Desperate times call for desperate measures, as the adage goes — and that is what was behind Japanese cosmetics giant Shiseido hiring a president from outside the ranks for the first time in its 145-year history. The company was an industry laggard with almost zero growth within Japan, and the board was forced to do something radical to turn things around, ie: seek out transformative leadership from outside the company. Masahiko Uotani, the former CEO of Coca-Cola in Japan, was an unlikely candidate — he was in favour of adopting a more Westernised approach to management, for example. He had spent his career in Japan, but mostly in the employ of companies that were headquartered in the US.
He was, however, familiar with the challenges Shiseido was facing — after retiring from Coca-Cola, Uotani ran a marketing consultancy that had Shiseido as a client. The slower pace of his new role allowed him to play more golf and spend time with his wife and two dogs, since his two daughters had already left the nest. When members of Shiseido’s board mentioned they were looking outside the company to fill the role of CEO, Uotani was surprised — this was quite out of character for a traditional Japanese corporation. He was even more surprised when he was informed that the candidate they had in mind was him.
“I was shocked,” he says. “But I could not say yes straightaway — I had to get approval from my wife, who was tired of me working for a large organisation and travelling so much. Ultimately, she said it would be a great challenge and I should take up the offer.”
It was a gamble for both parties, but at the end of the day, one that paid off handsomely. Since Uotani took over the helm in 2014, the situation at Shiseido has improved immensely — he has successfully reversed its fortunes and made it a global beauty success story. In Malaysia, Shiseido has historically been popular — particularly its skincare segment — while the cosmetics division continues to grow. If you have noticed that the brand has become more noticeable of late, it is partly due to Uotani’s efforts.
The tall, elegant Uotani, whose impossibly bright smile and cheery laugh are infectious, flew into Kuala Lumpur recently for a market visit. Unusually, our interview did not require the assistance of an interpreter or a translator, which is often the case for CEOs from Japan. I later learnt that Uotani was inspired to learn English by a secondary school teacher and became fluent while living in the US. An English graduate from the prestigious Doshisha University in Japan, he was sent to Columbia University to do an MBA by Japanese consumer goods company Lion Group before his stints at snack company Mondelez (formerly Kraft) as well as Coca-Cola.
“Financially speaking, the company was struggling a little,” Uotani says about Shiseido when he came on board. “It is public knowledge that the company was losing a lot of domestic business and missed its targets year after year. Internationally, China and Asia were growing but there was very scarce profit. The company was not showing growth and profitability was deteriorating.”
The bottom line wasn’t the only thing that was suffering. Employee morale was low as well — salaries and bonuses obviously were not going up, and there was a growing concern that the company would be unable to pull itself out of the doldrums. Uotani saw this as an opportunity for Shiseido to reinvent itself — it had great potential and most of the elements needed to become a truly international player with a strong local footprint. “My vision from the start was to grow Shiseido into a global company. By which I mean, we were going to achieve global standards of financial performance — growing sales and then growing profit to create a stronger company,” he says.
And so he did, with a cautiously implemented formula that remained respectful of the company’s heritage, but also looked outward for inspiration. For example, he insisted that English should be the lingua franca spoken at Shiseido’s Tokyo office by 2018, which has resulted in a huge surge of employees picking up the language.
My vision from the start was to grow Shiseido into a global company. By which I mean, we were going to achieve global standards of financial performance — growing sales and then growing profit to create a stronger company
Another key to his agenda for change was diversity. Uotani was inspired by his time at Coca-Cola — the five global CEOs he reported to represented five nationalities and backgrounds. “By definition, a global company means diversity — not just by gender, but nationality as well. Yes, this is a Japanese company, but I decided we should invite talented non-Japanese people to come and work with us, so we have 68 nationalities working at Shiseido now. Japan is based on homogeneity — in terms of nationality, culture and language. So to become diverse, the important condition is language, which is English. And it is not just about speaking the language, but a matter of mindset,” he says.
It was with some trepidation that Uotani first joined Shiseido — concerns that was not misplaced. “I would say that the reactions to me were mixed,” he says with an honesty that I quickly learn is a trademark of his. “People who had been in the company for a long time and preferred the traditional ways wondered if someone coming from outside could understand the corporate culture and heritage, or if they would destroy everything that was built over so many years. It is perfectly natural to have that sort of reaction.”
So, how did he win them over? “I had to prove that change is not a bad thing, and tried to show them that I embraced Shiseido’s heritage, and was going to build on it,” Uotani says. “There are two ways to make someone take off their jacket — one is to use the wind and blow it off, or you switch on the sunshine and if they are feeling warm, they will take it off themselves. At Shiseido, I did not need to make a radical change. I needed to be the sunshine, gradually getting everyone to understand that we needed to change. And, of course, to not be afraid of globalisation, because it was a good thing.”
Uotani structured his transformation plan based in part on Shiseido’s specific circumstances, and combined it with what he learnt from his previous assignments, in particular, Coca-Cola, where he spent 19 years. “At the end of the day, Coke’s objective was to get people to smile and laugh — it is not just a beverage to quench your thirst. That is important to keep in mind,” he says, counting off a list on his elegant fingers. “I also learnt a lot about diversity. Although the CEOs I worked with were all men, I was always taken by how diverse their backgrounds were. Then, I would say, people — they put a lot of focus on people development. At the end of the day, this business is driven by people — I am just sitting in my office every day, but Shiseido is brought to life by all the people on the ground and in the market.”
Aside from its flagship Shiseido brand, the group owns a number of globally popular brands across the personal care spectrum. This includes luxury label Clé de Peau Beauté, cult American makeup brands Bare Escentuals and Nars, as well as haircare brand Joico. In addition, it owns the Paris-based Beauté Prestige International, which produces perfumes for Issey Miyake, Narciso Rodriguez, Elie Saab, and Azzedine Alaïa.
“From a global business perspective, two brands are very significant because they are Japanese brands. Shiseido is going through a huge transformation in terms of product development, counter design and merchandising, and it is all happening now, so it is very interesting. The second is Clé de Peau Beauté, and it is my personal aspiration to make this prestigious brand a global one. It really works well and I have found that even younger consumers are interested in this brand, and for that reason, it is expanding very quickly.
“Of course, I cannot forget Nars — it is unique for a Japanese company to acquire a New York-based makeup brand created by a top artist, François Nars. It is a great story for Shiseido as an Asian company embracing the value of a highly artistic American brand, and I think it’s a good partnership,” he says.
Aside from growing the business in Japan and internationally, Uotani is also pushing Shiseido’s corporate social responsibility (CSR) platform from within and outside the company. “In Japan, a society dominated by men for many years, the gender gap index is embarrassing. Our prime minister is now really trying to change it, but Shiseido is moving ahead of it. In Japan, 30% of our managers are women — which is ahead of a lot of companies — and I have set a target of 40% by 2020,” he says.
Another initiative that is directly linked to its core business of beauty is Shiseido Life Quality Makeup, which has been developed specifically for people who have scars as a result of an accident or as a side effect from cancer treatment or other untreatable conditions. Recognising that one’s outward appearance can greatly affect quality of life, this initiative treats people for free and in complete privacy. Shiseido Life Quality Makeup is offered at more than 380 cosmetics speciality stores, department stores and medical institutions in Japan, as well as through overseas activities in various locations in Asia such as Shanghai and Hong Kong, as well as Taipei and Kaohsiung in Taiwan.
At the recently opened Shiseido Life Quality Beauty Centre in Tokyo, trained professionals do not just dole out makeup, but provide counselling services. “We can get people to smile and laugh again, and even go outside,” Uotani says. “This is a wonderful programme for Shiseido, and we have plans to grow it worldwide. This is a pure CSR programme, it was not set up for commercial reasons — everyone who comes can get counselling and treatment free of charge. This is the beauty of the beauty business.”
Although this initiative has yet to be replicated closer to home, another one by Shiseido has — food and confectionery. An extension of the über-luxurious Shiseido Parlour in Tokyo is a bakery that is part of the brand’s counter in Singapore’s Takashimaya Shopping Centre. The queues, we hear, are legendary, but nothing beats the challenge of getting a table at the original Shiseido Parlour in Ginza, which is famous for its pioneering Japanese-style Western cuisine, or yoshoku. Don’t let the lack of a reservation stop you from going, though, as you can also peruse the shop for anything from Western-style sweets with a modern Ginza esprit to traditional confections packed with flavour.
“You know, we were involved in the food business even before cosmetics,” Uotani says as he unwraps a piece of dark chocolate for me. “The company was founded in 1872 as a pharmacy. The founder appointed his son as a kind of second founder, who went to the US and Europe and learnt that pharmacies abroad were selling food. So he started the parlour 115 years ago — it was only 100 years ago that we started with cosmetics. But it makes sense, because food is important for your health — in combining the two, we are in search of holistic wellness, both inner and outer beauty. From that viewpoint, the food business is very important, although it may not be as profitable as the cosmetics side.”
According to Uotani, Shiseido’s vision is based on the founder’s three principles that remain central to the company’s growth: Products need to come though innovation; the company must become a global one; and you need richness in everything you do. “I interpret that last one as added functional value,” Uotani observes. “This is, to me, the most important because it is not just about making money, but making people happy, and that is the richness I want people to associate with Shiseido.”
Interestingly, this also relates to his own ikigai, a poetic Japanese word that loosely translates to raison d’etre. “Getting people to be happy and enjoying what they do,” he says, after a brief pause to consider my question. “I am a marketing guy — that is my career background. I wrote a book about marketing and in the last chapter, I was asked to write about this topic. This is what I think — I love it most when my campaigns make people laugh and smile, which is why I do what I do.”
The beauty of the beauty business? Indeed, Masahiko-san. Indeed.
This cover story appeared in the Nov 20, 2017 issue of The Edge Malaysia. Save by subscribing to us for your print and/or digital copy.