What are the words that drive transformation? We ask Avant Group President Morikawa.

This series delves into the essence of top executives who break all biases and personally execute business transformation within their companies as architects (overall designers).

Continuing from the previous installment, we speak with Mr. Tetsuji Morikawa, President and Group CEO of Avant Group.

Avant Group develops software for consolidated accounting and also operates business divisions including group management support, financial closing outsourcing, and DX/data utilization support. In October 2022, the group reorganized to realize its materiality: "Becoming a software company that contributes to enhancing corporate value." It has entered a second stage of business expansion, building platforms that visualize various management information to accurately measure corporate value and providing solutions to increase that value.

This time, Dentsu Inc.'s Masashi Koyama and Hideaki Fukui interviewed about "Words Driving Transformation."

Part 1: Interview with Avant Group President Morikawa: What Executives Should Consider for Corporate Transformation

Avant Group President and CEO Tetsuji Morikawa (right) with Dentsu Inc.'s Hideaki Fukui (center) and Masashi Koyama (left)

To ensure your vision reaches employees, constantly question whether your words are effective

Fukui: Avant Group underwent a group reorganization in October 2022. We assisted in refining management terminology and embedding the group's philosophy throughout the organization.

The vision "BE GLOBAL ~ A globally competitive software company ~" expresses the dream pursued since founding. The mission "Democratizing Management Information" aims to spread optimal management by building management information systems that enable many companies to sustainably create value. The corporate philosophy "Creating a 100-Year Company" signifies becoming a company that lasts 100 years by having all employees creatively provide value to society. Furthermore, we have defined "Becoming a software company that contributes to enhancing corporate value" as our materiality. (Diagram excerpted from the Avant Group Integrated Report)

Koyama: As companies grow larger, tasks like developing MVV (Mission, Vision, Values) are often oriented by corporate branding personnel. During this group reorganization, I received my first orientation in spring 2022. I was surprised that Mr. Morikawa himself spoke, and I felt, "This must involve tremendous commitment."

Avant Group's core business is developing and selling consolidated accounting software, where it holds a high domestic market share. However, as I listened, I sensed his complete lack of intention to confine himself to just consolidated accounting software development, and his passion to take on various challenges to enhance the value of companies in society. I agonized over how to express Mr. Morikawa's vision and how to effectively communicate it to employees and other stakeholders.

Fukui: Through our many discussions, I often felt your views changed quite a bit. Even after we'd meet, you'd agree, "Let's go with this," but then the next time we met, your ideas would often be refined and changed.

Morikawa: It must be tough for you, Fukui and Koyama. I wish I could make decisions more smoothly (laughs). Others often tell me the same thing. Even at our weekly external meetings, people say, "Your perspective changes every time."

Koyama: But after all that trial and error, your speech to all employees in September 2022 about the group reorganization was truly excellent. What are your thoughts on "words that drive transformation"?

Morikawa: Looking back on past experiences, I've realized that my own thoughts and feelings don't easily get through to employees. Even back when we had around 100 employees, few could immediately articulate our company's philosophy. So, what you say is incredibly important. That means, first and foremost, it's crucial to thoroughly refine and organize your own thoughts.

The core of this group restructuring is shifting our management from being solely mine to being a team effort. The Avant Group management team is upgrading to a structure that properly builds value for the entire company. Therefore, at the very least, the management team must thoroughly understand what the Avant Group aims for and what it must do. The biggest challenge is how to convey the fragmented ideas I envision to our employees.

Koyama: Working with you, Morikawa-san, I always got the impression you constantly check the strength of your words internally, considering changes in the external environment too. Even if something was decided in a meeting, if you think it should be changed, you don't hesitate to do so.

Morikawa: Once words are defined, it can lead to a kind of mental stagnation, right? I dislike that. The meaning we imbue in words and what we aim to achieve constantly evolve with changes in the environment. I want to change the defined words themselves, but once announced, they can't be changed frequently. That's why I keep questioning whether this is truly the right approach.

To avoid management that only chases numbers, keep putting soul into words

Morikawa: It's not just words; I constantly question whether our company structure is truly the best. As I mentioned before, Japanese companies are undervalued globally. The same goes for human capital value—compensation is significantly lower compared to the world. Raising human capital value is urgent, but it's not just about increasing pay. We must elevate the value of our people themselves. To do that, as a listed company, I believe we should start by considering corporate value. We've seen many cases where companies tried to value people, but ended up eroding their corporate value. That's why we should think from the perspective of corporate value. However, we tend to get pulled toward the finance side – investment, fundraising, distribution.

Koyama: So, you're saying that by chasing numbers, human capital value struggles to increase.

Morikawa: That's precisely where it gets very difficult. My fundamental belief is that "the company exists for its people," and this is paramount. Based on this principle, we need to create a good environment for employees, but to do that, we must sustain the business. And to sustain it, we need to make a profit. Within this structure, if we don't carefully consider the priorities of profit, business, and people, and keep a clear eye on corporate value, I think we'll lose our way in no time.

While frontline staff intellectually understand that boosting productivity is essential for business continuity, actually implementing it boils down to either raising per-person output or cutting costs. Simply reducing costs is easy—just restructure. This happens frequently in many companies, but it's not what management truly desires, right?

What's truly important is boosting productivity, which requires creative thinking—but that's no simple task. So, no matter how lofty the stated ideals, quotas emerge and control becomes about numbers. But if we accept this as normal, words lose their soul, ultimately hindering corporate value growth.

Koyama: So achieving the numbers becomes the sole purpose, and we lose sight of why we're achieving them in the first place.

Morikawa: That's why it's vital to keep infusing words with meaning. Otherwise, the words take on a life of their own and drift off in the wrong direction.

Making Management Enjoyable with Software

Fukui: Among the stories about how Mr. Morikawa values words, your 2023 New Year's message was also memorable. I understand you adopted the phrase "Joy in Everywhere." Could you share again what meaning you intended to convey?

Morikawa: Originally, I had prepared a draft emphasizing the unity of the individual and the public. It was one of those tediously long, typical Morikawa-style speeches that would take about 20 minutes to read (laughs).

Koyama: That's a lot...

Morikawa: But when I reread it, I wondered, "Will anyone actually gain anything from this?" and scrapped it. I then rethought it and settled on "Joy is found everywhere." I saw this phrase written on a scroll while visiting temples in Kyoto. It means, "Since joy exists everywhere, discover it and live each day happily."

I felt this phrase was important for our company. When working as a team, I want everyone to find enjoyment in the place they're participating. It's also crucial for those around them not to just dump work on one person, but to support them and make the team's activities more enjoyable.

Furthermore, when I considered what makes management enjoyable, I realized it ultimately comes from seeing the people involved become happier. When that happiness diminishes, management becomes an immense hardship. Then, poor performance leads to thoughts like "let's restructure," making it feel like someone else's problem. Instead, while not everyone can be happy, we should increase the total amount of happiness among those involved. Thinking this way, even though challenges exist, the joy of fulfilling our mission emerges.

While valuing employees, ultimately maximizing the happiness of all stakeholders, including shareholders, becomes the happiness of the manager themselves and brings happiness to those around them. From this, I thought it might be clearer to organize things around the idea that "there is joy in every aspect."

Koyama: When I talk to business leaders, I often hear them say, "Man, running a business is tough." Of course, I think they're just using that phrase, but there's a big difference between a business being "tough" and it being "difficult," right? Even when it's difficult, there are plenty of enjoyable aspects, but being tough and enjoyable are two different things. By the way, what exactly do you mean by "enjoyable," Mr. Morikawa?

Morikawa: To put it abstractly, the process of bridging the gap toward an exciting goal is enjoyable. I find it more fun than actually achieving the goal.

I love running, so I often compare business to marathon training. Lots of people want to run the Tokyo Marathon, right? Those pushing themselves to train hard on weekends to qualify must be physically wrecked during the week. Their work performance probably drops significantly. Then they spend the week recovering, only to push themselves again on the weekend. To someone uninterested in marathons, that seems like a crazy lifestyle. But they're not doing it reluctantly—they want to do it.

They have a goal: "I want to run this race with this time." They see the gap between that and their current time, and they work to bridge it. And the more they train, the more they see results. That's why their life is enjoyable. They have a focused goal, and closing that gap is what makes it fun. Companies should also be places that provide such an environment.

Koyama: Create opportunities for employees to challenge themselves, fostering that sense of accomplishment from closing the gap between reality and their goals. Repeating this process drives corporate growth and increases the enjoyment of management.

Morikawa: Continuing such creative activities makes management more enjoyable, and more people should naturally want to participate.

Koyama: I see. How do you approach this for customers?

Morikawa: What we aim to do for society is measure corporate value and properly visualize performance. It's about being able to make solid, data-based suggestions on whether corporate activities are being conducted appropriately, and if not, how to improve them. Therefore, we want to help create an environment where results can be achieved.

Fukui: Regarding making Avant Group's management enjoyable, are there any challenges you perceive?

Morikawa: There are several, but one is clarity. Since we're creating enjoyment not just for individuals but for the entire organization, it's crucial that each person can think for themselves, "Yes, this is the right way." Thinking about it that way opens up the question: "What does 'making management enjoyable with software' actually mean?"

Fukui: It makes you want to imagine what that might look like, doesn't it?

Morikawa: Yes. Building that kind of framework is vital. It's important to be able to clearly explain, in your own words, to both internal members and customers, "This is what 'making management enjoyable with software' means."

Finally, Mr. Koyama and Mr. Fukui have lent us tremendous support in transforming the Avant Group. We'd like you both to be like editors who turn struggling manga artists into best-selling authors (laughs). Editors have immense power. We count on your continued support to help our vision reach the world.