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Interview with Outside Directors

Two Outside Directors shared their views on their roles in corporate governance, future direction, and improvement of the corporate value.

  • Tomoya Yoshizumi
    Tomoya Yoshizumi
    Outside Director
    Joined Ajinomoto Co., Inc. in 1978. Named a Member of the Board in 2007. Served in leadership positions, including President of Amino Acids Company, and General Manager, North America Division, Bioscience & Finechemicals Business Division, Ajinomoto Co., Inc. and President of Ajinomoto U.S.A. (currently called Ajinomoto Health & Nutrition North America, Inc.). An Outside Director of Duskin Co., Ltd. since June 2017.
  • Nobuko Sekiguchi
    Nobuko Sekiguchi
    Outside Director
    After working at a foreign affiliated company and as a management consultant, Ms. Sekiguchi joined Capcom Co., Ltd. in 2005, where she was appointed as a Corporate Officer. While there, she was engaged in leadership roles including Head of Corporate Planning & Human Resources Division. An Outside Director of Duskin Co., Ltd. since June 2019.

From what aspects are you looking at Duskin's management?

Yoshizumi:
Duskin places great value on corporate governance. The information I need is always available, which enables me to fulfill my duty as an Outside Director. Duskin is a public company, develops its businesses, and grows with franchisees through the franchise system. Unlike non-franchise businesses, our franchisees are included among stakeholders in addition to shareholders, customers and employees. Because our focus tends to be on the franchisees, I make comments and extend advice from the shareholders' perspective at the Board of Directors' meetings.
Sekiguchi:
It has been a year since I was appointed as an Outside Director of Duskin. My responsibilities in previous positions covered growth strategy in corporate planning and human resources divisions. I offer comments and advice from the viewpoint of not only risk control — which functions as a brake — but also business growth and improvement of corporate governance — which serve as accelerators. As we are provided with opportunities to walk through the agenda and reference materials in advance, we can put forward constructive opinions during the meetings.
Yoshizumi:
In many cases, it is Outside Directors who pose questions and provide opinions at the meetings. Internal Directors should be called on to speak more not only on business of their areas of responsibility, but also on companywide matters from different perspectives. I understand it is not easy because I have had the same experience as an internal director in previous posts, but doing so should lift the effectiveness of our Board of Directors' meetings.
Sekiguchi:
Many proposals made to the Board of Directors meetings are about our individual business lines. The meetings should be a forum for discussing how to best allocate management resources for the entire company, not simply a forum for approving such proposals from different business divisions.

What are your views on our business and the future?

Yoshizumi:
We are now at an important stage in our return to growth, as I see initiatives are beginning to bear fruit. In addition to viewing growth from the perspective of sales and operating profit, we are evaluating the overall business from different viewpoints — including an investment hurdle rate that takes the cost of capital into account. If we could channel limited managerial resources through selection and concentration, considering the cost of capital, we could gain a clearer view of the track to renewed growth.
Sekiguchi:
In a way, Duskin's philosophy, Sowing the Seeds of Joy, is one of our greatest management resources. I believe this is our strength, and that we, including our franchisees, should take advantage of this strength in our daily business practices. While valuing interpersonal contact, we will need to consider how to transform our business model as digitization progresses. Not many business models create value for both franchisees and customers, so if we could develop people who take a more flexible approach to creating business plans to match business trends, we could nurture the next generation of core businesses for our company to keep growing. To make it happen, we need to put a human resource strategy in place based on individual skill sets.
Yoshizumi:
During the COVID-19 pandemic, all companies are being urged to address its impact on their business. However, Direct Selling Group is not seeing a sharp drop in demand. I believe this is because our sales channels remain strong thanks to our long, trusted relationship with our customers. Direct Selling Group should further leverage its strengths to meet customers' expectations. We need to be developing and providing products and services in a timely manner, which will help our customers to stay healthy and fine-tune the rhythm of their daily activities.
Sekiguchi:
It is true that COVID-19 has once again emphasized the importance of face-to-face contact. Meeting people in person will be increasingly important in this rapidly aging society and in this respect, Duskin already has an advantage. At the same time, as the pandemic is accelerating the shift to digitalization, Duskin should speed up the initiatives to expand our online presence.
Yoshizumi:
In Food Group, Mister Donut improved their donuts and other items. Another effort involved enhancing meal items under the concept of "Something good's gonna happen." and providing moments of joy for all our visitors. Despite these efforts, eat-in demand has dropped dramatically due to COVID-19. However, if we respond to changes in eating habits such as take-out and delivery, we should be able to recover swiftly with the help of improved products and promotion strategies. We expect to see the business undergoing major changes over the next few years.

What are the essential elements of Duskin's corporate governance?

Yoshizumi:
Duskin already has a corporate governance system in place; the next challenge involves how we live the culture and philosophy shaped by our corporate governance system. As shareholders are taking on a greater risk of receiving no returns, we often discuss the agenda from their perspective. By strengthening the functions of corporate governance, we will be able to grow into a more profitable company with a better work environment.
Sekiguchi:
We have a governance system in place, and our corporate culture encourages discussions. But the culture tends to be homogeneous, partly due to fewer mid-career hires. What we need is a mechanism for diversity to include multifaceted viewpoints. While listening to the opinions of our shareholders, we need to proactively communicate our strengths to them. This should also lead to a better corporate image.
Yoshizumi:
Directors have few opportunities to meet the shareholders, but it is important to increase opportunities for the President and other board members to interact with shareholders, institutional investors, and customers. These experiences would help them to see, think, and speak with broader perspectives not confined to those of the business domains under their responsibility. In my experience, communication with shareholders has always generated positive results. And it will continue to do so.

Looking ahead

Yoshizumi:
As Ms. Sekiguchi mentioned, we need to review and reform our human resources system, redesigning it in a way that links evaluation and reward to outcome. In other words, under the new system, those employees who are highly motivated with pride and purpose should be evaluated and rewarded according to their outcome. I believe such employee engagement and mindset would only strengthen Duskin.
Sekiguchi:
Duskin's business needs a female perspective. I believe I can contribute by providing advice so that more women, both internal and external, will be involved in management.