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Business trends

Corporate Japan's CEO picks for 2018 bring new skill set

In break with tradition, incoming bosses cut their teeth atop subsidiaries

Sony's new President Kenichiro Yoshida speaks to the press as his predecessor Kazuo Hirai looks on. (Photo by Ken Kobayashi)

TOKYO -- With the approach of spring -- and a new fiscal year on April 1 -- Japan's management-shuffle season is in full swing. New corporate chiefs are being announced on a near-daily basis.

Traditionally, Japanese companies groom "elite" employees in core divisions at headquarters. While this can be an effective way to learn the art of being the boss, it often leaves up and comers ignorant of the real business world.

But times are changing. Many of this year's new chiefs built track records leading subsidiaries or affiliates before being selected to head the parent.

Kenichiro Yoshida, the incoming Sony president, is a prime example. Yoshida, 58, served as president of subsidiary Sony Network Communications, or So-net, for eight years from 2005. He led So-net's incubation business to success and was instrumental in the birth of gaming company DeNA and medical information site M3.

Yoshida once noted that, despite So-net's modest size, his duties involved associating with a far wider range of people than he had been accustomed to. "The experience, personal connections and expertise I accumulated there are all beneficial to me today," he said.

Yoshihisa Suzuki, left, Itochu's next president and COO, seen here on Jan. 18, once served as president of Jamco.

Yoshihisa Suzuki, Itochu's 62-year-old next president, headed Jamco for four years from 2012. There, Suzuki helped the company achieve a V-shaped recovery from its struggles following the earthquake and tsunami of 2011.

Jamco, a manufacturer of aircraft galleys and lavatories, also entered the aircraft seat business under Suzuki's stewardship, paving the way for growth.

Kentaro Kawabe, senior executive vice president at internet portal operator Yahoo Japan, will be promoted to president. Kawabe, 43, established a company when he was still a university student.

After joining Yahoo Japan, Kawabe assumed the post of president at online video streaming service Gyao, which Yahoo Japan had acquired, in 2009. Gyao was in dire financial straits at the time, posting annual losses of around 10 billion yen ($91.2 million).

Kentaro Kawabe, right, Yahoo Japan's senior executive vice president and next president, speaks at a press conference on Jan. 24.

But Gyao swung into the black in two years under Kawabe's leadership. The company launched new businesses, such as a paid video streaming service that allows customers to watch TV shows they have missed. It started the service in partnership with private broadcasters.

"Serving as a top official of an organization or company -- large or small -- and thereby learning firsthand how the job of president is tough and interesting, is a requirement future top managers need to meet," said Takashi Kawamura, chairman of Tokyo Electric Power Co. Holdings.

Kawamura, 78, is widely credited with turning around Hitachi as its top executive.

One might call this way of thinking "Kawamuraism," and it now seems to be spreading across corporate Japan. Among other noteworthy examples are Japan Airlines and sporting goods maker Asics.

Since going bankrupt in 2010, JAL has adopted a policy of "not pursuing quantity unnecessarily," partly in line with a lesson from Kyocera Chairman Emeritus Kazuo Inamori, 86, who played a key role in the airline's rebound as chairman.

JAL's new president is expected to strengthen its low-cost carrier wing for further growth.

But as tourists stream into Japan in record numbers, some observers say JAL will miss a good chance to grow if it continues to emphasize only profits and service quality.

JAL Managing Executive Officer Yuji Akasaka, 56, will take over from Yoshiharu Ueki, 65, as the airline's president in April. The question is, will he carry on the policies of Inamori and Ueki or gradually shift the focus to growth -- including by strengthening budget affiliate Jetstar Japan?

Asics' next president, meanwhile, is one of the few outsiders being brought in to run companies this year. Yasuhito Hirota, 61, currently serves as a senior executive at trading house Mitsubishi Corp.

The company aims to overtake Puma as the world's third-biggest sporting goods maker by sales, after Nike and Adidas. But Asics has a relatively limited presence in the U.S. market. Market watchers are paying close attention to the global strategy Asics will pursue under its new leader.

Now let us look at what not to do.

Any "family feud" or conflict between new and old top executives can deal a serious blow to a company, as exemplified by Toshiba. Bad blood between two former presidents, Atsutoshi Nishida and Norio Sasaki, was partly responsible for Toshiba's recent financial crisis.

Sony and Panasonic had their own problems with this. Each saw a tug of war break out over management after their founders died, leading to prolonged slumps.

So perhaps the most refreshing move this spring was Sony President Kazuo Hirai's surprise decision to step down.

At 57, Hirai is still relatively young in Japan's business world, and for the fiscal year through March, Sony is on track to post a record consolidated operating profit for the first time in 20 years. It is easy to imagine a president in Hirai's position preferring to stay on, or double as CEO and chairman.

But Hirai has decided to cede total control over management, including the title of CEO, to Yoshida, who is one year older.

Then again, Hirai is not your typical Japanese. Educated in the U.S. and Canada, and at an international school in Japan, his English is better than his native tongue.

His clean break comes in stark contrast with the many former executives who seek to wield influence behind the scenes. This has long been considered a key problem for Japanese companies. With his decisive move, Hirai has sent a strong message to the rest of the corporate community.

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