Interview with Ajinomoto President Nishii: 5 Key Points for Achieving Transformation (Dentsu Inc. BDS Yamahara)

"New value isn't emerging from within our own company."
"What used to be our strengths no longer work, and have even become a burden."
"How can we turn small reform movements into a large wave of change within the company?"
We hear these concerns from many executives.

Amidst this, some companies are charting a comprehensive transformation architecture, dismantling existing concepts, and tackling change across the entire organization. This series delves into the essence of such transformation by interviewing top executives who personally act as architects, driving business change within their companies.

This time, we speak with Mr. Takaaki Nishii, President of Ajinomoto Co., Inc. (hereafter Ajinomoto), who has spearheaded group-wide business transformation. Through a dialogue with Mr. Shingo Yamahara of Dentsu Business Design Square (hereafter BDS), we explore the background leading to this transformation, the indispensable perspectives for its realization, and the mindset required of a leader.

The transformation began with revising the vision. What was the background, and what dilemmas does top management face?

Yamahara: Since declaring your goal to "transform into a company solving food and health challenges by 2030," your company has launched initiatives like the "Business Model Transformation Task Force," driving change as a unified group to realize this vision. First, could you explain the background behind deciding to embark on such a transformation?

Nishii: The year I became president, 2015, was a pivotal year globally, marked by the UN's adoption of the SDGs. It signaled an era where sustainability must be considered not just by academia, but by society as a whole.

Reflecting this global societal shift, the value demanded of companies naturally transformed as well. If companies worldwide continued pursuing capitalism with their existing business models, society and indeed the planet would cry out in distress. Therefore, I became convinced that sustainable management would be difficult unless our company, too, transformed itself into one that contributes from environmental and social perspectives, rather than acting solely based on our own convenience. That was the origin of our transformation.

However, when I became president, Japanese companies and media were not significantly covering SDGs or sustainability. I keenly felt the gap in awareness between Japan and the rest of the world.

Yamahara: It's only really been in the last two or three years that SDGs have become an active topic of discussion in Japan, right? At the Cannes Lions I attended in 2016, top executives from various global companies were already leading discussions on the theme of "How should our industry approach the SDGs?" Compared to that, I felt Japan was significantly behind. Amidst this, I understand President Nishii positioned SDGs at the core of management from an early stage. Was there a particular reason for this?

Nishii: Before becoming president in Japan in 2015, I served as president of Ajinomoto do Brasil for two years. There, I gained firsthand experience of the world changing—witnessing the formation of the SDGs and their differences from the MDGs. I sensed a major global transformation was underway. I became convinced this was an indispensable theme for corporate management policy and consciously followed how global companies were engaging with the SDGs.

Yamahara: I see. So, from the outset, you sensed this would significantly impact corporate management. After assuming the presidency, did you then initiate corporate transformation based on that conviction?

Nishii: We began the concrete transformation of our business model in 2019. For the first four years after becoming president, I focused on upholding our existing vision: "to become one of the top 10 global players in the food industry." Even now, I sometimes think about how things might have been different if I had acted immediately upon taking the presidency.

For the first year or two after becoming president, we were meeting our targets. But around 2017, we started seeing strains across all internal businesses under the existing vision. Amid societal changes, the limitations of achieving our previous goals became clear. That's when I decided we absolutely had to change and started by reevaluating the vision.

Even so, the decision took time. There was a dilemma: was it right for me to arbitrarily shift the 10-year vision we'd built? Even though I sensed the limitations of the existing direction, I hesitated. I suspect the more successful a company is, the greater the anxiety about transformation.

Yamahara: That's right. In corporate transformation, I often see companies where the "gravitational pull" of their core business, along with systems, unseen dynamics, and internal culture, is too strong, preventing change from proceeding as envisioned.

Five Key Points for Changing Architecture with a 10-Year Vision

Yamahara: So, specifically, what perspectives is the Ajinomoto Group adopting to achieve its business model transformation?

Nishii: There are five key points for transformation.

The first is "revising the vision." As mentioned earlier, rather than setting the vision of "entering the global top 10 in the food industry" as an end goal, we resolved to transform into a "company solving food and health challenges" to become a business that contributes more to society.

Next is "Redefining Corporate Value." In this transformation, we are focusing not only on visible values like stock price but also on intangible values, adopting terms like "human capital value" and "customer value." We have redefined corporate value as this cycle: enhancing the value of human resources and employees creates new value for customers, which ultimately leads to economic value.

Third, "rebuilding our human resource development and management systems. " Without human capability, we cannot create new customer value. We have reviewed and newly implemented systems for developing and managing such talent.

Fourth is "changing our revenue policy. " We have shifted away from our previous corporate culture focused on accumulating short-term profits, transitioning to management that prioritizes organic growth from a long-term perspective. Even in this mid-term plan, we did not announce sales or profit targets for three or six years ahead. While there was considerable resistance, we believe there is meaning in not announcing them. We aim to backcast operations from our desired state ten years from now, maintain a mindset of constantly challenging new businesses, and connect this to sustainable growth.

The fifth point is "Annual Updates to the Mid-Term Plan Draft. " We believe it is crucial to establish a cycle of continuous improvement rather than setting a plan and rigidly adhering to it for three years. Indeed, the Ajinomoto Group has already begun revising the three-year plan formulated in 2020. We have committed to annual updates to realize our 10-year vision.

We are advancing transformation through these five points, aiming to be reborn as a company that solves food and health challenges.

Transformation without digital is impossible. The essence of DX is making the numbers "visible" to the core.

Yamahara: Prioritizing "numbers" and "scale" first was, I believe, a kind of "safety indicator" for management that no one could complain about.

President Nishii has now made a major shift in this management philosophy. Instilling new values and transforming the company must have been extremely challenging.

Nishii: We still face challenges, but I believe it's achievable with the power of digital.

For example, we changed our profit policy from "management focused on accumulating short-term profits" to "management prioritizing ROIC (Return on Invested Capital) and organic growth." However, measuring results requires complex calculations, and we must also ensure this new approach permeates the organization.

This was difficult before, but with digital tools, we can visualize even complex formulas, making them simple and understandable to everyone. We can also uncover previously invisible metrics within corporate activities. I believe this allows us to efficiently embed the profit policy throughout the organization.

Yamahara: Precisely because it's a world of numbers that "seem clear to anyone at first glance," underlying crises or fundamental slowdowns in growth can sometimes be obscured. If we can use digital power to "visualize" that, everyone will be looking at the same metrics, making it easier to create new value.

Nishii: Exactly. It clarifies the underlying issues so anyone can grasp the core of the problem. That's the strength of digital.

But digital enables more than that. It makes it easier to measure ad reach and response effectiveness. Digitizing our global employee survey, previously conducted every two years, allowed us to run it efficiently annually, making employee engagement visible year-round... As DX advances everywhere, the organization's architecture will improve. I believe transformation cannot move forward without digital.

Yamahara: While "visualizing numbers" and "improving efficiency" are surface-level benefits of digital adoption, I believe the most crucial aspect is gaining a grasp on the true nature of challenges and needs faced by employees and consumers.

Nishii: I agree completely. Having declared our vision as a "company solving food and health challenges," we need society to recognize that the Ajinomoto Group has changed. The same applies to our employees. If each individual doesn't feel a sense of purpose toward realizing this vision, the organization cannot fully unleash its potential. That's why I believe it's crucial to effectively use digital tools to connect with customers and employees, and communicate the Ajinomoto Group's vision.

Companies that pursue only sales are unattractive. Rethinking the "Role of Companies and Employees"

Yamahara: Recently, both customers and workers find companies focused solely on sales less appealing. I find it very interesting that your company has consistently updated its corporate identity to align with the values of this new generation. I understand you also joined the "30% Club Japan" in 2019, which aims to increase the proportion of women in key decision-making positions to 30%.

Nishii: At the Ajinomoto Group, we promote diversity and inclusion, aiming to be a company where every employee, regardless of gender, age, nationality, or background, respects one another and can thrive. Among these efforts, advancing women's participation is something I consider absolutely essential as President of the Ajinomoto Group.

The Ajinomoto Group has many talented female employees, and we continue to welcome them as new hires. However, the number of women in core positions remains low. This is a significant loss for the company.

Currently, women often find themselves having to give up their positions or careers due to life stages. I firmly believe that by not only creating a more supportive work environment for women but also advancing career development support, and achieving a 50-50 gender balance in key positions, the overall performance of the organization will undoubtedly improve.

While we still have a long way to go, we are fully committed to achieving our goal of increasing the proportion of women in core positions within the company to 30% by fiscal year 2030.

Yamahara: Regarding "corporate appeal," one more point. In today's world where work styles are diversifying—with people launching startups or thriving as freelancers—what do you consider the appeal of working for a large corporation like yours?

Nishii: I believe the appeal of a large corporation lies in its ability to "make a significant contribution to society" and "bring happiness to more people."

Our work cannot cure people who have already fallen ill. What we can do is provide solutions for daily activities like diet, sleep, and exercise, supporting people's health.

In fiscal year 2019 alone, our B2C consumer food products reached 700 million people. We aim to increase this to 1 billion by 2030. Contributing to the health of so many people through our products and services is deeply rewarding, isn't it?

Yamahara: The Ajinomoto Group has a global network and possesses a strong technological foundation centered on amino acids. The ability to transform this foundation through the passion and capabilities of our employees, delivering value not just domestically but globally, is a unique and compelling strength.

Nishii: We want to continue valuing the talent who feels that way.

*Continued in Part 2