CEO MESSAGE
We will boldly undertakea transformation toachieve growth hand inhand with employees.

Hitoshi Kobayashi

CHAPTERbusiness, we launched a local subsidiary in India to start theschool education support business in the country. Also, we
improved our profitability by selling the Berlitz business,
which had been a management issue for many years.
Moreover, we established Digital Innovation Partners (DIP)
as a Group-wide organization to promote digitalization for
the further development of each of our businesses, andhave been steadily implementing relevant measures. For
fiscal 2022, we recovered our operating income to nearly
the pre-COVID-19 fiscal 2019 level by posting income of
20.6 billion yen. Although operating income is still below its
record high, the Group has proved that it can make a profitof 20 billion yen or more even when it faces difficulties in
its core businesses, such as the Shinkenzemi and Komodo
Challenge businesses. Indeed, the Group has a businessportfolio that helps secure this profit level.
According to the explanations that I have given above,
you might wonder why it was necessary for the Group toreview the Medium-Term Management Plan. The reason
is that the market growth rate of the education businesswill decline due to a decrease in the birthrate, although
the business is still providing the Group with a major
source of revenue. We need to think about how to build
a robust revenue base for 10 years in the future while we
still have enough earning power in the business. To meetthis requirement, we conducted examinations from a new
viewpoint and new angle, rather than regarding the future
as an extension of the present, and this led us to review
and update the Management Plan.

Representative Director and President, CEO

Helping individuals to lead their own
lives

Announcement of the Transformation
Business Plan
In May 2023, the Benesse Group announced theTransformation Business Plan for fiscal 2028, which is
aimed at increasing its corporate value on a mediumto long-term basis. For the Medium-Term Management
Plan that was released in November 2020, we completed
phase 1 of the plan, or its first two years, in March of thisyear. Also, back in May 2022, we updated some of thefinancial KPIs set under the Management Plan. Then, we
formulated the Transformation Business Plan as an updateof the Management Plan in view of changes to the businessenvironment surrounding the Company and its businesses.
In the Medium-Term Management Plan, we aimed to17

Benesse Report 2023

achieve a V-shaped recovery from the business impact of
COVID-19 and increase our operating income for fiscal 2022
to exceed the 21.2 billion yen we had posted in fiscal 2019,
before the outbreak of the pandemic. For core businesses,
we were unable to make a recovery as planned in thenursing care business and the Kodomo Challenge businessin China. However, we were able to achieve a V-shaped
recovery in the education business in Japan by exceeding
the profit that we had posted for 2019, before the outbreakof COVID-19. Also, in New Fields, we newly established the
University and Working Adult Business Company, and inparticular, we have been steadily expanding the Udemy
business. Further, to speed up our growth in the university
and working adult field, we invested in two companies,
one of which joined the Group. For the overseas education

The Benesse Group has long been widely recognized
as a leading enterprise in the educational field, and has
steadily achieved growth based on its unique businessmodel. However, the numbers of enrollments and students
registered with Shinkenzemi and Kodomo Challenge havebeen decreasing. This raises concerns about the growthpotential of the Group to some people, and our stock pricehas been halved compared with its record high for the recent
decade. What should we do to increase the expectationsof our stakeholders, including our investors, for the Group’s
long-term growth and gain their medium- to long-term
support? How should we help Group employees, who arefacing a range of challenges, to demonstrate their passion
and potential for their jobs? We held many discussions tofind the answers to these questions for ourselves, and these
efforts culminated in the formulation of the Transformation
Business Plan. Based on the Group’s purpose, we will makefull use of our strength and expand our business domains inline with the strategies set in the Plan, which are not simple
extensions of our conventional management strategies that
focus on the education business.
As implied by the term Benesse (well-being),
which we uphold in our corporate philosophy, theentire Group is committed to supporting individuals
in leading their own lives at each life stage from birth
to the last moment. However, we were trapped in apast of successfully achieving growth by conducting
a unique education business, and we also needed to

01 Our Vision and Business Strategies

respond to a personal information leak that occurredfrom within the Group. Under these circumstances,
we tended to take a narrow view and focus on
the immediate results of our work, although wewere aware of the importance of implementing
our corporate philosophy. On the other hand, thepandemic caused a range of social issues to surface,
and the business environment surrounding theGroup is continuing to change dramatically. We canno longer deal with such changes only by making
improvements to our existing businesses. We should
be bold enough to break the business model that wehave built, regarding it as a precondition to meet ourcustomers’ needs on a continual basis. We must haveenough courage to break away from our past successto be a corporate group that can continue to win
public support and trust in a very steady manner. To
this end, we will promote our own evolution in linewith the Group’s purpose and the Transformation
Business Plan.

Embodiment of the corporate philosophy
through business operations
The Benesse Group includes Benesse Style Care, a company
engaged in the nursing care business. In 2000, I wastransferred to the predecessor of this company (Benesse
Care) to serve as one of its directors. At that time, many
people both inside and outside the Group objected to theGroup’s engagement in the nursing care business, and I
was surprised and embarrassed at my own transfer to thecompany. However, when I visited a nursing home operated
by the company as director, I was impressed with theattitude of the company’s staff. They were embodying ourcorporate philosophy by being committed to supporting
residents of the home in leading their own lives beyond
the framework of their jobs. I was so inspired by them that
I involuntarily exclaimed, “Amazing!” I strongly rememberthat to this day. Now there are many companies operatingin the nursing care business. At that time, however, very
few companies were doing the business and the quality ofthe services provided by these companies was generally
not very high. But the staff of Benesse Care was thoroughly
devoted to helping residents of the home to lead their own
lives while also striving to meet the needs of their families.
Both the residents and staff of the nursing home that I
visited looked happy. This experience led me to uphold theidea that we can offer the ideal service by helping our users
to continue living their own lives. When starting to provide
welfare and nursing care services, you usually employ
people who have experience in the industry. However, wehave been proactively employing people who have diverse
experience in fields other than the welfare and nursing careindustry, in order to provide individual customers with theideal service that truly fits their individual needs. I think thisis an unusual practice in the industry.
It is essential for the Group to 1) achieve businessgrowth, 2) contribute to solving social issues, and 3) help
its users continue to live their own lives. In order to do
all of these three good things as our unique initiative,
I believe it is important to help all Benesse Group

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CEO MESSAGE

employees to have the self-confidence that they canembody the corporate vision and philosophy throughtheir own jobs, as already demonstrated by our staff thatengages in the nursing care business.

Grasping new business opportunities
at the turning point of school education
Education is one of our main businesses, and we havealready taken measures to respond in a timely manner
to changes in the field’s business environment, including
shortening the time required for the creation of teachingmaterials. I regard 2025 as a turning point for school
education in Japan, which is undergoing various changes
including those related to children’s motivation for learning,
their parents’ values, the guiding principles adopted at
educational facilities, and the university admission system.
In December 2019, the Japanese Ministry of Education,
Culture, Sports, Science and Technology announced its
intention to promote the introduction of ICT to schools
under its GIGA School Program. While the introduction of a“one device to one student” policy was planned for the endof fiscal 2023, it was implemented under the program three
years earlier than planned to meet the need for online
education caused by the pandemic.
Starting in 2025, students will receive new replacement
devices under the Next GIGA Program formulated as thesecond phase of the Ministry’s aforementioned initiative.
Also, school administration support systems will be updated
to cloud-based systems, the assessment of students
through computer-based testing (CBT) will expand, andthe application and effective use of educational data will
be further promoted. On the other hand, we face threats
and risks, including the reduction of the budget allocatedby local governments to software applications and theshrinkage of the out-of-school learning market following
the spread of devices. While keeping these challenges inmind, we should further promote the transformation of
our education business in fiscal 2026 and onward to grasp

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Benesse Report 2023

CHAPTERnew opportunities provided by the need to reduce theadditional burdens imposed on teachers, and also narrow
regional gaps in terms of education and increase the device
possession rate. To this end, we will take the following three
approaches.
First, we will take a Bring Your Own Device (BYOD)
approach mainly in the Shinkenzemi business, thereby
transforming it into a next-generation business model witha focus on serving more diverse households and children
in the business. As the second approach, we will help
schools shift to cloud-based school administration. We will
make more effective use of relevant data to help schools
provide a new type of education, thereby contributing to
the reduction of burdens imposed on their teachers. Thirdand last, we will promote CBT for educational assessments.
The Benesse Group has unique expertise and know-how
in educational assessments. Accordingly, we can provide
schools with the services that will help them to promote
daily learning, show them education courses that match
individual students, and support their students in taking
intra-year entrance exams. We will expand the use of
CBT in these services to promptly find more business
opportunities.
The Benesse Group has accumulated know-how and aproven track record in the creation of paper-based teachingmaterials that are useful for children. Now, amidst the rapid
progress of digitalization, we need to do more than simple
digitalization. Specifically, we need to take advantageof the features of digital media to create new teachingmaterials that will give children more motivation to learn.
For the creation of such materials, the Group is focusing on
reskilling Group employees. In addition to acquiring new
skills, Group employees are required to make efforts to viewthings beyond the scope and framework of the Group’s
conventional businesses.

01 Our Vision and Business Strategies

Left: Final screening session for the B-Stage internal proposal system Upper right: Benesse Group’s monthly morning meeting held to promote transformation
Lower right: President’s roundtable meeting report in the online in-house newsletter

Involving employees for speediertransformation
It is not easy for us to dramatically change the Shinkenzemi
and Shinken Simulated Exams businesses, which have longprovided us with a great driving force for growth based on
the quite unique business models. We have a total of morethan two million enrollments in the businesses, and we
require great courage to adopt the opinions of people whoare not registered members of the services while continuing
to meet the expectations of the members. It would also be
difficult for each of our employees to search for new businessideas from a broader perspective while performing their
daily operations. I therefore decided to provide employeeswith special opportunities to get inspired and think deeply,
including establishing the B-Stage internal proposal system.
In fiscal 2022, the number of proposals made under thesystem reached 3,427, almost doubling from that in fiscal
2021 (1,782). Although many companies have their own
in-house proposal systems, it seems rare for the numberof proposals made under such a system to double in thesecond year. But we have achieved it, which is attributable to
the great efforts made by the secretariat. Also, the heads ofthe in-house companies steadily responded to all proposals
and ideas submitted by employees, including minor ones, ina very sincere manner. Due to these two factors, employees
felt more encouraged to make proposals under the system,
which in turn increased the number of entries.
The Benesse Group has established a CXO-based system,
placing importance on cross-organizational functions,but it still has a vertical organizational structure. However,through the B-Stage system, it has been clearly revealed
that employees working onsite have a range of ideas andthoughts regardless of their affiliation in the Group, and thisis indeed a great finding for us. Of course, we need to do
more than just encourage employees to make proposals.
It is also important for the management side to respond totheir proposals in a sincere manner, and I have asked theheads of the in-house companies to avoid simply ignoring
any proposals. Under the B-Stage system, which is now
three years old, we ask employees to make proposals in
two separate divisions, which we call the “free competition”
and “compulsory competition” divisions. In the compulsory
competition, we solicit proposals in the business domains
important for the Group’s sustainable growth as describedin the Transformation Business Plan. We will examine each of
the submitted proposals in consideration of its business sizeand social impact.

Building a corporate culture that
promotes the growth of both theCompany and employees
Since joining the Company in 1985, I have been achieving
self-growth with the growth of the Company. The Company
respects the opinions of employees, and it used to be
included in the job of the president to read all employees’
daily reports by noon the next day and then give comments
to the reports written with a red pen, just like a teacher does
for their students. Also, at the end of each year, employees
used to write a letter to the president to describe thechallenges that they want to embrace and propose their
new ideas. The president would read all the letters during
New Year’s vacation, which must have been time- andlabor-consuming. However, thanks to this culture, onsite
employees felt a sense of unity with the management teamand were highly motivated. As the Company went throughthe growth phase and faced changes in the businessenvironment, this culture was unfortunately lost. I would
like to bring back this culture to the Company. In your daily
operations, you might feel uneasy as you cannot boost
revenue as planned. But I want all employees to embracechallenges with self-confidence to help the Benesse Group

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CEO MESSAGE

CHAPTER

01 Our Vision and Business Strategies

planned for all the measures, but I am determined to build a
corporate culture that encourages all employees and officers
to boldly promote transformation on a full scale.
I am also committed to further promoting meaningful
dialogue between the Group and its shareholders, investors
and other stakeholders, and would like to ask all our
stakeholders for their continued support for the Group.

Conclusion
What the Group should aim for is thus summarized in theTransformation Business Plan. The Group’s purpose and the
purpose set for each business have been gradually shared
more widely across the Group. Fiscal 2023 is the first year of
the Plan, and is an important year in achieving the targets
set for 2025 and 2028, which are milestone years under thePlan. If we fail to implement measures as planned in the firstyear, it will be quite difficult for us to complete the plan by
the deadline. It is of course difficult to make achievements as▶Goals of the Transformation Business Plan and Outline of the Plan

Goals of the Transformation Business Planpush ahead with measures to compete in a more robust
manner. When onsite employees do not feel enoughmotivation or passion for their work, no management
plans will function well, even if they are excellent plans.
This has been proven in the Group’s history. I have learned
that the insights, creative measures, and passion of onsite
employees provide a driving force for the Group to
increase corporate value, and this should be a part of ourcorporate culture. For our customers, not the words of the
management, but those of onsite employees and staff
members are what matter. All officers and employees mustclearly recognize this fact.
However, I do not mean to say that onsite employees
are allowed to do only what they want to do. In orderto please our customers, we need to inspire them andencourage their self-confidence, and their needs change
constantly. In particular, children are placed in a dramaticallychanging environment, and there are children who havelost their self-confidence or motivation for learning. For the
onsite staff to help these children out of such a situation,
the staff members need to change themselves, even bydiscarding their past successful experiences. All officers andemployees must understand the fact that these changes
revitalize our sites. As I often say, Benesse can maximize its
strength by helping its sites demonstrate their respective
strength. I would like to have more opportunities tocommunicate this directly to more employees.

Never making my own limits theGroup’s limits
I am strongly committed to transforming our business incooperation with onsite employees. However, I do notthink that I can lead the entire Group’s transformation on
my own. In other words, I should never make my own limits
the Group’s limits. I have therefore rebuilt and enhanced
the CXO system as part of the management and corporatetransformation process. The Benesse Group had highly
professional administrative departments even before
the establishment of the system. However, for the Groupto transform its business portfolio and urge employees
to embrace new challenges in their respective businessfields, the administrative departments need to work incooperation with the upper management team while
understanding the challenges embraced by the onsite
staff. However, if the administrative staff need to ask me
to check everything, they will be unable to work speedily
to make reforms in a timely manner, and this implies therisk of making my own limits the Group’s limits. On theother hand, there have been more cases in which advice
and support need to be given to onsite employees from a
broader perspective rather than focusing on one specificbusiness area. In consideration of these facts, I have beenleading the organization of a cross-departmental meetingfor the administrative staff since fiscal 2022. The CXO
structure shown in the Transformation Business Plan has
been built against this backdrop. As a result of changing
the organizational structure, I think both the CXOs and staffof the administrative departments are becoming morestrongly committed to leading the Group’s transformation.
As CEO, I used to make decisions in a range of cases, butnow, those around me are making decisions instead of me
more frequently than before, which sometimes gives me asense of loss, but I believe such empowerment is necessary
for the Company to exceed my limits.

1. Be a corporate group devoted to solving social issues centered on people
2. Pursue sustainable profit growth through portfolio structure transformation
3. Establish three pillars of income with Core Education, Core Nursing Care, and New Fields

Direction

Benesse Report 2023

Benesse will continue to aim forthese ideals.

Financial
KPI

Operating income*
FY2025ROE
FY2025

Sales growth in New Fields
FY2022–2025

32 billion+ yen

10%+

Doubled as of FY2025(Relative to FY2022)

Portfolio structure vision for FY2028:

Portfoliotransformation

Well-balanced profit generation from three pillars:Core Education, Core Nursing Care, and New Fields*Goodwill from future M&As are excluded.

Portfolio strategy

Transformationof core businesses(Core Education)

Management
systems toachieve the plan

21

Group’s
purposeAnybody can enjoy lifelong growth.
Toward a world in which everyone
can live their own life.

Transformationof core businesses(Core Nursing
Care)

Challenges for
new growth(New Fields)

Management system transformation
Corporate transformation

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