The importance of life-long learning that goes beyond school education and the importance of human capital in corporate management are well-recognized. The aging society is also an urgent social issue. As a pioneer in the education and nursing care businesses, what do you think Benesse Holdings’ strengths are?

Our predecessor was Fukutake Bookstore, which was founded in Okayama Prefecture in 1955. The business began by selling books and student handbooks for junior high schools.
With Benesse as our basic philosophy, we’ve diversified our business in anticipation of the changes in society and the world, such as globalization and the declining birthrate and aging population. It was also around this time that, beginning with our nursing care business, we published our pregnancy, childbirth, and childcare magazines Tamago Club and Hiyoko Club, which led to our current lifestyle business.
In 1995, the company changed its name to Benesse Corporation to harmonize its business activities and corporate philosophy. Since our founding, we’ve operated with the idea of supporting the sustainability of people’s lives and their wellness—in other words, people’s well-being [yoku ikiru, in Japanese].
Our business model has always been to take ownership of and solve our customers’ problems. Our employees are hardworking, and we believe that the reason why we’re supported by our customers is that we’ve solved their problems by repeatedly improving their lives.
On the other hand, we feel that our business model itself, which has grown to meet the needs of society, also has to be improved to be more in line with the changing times. We must avoid allowing our strengths to become weaknesses. So we’ll leave the essential parts that shouldn’t be changed as they are, and we’ll change conventional ways of doing things for the benefit of our customers, even if it’s not in our own interest.

Improvement activities are common in the manufacturing industry, but do you think perhaps the reason why the service industry has been able to make improvements to this extent is because management and employees are united in their aspirations?

It all comes down to the fact that we’ve been willing to take on board customer feedback and have continued to make improvements. No matter the business, the corporate culture of facing and solving customer problems will lead to improvement. On the other hand, we believe that it’s precisely because we have one ambition that we can achieve transformation in response to the major social changes that have occurred in recent years. For example, as one of our promotional activities, in 2021 we launched the B-STAGE proposal system for all employees.
It’s also an opportunity for management and staff to work together to solve customer issues that can’t be solved as things stand and to tackle business issues and conflicts. Thanks to these opportunities, there have been some business initiatives achieving unprecedented success, such as the development of ICT teaching material that matches children’s state of educational development.

Up to now, financial information has been regarded as the most important management indicator in corporate management. Currently, customers and investors are demanding the disclosure of such information as what the company aspires to achieve in conducting its business. With that said, I think Benesse has successfully and sustainably realized not only its management philosophy but also its actual business.

We place “people as the axis” at the core of our management philosophy, and our business is to take on and solve the social issues and difficulties that people face in their lives. Because of this philosophy, we’ve focused on customer-perceived value, not just financial goals.
For example, in Shinkenzemi, a distance learning course for elementary, junior-high and high-school students, the number of new learners acquired isn’t the only KPI [key performance indicator], but rather how learners have gained knowledge and changed as a result of the course. Residential long-term care services consider not only the number of residents, but also how to provide service that takes into account the comfort of each resident. Our business becomes fully established when our ideas and initiatives are recognized and spread by society and customers. We believe that our corporate philosophy and financial value aren’t mutually exclusive, and that if we embody our philosophy, our financial value will naturally improve.

The modern way of thinking is that non-financial goals lead to financial value. How do you prioritize and work on non-financial goals such as diversity and well-being?

We apply the universal philosophy of “Benesse”, which stands for well-being, to the purpose of each business and then consider the order of priority. For example, what is the Benesse in Shinkenzemi? What is it in the nursing care business? How do we want to serve our customers? These are several cornerstones of our business.
On the other hand, to meet the diversifying needs and opinions of our customers, we also have to diversify ourselves. For this reason, we believe that diversity is an area in which we should work even more proactively. The company was originally dominated by women, but going forward, we’ll focus on enabling our diverse personnel to each fully realize their individuality and abilities. For instance, we’ll train executive-side women internal directors to be involved in management decisions.

Are there any challenges in realizing your corporate philosophy?

As the business expanded and efficient management progressed through the division of labor, we unintentionally narrowed the perspective of each employee, and we should reflect on the fact that we lacked a bird’s-eye view of the overall business. As I mentioned earlier, we launched the B-STAGE proposal system to allow all employees to convey opinions and ideas that don’t arise from individual operations. Those opinions will be passed on to the management and will be reflected in management strategies. Proposals of great significance are submitted to the Business Plan Review Committee in the same way as existing projects, and serious discussions are held with management. In addition, the head of each project will also look over related proposals and consider them for implementation. This way, employees and management will work together to effect positive change.

So, rather than continuing business as an extension of the past, the company will promote business reforms leading to the next stage of growth.

For example, Shinkenzemi centrally manages a huge amount of learner information and promptly delivers a large volume of paper-based teaching material to learners every month. A customer-based business model like this can’t be easily imitated by other companies. However, the amount of paper-based teaching material is decreasing now. In other words, if a model that’s been successful so far continues as it is, it can become a cost burden.
By switching to the distribution of digital teaching material, it’s become possible to obtain information on learning outcomes, such as when learners made gains and when they stumbled, that couldn’t be obtained with paper-based material. If we can change the cost structure by eliminating the need to print and distribute a large volume of paper-based teaching material, we can increase our financial value. At the same time, if we can provide services that are close to each learner on the course, satisfaction will increase, as will customer value.
To do that, we have to change our current skillset. For example, to digitize traditional paper-based media, our employees need to learn new skills. In recent years, we’ve been placing emphasis on our learning culture and especially encouraging our employees to reskill in the area of DX [digital transformation].

So DX seems to be the key to business transformation.

In April 2021, we established an organization called Digital Innovation Partners to steadily promote DX. It’s a cross-group organization that integrates the digital, IT, personnel, and consulting departments for DX promotion. From strategy planning to resource and investment allocation and promotion of specific measures, we’re trying to promote DX beyond the boundaries of business divisions and the company. As an organization, we’ll also work on reskilling education to develop DX for our personnel and ensure that each employee will always continue to learn as they move forward.

By promoting DX, will it be likely that you’ll be able to connect previously separate businesses and create synergies between them?

The lifetime value of customers increases if we’re able to provide services for learners throughout their lifetime. For example, unfortunately, at present, there isn’t enough connection between learning at school and living in society. It’s necessary to connect what children want to do, where they can learn to do it, and with that, how they can be useful in society. By understanding what you’ve learned in high school and what you want to learn at university, you can link the high-school and university entrance examinations. Even when people go out into the world, it’s possible to connect learning and working by matching the personnel that companies want with what employees have learned. I believe that this social issue can be resolved if we can connect the learning history of each child and student with information on the personnel that companies are looking for.
On top of that, it’ll be necessary in the future to continue learning while working. Through the Udemy online learning platform, we’ll support working people in their learning and foster a culture of lifelong learning. Udemy is used by over 1,000 companies and over 40 municipalities. DX will let us contribute to individual well-being and success at work and can also help improve the productivity and personnel of Japanese companies.
DX is also effective in the nursing field. We’ll improve the quality of nursing care by using Majikami AI, which visualizes the knowledge of individual members of the nursing care staff with AI, and then spreads that knowledge to other members of staff. In addition, through a portal site called Nursing Care Antenna, we want to disclose the knowledge we’ve accumulated so far, such as key aspects of dementia care, and use it to improve the skills of the entire nursing care industry.

How will you proceed with your overseas business?

In Japan, the aging of the population and how to deal with it have become urgent issues, but we believe that even overseas, we can make use of the business experience we’ve built up here in Japan. For example, in China, where the population will continue to age in the future, we’re conducting nursing care training to help people acquire the right nursing care techniques and skills in order to establish nursing care as a career.
In the education business, we’ll expand overseas the Shinken mock exam, which is used by 90% of high schools in Japan. For example, in India, Shinken mock exams are being introduced as a demonstration test to objectively evaluate the learning achievements of children. In a country where the education system isn’t as well-developed as it is Japan, I think we can demonstrate practical examples of how the Japanese learn.
Unlike other businesses, education and nursing care are highly regulated because they’re essential to the national interest. Even if the service is good in Japan, it may be unnecessary in other countries, and foreign companies may be unable to enter the market. Localization that matches the culture and values of each country and region is necessary.

From what you’ve said, I see that you’re providing not only economic value but also social value. What kind of value does your company aim to provide in the future?

The values that society holds important change over time. For example, in education, the spread of Covid-19 at the same time that the curriculum guidelines changed caused great confusion in school education. On the other hand, how teachers work has also become a social issue. It’s extremely important to address both of these current problems through business and to tackle social issues by adopting a 10-year outlook. If we can create a business that can solve current and future problems and gain trust, we’ll be able to increase our business value, continue to grow, and will eventually also increase our financial value.
The three values that matter to us are customer value, such as the number of customers and customer satisfaction gained from the products and services that we’ve pursued so far; economic value, such as profitability and efficiency; and social value, which connects solving customers’ problems to solving society’s problems. We plan to build a value reaction model that creates and promotes these three types of value. Currently, we’re formulating a group purpose that’s linked to these three values, and through it we want to showcase Benesse’s vision.

The three values that Benesse emphasizes are also expected of other companies. With that said, what will you be working on when you assume the position of Representative Director, President and CEO in April 2022?

As society undergoes major changes, our business is at a crossroads. We must reform with the determination to demolish and rebuild our existing business model if necessary.
Even though Benesse is still generally seen as an education and nursing company, by focusing on people, we’ll transform the company into one that solves the challenges of each stage in life in order to help people lead sustainable and fulfilling lives.