Jill Scalamandre, chairwoman, CEW, and president, bareMinerals, Buxom, Global Development Shiseido Makeup, began the discussion noting that the appointment of Uotani, as Shiseido's president and CEO, represented a profound statement for change.
“Mr. Uotani’s breakthrough position has inspired change on a vast scale and he has made a company known for its innovation even more forward-thinking,” said Scalamandre.
Jennifer Spaulding Schmidt, McKinsey & Company, acknowledged that Uotani has been transforming Shiseido to create a truly global company. According to CEW, Shiseido hits its sales goal of $9.45 billion (or 1 trillion yen), three years ahead of plan, and has achieved a compounded annual growth rate of 9%, while maintaining a significant presence in Japan and Asia.
Uotani, who joined the company in April 2014, has positioned it as a major global player, while building on the Japanese cultural heritage it cultivated for many years. However, his appointment from outside the beauty industry is a first for the Shiseido Company in its 140-year history. Uotani had more than 30 years in marketing and management in both Japanese and global companies, including 18 years as CMO and CEO at Coca-Cola in Japan. Leveraging both Japanese and global strengths, he is said, according to CEW, to have created a “hybrid model” of leadership capacity, with which he oversees multiple prestige brands, including Shiseido, Nars, Cle de Peau Beauté, bareMinerals, and Dolce & Gabbana fragrance. Shiseido currently employs 46,000 people worldwide and operates in 120 countries.
What Can Beauty Do?
Moderator Jenny Fine, Beauty Inc, opened the discussion with a video asking, “What Can Beauty Do and What Can We do To Protect the Beauty That is Earth?” It captured some of the envisioned innovative technological leaps currently being undertaken by Shiseido, including color capture nails, and a one-touch beauty shield; as well as an exploration of human diversity, so integral to Shiseido’s future-forward positioning. Fine noted that Uotani was the first Japanese executive to be on the CEW stage. He acknowledged that although he did live in Tokyo, he had spent time in New York, where he attended Columbia University, and earned a Master of Business Administration degree at Columbia Business School.
“Everything at that time in the ‘70’s was going to Japan, including fashion and Coca-Cola,” he said. He noted that when he learned Shiseido wanted to appoint someone from outside the beauty industry, he knew it wouldn’t be easy to change the business, but decided to take on the challenge and really learn what the beauty business is all about.
“I wanted to emphasize the mission of Shiseido to become a global company from a Japanese company. That was the mission.”
He noted that when he first joined Shiseido, it was clear that everyone was working hard and developing new products, but he really wanted to understand the beauty consultants' experiences, since they were the ones interacting with customers and knew the business best. At first, the consultants were reluctant to speak up; however, Uotani encouraged the dialogue, and eventually someone asked how he wanted to change the company. He empowered the consultants to transform the culture, saying, “You are the ones who will transform the company.” He noted that a colleague had characterized Shiseido as “a sleeping beauty,” and felt his mission was “to polish it.”
The result is that business-as-usual no longer works at Shiseido.
"We accept change and we have eight global programs, and have expanded fragrance.” He emphasized the importance of trust and dialogue, saying, “Management should be trusted by employees. That way I can ask more of my employees. I wanted people to have confidence in management. I have spoken to 70,000 people in China and elsewhere to create a diverse culture,” and added that the diversity was both global, and in Japan. “Five years ago, the culture was very much based on Japan,” he said, noting that there is a gender gap index of 1 in 10. “We are still behind and there is a very strong hierarchy, but we have now hired a global all-star team of talent,” he said, noting that people are honest in talking with others and that part of the culture is strong.
"Shiseido is growing at a compound annual rate of 9%,” he said, noting that while sustaining that growth may be uncertain, “As a business leader you have to have aspirations. For example, we came up with the goal of doubling our sales in the next six or seven years. We can’t achieve our big goals tomorrow, but our priority is organizing the growth of existing brands,” he said. “Our makeup brands are not yet in all countries, so we are growing, but we are also determining how we are going to grow our people. Seventy percent of our business will be outside of Japan, while 40% of the business is now in China. We are also seeing 40% growth in prestige, and we should assume that prestige beauty will continue to grow” he noted.
Uotani also discussed the shift from manufacturing in Japan to the US, saying, “New York is a center of business. You have a lot of talent here,” he said, noting also, that the global teams are becoming more open to collaborating.
“There is a shift in the consumers and we have to respond quickly. We need a combination of online and offline, this is the way of the future, and we have to be fast enough to grow with it, which is one of the reasons we created the Shiseido Center of Excellence, here in New York,” he said.
Fusing Science and Art
A video exemplifying the fusion of science and art in the world of beauty is at the center of Shiseido’s aesthetic. At Shiseido's new Innovation Center in Yokohama, the second largest city in Japan, science interacts with consumers to spark new ideas, with diverse talent from around the world, according to Uotani. It is a place where inspiration flows beyond borders, and promotes the vision of “Beauty Innovation for a Better World.” Known as S/Park, where ideas are sparked and consumers contribute to the process by interacting with scientists, the role of technology and R&D is strengthened and communication is at the core.
According to Uotani, the language of communication at the center has changed from Japanese to English, and the center epitomizes the changing culture of the company.
“Our beauty business is about making connections with consumers, so we have placed the center in the city of Yokohama. It is open to the public every day, and they are coming,” he said. “Here, in Beauty Park,consumers can get 100% personalized skin care products,” said Uotani, who added that personalization is the wave of the future.
"Our brand is about customization and we can create a customized product in two months. It is key to have technology in everything from cosmetics to fragrance,” he said. When asked by Fine just how close we are to the color changing nails and invisible sun shields, he replied, “Whatever you dream, can happen. Beauty is a power. I spoke with our R&D people and these things can happen.”
In replying to the moderator’s question about whether he still had time to visit the beauty advisers with all of the traveling he does, he said, “That’s what I do,” adding that his wife notices just how energized he is when he comes back from his trips to the US.
The presentation was opened to audience questions addressing investments, artificial intelligence and diversity. Regarding investment, Uotani said, “A lot of our $1 billion investment went to marketing, communication, advertising and capital investment in brands, supplier capacities, R&D, IT, plants, and people. It’s not simply people, but investment in educational opportunities, learning centers, understanding different working styles in order to collaborate and communicate, so as a creative group we can really change a lot.”
He explained that while the company received many applications for jobs, they were so numerous that they apply AI to assist in selecting applicants, and are also utilizing AI for product development, quality control, and screening, as well as for marketing purposes. Regarding diversity, he said that 85%of Shiseido’s customer base is comprised of women; however, 45% of men are now using skin care products in Japan, and makeup is also happening now in Japan, for men.
“As you saw in our video, Shiseido is reaching all kinds of people.” In conclusion, when asked what he is most proud of, Uotani replied, “the global organization and its people.”
Newsmaker Forum sponsors included McKinsey & Company, Arcade Beauty, Aptar, Axilone, Albéa, Facebook, HCT Group, MOSS®, Moblty, Mei\Yu\Me, Autojon Packaging, Cultech, ShyaHsin Packaging Group, Jerhél, Conex Connected Experience, Fabler, Beauty Inc, WWD and Kaplow Communication.