An Interview with Outside Directors (Isao Endo)

Isao Endo

Leverage Gemba-Power*
under the Business Owner
System and Achieve

Isao Endo

Chairman of Roland Berger Ltd.

- What impression of the Sompo Holdings Group have you developed since becoming a director three years ago?

The Group as a whole is on the cusp of significant change. Rather than incremental improvements and reforms, it is seeking complete transformation. Three years ago, the Group had yet to enter the nursing care business, and neither Sompo International (Endurance) nor the Business Owner system existed. If we compare transformation to a voyage, the first action, changing course dramatically, has been accomplished very well. With an appropriate course set, the ship has begun moving. That is how I see the past three years.

- How would you judge the governance practiced by the Group?

The Group is advancing toward extremely ambitious goals. The management team is firmly committed to realizing transformation, and, in this respect, I share their commitment. On the other hand, risks accompany transformation. Therefore, outside directors must monitor developments continuously to avoid damage to corporate value. At the same time, our monitoring should help heighten corporate value. With regard to these points, I think that communication with the officers responsible for operational execution is sufficient and that discussions are thorough. The quality of discussions is important. Outside directors make points based on external perspectives, alternative approaches, and different ways of thinking.
I think that the Group has shown a willingness to accept such opinions and to incorporate the elements that it needs.

- What do you think is important to bring about transformation?

The Group has successfully changed course. Now, how it moves ahead is important. The future will test the Group’s ability to take action. Will the personnel at operating companies who actually create value be able carry initiatives through to their conclusion?
Can these personnel change completely? In accomplishing these tasks, the Business Owner system will play a crucial role, I think.
Only a Business Owner is capable of refitting such a large ship. It is up to Business Owners to direct frontline operations. Therefore, they must show leadership as they leverage Gemba-Power to transform businesses. This is a very challenging task, and I do not think there are many examples of companies delegating responsibility to Business Owners to the extent that the Group does.

- What tasks must the Group carry out, and what do you expect of the Group?

To say “Gemba-Power” is to refer to the ability to identify and tackle issues in frontline operations. Without exercising Gemba-Power, the ship will not reach its destination. It is important that personnel from middle management through to frontline operations are genuinely committed to transformation. I think the Group’s decision-making is quite fast. However, there is a difference between decision-making speed and implementation speed. Implementation takes time.
Although implementation should be rapid, time should be taken for the implementation of a number of measures. Also, delegating to operating companies is important, but equally important is the ongoing consideration of the functions of the holding company and the support it should provide. I want the holding company and operating companies to collaborate closely to realize transformation.

  • Gemba-Power is the autonomous problem-finding and problem-solving capability of gemba, which can be loosely translated from Japanese as staff at the frontline.