Making ROIC the metric — and merging commodity cable with Furukawa (2019)

What it means to change the measuring stick

What President Hasegawa Takayo changed was not the line-up of businesses but the stick they were measured with. Against an internal assumption that cable simply is a low-value-added product, she introduced ROIC — which asks how much capital was consumed to earn what was earned — and reset the standard so that a business in the black but unable to cover its cost of capital became one to let go. The thoroughness of it shows in how far she went: the sale of commodity cable, the company’s trade since its founding, was combined with that of its competitor Furukawa Electric.

Management run off a metric, though, carries the danger of shrinking into balance. The company itself acknowledges that up-front investment for growth temporarily depresses ROIC, so that making ROIC the ultimate goal saps business heads’ appetite to invest, and it is now reworking the framework to look at growth and cash flow alongside it. The commodity cable it split with Furukawa will be bought back in full at the end of March 2026 and brought back in-house. A decision to change the measuring stick is never finished in one go; every time what it is applied to changes, the line has to be redrawn.