A defining question in the industry remains: ‘What is beauty’? The answers are complex and far-reaching, going beyond the parameters of makeup and fashion, and entering the realm of culture and history.
The recent Newsmaker Forum, presented by Cosmetic Executive Women (CEW), and held June 6, at New York’s Roosevelt Hotel, explored the concept in global and personal terms. It featured speaker, Masahiko Uotani, President and CEO, Shiseido Company, Ltd., who provided perspective on the question with both humor and gravitas.
Jill Scalamandre, Chairwoman, CEW, and President, bareMinerals, Buxom, Global Development Shiseido Makeup, began the discussion noting that the appointment of Masahiko Uotani, as President and CEO, Shiseido, was 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.
She thanked event sponsors, including 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, and introduced speaker, Jennifer Spaulding Schmidt, McKinsey & Company, who acknowledged that Mr. 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 percent, while maintaining a significant presence in Japan and Asia.
Mr. 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, Mr. Uotani’s appointment from outside the beauty industry, is a first for the Shiseido Company in its 140-year history.
Mr. 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 it was an honor to welcome Mr. Uotani and that he 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.”
In describing how he found Shiseido when he first accepted the appointment, he said, “Everybody was working very hard, coming up with new products, but I really wanted to understand what our beauty consultants were experiencing.”
He said that he realized that the consultants were the ones interacting with customers and knew the business. Admittedly, there was reluctance to speak up, however, Mr. Uotani encouraged the dialogue, and eventually someone spoke up, asking 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.”
“It is not the same anymore as a company. 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 percent,” 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 percent of the business is now in China. We are also seeing 40 percent growth in prestige, and we should assume that prestige beauty will continue to grow” he noted.
Mr. 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. I can’t only rely on China, particularly since New York is the cosmetic center,” 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. He highlighted the company’s new Innovation Center in the city of Yokohama, the second largest city in Japan. Here, according to Mr. Uotani, science interacts with consumers to spark new ideas, with diverse talent from around the world. 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 Mr. 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,” said Mr. Uotani, “consumers can get 100% personalized skin care products.”
“I think 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, that can happen. Beauty is a power. I spoke with our R&D people and these things can happen,” he said.
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 (AI), and diversity. Regarding investment, Mr. 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 percent of Shiseido’s customer base is comprised of women; however, 45 percent 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, Mr. Uotani replied, “the global organization and its people.”
—Written by Nancy Jeffries, Beauty Packaging correspondent