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Shiseido’s Masahiko Uotani: Innovate to Thrive

The ceo laid out his plan for driving innovation across all areas of the business to increase global sales.

Since becoming chief executive officer of Shiseido five years ago, Masahiko Uotani hasn’t shied away from shaking up the status quo.

Now he’s looking to make change a permanent part of the mandate with a new corporate mission: “Beauty innovations for a better world.”

When it comes to innovation, Uotani is thinking far beyond product development, though, as he looks to harness the momentum the company has garnered by hitting its 2020 goals three years early — and he’s putting his money where his mouth is.

Shiseido has invested more than $600 million in a new research center outside Tokyo and upgraded offices around the world, strengthening its global hub system and adding new facilities in the U.S. and Asia.

“Innovation can be done everywhere and in everything we do, from R&D, to supply chain, to marketing and more,” he said.

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“To me, innovation means moving away from what you’re comfortable with. In Japan, there’s a tendency to say, ‘We’ve been doing it this way for 20 years, so we should respect that,’” Uotani continued. “My point is — maybe with some things. But consumers are changing, so we have to challenge ourselves and the status quo.”

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The ceo was in the U.S. to commemorate the 30th anniversary of Shiseido’s alliance with CBRC, or Cutaneous Biology Research Center, established by Harvard Medical School and Massachusetts General Hospital, and to sign a new six-year agreement. During an exclusive interview with WWD, he outlined the different initiatives he’s put in place to drive meaningful innovation across the organization.

One is the creation of the Technology Acceleration Hub, helmed by Jim Mainard, formerly of DreamWorks Animation. Mainard’s charge is to identify and implement key technologies, and maximize the application of acquisitions like MatchCo and Giaran.

“We bought those companies, but we were not able to really integrate them, to make it materialize for the consumer to use,” Uotani said. “We’re looking at the technologies we have, what we need to complement them and the organizational capabilities we need to develop.”

While Uotani didn’t rule out the possibility of more acquisitions or strategic partnerships on the technology side, he did say a key goal is to develop capabilities in-house as well. To that end, Shiseido has set up its technology accelerator in Austin, Tex., which is expected to have about 100 people.

Shiseido is also looking to capitalize on the April opening of its $400 million Global Innovation Center in Yokohama, Japan.

The 17-floor space includes a variety of research and development facilities, as well as areas that are open to the public, including a museum and a Beauty Bar, where customers can have a specially trained researcher create a custom skin-care formulation for them. To date, about 30,000 consumers have visited the facility, Uotani said, which has been an unexpected boon for the scientists.

“Usually these researchers aren’t exposed to consumers. They’re in their labs, in their white coats, and they’re focused on what they do,” Uotani said. “But to have a chance to talk to people has created a change. They’re excited and motivated, eager to try something new.”

To try to imbue the whole organization with that same spirit, Uotani has created a company-wide global innovation contest, in which teams first face off at the regional level, with winners going to Tokyo in November to compete.

But he’s after much more than pie-in-the-sky thinking. “We want people to understand that innovation drives our business, and to become more receptive to new ideas, new business models, new ventures,” he said.

Uotani was himself in a comparable position when he was presented with an idea targeted to sensitive skin, noting that he underestimated the trend until a young brand manager came to him with the proposal of reviving a “sleeping” brand called D Program.

“She saw that it has huge potential for consumers who are suffering from sensitive skin because of the environment and pollution and quality of the air, particularly in China and Japan,” Uotani said.

Shiseido relaunched the brand in Japan, then rolled it out to China via Watson’s and Alibaba.

“It’s been very successful,” Uotani said. “We had a great asset and a great opportunity and we did it.”

And the impact of such programs on sales is clear: For the six months ending June 30, Shiseido’s net profit gained 10 percent year-over-year, totaling 52.45 billion yen, or $494.4 million, driven by sales gains in almost every segment of the company’s business.

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