ESG IN ACTION

Feature: 2A Driving Force for Evolution and Ambition

Promotion of Diversity & Inclusion
The Teijin Group has positioned diversity as a priority field in its medium-term management strategy.
So, what should we do to be an organization that can unleash the capabilities of diverse human resources
to create innovation? We held dialogues with three invited external experts and got valuable suggestions
from them on the matter.

Mr. Akie Iriyama

Ms. Etsuko Okajima

Ms. Yumiko Murakami

Associate Professor, Waseda Business School

President & CEO, ProNova Inc.

Head of OECD Tokyo CentrePROFILEAkie Iriyama graduated from Keio University with a bachelor’s
degree in economics and subsequently acquired his master’s
degree from Keio University’s Graduate School ofEconomics. After engaging in research and consulting workat Mitsubishi Research Institute, Inc., he went on to earn aPh.D. from the University of Pittsburgh’s Joseph M. Katz
Graduate School of Business in 2008. He then served as an
assistant professor at the State University of New York’s
School of Management in Buffalo prior to undertaking hiscurrent post from 2013.

PROFILE
After working at Mitsubishi Corporation and McKinsey &Company as well as earning an MBA from Harvard
Business School, Etsuko Okajima participated in theestablishment of GLOBIS Management Bank in 2002 tobecome its CEO in 2005. She then went on to establish
ProNova Inc. in 2007, which offers corporate growthstrategy consulting services. Ms. Okajima provides
executive development services as the go-to for over 200
companies’ leaders annually.

PROFILE
After graduating from Sophia University’s Faculty of Foreign
Studies, Yumiko Murakami earned an MA from Stanford
University and an MBA from Harvard University. She served
as a managing director at Goldman Sachs and CreditSuisse prior to undertaking her current post in 2013. Ms.
Murakami offers recommendations for making the most of
the declining population including with regard to workstylereform and work-life balance.

Diversity is a Means of Spurring
Innovation at Companies
Iriyama
In promoting diversity, the most important thing is to ask yourself why you are doing it. Otherwise, the goal of diversity
tends to become diversity itself. It is vital that diversity leads toa means of making the company better or, in other words,
that it leads to innovation.
Teijin’s medium-term management plan positions diversity
as key in strengthening the management base. I think that isa good framework. However, there are also issues. This is abit harsh, but prompting diversity with the “aim of global
excellence” as put forth in the former medium-term management plan does not really hit close to home. That is not42TEIJIN LIMITEDINTEGRATED REPORT 2018

going to get the idea across on the front lines. Innovation
emerges from diverse people and perspectives. That is whydiversity is vital. Frontline employees need to be convincedof that. In other words, a message that does not “sit well”
with people is not going to be conveyed. It is up to top­management to have a clear vision that gets employees onboard. The head of the company presents the overall direction and directors and management bring it to the worksites.
I think that discussions about diversity are not enough, butorganization-wide discussions are also needed.
I hear that Teijin’s diversity arising from its complex business structure is making it hard to bring together employees with differing views from each business. I also hear thatTeijin’s advancement of M&As with overseas companies
has made it difficult to generate synergies with domestic
operations and establish good communication. Tips foraddressing those issues can be drawn from a certain
European company. It always sets out its direction for thecentury ahead and meticulously disseminates this as avision throughout the entire group. For this as well, getting
frontline employees on board is the key. When you think
about what to focus on looking way down the road, there
is business growth along with social issues beyond that. I
think sharing such a vision throughout the organization andbringing together people with differing views can bringabout innovation.

Diversity is About a Diversity ofMinds, Not Attributes

recognizing potential. Focusing on the productivity and innovation of selected individuals is key. For Teijin, I think choosing
personnel from both the materials and healthcare sides of thebusiness to establish a pipeline between the two will close thegap and make networking easier. I think it is important toaccelerate work being done now by having employees crossthose boundaries while they are young through personnel
exchange with each business. Who is to handle this selectionof personnel with purpose? Since criticism comes with theterritory, I think the job clearly requires a skilled hand. Namely,management.
To further elaborate, the mindset that personnel transfers
diminish employees’ standing needs to be changed.
Conversely, personnel transfers need to be positive. Unlessthat is assured, really good people are not going to beselected. This is the idea of open innovation. The venturecompanies that have introduced this succession plan are all
growing, and more major companies are incorporating theseventure companies’ methods.

Creative Friction isWhat Sparks Innovation

Okajima
I specialize in succession planning, which entails offering
support to companies with organizational development thatspurs innovation. As part of that, I also provide support withdiversity and inclusion. Teijin has achieved discontinuous
growth during its 100-year history and has worked on­diversity from early on. But frankly, it seems to me that theopportunities are nowhere near being fully exploited. LikeMr. Iriyama said, to what end is diversity and inclusion being
pursued? Women are being treated as symbolic of diversity
since they are in the spotlight now. However, women’s
advancement is just the first arrow—a recipe for minimal
growth. Diversity is about a diversity of minds, not attributes.
One way to really leverage diversity is for management tomentor employees, selecting such personnel early on. When
it is hard to say which of two candidates is better, choose thewoman or non-Japanese for instance. What is important isMurakami
Listening to what Mr. Iriyama and Ms. Okajima have said so far
brought to mind the term “creative friction.” Teijin is taking various diversity and inclusion initiatives but there may not beenough friction. While everything is lined up, friction is lacking.
Friction is the potential that arises when an array of diverse
elements collide. Generating friction gives rise to creativity,
which leads to innovation. No matter how much is accomplished with regard to work-life balance, those efforts will notestablish an environment leading to innovation. M&As also
cause friction, but it is not currently clear whether that is leading
to creativity at Teijin. I think Teijin needs to skillfully create friction
between materials and healthcare businesses, or between
Head Offices and subsidiaries via M&A, and tie that to creativity.
Fundamental systems are needed to enable work-life­balance and equal opportunity. Is the human resource
system accessible, rather than being based on seniority?
TEIJIN LIMITEDINTEGRATED REPORT 201843

ESG IN ACTION
A Driving Force for Evolution and Ambition
Promotion of Diversity & Inclusion

Feature: 2When management approaches employees, is it done in an
equitable manner irrespective of age? I think that lifting up
younger people and seeing what this type of changing thebalance does, brings forth creative friction. Fortunately, theoutlook is bright for Teijin’s businesses. There is major potential in growth fields. If something was needed, I would say it
is more young people. With tons of opportunities to fusebusiness models and social infrastructure in the chemicals
and digital domains, the time has come for Teijin to show its
real strength, but the power of youth is what can bring about
those chemical reactions. Of course, the overlapping category of women is needed too. Taking a wide approach todiversity and bringing both more women and more younger
people into the mix leads to innovation. Shifting the axis ofsuch traditional ways of thinking will bring about friction.

believe staff need to gain management experience to become
executives. While it is not always smooth sailing, the company
says that following up is vital when things do not work out.
This is called “shame-based management,” but the company
says the experience is very helpful for the future. That is a
stepping stone for the next endeavor.
Okajima: Incorporating the number of failures into KPIs—it is
only from there that innovation will arise.
Iriyama: It would also be good to incorporate in the assessment system how many times an employee went up to bat,how many times they took on a challenge. Evaluations shouldcount the number of failures as well.

Mechanisms for Follow-Ups andAssessing the Number ofFailures is Important
Okajima: Since equality for all is impossible, emphasizing
justice rather than equity is what equal opportunity is about.
Murakami: That is a key point at Teijin. I also think it is good
for Teijin to have such systems for selecting employees foradvancement, including for special positions.
Okajima: Teijin needs lead engineers with special skills. Suchindividuals may not have management capabilities, but that isfine. It is good to have various options. It is important to instilla mindset of what each person is geared towards considering
their life stage.
Iriyama: At a certain company, they are aggressively entrusting younger employees to manage subsidiaries as they44

TEIJIN LIMITEDINTEGRATED REPORT 2018

Murakami: That requires supervisors that provide suchopportunities, and so evaluation of such particular supervisors
is also important. In addition, it is critical that supervisors aregood judges of people and have the ability to determine
whether a subordinate can handle the next task even if they
have previously failed.
Okajima: Supervisors tend to regard people like themselves
as being outstanding but they also need to choose people
that are different from them. I want them to have the courage
to select employees with interesting views and younger
employees for opportunities.

(From the left in the front row) External experts: Mr. Akie Iriyama, Ms. Etsuko Okajima, Ms. Yumiko Murakami(From the left in the back row) Teijin participants: Noriko Hidaka (Head of Diversity Promotion Office), Nobuyuki Takakura (Chief Social Responsibility Officer),
Yasuhiro Hayakawa (Chief Human Resources Officer), Shuichi Osaki (General Manager of CSR Planning & Promotion Department)

Setting Out a Vision and Gaining
Frontline Understanding Should
Go Hand-in-Hand

is coming up with a general trajectory and a support plan toconvey the message from the top to middle management.
The more history a company has, the more thorough thatprocess must be. And, it is important for evaluations of management to take into account just how much diversity they
have incorporated themselves.

Okajima: Systems that have long been upheld sometimes
become obstacles for companies. A change of perspective isnecessary. The fact is that diversity is uncomfortable.

Okajima: The vision and understanding on the front lines
must go hand-in-hand. Until recently, not having a vision wasalright for Japanese companies where lifetime employment
was the mainstay. But from here on out, independent thinking
is critical. That is why a vision is necessary. I feel it is difficult
when mid-level management does not realize the benefits.
The vision is not fully conveyed throughout the organization in
the case that management does not own it. For that reason,verbalization is needed to convey the vision. Including thevision in the policy standards and putting it in words is very
important. “Owning it” is the catchphrase. I think the bigger
the company is, the more critical it is to arm mid-level management with a verbalized version of the vision. Put anotherway, having diversity and a vision entail “having diverse­perspectives but shared values.” I think that is crucial forcompanies moving forward.

Murakami: It is good if that causes conflict or, in other words,friction.
Iriyama: I agree. Conflict spurs innovation. But having robust
diversity and inclusion mechanisms is important. Another key
is having a vision. For example, it is vital that those on thelosing side of an argument understand and accept the viewsof those on the winning side. Having a vision with whichpeople are on board makes that possible. The vision needs tobe shared throughout the organization. I think the vision
reaches the front lines only when top management has owned
it and really conveyed the message within the company.
Murakami: Getting the vision across to people on the front
lines is not easy. The first step towards making that possible

Reflecting on the Dialogues
The Teijin Group has historically had a complex business structure and we have struggled withhow to bring together personnel from various areas. As our business has become more global,
we have been bringing more non-Japanese employees into the fold and making progress on
diversity. However, the dialogues really drive home that to create innovation from now on, we needto develop ways of promoting talent from an array of routes irrespective of their business department, age, and so on. Personnel exchange through the free agent system* has actually worked out
well at times with talented staff from other departments being selected to start up new business.
Going forward, I want for us to endeavor to create numerous options along these lines.
* A system by which the employees themselves express their desire to develop abilities, gain experience or qualifications and such
like by applying for a target business and are granted a transfer if selected.

Yasuhiro Hayakawa
Chief Human Resources Officer

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