The Gunze Group has received a growing number of requests to improve the speed of its management decisions during discussions with investors. What are your thoughts on these frontline deliberations from an outside perspective?
Nakai
Gunze is sometimes said to lack a sense of speed when it comes to implementing new initiatives. To the contrary, I believe that the Company frequently identifies issue sat an early stage, often looks for a response, and acts swiftly once an appropriate solution is found. Regrettably, this process is not visible from the outside, and as such may appear to lack sufficient speed. Disclosure and dialogue with investors regarding the decision-making process.
Kida
While steps are taken to put forward and steadily implement business strategy plans by business division to secure positive GVA, undertaking the management of targets within each business division runs the risk of slowing the decision-making process as divisions that are forced to drive overall growth become overly cautious. Taking in to consideration such factors as the level contribution to the Company as a whole and the potential of the market, I am also concerned that delays may arise when determining whether or not to with draw. I believe that the speed at which decisions are made can be improved if management resources are allocated in line with a clearly defined business portfolio and management routinely discusses the criteria for key issues, including whether to invest aggressively or consider with drawing from a business.
Kujiraoka
I have participated in discussions on such issues as plans and prospects for business initiatives, and can at test to the fact that management has frequently expressed an awareness toward the need for speed and expectations for timely reporting. I often feel that such themes as the launch of a new business or business expansion are naturally carried out with a sense of speed because of their forward-looking nature, and that even themes that entail the restructuring and review of existing businesses prioritize speed commensurate with plans. Having said this, hasty decision must of course be avoided at all cost. If Gunze’s image as a prudent, earnest, and staid company is creating concerns surrounding a lack of speed, steps should be taken to showcase the Company’s ability to engage promptly in business activities on a daily basis.
Gunze is engaging in management that emphasizes the cost of capital. As far as management activities are concerned, what do you think is necessary to further increase corporate value?
Nakai
Gunze’s PBR ratio has fallen below 1x, indicating a low evaluation of the Company’s value and its potential for improvement. In addition to our current earnings, we must demonstrate to the market the potential for sustained growth in Gunze’s corporate value going forward. Gunze is engaged in a wide range of circular factory, net zero factory, and other pioneering initiatives. It is vital that the Company quantifies and highlights the value of these initiatives in a definitive and easy-to-understand manner while show caseing its future.
Kujiraoka
To further increase its corporate value, it is imperative that the Company invest in R&D and human capital to accelerate the pace of high value-added business creation, increase quantity, and improve quality. It is equally important to prioritize investments in both growth and high profitability fields as a Group-wide strategy that looks beyond the income and expenditures of individual business divisions. Profit margins in the apparel business, a mainstay of the Group’s sales, have struggled in recent years. Improving profit margins is therefore a pressing issue. Looking beyond the conventional confines of a manufacturer to make a quality product, I believe the Company must not only improve the efficiency of its organization and facilities, but also further accelerate its D-to-C activities (its sales strengths) and implement a brand strategy that once again clarifies the value of the Gunze brand to become the preferred choice of customers.
Kida
Gunze has developed a variety of businesses since its foundation and continues to focus on creating new businesses. This kind of consistent effort is essential for the survival of a company. I am acutely aware of Gunze’s fervent efforts to improve the profitability of its business, effectively utilize its assets, and otherwise enhance its corporate value. Nevertheless, I believe that the Company must also communicate details of its accomplishments since its foundation to the present day and garner the market’s understanding and acceptance to enhance its corporate value.
What is needed to increase new growth areas following the medical business, which is responsible for driving growth?
Kujiraoka
I look forward to Gunze’s vibrant and dynamic efforts to create growth fields. Creating new markets and high value-added products requires both a market-in and product-out approach. In addition to a market-in approach that addresses market needs, I believe that a product-out approach that utilizes the Company’s potential is also essential in creating new markets with amazing products. Providing comfort is an area in which Gunze maintains a competitive edge. With this in mind, I believe there are a reas of growth where diverse businesses are connected.
Kida
To reiterate, Gunze must actively invest in R&D and human resources. It is important that the Company foster a corporate culture that encourages its employees to develop new businesses and take on new challenges, and to provide training while establishing related challenge and evaluations. In this so-called era of volatility, uncertainty, complexity, and ambiguity (VUCA), rapid social change, and difficulties in predicting the future, I believe it is important for the Company to adopt a give-it-a-go approach. Regardless of past successful practices, customs, and organizational decision-making procedures, I am convinced that Gunze will be better served by responding to change in a flexible and timely manner. In adopting this give-it-a-go approach, the Company can then identify and nurture seeds of future growth. Every effort should be made to foster an organizational culture that has the courage to take on new challenges and to learn from and make the most of any subsequent failures going forward.
Nakai
As Japan becomes an increasingly super-aged society, the medical field will inevitably expand. Extending Gunze’s gentle to the skin concept and technologies to people’s well-being as a whole will help further distinguish the Company from its competitors. Inspired by the goal of helping others through quality products, Gunze is more likely to uncover new needs by closely aligning itself to those who are ill or who have become less active through age. With this in mind, I believe that the challenge facing Gunze is to make the world widely aware of its ongoing efforts to provide quality products in the medical field by utilizing its technological capabilities. Medical care is an issue that continues to be questioned irrespective of national boundaries, and global expansion will be the key to Gunze’s next leap forward.
Gunze has outlined a strategy to actively engage in D&I in its VISION 2030. What are your thoughts on current conditions and what challenges do you see for the future?
Nakai
Various organizations in Japan have made little progress and continue to lag behind other countries with respect to gender equality. Gunze is one of the companies that has struggled with this issue, and we are currently seeing serious efforts implement appropriate measures. Despite these endeavors, the Company still has a long way to go to achive its target ratio of 20% or higher women in managerial roles by 2030. In similar fashion to its male employees, Gunze must put in place a workplace environment in which its female employees can feel equally fulfilled and maintain balance with their personal lives if it is to achieve this target. In addition, it is important to have a corporate culture that encourages employees to return to the Company after taking maternity or childcare leave, or for some other reason. Meanwhile, amid this corporate culture, it is also important to actively recruit mid-career workers in a bid to instill a breath of fresh air. This initiative is directly related to Gunze’s development and expansion as well as the promotion of D&I.
Kujiraoka
New ideas and flexible approaches are a byproduct of diversity. Each in turn helps to foster a new corporate culture and enhance corporate value. While discussion sregarding the empowerment of women have been active eduring Board of Directors’ meetings, dialogue on D&I is very much in the infancy stage. Gunze must promote in depth discussions on diversity, including foreign national employees. I also see the need to avoid developing the Group’s overseas business as something special. The Group’s overseas business should be positioned as just another part of Gunze’s overall business and on an equal footing with the Group’s domestic operations. I sometimes hear people say that “others are also addressing the issue” or “we must...” in response to concerns surrounding D&I, including the SDGs. I would argue that adopting a positive approach is important effort sand will lead to real benefits.
Kida
When asking whether the organization is fully utilizing the individual capabilities of its diverse human resources in terms of such aspects as gender, age, and nationality, a look at various indicators would suggest the Company has a way to go. One key indicator, the ratio of women in managerial roles, for example, remains low at 5.1%. A look at the Group’s endeavors to date and current circumstances clearly indicate that a solution is unlikely to be found overnight. Here, I believe the Company should prepare and thoroughly communicate both internally and externally a roadmap for the next eight years, employing a back casting method, in order to achieve its VISION 2030 target of a 20% or higher ratio of women in managerial roles. I also believe that women must take the initiative in proposing and implementing career plans. On a personal note, I would like you to take on the role of generating and disseminating ideas for the success of diverse human resources, not limited to those of one gender or the other.
What qualities do you think are necessaryfor management executives, and what skillsand experience should be refined toachieve these qualities?
Kida
GUNZE has its own distinctive pillars of business, and management executives are made up of people who are well versed in each of these fields. Looking beyond the confines of an individual business division, I believe it is important for management executives to have the perspective, knowledge, and conceptual ability to create synergies as well as formulate and execute growth strategies for the Group as a whole. With a view toward broadening the pool of management executive candidates, Gunze must provide opportunities to actively participate in internal and external training, workshops, and networking while putting in place an environment in which candidates can gain experience from a nearly stage, including rotation among business divisions.
Nakai
In order for Gunze to grow dramatically in the future, it is vital that it break free from the status quo and expand its business. To achieve this, management executives must possess the ability to anticipate, nurture, and deliver the next businesses to society. Moreover, while a diverse range of human resources is necessary for the development of an organization, coaching skills are also required to organize and nurture human resources. The ability to grow resides not in the leader, but is an inherent subordinate quality. The key here is to properly uncover this ability, build relationships of trust, and provide a source of encouragement. While these attributes are innate, I believe they can be created through multifaceted learning and experience.
Kujiraoka
The significance of the SDGs lies in the concept of involvement and cooperation. I believe that consider able coordination is required to achieve sustainable growth. Over and above this collaboration, cooperating with unexpected partners from different industries through various means, including business expansion through M&As in certain instances and entering new businesses, as well as interaction with local residents are also of importance. Looking ahead, itis important for future management executive cand idates to gain experience by going out and meeting a variety of people and exchanging opinions.
