DyDo Group Holdings

The shift to a holding company system has improved Board discussions

With the shift to a holding company system in January 2017 and the transfer of authority to our operating companies, the topics for discussion at Board of Directors’ meetings have been narrowed down, allowing for greater depth of discussion. In particular, I feel there have been more meaningful discussions on investments for future growth and the monitoring of our businesses outside of Japan.

After becoming a holding company, discussions at the Board of Directors’ meetings became focused solely on matters of company-wide importance. This created time to discuss group management, and the quality of the discussions improved a great deal. However, with regard to possible new investments, I think the company needs to have a clearer vision of what is meant by success, together with a stronger focus on returns on investment.

I feel it is important, when engaging in new businesses, not merely to seek short-term profits, but to give weight to the nurturing of the business from a long-term perspective. At the same time, it is important to remain aware of the criteria for deciding when to pull out of an investment, and to do so when necessary. Thoroughly monitoring investments is one of the key functions of the Board of Directors

The business in Turkey we acquired in February 2016 was the company’s first real international business venture, so the employees engaged in the business didn’t know what they didn’t know, as they say. Nonetheless, in January 2017, the year following our acquisition, the company identified the key issues to focus on, which enabled a clarification of applicable policy and key performance indicators. Such KPIs have led to monthly reports for checking on progress; the quality of monitoring has improved greatly, as well.

Engaging in the healthcare sector for future growth

We have identified the growing healthcare sector as an area for investment, but other corporate groups have a big head start and the investments required are very high. I think we need to take a different approach than the major players if we want to succeed in healthcare. I would like to hear the president’s thoughts on what specific areas in the healthcare sector are our focus and what the long-term growth strategy looks like.

I feel that interest in health is trending both domestically and globally. Considering our current businesses, the most accessible field would be preventive medicine. In March, we announced our entry into the orphan drug business, believing that this opening move is an important one for obtaining knowledge related to health and pharmaceuticals. We will work to develop products that cross over conventional drink, food, and pharmaceutical categories, and will cultivate healthcare-related markets that aim to extend healthy life expectancy so as to tap them as a major source of future revenue.

I believe this field is a good fit for the company, which started out in the pharmaceuticals business. It will be necessary to maintain a long-term perspective on this business, first investing to acquire know-how, then setting up a solid policy to nurture the pharmaceuticals business over the long term.

Using dialogues with stakeholders to guide strategy

With the narrowing down of topics of discussion for the holding company’s Board of Directors, the content of reports related to dialogue with shareholders and investors became more substantial.

Institutional investors are professionals who measure investment efficiency, so talking with them is extremely valuable for us to gain objectivity toward investments. A lot can also be learned from their analysis as specialists with regard to the business climate of the industry or markets, and so on. This can help in building a long-term strategy for the company.

When you shift the focus to other stakeholders, not only shareholders and investors, you also realize how important it is to listen to consumers. Expanding the dialogue with consumers is vital if we want to continue bringing out products that customers desire in each business area.

The importance of investing in human resources

These days, the stock market has again been placing importance on investing in human resources, and I agree that personnel are a vital focus for the company’s management. Particularly urgent issues for us are establishing a personnel training system and building a pleasant work environment for employees. Wages and compensation are important, naturally, but we also need to put effort into cultivating skilled personnel, making work meaningful and easy to engage in, and supporting a balance between their work and private lives.

Employees working in our new business areas may require talents that cannot be carried over from current work duties. Capable personnel can be put in charge of an area of business that is not too large so they can have a good overview. That way, their talents can be developed by training them in how to devise strategies and utilize PDCA cycles. The key to doing this would be to educate such personnel ahead of time in both operational and financial aspects of the business. With sound knowledge in both areas, it becomes possible to translate vision into strategy and, further, write a business plan for setting goals, getting the management cycle going.

It is necessary to create a training system that enables personnel to carry out the full process of going from vision to business strategy, to creating a concrete business plan.

Adapt to change with the times and grow along with people and society

I would like to ask about two things—what issues we need to address to achieve sustainable growth as a group and what the role of the Board of Directors should be.

The system of governance that unifies over 20 group subsidiaries, both consolidated and nonconsolidated, is very important. Today, each subsidiary needs to take responsibility for its own business execution and have its own auditing system, but it is the holding company’s responsibility to guide the building of that system and to check on it. Ensuring that it functions well will connect to our group’s growth strategy.

Looking to future business expansion, I think it’s necessary to create several mainstays for our business portfolio to aim for growth over time. The Domestic Beverage Business is a core business and the base of the corporate group that continuously generates cash to invest elsewhere. DyDo has 280,000 vending machines throughout Japan that serve as “retail outlets.” These need to be utilized to supply safe, trustworthy products without wasting energy or resources. By extension, we have to carry out business that is both people-friendly and good for society. As greater energy efficiency is pursued, we predict that the number of vending machines in the industry overall will decline. Anticipating this development, taking action to enhance the appeal of the company’s own “retail outlets” and to survive in the marketplace will also contribute to social sustainability.

In the Domestic Beverage Business, our 280,000 vending machines quietly hold great potential as social infrastructure. I look forward to seeing the company innovate ahead of other companies by using the vending machines not only for selling beverages, but in connection with new businesses to generate new value.

While it is important for a company’s lasting business continuity to genuinely excel at one thing, it is also vital that the company change in tune with the times. Our group has up to this point been sustained by the revenue from the Domestic Beverage Business.
Healthcare, a sector in which we are expanding our efforts, is a social issue, and more fundamentally an issue that affects every individual. Our solid efforts in solving problems in this domain is a way for us to contribute to society.
The fabric of society is changing greatly due to global warming, the depletion of natural resources, the evolution of technology and other significant factors. While sometimes such changes create obstacles, we can also turn them into opportunities. I will make sure that the DyDo Group adapts flexibly to a changing environment and prepares for what is to come, in order to achieve high growth.