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Masahiko Uotani Charts Shiseido, Beauty Industry Game Plan

The Japanese beauty giant’s president and chief executive officer gave a far-ranging speech at the WWD Beauty CEO Summit.

Masahiko Uotani is a man with a supersized mission. Right after it was publicly announced in December 2014 that he would be Shiseido’s next president and chief executive officer, Uotani was charged with an undertaking extending well beyond the beauty industry’s bounds.

“I received over 700 messages from politicians, business leaders and my personal friends. They all said Shiseido is an icon of Japan, so you have to work hard to rejuvenate Shiseido, since it means rejuvenating Japan as a country,” explained the executive, speaking at the recent WWD Beauty CEO Summit in Palm Beach, Fla. “I realized that the responsibility of this position is bigger than I initially thought.”

Not that he didn’t have his work cut out at the company alone, though: Over the prior eight years its value had been flat, domestic sales had declined by almost $1 billion and the international business had grown significantly but wasn’t profitable.

Uotani — formerly chairman of Coca-Cola Japan Co. Ltd. — met with more than 4,000 employees in his first 100 days on the job at Shiseido. He realized the company was in a vicious cycle, including lack of investment and increasing inventory.

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“At the same time, I also realized that Shiseido has a rich heritage and passionate people,” he said.

Uotani explained the company had been founded on a trio of principles in 1872: products speak for themselves; richness should be in everything it does, and brands must be international.

“I believe in these three principles and that they are the DNA of Shiseido even today,” he said. “The challenge for Shiseido is to become a strong global company. We must change quickly, become more results-oriented, create speed and get rid of bureaucracy. At the same time, we also needed to embrace our heritage of high-quality products and caring for people like a family. Shiseido needs a transformation.”

Uotani maintained that for Shiseido to become global, it must develop by investing in people and the organization, plus building on diversity. That’s where his Vision 2020 corporate strategy comes in.

The plan includes a regional headquarters system, upping the number of women in managerial positions and growing the percentage of business done outside of Japan. Succession plans for the top 150 positions around the world are in the works, too.

From his job at Coca-Cola, he learned that brand value is an intangible asset of the company and key for sustainable growth.

“Combining marketing with innovation is going to create the values of the brand for consumers,” said Uotani, adding Shiseido is putting money in both.

His second learning was the importance of thinking global and acting local, dubbed “glocalization.”

“The centralization model does not work anymore in this world with consumer diversity,” he said. “At Shiseido, we have just implemented the matrix organization model so that we can empower each region to drive the business, exploring the market opportunities. I want Shiseido to be a showcase for other Japanese companies.”

Another change instigated is that English will be the main language in Shiseido’s Tokyo headquarters by 2018. Uotani nominated leaders for the Americas and Europe and set up a center of excellence for each region of the world.

“Centers of excellence as a global hub will be leading the consumer trend intelligence, strategic planning, new product development and sharing best practices not only for the region but for the entire world of Shiseido,” he said.

On a more macro-level, Uotani discussed the swiftly changing nature of today’s beauty landscape into which brands are born and developed. He said consumers are influenced by their own cultures plus the world at large, friends and family, as well as by mainstream and digital media.

Other shifts include ideas coming from everywhere, rather than simply the West.

“A great challenge for industry is to make our products and marketing fit with new urban consumers, who want to blend their own identity with exciting global opportunities,” he said, adding some are emerging from regions with social unrest or other uncertainties.

Uotani said it’s key for brands to combine intrinsic and extrinsic value, and that the mix of the two differs according to product category.

“I see the creative, artistic, emotional side becoming more important,” he continued.

Another trend is younger consumers being eager for brands and products offering new ideas.

“Individuality and self-expression are now being modified by values of community, family and social relationships,” Uotani said.

He explained that when considering how to build meaningful relationships with consumers, Shiseido executives thought about elements the company could offer the world.

“Some of them could be attentiveness, a sense of respect, the ability to listen and to serve, the ability to be quiet when others are talking, the ability to present things in a thoughtful and beautiful way, seeing meaning in the tiniest detail and the unique Japanese aesthetics that can be innovative and aspirational,” he said.

“Our industry has great opportunity,” added Uotani. “It offers consumers positive influences and happy experiences every day. We are very fortunate to live in this historic time of change. We also have a great responsibility to do that.”

To wit: at the end of his Summit speech he called for a global industry forum in order to share ideas.

“The forum could be a platform where our companies can discuss non-competitive and industry-wide issues, such as sustainability, and the shared industry perspectives. With so much change, we’d all benefit from thinking as an industry about our shared responsibilities — by being change, not just responding to change.”

During his tenure at Coca-Cola Japan, Uotani said beverage makers would periodically meet — eventually deciding to standardize the size and color of the outer carton boxes. They also opted to collaborate in times of emergency.