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Ikeda’s New Century of Relationships

EVIAN, France — "I find myself sounding very much like a preacher," joked Morio Ikeda, president, chief executive officer and chief operating officer of Shiseido Company, Ltd., as he quoted from the Bible during his keynote address at the WWD...

EVIAN, France — “I find myself sounding very much like a preacher,” joked Morio Ikeda, president, chief executive officer and chief operating officer of Shiseido Company, Ltd., as he quoted from the Bible during his keynote address at the WWD Beauty CEO Summit here.

Perhaps that is appropriate, as Ikeda once considered becoming a missionary — and, in fact, graduated from the Tokyo Union Theological Seminary — before joining Shiseido in 1961.

During his tenure, Ikeda has helped to innovate Shiseido’s business structure through a simple rule. “My creed is service and sacrifice, upon which my business stance is also based,” said Ikeda. “The idea is to serve the needs of customers and business partners and to make their joy our own.”

Ikeda explained that an organizational chart that Shiseido has adopted, called the inverted pyramid, helps to explain this objective. At the top of the pyramid are the sales and marketing functions, which are closest to the company’s customers, he said. At the bottom are the president and the chief executive officer. “I do not have to remind you that the cosmetics industry must be closest to customers, the users of our products,” he said. “From both a customer-oriented perspective and my personal creed embodying the serving spirit, I felt it was necessary to change the conventional pyramid-type organization.”

With the rapidly growing markets in Asia and the aging population in industrialized countries, coupled with other socioeconomic changes, many new demands have emerged, he said. “Therefore, I anticipate a continued expansion of our industry,” he said. “Currently, the Japanese economy, as a whole, is sluggish. Yet, at the same time, diversifying lifestyles and the rapid progress of participation by women in socioeconomic activities continue to constantly change the needs of clients and customers.”

The question then becomes, he said, how to enhance corporate capability to cope with changes. One answer: to establish a mechanism that supports employees and staff working at the forefront of information, so that each can take the initiative as a leading player, he said. “It means that the philosophy and vision of the top management should be shared with its employees. In order to implement this idea, a relationship must be based on mutual trust, in which top managers support employees, who in turn are aware of being supported.”

This story first appeared in the July 19, 2002 issue of WWD.  Subscribe Today.

Because the 20th century was an era of science and technology, scientific advancement made many people’s lives prosperous, he said. As well, the 20th century was more materialistic, he added. “Such abundance impoverished our minds, weakening our sense of existence as human beings. In an era when many seemed to benefit from such prosperity and longevity, it became difficult for us to draw a positive future vision for society and for ourselves,” he continued. “That is precisely why we need to regain our humanity in this new century, and why we want to feel the innate sense of being human, that is to say, the joy of living. And as a medium as the 21st century, cosmetics are one of the most suitable items to help us achieve this.”

Ikeda noted that the “blistering pace” of the information technology revolution continues to increase, as the Internet is at its peak. “While on one hand this enables people to share information, it seems as if the emotional ties between people are becoming tenuous,” he said. “Despite further advancement in the IT revolution, I doubt that a bright future will appear on our horizon if human relations are linked by cables alone. In this respect, our intention should be to utilize the vast potential of IT development as a tool to deepen the bonds between humans and engender enrichment of the human heart, rather than letting this advancement hinder direct contact between people.”

And, he said, given such an era, “what is demanded of us in the cosmetics industry is no longer simply the conventional manufacturer’s approach to produce good products and deliver them to the market. What is asked of us is to undertake our utmost efforts to meet customers’ desires, for example, a desire to be beautiful and to be rich in heart.” In the 21st century, he said, companies should use information technology to promote human touch.

“No business without a trusting relationship among people is viable,” Ikeda continued. “I believe this is a universal standard of values. We should take this fully to heart and take efforts to develop products and provide services, which in turn will become a key condition for achieving any significant leap forward.”

In short, he said, this means becoming “customer-centric.”

“We must direct our focus on counters, the meeting points with our customers. Accordingly, our business activities should be fully directed toward marketing efforts centered around shops.”

At the same time, he added, it’s critical to recognize regional differences in cosmetics. “Cosmetics reflect a nation’s culture, history and tradition,” he said. “Depending on the country or region, these naturally differ. In this respect, I believe a truly global product is based on how much it is established in the domestic market. To ensure that it is established domestically is to undertake face-to-face activities, keeping in mind the importance of human bonds.”

Following these mandates, Ikeda contends, will help to build a successful business model for the coming century — and beyond.”