A Society in Flux? These CEOs Are Ready.

The transformative power of new technology — and the deftness needed to stay ahead of competitors — is on the minds of leading chief executives chosen for Institutional Investor’s 2019 All-Japan Executive Team. They urge investors to proceed with caution at a time of heightened political uncertainty.

“There is a lot of focus on risks and instability right now, but I believe that 2019 will become a year that is also remembered for societal changes due to the arrival of new technologies,” said Shigenobu Nagamori, chairman and CEO of Nidec, the leading global manufacturer of micromotors in hard disks and optical drives. 

Nagamori stepped down as president in June 2018, making the first move towards handing over the reins of Nidec, though he remains in leadership — and still approves every deal. The decision marks the beginning of the end of a tenure in which he has successfully predicted industry shifts such as factory automation and electric vehicles, leading Nidec in its acquisition of companies capitalizing on these trends. In 2019, Nagamori is eyeing technological opportunities in 5G, electric vehicles, and driverless cars. 

[II Deep Dive: The CEOs Breaking New Ground in Japan]

Issei Ainoura, chief executive of GMO Payment Gateway, considers the decline of cash as an historic business opportunity. “The biggest challenge we face is to develop a viable industry-specific payment platform for every industry,” he told II.

The specter of an asset bubble in Japan reflects in chief executives’ calls for caution: “Be deft and nimble,” advised Yasuhiko Saitoh, chief executive of Shin-Etsu Chemical Co. Shin-Etsu is the largest chemical company in Japan, and grew revenue 10.6 per cent year-on-year according to its latest set of annual accounts. Business leaders are wary of continued quantitative easing and ultra-low interest rates as the Bank of Japan has decoupled from the Federal Reserve in its approach to inflation targets. “The biggest risk — not just during the year 2019 — is to over-inflate the value of things beyond their intrinsic value,” Ainoura said.

Industry leaders are wary of the 2020 Tokyo Olympics, which have already led to unprecedented growth in Tokyo’s real estate market. Some fear this could lead to a post-games depression. Ainoura described 2019 as “the year to prepare for Olympics — and also the year to prepare for the post-Olympic backlash.”

How is your company being innovative?

By aggressively pursuing and implementing an open and highly transparent culture in all aspects, including technology choice and management style. The source of our innovativeness is to tirelessly pursue transparency in our HR systems and practices, Director’s bonus, and KPIs. Even the meeting rooms are literally transparent.

What’s the best piece of business advice you have received?

That would be the importance of striking a balance. This can apply to striking a balance of the value creation between shareholders, clients, and employees. It can mean balancing human resources and the balance sheet as well.

What is the biggest risk to the global economy in 2019?

The biggest risk — not just during the year 2019 — is to over-inflate the value of things beyond their intrinsic value. We should not invest when the value is over-inflated and a company must never make plans on an over-inflated basis.

How will 2019 be remembered?

The year to prepare for Olympics and also the year to prepare for the post-Olympic backlash.

How is your company being innovative?

By leveraging the technologies we developed for our small precision motors for IT equipment, we design unprecedentedly compact and lightweight motor-based solutions for other fields such as the automotive market. Also, focusing on our technologies and applying them to many different markets instead of limiting ourselves to any particular one allows us to develop innovative unconventional products. 

What’s the best piece of business advice you have received?

The words that have influenced me the most were those of my mother. My father passed away when I was young and my mother, who was a farmer, was left to take care of me and my siblings. She would always tell me that as long as I put in twice as much effort as others I would succeed in my endeavors. This piece of advice has helped me overcome countless hardships when managing my company.

What is the biggest risk to the global economy in 2019?

Generally speaking, the economy has become more susceptible to political risks. Political circumstances can change very rapidly and as a business manager there is very little you can do. For this reason, it has become more important than ever to diversify these risks by being active in many different countries in the world. 

How will 2019 be remembered?

Turbulent but transformative. There is a lot of focus on risks and instability right now, but I believe that 2019 will become a year that is also remembered for societal changes due to the arrival of new technologies like 5G, the increased presence of electric vehicles, and further development of autonomous driving.

How is your company being innovative?

Customer focus.

What’s the best piece of business advice you have received?

Be deft and nimble.

What is the biggest risk to the global economy in 2019?

Overreaction and overshooting.

How will 2019 be remembered?

Opening of a new chapter for growth.