For the first six months after joining the company, I worked at the ticket gates of Sannomiya Station in Hyogo Prefecture, assisting customers and handing out tickets. However, despite joining a railway company, I became more interested in developing the areas around stations than the railway itself, and so I obtained a real estate appraiser license, was seconded to Daiwa Bank (now Resona Bank), and gained experience in condominium sales and station building development. For the next 20 years or so, I utilized the know-how I gained in real estate to work in Kyoto, primarily in staff roles such as developing areas around stations, managing the investment department, and overseeing M&A capital and management strategies. However, one experience I will never forget is the JR Fukuchiyama Line train accident that occurred at our company in 2005. It reminded me that no matter what job I was engaged in, I needed to reaffirm the importance of safety, something that must never be neglected as a railway company employee.

■I avoided becoming a boiled frog

The Digital Solutions Division where I currently work supports the transformation of companies by utilizing digital technology and data. We are considering new business opportunities beyond just using stations as stations. For example, the metaverse space currently underway, "Virtual Osaka Station 3.0," has been visited by 1600 million people in the three months since its launch. People can use avatars in the digital space to meet up with others or participate in events, and we have received a lot of access from overseas.

This department was established during the first wave of the coronavirus pandemic in April 2020, when the number of Sanyo Shinkansen passengers fell by 89% compared to the previous year, creating a critical situation with only 10 people on each of the 16 Shinkansen cars. If the railways were no good, what about our other businesses? Most of our group's shopping centers and hotels are located near train stations, so a decrease in railway usage would mean a complete collapse. In response to this, our president asked us to consider a new vision for our company in the post-COVID era. We proposed two challenges: "Accept that we will never return to the way things were before, and fully utilize digital technology and data to adapt to significant changes in the environment," and "We must create new businesses that do not rely on railways (travel)." We then put these two ideas into action.

Before COVID-19, our current sales and profits were strong, so we were unable to focus on social changes such as population decline and accelerating digitalization, and we were in a state of being like a "boiled frog." Our company president has said, "Thanks to COVID-19, the world of 10 years from now has come to us first," and I believe this was exactly the time we avoided becoming a boiled frog and turned a crisis into an opportunity.

■Transformation through digital technology

Until now, the railway business has supported transportation around the world, and due to its characteristics of mass transportation, it has viewed customers as a mass market. However, by utilizing systems such as membership and points bases, we hope to be able to understand and meet the needs of each individual customer. For example, we can analyze individual behavior based on data, such as where people go after leaving the station and what they buy. By providing services that meet the needs of each individual, we hope to create a space that makes people want to return.

Through the digital transformation we have seen so far, I feel that even if we are behind, we can make a big leap forward. It's the same as how people in developing countries are getting smartphones after having had feature phones and are discovering all sorts of ways to use them. When I joined the company, train stations were merely stopovers, but now they have systems that can use and analyze data, and have been reborn as real, important points of contact with customers.

Furthermore, new businesses are being born that utilize technology from stations. The AI ​​we developed, which predicts when automatic ticket gates will malfunction, not only contributes to the efficiency of our own operations, but is also being rolled out to other railway companies and people in other industries. For example, we are collaborating with JAXA to work on efficient operation by predicting satellite failures, leading to applications in a variety of industries.

■Message to university students

Do you think that working life is boring? The first thing I want to say is that working life is surprisingly interesting! It's not just about work, but also about life changes like marriage and childbirth, and a life where you can enjoy doing what you want. Students will be job hunting, but I hope you look at various companies while imagining the fun life you'll have as a working adult. And one more thing. Take care of your parents from now on. Even after you enter the workforce, I hope you don't forget to spend time with your parents.

Interview with Student Newspaper Online on October 17, 2024 by Sophia University third-year student, Himari Shirasaka