Key Points of the New Mid-Term Business Plan "JSR20i9" and JSR Group's Future Orientation

Growth Scenarios

Pedersen:

How are you planning to move forward with the new mid-term business plan, which will extend up to fiscal 2019?

Koshiba:

Although our Fine Chemicals Business has successfully increased its share overall, with the exception of some semiconductor materials and LCD materials, it has had difficulty achieving greater share and appears to have reached its limit. So we think our future business growth will be in line with market growth but not more than that. Likewise, our existing Petrochemical Business will grow at about the same rate as GDP growth. We are looking at three points as promising areas for profits in the future. The first is SSBR, which is a very competitive product. We are currently constructing a new plant in Hungary to go with our plants in Yokkaichi and Thailand. The second is semiconductor materials in our Fine Chemicals Business. We want to expand our share of semiconductor materials in the "data society," which will continue to grow and develop. And finally there is our Life Sciences Business. These three growth drivers will steadily produce higher profits. Additionally, we must enhance our global competitiveness. As part of this, I think we need to restructure our work formats to improve labor productivity—in other words, we must execute initiatives toward introducing heretofore nonexistent work modes in order to improve labor productivity.

Pedersen:

Up until the late 20th century, I think competitiveness was built around four axes: "adaptiveness," "market share," "quality," and "price." However, in the 21st century market, I think an additional "fifth axis of competitiveness" called "sustainability innovation" is demanded. What I mean is, we now live in a time when companies that raise corporate value and creating value for society and the environment following an integrated strategy will be supported by society – and gain in competitiveness. An example here is a proactive response to climate change and the Sustainable Development Goals (SDGs). Additionally, labor productivity in the 20th-century market was handled in terms of "achieving the same output while reducing invested resources" or "increasing output by efficiently utilizing invested resources." However, I think that in the 21st-century market, labor productivity will be oriented more toward "improving human resources that create new value and organizational performance through demonstration of creativity and innovative abilities" and "creation of value that was impossible within the restricted environments of departments and companies – and often with the participation of a broad range of employees and collaboration with external partners."

Incorporating a "Digital Mindset" into the Company Organization

Koshiba:

So management will change greatly.

Pedersen:

That's right. We will need not only "functional problem-solving" in the form of the "P" (plan), "D" (do), "C" (check), and "A" (action) cycle but also more "creative problem-solving" in the form of the "DIE-I cycle," which is comprised of "De-framing" (stepping away from the usual point of view), "Insight" (gaining new awareness and insight), "Experiment & Learn" (gaining knowledge from experimentation), and "Implementation" (putting into action).

Koshiba:

I think that, with the "DIE-I Cycle," you're talking about responding to the digital revolution. Although we can consider that there are businesses out there that have incorporated AI and IoT into various aspects of their operations, I think it is first important to incorporate a "digital mindset" into the organizational culture. For example, it is possible to accelerate the speed of R&D by ten or even one-hundred times by using AI. As we can see with Google's AlphaGo, which suddenly gained fame by defeating the top Go players, the development of AI entails great cost. However, in the semiconductor industry, such costs may fall in line with "Moore's law" and, perhaps in five years or so, we may be able to obtain AI technologies that are out of reach now. So, if we look at the "work-style reforms" that are coming, although I believe that such schemes as "no overtime days" and "Premium Fridays" are also important, we cannot view those reforms in this dimension alone. Indeed, I believe we must reexamine conventional practices and consider productivity in a completely new light through "De-framing." I think the target before us is to improve productivity in the 21st-century-style white-collar market.

Pedersen:

I completely agree.

 

Dialogue - 3 Action toward Sustainable Growth