Chairman & CEO
The world is facing many challenges. Recently, Russia’s invasion of Ukraine led to soaring resource and energy prices around the world, food security crises, acceleration of inflation in the US and other countries, fluctuations in interest rates and exchange rates, etc. that continue to affect businesses and people’s lives. Japan is not immune, and abnormal weather and natural disasters threaten the safety of people in their daily lives, while we must remain vigilant against the spread of COVID-19.
In an age of division where self-interests clash, while facing various challenges, I have to say that it is extremely hard to make the right choices for the future and build a consensus in society. I think the only way to overcome this is to apply the multistakeholder principle, that is, various stakeholders in society seek consensus by overcoming their differences in positions and interests.
And I believe that Japan indeed has the upper hand over other countries in practicing this multistakeholder principle. The spirit of altruism is the key, as unselfish concern for others and the world eventually brings advantages for individuals. These values were presented in Inazo Nitobe’s Bushido: The Soul of Japan and revered Eiichi Shibusawa’s Rongo and Soroban (Analects of Confucius and the Abacus). In my view, Japanese spirituality that values the golden mean and social harmony as well as our rich culture and traditions will nurture the characteristics and practical wisdom, and become strengths of Japan. This also relates to the SDGs and climate action toward Carbon-free society, which have become increasingly important in discussions among world leaders and in business management in recent years.
On the other hand, I am concerned about the possibility of Japan descending into a weak country in the world as a result of the prolonged stagnation over the past 30 years. We can lose no time in addressing demographic change as well as low birthrate and population aging in Japan, and cannot turn our eyes away from the reality of being a country facing advanced challenges. Under such circumstances, however, SOMPO has taken on challenges to realize “A Theme Park for Security, Health & Wellbeingprimarily in insurance and nursing care. SOMPO posted record high profits in FY2021, which is a proof that SOMPO can be expected to grow steadily even in the age of VUCA. The Sompo Group will continue to grow by believing that the story written by SOMPO will prove correct and by presenting the image after completion along with how SOMPO will contribute and what kind of future society we will create for Japan and the world.
2. SOMPO’s Purpose and the Group Growth Story
(1) “SOMPO’s Purpose” that Became a Common Language of the Group
Sompo Holdings agreed with all Group companies to place SOMPO’s Purpose at the core of business management and has made efforts to instill it in each and every employee. At the same time, noting the importance of “My Purpose”, we held townhall meetings for multiple times, and I personally spoke with a total of over 10,000 Sompo Group employees.
I reconfirmed, after spending much time, that a fusion of SOMPO’s Purpose with My Purpose is crucial for business management, and there is no hope for growth without this. In an environment full of diversity and inclusion (D&I) that respects a wide variety of each employee’s “My Purpose”, employees driven by their own “My Purpose” keep taking on challenges in their own way to deliver SOMPO’s Purpose. This is exactly what drives SOMPO’s growth, and we will create innovation that helps address social challenges through existing businesses, such as insurance and nursing care, and new value creation, primarily with the Real Data Platform (RDP), described below. This is the ideal state of value creation in SOMPO’s way and SOMPO’s growth story towards delivering purpose.
The starting point for this story is the purpose of each employee.Everything starts from the employees believing in the importance of their purpose and practicing deep self-inquiry to come up with “My Purpose” without using someone else’s ideas, and then expanding the circle throughout the Group. We will get everyone on board to large ship of SOMPO that goes beyond the boundaries of nations and organizations, and work together towards the ideal society.
I have had many discussions on the topic of co-creation of society by Seikatsusha (Citizens), with the next generation, young business leaders, media, and academic experts through my involvement in the Japan Association of Corporate Executives (Keizai Doyukai), etc. Seikatsusha (Citizens) are consumers, and used here in a broad sense that includes all workers, individuals, companies, and government agencies. The main topic is how to create a society in which each Seikatsusha (Citizen) makes various choices and takes actions from a subjective viewpoint in accordance with purpose, and pursues qualitative growth as a group to realize the greatest happiness of the greatest number of all stakeholders. We still need to broaden our minds, but SOMPO aims to become a trailblazer for accomplishing this goal.
(2) SOMPO’s Culture and Drivers Spurred by “My Purpose”
At the town hall meetings I held, employees talked frankly about their own experience and “My Purpose” drawn from it. One employee said, “I learned the importance of money from my experience of childhood poverty and that lesson is now applied to my work in life insurance,” while another employee said, “I overcame an adverse childhood experience by working in nursing care, and truly felt the importance of trusting other people and being trusted by others, and now nursing care is my life.”
Employees who work on “My Purpose” think and act by themselves driven by intrinsic motivation, which should result in higher employee engagement. Also, intrinsic motivation and strong sense of ownership arising from “My Purpose” would be the source of greater productivity, expertise, creativity, etc. at work.
SOMPO has 130 years of history as an insurance company and tradition of the founding business. The trust of customers built over many years through our willingness to “protect customers at all costs”, our ambition of founding, responsibility of living up to this, and the spirit of offering genuine “security” and “warmth” will continue to lie at the core of the Group as SOMPO’s DNA. I hope that a fusion of this strong DNA with employees driven by “My Purpose” will create amazing chemical reactions in SOMPO.
It may be generally thought that it is hard to link the individual’s purpose with the company’s purpose in a large organization. However, if “My Purpose” takes the lead in the company with an increasing number of employees thinking that they want to fulfill “My Purpose” by using the company, an instrument to accomplish what is difficult on their own by working together as a team and a company, behavior will change dramatically and the corporate culture will also change.
D&I (diversity and inclusion) is essential for underpinning and accelerating such cultural change. At SOMPO, employees with various background are working at the frontline of a variety of businesses worldwide. Regardless of which business one works in, everyone is invited to participate in the townhall meetings, while training programs and courses are held for employees across businesses. We set up on office of Sompo International in the main office building in Tokyo so that members can be based there on a regular basis. I believe SOMPO can become stronger by actively hiring and promoting employees who can produce results by merging “My Purpose” with their own work and by grasping various opportunities, regardless of sex, age, and nationality. SOMPO will strengthen our human capital, the driver of value creation, through a strategy to improve the quality of business management by raising intrinsic motivation of employees, increasing opportunities for challenges and innovation, and by creating energy in the workplace.
3. SOMPO’s Strategy for Improving Corporate Value
(1) Room for Improving SOMPO’s Corporate Value Demonstrated by Unrealized Financial Value
Sompo Holdings announced a new medium-term management plan in 2021. Our core strategies under this plan are to increase our scale and diversify risks (primarily in the existing businesses), create new customer value, and promote new work style. We will execute strategies from the viewpoints of and to meet expectations of customers and users, not of a service provider, and implement measures that increase employee satisfaction and productivity at work. We need to work to accomplish a digital transformation (DX) and realize Group synergies strategically by employing a complete hands-on approach and recognizing that we cannot move ahead by maintaining the status quo.
However, the outcome of such efforts is evaluated in the market mainly in terms of financial value which is generally regarded as corporate value. I presume that many firms feel the same and it is not only SOMPO but the value of a company must be mediated by “something” that is hard to quantify. I think that a story unique to our Company as well as the existence of evidence as proof are related to the answer to this question.
Contribution to addressing social challenges and realization of wellbeing are essential elements of a story that helps increase corporate value. SOMPO will try to accomplish this by presenting a value creation story “unique to SOMPO” that is “A Theme Park for Security, Health & Wellbeing” for multistakeholders and continuing transformation to realize this. To accomplish this, we partnered with Palantir Technologies Inc. of the U.S. and the National Institute of Advanced Industrial Science and Technology (AIST), one the largest public research institute in Japan.
We will build strong trust that “SOMPO can do it” by tapping into the wisdom from in and outside the Group so that the social impact and evidence can be presented, not just enthusiasm or vague definition, and increase SOMPO’s corporate value and brand. This is my mission as the Group CEO, relegated by all shareholders and the board of directors, so I am strongly committed to accomplishing this by all means.
(2) Nursing Care RDP that Transforms Society
I would like to first successfully put the Real Data Platform (RDP) in the nursing care business into practical use to enhance SOMPO’s corporate value. Shortage of caregivers due to low birthrate and population aging and surging social security expenses are real problems and almost a national crisis that we cannot escape.
SOMPO is determined to tackle these critical challenges head on. We will use real data collected from the nursing care front line to deliver “visible nursing care” to support the frontline. Moreover, we will develop solutions to improve the quality of nursing care under the concept of “systematization of mastery” and also deliver “predictable nursing care” to support the people “providing care” which is estimated to be around2.3 million people. If this know-how can be shared with all other care providers, it should have an enormous impact on society in the future. We will improve the quality of life (QOL) and build a platform for approximately 7,000 companies so that everyone can live a prosperous 100-year life. While the nursing care RDP is currently being developed for release, I believe that the future will be changed for the better, and await with great anticipation that day.
The issues in nursing care are enormous and cannot be solved without the help of various stakeholders. It is necessary to establish an athomecare model: through the combined efforts of the government, public and private sectors by also cooperating with the national and local governments, and integrate services (covered and uncovered) by public long-term insurance in the future. Other countries in the world may face the same issues in the future. We want to create a large ecosystem for people’s happiness by getting all stakeholders involved with a view to exporting the solutions developed by SOMPO in Japan to other countries.
4. SOMPO’s Mechanism Underpinning Sustainable Growth
It is crucial to establish a sustainable business management framework to support society over the next 20 or 50 years. Five Business CEOs and nine Group CxOs are currently in charge of business execution at SOMPO. The Business CEOs, as leaders, increase the attractiveness of the business as the leader, and drive the growth and expansion of the Group by exerting “centrifugal force”. The Group CxO coordinates efforts across businesses by exerting “centripetal force” of the Group and implements plans so that Group-wide strategies are executed without fail. The Group COO and myself, the Group CEO, oversee the entire Group.
These members are selected following the appointment and endorsement by the board of directors. Sompo Holdings became a company with committees in 2019 based on the notion that rigorous governance is indispensable for sound growth, and the board of directors supervises business execution with 10 out of 14 members being non-executive directors. On April 1, 2022, Mikio Okumura, Giichi Shirakawa, and Ken Endo were newly appointed as the Group COO, CEO of Domestic P&C Insurance Business, and the CEO of Nursing Care & Seniors Business, respectively. All three members were approved by the Nomination Committee comprised only of non-executive directors in accordance with the succession plan, and I am sure they will provide strong leadership in their respective businesses.
Mr. Okumura, the Group COO, who has a good track record in a wide range of business areas is the right person to be in charge of many areas of business execution, and was nominated to and approved by the Nomination Committee as the new President and Representative Executive Officer to lead the realization of “A Theme Park for Security, Health & Wellbeing” with a view to becoming the Group CEO in the future. The duties will be divided between Mr. Okumura who will practically be in charge of the insurance business (Domestic P&C insurance, Overseas Insurance and Reinsurance, and Domestic Life Insurance) in particular, and lead efforts to the achievement of the goals of the current Mid-Term Management Plan, and myself while I will continue to be in charge of priorities related to the strategic challenges for the whole Group, including nursing care, digital, and large M&A, as the Group CEO of Sompo Group. Under the new management framework, we will work as one to accomplish the Mid-Term Management Plan over the remaining two years as a must.
I wanted to become strong and cool when I was a child. However, I came across the quote “think more about others and less about yourself” in the great swordsman Musashi Miyamoto’s “Dokkodo” and realized that I cannot obtain true strength if I think only about myself and the spirit of trying hard for others is what matters most.
Since then, I have had various encounters and experiences, came to lead a large corporate group, and set the Group’s Purpose to “create a society in which every person can live a healthy, prosperous, and happy life in one’s own way with a Theme Park for Security, Health & Wellbeing” last year. My purpose is to utilize real data, reduce traffic accidents, disasters, and the risk of illness, make our daily lives safer and more secure, and help people live healthier lives.
I would like to fulfill my responsibility to drive the Group’s growth and create a better society to pass on the baton to young people and next generation who have the right to choose the future.