Learning Global Management from Shiseido [CSV Forum Report 1]

Provided by Dentsu Inc. Public Relations Advisors (Beijing) Co., Ltd.

This article reports on the CSV Forum Special Edition event jointly held by Japan and China on April 17, 2021. Part 1 covers Shiseido's global diversity management, Part 2 covers Panasonic's China operations, and Part 3 introduces a panel discussion featuring young Chinese entrepreneurs.

※CSV = Creating Shared Value. A management model that aims to achieve both economic benefits from corporate activities and solutions to social issues. Proposed by Michael Porter in 2006.

Why focus on CSV × Global?

The CSV Forum Special Edition was a joint initiative between Takashi Nawa, who promotes CSV in Japan, and Zheng Yan, who promotes CSV in China. It was held online, connecting Japan and China. The theme was "Toward Realizing Human and Social Well-being: Sustainable Management at Shiseido and Panasonic," featuring a three-hour discussion among five participants.

【Speakers】※In order of appearance (photos from left)
Takashi Nawa (Professor, Graduate School of International Corporate Strategy, Hitotsubashi University)
Ms. Zheng Yan (Representative, Dentsu Inc. Public Relations Consulting (Beijing) Co., Ltd.)
Masahiko Uotani (President and CEO, Shiseido Company, Limited)
Tetsuro Honma (Executive Vice President, Panasonic Corporation; President, China & Northeast Asia Company)
Yao Songqiao (Founder, Wild Bound)

At the outset, Mr. Nawa introduced Mr. Zheng, stating: "In Japan, the CSV Forum is in its eighth year, with companies gathering monthly since 2014. In China, CSV is called CCSV (Co-Creating Shared Value), and Mr. Zheng is the initiator of this activity. We have been working together for the past year and a half."

Mr. Zheng raised the issue: "Sustainability is a major theme in China this year, with consumers paying close attention to corporate Safety, Quality, and Reputation. As Dentsu Inc.'s survey also showed, consumer interest in sustainability is high in China, and communication on the topic is active. Therefore, the CSV movement may penetrate faster here than in Japan."

CSV is an area Japanese companies have focused on early, but the opening session suggested that Japanese firms could learn sustainable management practices from real-world examples in the Chinese market, where swift, integrated public-private adoption is anticipated.

Zheng Yan, Representative, Dentsu Inc. Public Relations Advisors (Beijing) Co., Ltd.

Shiseido: Embracing CSV Spirit Since Founding

In Part One, Mr. Uotani took the stage. He explained that two years ago, Shiseido redefined its mission as "Beauty Innovations for a better world." He shared an image film he personally supervised with all employees worldwide.

Mr. Uotani stated emphatically, "Cosmetics companies do not exist solely to sell cosmetics. Our purpose is to empower people to lead vibrant, happy lives through makeup. The scene in the film where an elderly woman in a wheelchair finds new energy and stands up after applying makeup is based on a real-life story. That is our mission, or what Professor Nawa refers to as our purpose."

Shiseido, which will celebrate its 150th anniversary next year, introduced its origins: the company name derives from the Chinese I Ching phrase "The Earth is the source of all things," embodying the aspiration to fill the world with energy born from nature. The spirit of CSV—balancing social value and business—has been inherent since its founding, and Shiseido is still widely regarded globally as ethical and sincere.

Masahiko Uotani, President and CEO, Shiseido Co., Ltd.

Sustainable Management Starts with People First

For attendees aspiring to CSV management, President Uotani shared a personal anecdote. Upon becoming Shiseido's president, a respected mentor told him, "When a company representing Japan thrives, Japan thrives. Don't you want to revitalize Japan?" This prompted him to resolve two things.

The first was "to become a globally competitive beauty company originating from Japan." The second was "to build a Shiseido that continues to shine for the next 100 years." While shareholders expected him to change the short-term profit structure, he did not make that his goal. Instead, he made it his mission to implement reforms that would form the foundation for long-term survival.

When embarking on management reform, Mr. Uotani engaged in dialogue with over 80,000 employees, including those overseas. He explained, "Management strategy is important, but in B2C business, the transaction where customers purchase our products is the source of everything. It's from this that we can pay employee salaries, shareholders, and suppliers. So, first, we must ensure the customer touchpoints are functioning correctly. The origin of business lies in the field."

"It might be difficult for the front lines to voice opinions. In such cases, laughter is actually important. Create an atmosphere where people feel they can speak up about concerns. Hidden within those front-line voices lie critical management issues. Rather than central control, we need to build trust with the front lines, delegate budgets and authority, and foster relationships."

"Not just in Japan, but overseas too, many people genuinely want to improve the company, regardless of how long they've been there. But they say they don't know how. The problem isn't people, it's the system. It's about how to foster an organizational culture that encourages diverse voices and ideas, and how to align the varied opinions of diverse people toward a single direction. However, I don't want centralized management. That's why we established headquarters in six regions, placed a CEO in each region, and delegated authority. People will take ownership and work hard when they are trusted. This holds true regardless of country, culture, or language," he stated.

Over seven years of leading Shiseido, Mr. Uotani learned the PEOPLE FIRST management philosophy. "Our diverse employees are at the center. It is our employees who create value for our customers," he stated. As part of its Diversity & Inclusion efforts, Shiseido adopted English as its official language and achieved a high ratio of female managers. It now aims for an even higher target of 50%. Furthermore, starting in January, as a new initiative, it welcomed experts in supply chain, digital, and legal fields active overseas as Executive Officers. Gathering diverse opinions has also invigorated management meetings.

Concluding, Mr. Uotani stated, "Diversity doesn't mean fragmentation. Only when values are shared toward the company's mission and purpose can the power of diversity be harnessed in a unified direction. At our annual global conference, we don't discuss topics like this year's sales plan. It's a forum to reaffirm why we exist."

The management reforms initiated by Mr. Uotani in 2014 enabled the company to achieve sales of 1 trillion yen three years ahead of the planned 2020 target. Market capitalization quadrupled over four years. Although profits significantly declined in 2020 due to the COVID-19 pandemic, investors reportedly stated, "Short-term performance is acceptable. We want to discuss how the company will develop in the future, five or ten years ahead," indicating a relationship enabling long-term dialogue.

Fusing Western science with Eastern wisdom, Shiseido's pioneering diversity management embodies stakeholder capitalism at the cutting edge of the times, while remaining rooted in its founding spirit.

This management style, which devolves authority to regional headquarters rather than centralizing in Japan, is also shared by Panasonic, which followed later.
(Continued in Part 2)