Vision & Strategy

01
CHAPTER

Supporting lifelong growth
to forge a new future
Our Vision and Business Strategies
What future does the Benesse Group envision for itself, and how is
the Group aiming to achieve that vision?
In this chapter we describe the medium- to long-term vision andstrategies that the Group is pursuing for value creation.

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14

CHAPTER

01 Our Vision and Business Strategies

Benesse’s Value Creation Process
We seek sustainable growth for both the Benesse Group and society by bringing people “Benesse = well-being” through ourbusiness and social activities, and continuously creating new value that helps solve social problems.

INPUT (FY2022)

Transformation Business Plan

Financial capital

541.5
152.3 billion yen

Total assets

billion yen

Shareholders’equityProductive capital

2,204

Prep schools
and classrooms

locations(Total for Tokyo Individualized Educational
Institute, UP, Ochanomizu Seminar, Tetsuryokukai,
Benesse BE studio, and StudyHacker)

352 locations

Nursing homes

Human capital
Employees(consolidated)

Approx.

17,000Digitaltransformation
Approx.
(DX) human resources

Strong brands for childcare, education, andnursing care
Teaching materials and methods for instillingthe ability to learn
Expertise in developing and grading
simulated exams
Unique nursing care methods andmechanisms
Multifaceted surveys and research in the
education field

Social capital
Cumulative enrollments in Shinkenzemi /learning data
Approx.
millionmembers
Students taking Shinken Simulated
Exams and other exams / test data

18.31

9.10 million people

Approx.

Number of Udemy users in Japan
More thanpeople1.40 million(as of June 2023)

Approx.

15

17,000 people

Benesse Report 2023

Financial key
performance indicator (KPI)

Transformationof core businesses(Core Education)

Operating income*
FY2025

Transformationof core businesses(Core Nursing Care)

Return on equity (ROE)FY2025

1,200Intellectual capital

Nursing home residents

Portfolio strategy

Materiality (See page 37 for details.)

Challenges for
new growth(New Fields)

32 billion+ yen

10%+
Sales growth in New
Fields
FY2022–2025

Doubled as of FY2025

Toward the achievement of our purpose

Supporting diversified andmultilayered learning experiences
to provide motivational education
services
Supporting sustainable corporate
growth and personal careerdevelopment through learning
experiences
Respecting the unique individualityof the elderly while resolving
structural nursing care issues

Achievement of the Benesse
Group’s Purpose

Anybody can enjoy lifelong
growth.
Toward a world in which
everyone can live theirown life.
Benesse will continue to aim
for these ideals.

(Relative to FY2022)+
Management systemtransformation
Corporate transformation
Promotion of DX
mainly through theGroup-wideorganization DIP*
*DIP: Digital Innovation Partners

Portfolio structure
vision for FY2028:
Well-balanced profit
generation from threepillars:
Core Education,
Core Nursing Care,and New Fields

Foundation that underpins the above

Nurturing organizations and people asdrivers of transformation
Preserving a sustainable global
environment
Cultivating a corporate culture
conductive to serving society andcustomers with integrity*Goodwill from future M&As are excluded.

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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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CHAPTERCSO MESSAGE
We will appropriately allocate
our managerial resourcesfrom a firmwide viewpoint toachieve sustainable profit
growth.
Koutarou Ueda

As clearly stated in the Group’s purpose, the Benesse Groupis constantly working to solve social issues centered on
people based on its belief in the potential of people. Mainlyin the fields of education and nursing care, we have been
sincerely serving customers by attributing importance toonsite activities and have proven track records for the quality,
know-how and reliability of our services, with our employees
being committed to providing such services by sharing thevalues of the Group. All the quality, know-how, and reliability
are important assets of the Group, as are our employees.
I believe that by capitalizing on these assets the Group can
become a corporate entity that is deemed necessary for thesolution of global issues both within and outside Japan.
On the other hand, the fields of education and nursing
care are undergoing changes at an even greater speed.
The Company used to formulate its firmwide medium-term
management plan based on the strategies and business plans
made by each business department in line with the firmwide
policies. This approach was quite effective in enabling theCompany to respect the opinions of those working onsite
and make improvements to provide more customer value
over the decades. However, Japan’s formerly rising population
began to decrease, and digitalization started to be promoted
dramatically. We can no longer depend on a conventional
approach, because if we do, we are likely to make strategies
and plans that are simple extensions of the conventional ones.
Against this backdrop, in the Transformation Business
Plan, we clearly show the goals to be achieved by the entire
company under the plan, indicate the “targeted status” of eachbusiness for our business portfolio, and then make our strong

23 Benesse Report 2023

Key points of the portfolio strategy
To generate stable profits in the Core Education
business
The Core Education business comprises the Shinkenzemi,
Shinken Simulated Exams, and prep school businesses,with which we have built a unique business model for thecreation of customer value. This business has been driving
the Group’s growth since its founding, and still accounts
for a large portion in terms of the profits generated by
the Group. At least 90% of senior high schools in Japanare our customers, and we have an overwhelmingly large
number of students enrolled in the business, who aremainly elementary school students. The customer basethat we have built and the trust that we have earned fromour customers will give us a great advantage in the coming
age of digital data and AI.
However, due to Japan’s decreasing birthrate, ourmarket in the country has been diminishing, while themarket needs that we are required to meet are changing
due to the trend of digitalization. Also, changes are being▶Key points in portfolio transformation

Managing Executive Officer, CSO,
Executive General Manager of Corporate
Planning and Promotion

Key points of the Transformation
Business Planof employees beyond the divisional framework as well asa system to ensure that the human resource development
department will receive fair evaluations. We will thereby
increase the precision of matching between our employees
and business opportunities beyond the simple allocation of
personnel. As for the organizational abilities and key humanresources that we clearly lack, I will cooperate with the
CHRO and the Chief Financial Officer (CFO) to acquire themfrom the outside through a special employment program,strategic investments, and M&A. Furthermore, I expectthat the structural reform of the core businesses and theimprovement of our corporate productivity, both of which
are promoted under the leadership of the Chief DX Officer(CDXO), will help us secure more resources.
As described above, the CXOs need to collaborate andenhance their teamwork to implement the Transformation
Business Plan. Already, only several months after theannouncement of the Plan, we have promoted mutual
collaboration and cooperation in an unprecedented manner.
To achieve the structural reform of the business portfolio,
it is important to promote management and corporatetransformation mainly by enhancing the CXO system, while
promoting the transformation of the businesses.

commitment to transforming our management approachand system. Specifically, we uphold, “Establish three pillars
of income with Core Education, Core Nursing Care, and New
Fields for sustainable, profitable growth” as one of the goals
and clarify the time frame for the achievement of the goal.
We will push ahead with the structural reform of our businessportfolio under this plan.

Approach to the structural reform of
the portfolio
It will take us more than one to two years to complete thestructural reform of the portfolio. For the reform, we will first
define the targeted status for each of the businesses and thenappropriately set the tasks to be performed, the goals to bereached, and the timeframe for the attainment of each goal.
Then, the management team will lead the reform for years, while
allocating the necessary resources with total commitment.
In the Transformation Business Plan, we set the targeted
status of the following businesses that comprise New Fields
to be the growth driver: the University and Working Adult
Business, the Nursing Care Peripheral Business, and Overseas
Business. We will input resources intensively in New Fields. For
example, for human resource development, which is being
promoted under the leadership of the Chief Human Resource
Officer (CHRO), we will implement a range of measures tohelp employees develop their career with strong ownershipand support their reskilling while showing, more clearly than
before, the organizational abilities and types of personnel
that we need to have to achieve rapid growth in New Fields.
Moreover, we will introduce a career development meetingin which the management team furthers their understanding

01 Our Vision and Business Strategies▶Management and corporate transformation

Strengthening resources and optimizing their
allocation from a company-wide, medium- tolong-term perspective

Reconstruction and reinforcement of system led by
CXO to achieve the goals of Transformation Business
PlanManagement decision-making based on appropriate
evaluation of return on investment (ROI) of key measures incore businesses and business potential of low-profit businesses

Construction of management system where top
management allocates resources across thecompany

Improvement of management team’s capacity,
expertise, and productivity to drive achievement ofTransformation Business Plan goals

Improvement of corporate productivity

Enhancement of the CXO system

Rebuilding the CXO system and clarifying the CXOs’ missions and KPIs
CEO

Enhance corporate
expertise

Overall supervision
ESG and sustainability

CSO

CFO

CHRO

CCO

Achievement andupdating of theTransformation
Business Plan
goals

Appropriate
profit generation

Enhancement oforganizational
strength
Allocation ofhuman resources

Promotion ofinternal &external
communications

Cash allocation

Enhancecross-organizational
cooperation for speedier
implementation

Increase the precision ofprogress monitoring

CLRO

CDXO

GovernanceDX

Compliance

Structuralreforms▶Establishment of the Transformation Management Committee●

Participants: All CXOs
Purpose: Promote discussion for the CXOs to share issues and information for closer
cooperation and optimal decision making● Frequency: Every week●

▶Organization of the CXO Monitoring Meeting (monthly)●

Held immediately after the end of the monthly Company Management Committee meeting for
the CXOs to discuss necessary corporate support in reference to the business progress report
made at the committee meeting

Benesse Report 2023

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CSO MESSAGE

CHAPTERsteadily made to the lives of our customers and theirlearning environment, including an increase in the numberof working mothers and the decline and diversification ofpeople’s motivation for learning. Under these circumstances,
we need to maintain and enhance our customer base,which is one of our strengths, respond to the diversificationof customers’ needs, steadily grasp the opportunities
brought about by the Next GIGA Program and other social
reform initiatives, and transform our strengths gained in
the age of expanding population into those that match theage of data, depopulation and digitalization, thus creating anext-generation business model.
In consideration of these changes and challenges, wewill examine our ROI first, and then implement measuresand make investments effectively to maintain andenhance our customer base and to respond to diversified
customer needs. At the same time, we will proactively
utilize the technologies that are dramatically changing,such as generative AI systems, across the organization
to promote structural reforms. In the progress ofdigitalization, we will transform our products and services
into those that better match our customers, includingchildren, their parents and schools, while responding to
the diversification of their needs by further developing
peripheral services such as EVERES, Challenge Schooland MARUG land. Further, in anticipation of the dramaticchanges to be made starting in 2025 following thosemade under the Next GIGA Program, we will work on
the Mirai Seed software and C4th as strategic products
and strive to create the next-generation versions of
Shinkenzemi and Shinken Simulated Exams in the Core
Education business.

For the stable growth of the Core Nursing Carebusiness
In the Core Nursing Care business, we will focus on recovering
the occupancy rate at our nursing care facilities, which has
yet to recover from the impact of COVID-19. However, theoccupancy rate is steadily increasing along with an increasein the number of inquiries from people who want to visit
the facilities for a tour. We will make even more efforts tostrengthen relationships with hospitals and care managers
while enhancing our sales activities and providing short-term
nursing care services to boost the occupancy rate as soon as
possible. On a medium- to long-term basis, the populationof people aged 85 and older will continue to increase up to
2065. In view of this fact, we aim to achieve stable growthin the business by improving the quality of our nursing careservices and helping our customers improve their qualityof life (QOL) through innovative measures such as offering
Majikami AI solutions based on the expertise of Majikami(Benesse's specialists in nursing care).

For the acceleration of growth in New Fields
For New Fields, which comprises the university and working
adult field, the nursing care peripheral field, and the overseas
field, we set the targeted status to be a growth driver for theentire Group up to fiscal 2028.

University and Working Adult BusinessIn the university and working adult field, the markets will
steadily expand for learning, career development and thematching of human resources, amid the remarkable change
and diversification of people’s work styles and necessary
skills. In response, we will make strategic investments andproactive use of the Group’s assets and resources to rapidly
develop the business in a manner unique to Benesse,
specifically by assisting both companies and individuals
with reskilling and thereby more closely linking learning andworking.
The Benesse Group did not have a robust customer
base for businesses targeting companies and working
adults in the past. However, by making strategic
investments in Udemy to form business partnerships withthis online learning platform provider, we now have morethan 1,300 corporate customers, including more than 50%of the Nikkei 225 Index constituents and more than 1.4
million personal users of the business in Japan, and the

Pursue sustainable profit growth through portfolio structure transformation

Our vision (FY2028 -)Goals of current medium-term plan (FY2025)

Sustainable profit growth through a three-pillared
income structure

Our targeted status for FY2025, backcast form our visionWell-balanced profit generation from three areas:
Core Education, Core Nursing Care, and New Fields
GrowthdriverCore
Education

Stabilized earnings throughstructural reforms and response toincreasingly diverse needs, etc.
Initiation of business modeltransformation

Core
Nursing
Care

Quick recovery to pre-COVID-19
occupancy rates
Moving on to stable growthtrajectory

New Fields

Strategic investment and sales
growth to drive profit growth in
FY2026 and beyond

Stable profits

New Fields

StablegrowthCore
Education

Core Nursing
Care* Core Education = Out-of-School Learning + School + K&F, Core Nursing Care = Nursing Care and Childcare
New Fields = University and Working Adult, Nursing Care Peripheral, and Overseas

25 Benesse Report 2023

01 Our Vision and Business Strategies

number of customers is continuing to increase. Also, we
have recently made announcements about Waris joining
the Benesse Group and about our strategic investment in
SkyHive to form a business partnership with the company.
We will continue to speed up our growth in the businessby forming strategic capital and business partnerships
including M&A, freeing ourselves from not-invented-here
syndrome. Further, to propel the growth of our University
and Working Adult Business, we will make effective useof the powerful assets possessed by the Benesse Group,
including Manavision, through which we have contact withalmost all senior high school students in Japan; Shinken-AD,
through which we offer support to universities acrossJapan; doda campus, a joint venture with PERSOL CAREER
Co, Ltd. to support new graduates in finding jobs, theTamahiyo and Kodomo Challenge businesses, and “Thank
You!” magazine, which helps us further our relationships
with parents, particularly mothers.

Nursing Care Peripheral Business
The Benesse Group has long accumulated a range ofexpertise and know-how as a leading enterprise in theindustry of nursing care facilities. We regard the nursing
care peripheral business, in which we have uniquestrengths, as an important growth business for us. The
nursing care market is expected to expand on a mediumto long-term basis. However, due to the serious shortageof labor in Japan, it is becoming a great social challenge
to secure staff for nursing care service and to serve highquality meals, which have a direct impact on health and
QOL, to the residents of nursing care facilities. In theTransformation Business Plan, we have made our firstclear statement that the nursing care peripheral field is an
important growth field for the entire Group. We will takeon the challenge of promoting the nursing care peripheralbusiness by making effective use of the Group’s assets,
including the industry top-level know-how that we havegained through our business operations as well as Group
personnel well-versed in digital technologies.

Basic policy for overseas business development

1

Develop in domains(education/nursing care related)
where the company has strengths
and know-how, rather than in
unrelated areas.

2

Base the strategy on deep
commitment to a specific country,
rather than a global development
strategy (e.g., K12 education in India).

3

However, in areas where we haveknowledge but insufficientorganizational capacity, consider
scenarios involving M&A as a starting
point or booster.

Overseas Business
The Benesse Group has been making examinations to build
a new pillar for the Group’s profit growth outside of Japan
since before the outbreak of COVID-19. The educationand nursing care fields, in which the Group is operating,strongly reflect the culture, tradition, values and social
systems of each country, and we cannot simply apply themethods used in the fields in Japan in other countries.
However, the Benesse Group’s business know-how andassets, which we have accumulated over decades, are on
an incomparably high level globally, and many people fromleading companies overseas and foreign governments are
surprised at the level of our assets when I talk with them.
The Benesse Group is thus attracting much attention fromoverseas as a leading company in Japan, which is facing
social challenges ahead of other companies and which also
boasts high quality product brands. Therefore, I think that
we have great business potential in the countries where
our products and services are closely matched to help local
communities and people solve their issues and where we
can find a market with substantial size and growth potential.
Based on these ideas, we have already expanded the
Kodomo Challenge business in China and have also started
to embrace the challenge of conducting the school support
business in India with a focus on the assessment of students.
Japan and India have much in common in terms of school
entrance examination systems. Moreover, India announced
its intention to reform its entrance examination system in2020 and has been implementing measures for the reform.
We can steadily support the reform based on Benesse’s
know-how and expertise in the field and will take on thechallenge of serving local customers in a manner uniqueto Benesse in the country where the education market
will grow at an overwhelmingly high pace. Also, in thenursing care field, including both the operation of nursing
care facilities and the peripheral business, we will promotedialogue and the implementation of pilot projects withcandidates for our leading business partners in overseas
countries and particularly in China, for which we have been
making examinations with a focus on the human resource
development field.

Benesse Report 2023

26

CHAPTER

CFO MESSAGE
We will proactively makegrowth investments and boldly
promote transformation.

Shinsuke Tsuboi
Managing Executive Officer, CFO,
Executive General Manager of Finance and Accounting

Summary of results for fiscal 2022
and outlook for fiscal 2023
Fiscal 2022 was the final year for phase 1 of the current
medium-term management plan. For the fiscal year, weposted net sales of 411.8 billion yen, down 20 billion yen(4.6%) year on year, operating income of 20.6 billion yen, up
400 million yen (2.2%) year on year, and net income of 11.3
billion yen, up 10.2 billion yen (966.8%), year on year. The
decrease in net sales is attributable to the sale of the Berlitz
business. In operating income, we were able to achieve
an increase of 400 million yen. Although the lingering
pandemic caused a delay in the improvement of theoccupancy rates in the nursing care and childcare business,and the enrollment rate in the Kodomo Challenge businessin China decreased due to the country’s zero COVID-19
policy, we were able to increase profit by selling theunprofitable Berlitz business and expanding the University
and Working Adult Business, in particular the Udemy
business. The environment surrounding our businesses,
including the education business in Japan, is becoming
harsher, and in response we are further enhancing ourbusiness performance management function. We havebeen dispatching employees in charge of managing
business performance under the CFO to each of the
in-house companies and have been appointing somestaff members to more than one job while implementinga job rotation system among them. In fiscal 2022, we also
started to implement measures to increase the frequencyof reporting from onsite staff to the management teamand enhance communication between the two sides.
As a result, the management and onsite staff began toshare a commitment to numerical targets and a sense

27 Benesse Report 2023

of crisis that were stronger than before. They have been
more stringently reviewing measures for each in-housecompany, working to reduce costs, and striving for
more drastic full-year profit and loss management inaddition to ensuring the conventional monthly profit
and loss management. I think these improvements havecontributed to increasing our operating income.
As for our performance in fiscal 2023, the first yearof the Transformation Business Plan announced in May
2023, we expect that net sales will reach 423 billion yen,up 11.1 billion yen (2.7%) year on year, and operating
income will also increase by 800 million yen (4.3%) to
21.5 billion yen, mainly driven by the recovery from theimpact of COVID-19 in the Nursing Care and Childcare
Business. In the Shinkenzemi business, we will face adecrease in the number of enrollments. To counter this,we will work to increase profit through our own pricerevisions and cost reductions.
For fiscal 2023, we will also make investments infuture growth. Specifically, we will allocate funds mainly toenhance our products and operational foundation in thebusiness targeting elementary and junior high schools,
where replacement of devices will be promoted based on
the “one terminal per student” principle under the Next
GIGA Program starting in fiscal 2025; promote sales anddevelop human resources for the speedier growth of the
Udemy business; enhance the area business promotion
system; develop business in India; and develop humanresources for DX. For the fiscal year, we thus plan to increase
the investment amount by a total of about three billion yen
year on year.
While proactively making investments in future growth,
we will also strive to keep increasing our profit.

Important points of the Transformation
Business Plan from the CFO’s viewpoint
Fiscal 2025 and fiscal 2028 are milestone years for theTransformation Business Plan. In consideration of thepresent situation for our existing businesses and theinvestments to be made in new businesses for future
growth starting in fiscal 2025, we set the operating incometarget for fiscal 2025 at 32 billion yen. For the ROE target
for fiscal 2025, we strive to increase the return to 10% ormore. Also, through the transformation of our businessportfolio, we aim for well-balanced profit generation fromthree pillars: Core Education, Core Nursing Care and New
Fields, by setting the targeted status of the three to bestable profits, stable growth and growth driver, respectively.
Specifically, for Core Education, we will boldly transformthe business model up to fiscal 2025 and onwards, while
drastically making structural reforms, enhancing thecustomer base, and responding to the diversificationof market needs, thereby stabilizing our foundation to
generate profits. In order to achieve the targeted status(stable profits), we must maintain the current profit level,
for which we will implement measures as required.
Although the education business remains a core businessfor the Group, the market growth rate will inevitably drop
due to the decreasing birthrate. For the time being, we willcontinue to make prior investments to grasp opportunities
given by the Next GIGA Program to be implemented
starting in 2025, while also steadily evaluating ROI for
well-balanced investments.
In Core Nursing Care, the market will continue to expandin line with the aging of society. Also, we can see signs ofbottoming out regarding the occupancy rates at our nursing
care facilities, which had been falling due to COVID-19. We
are offsetting the increase of costs caused by the recent
inflation by raising our own service prices and saving costs
and are nearly on the path to boost our profit substantially.
First, we will achieve recovery to the pre-COVID-19 level forthe occupancy rates and profits toward building a robust
business foundation for stable growth.
For New Fields, we regard these fields as those that will
drive the Benesse Group’s profit growth starting in fiscal
2026. Accordingly, we will make proactive investments inthe fields, including those for M&A.
We held some meetings with investors after theannouncement of the Transformation Business Plan, andI think the investors largely agree with the direction of
the strategies that we are upholding. However, to further
increase their expectations for our growth potential, we
need to demonstrate that we do have such potential bymaking achievements.

For the sustainable improvement of ourcapital efficiency and earning power
In fiscal 2022, we recorded 7.5% for ROE, up as much as 6.8
percentage points year on year. For fiscal 2023, we will post
ROE of 7.3%. The attainment of 10%, which is our ROE target
for fiscal 2025, is within reach if we can steadily increase our
profit in line with the Transformation Business Plan in addition
to gaining a tax effect from the sale of the Berlitz business.
As for cash allocation for three years from fiscal 2023 to
fiscal 2025, we will allocate a total of about 124 billion yen

01 Our Vision and Business Strategies

to transform the core businesses, make growth investments
in New Fields, and to return profits to shareholders. For
the breakdown, we will allocate a total of 103 billion yen
to making investments at the rates of 30%, 20% and 50%
in Core Education, Core Nursing Care and New Fields.
Specifically, we will invest 50 billion yen in the transformationof the core businesses, and the remaining 53 billion yen in
the growth of New Fields. Then we will use the remaining
21 billion yen to return profits to shareholders and to solidify
our financial foundation. We used to categorize the use offund into the following: 1) CAPEX and other investments
in existing businesses, 2) growth investments in new
business fields and M&A, 3) return of profit to shareholders,and 4) internal reserves. Going forward, we will prioritize
investments in the Core Nursing Care business in which
we are aiming for stable growth, and in New Fields whichhave market growth potential, while making more selective
investments in the Core Education business than in the past.
We will not cut the number of necessary investments, butwill strictly check the returns on each to make well-balanced
investments, which I will lead as a responsibility to be fulfilledby the CFO.
As for the balance sheet, we secure about 150 billion
yen as cash on hand and bank deposits. Relative to theamount of our interest-bearing debt, we have adequate
cash and bank deposits. However, advance payments
received from our customers amount to 100 billion yen
or more, and funds that we can immediately spend total
40 billion yen to 50 billion yen. It might be possible toinvest the funds from advance payments also in ourbusinesses, but as a corporate group engaging in the social
infrastructure business, we have consistently adhered tothe policy of retaining all the cash gained from advancepayments. The Benesse Group thus has enough surplus
fundraising capacity, while the interest rates remain at avery low level. Against this backdrop, when making a large
investment such as for an M&A, we will consider raising ourfinancial leverage on a temporary basis, while giving due
consideration to the availability of working capital.

For the maximization of shareholders’value
In returning profit to shareholders, we aim to continuously
increase the dividend payout ratio by increasing our profit,
setting the lower limit of the ratio at 35%, and enhancing ourfinancial foundation mainly by recovering the equity ratio
to 30%. Recently, our dividend payout ratio has remained
at 45% to 50%, and we will allocate the balance between
the total amount of profit gained and the amount paid
to shareholders as dividends to internal reserves and as afund for future investments. For the repurchase of our own
shares, which we have been conducting, we will consider
shifting our focus to the payment of dividends in view of
the increased number of personal shareholders and witha focus on encouraging our customers to become ourshareholders and our shareholders to become our customers.
Our equity ratio is currently slightly below 30% due tochanges made to the lease accounting method and becauseof the introduction of the revenue recognition standard. To
maintain our corporate rating, we need to recover the ratio
to at least 30%, for which we will focus on dividends as ameans of returning profits to shareholders.
Benesse Report 2023

28

CFO MESSAGE

CHAPTER

Conclusion
The Benesse Group is strongly committed to serving society
and our customers. On the other hand, the Group tends
to be not very sensitive to numerical figures that reflect its
business performance. In order to implement the Group’s
corporate philosophy through its business operations asa going concern, I strongly feel it necessary for the Groupto develop human resources who can help the Group
increase its corporate value financially. To this end, for theeducation business in Japan, employees working under the
CFO are given multiple jobs and are transferred to makethe business more financially robust. I would like to expand
this practice to across the Group to develop personnel who

can make business and investment plans and formulate
financial strategies based on the understanding of worksite
atmospheres and situations.
The Benesse Group’s price-earnings ratio (PER) andprice-to-book ratio (PBR) are about 15 and 1.1, respectively,
and are thus on an average level in the market. However, ourPER used to be 20, and compared with that time, the Group’s
rating in the capital market is not very high. Also, I am not
at all satisfied with our current stock price. We have beenpresenting detailed explanations to investors about thegrowth strategies described in the Transformation Business
Plan, while providing them with relevant quantitative
information to help them further their understanding of
the Group. However, it is not enough, and we need to
implement strategies to make achievements. If we cansuccessfully transform our business portfolio under thePlan, investors will have more expectations for the Benesse
Group’s future growth. Accordingly, it is becoming evenmore important for us to report the progress with the Plan
to them continuously through proactive IR activities.
I would ask all our stakeholders, including shareholders
and investors, to give your frank opinions to the Group, andask for your continued support for us.

Financial Highlights

Net sales

500.0

Operating income/Operating income ratio

Net income attributable to ownersof the parent/Net income per share

Operating income (left)
Operating income ratio (right)

Net income attributable to owners of the parent (left)
Net income per share (right)(billionsof yen)(billionsof yen)

439.4

448.5

(%)

25.0
427.5

431.9

400.0

411.8

21.2

20.1

20.0

300.0

15.0

13.0

10.0

200.0

3.7

4.7

0

18

19

20

21

22 (FY)

ROE/ROA

0

18

4.7

5.0

3.1

5.0

100.0

15

15.0

12

12.0

9

9.0

19

20

6
3

21

0
22 (FY)

CAPEX

(yen)

250

11.3 200

117

6.2

6.0

100

4.9

3.0

50

0

18

65

3.1
32

19

150

20

1.0

50
11

0
22 (FY)

21

Depreciation & amortization

ROE
ROA

(billionsof yen)8

7.5

6(billionsof yen)

25.0

40.0
30.0

31.5

4

The investment plan allocates approx. 50% of them to New Fields.
We also make investments in core business transformation while verifying ROI.

2

▶Cash allocation (FY2023-2025)

0

3.7

23.5

1.2

18

19

24.4

19.8

19.8

18

19

18.8

18.8

19.2

20

21

22 (FY)

15.0

20.0

2.9
1.0

20.0

29.2
22.6

Cash and investment allocation

approx. 124 billion yen

20.6(billionsof yen)16.2(%)

Three-year cumulative cash position
in FY2023-2025:

01 Our Vision and Business Strategies

2.1

1.8
0.6

0.7

20

21

0.2

22 (FY)

Investment plan
(FY2023-2025)

10.0
10.0
0

5.0

18

19

20

21

22 (FY)

0

Note: CAPEX shows the “increase in tangible fixed assets andintangible fixed assets” as listed in summaries of financial
results.

Note: Depreciation & amortization shows the total amountof “depreciation and amortization” and “amortization of
goodwill” as listed in summaries of financial results.

Interest-bearing debt/
Debt-to-equity ratio

Cash dividends/Dividend payout ratio

Percentage of total

Use

1 Core business transformationUse

2

New fields growthBusiness investment

Business investment(CAPEX etc.)(M&A, CAPEX, etc.)*Excluding lease assets, long-term
prepaid expenses, etc.

(Approx.) 50 billion yen

CoreEducation(Approx.) 53 billion yen
Core Nursing
Care

Use

3

Shareholder returns and strengthening of financial base

Shareholder returns

Strengthening of financial baseWith lower limit of dividend
payout ratio at 35%, dividends toincrease continuously thanks toincrease in net income after taxes

Some retained earnings forrecovery of 30% equity ratio in
FY2025 and for future
investments

New Fields

30 %
20 %
50 %
100 %

Equity ratio

Interest-bearing debt (left)
Debt-to-equity ratio (right)

Cash dividends (left)
Dividend payout ratio (right)(billionsof yen)

(%)

(%)

160.0

40

33.6

32.7

31.3

30

27.6

28.5

120.0

20

80.0

10

40.0

120.6

68.1

123.6

72.2

137.2

77.0

139.9

86.9

143.9
93.5

120
90

(%)

(yen)

100

500

452.9

400

80
60

60

60
50

50

50

76.6

154.3

50

40
30

20

300
200

98.2

100
51.0

0

18

19

20

21

22 (FY)

0

18

19

20

21

0
22 (FY)

0

18

19

20

21

0
22 (FY)

Note: Interest-bearing debt includes lease obligations.

29 Benesse Report 2023

Benesse Report 2023

30

CHAPTERCDXO MESSAGE
In response to the changesof the times, we will further
promote our DX strategy
and its growth.
Hidetomo Hashimoto
Senior Managing Executive Officer, CDXO,
Executive General Manager of Digital Innovation Partners

Outline of the Benesse Group’s
DX strategy
In 2021, the Benesse Group launched Digital Innovation
Partners (DIP) as a virtual organization to plan andimplement the Group’s DX strategy. In 2022, DIP became
an actual Group-wide organization that has digital,
IT, human resources, and DX promotion consulting
departments within it. As such, DIP has been leading theGroup’s DX strategy, from making plans and allocating
resources and funds to implementing specific measuresacross the businesses and companies of the Group.
In July 2023, Benesse Corporation merged Benesse
InfoShell Co., Ltd., and integrated the supply chain
management function of this IT company, which was
engaged in the development, maintenance and operationof systems and the implementation of security measures
for the entire Benesse Group. As a result, DIP became anorganization with more than 800 staff members.
Based on the business plans made by each of the
in-house companies, the staffs of the business departments
and DIP have been collaborating as a joint project team tosteadily promote the DX of Benesse’s products and services.
On my part, I frequently visit Group sites to talk withkey persons on pushing ahead with innovation onsite.
Moreover, I check the progress of a range of related projects
on a weekly basis to propel the implementation of the
DX strategy, while focusing on promoting the sharing ofspecific successful examples across the Group.
Under the leadership of DIP, we will continue to further
promote the entire Group’s DX.

31

Benesse Report 2023

Recent results achieved through the
DX strategy
In fiscal 2022, as in fiscal 2021, the Benesse Group was highly
rated for its DX initiatives by multiple external organizations. For
example, at the 19th Japan e-Learning Awards held in 2022, wereceived the grand prize for MARUG land, which is an ICT-basedteaching app that provides children with learning experiencesin reading and writing that are tailored to their individual
developmental characteristics. Also, at the 40th Information
Technology Awards, we received prizes such as one for DIP inrecognition of its consistent promotion of DX projects acrossthe Group, and another for the development of Majikami AI.
Further, in fiscal 2022, coverage of our DX initiatives bymass media such as newspapers, magazines, TV broadcastingstations and online media in their DX-related articles/programs
increased by as much as 266% year on year. Also, we weremore frequently asked to give training and speeches on our DX
strategy and specific DX promotion cases. I therefore feel that
we have substantially increased our public profile as a company
advanced in DX. Partially thanks to these achievements, we also
increased the number of applicants to our DX-related job offers
targeting experienced workers by 150%, whereas companies
are generally facing difficulties in securing personnel for DX.
We also established the Digital Innovation Fund (DIF) in
November 2021 to promote DX for our existing businesses
and services and to promote the co-creation of new
businesses. The number of companies in which we invest
through this fund increased by six over the past one year andtotaled nine as of July 2023. Since the establishment of the
DIF, we have been proactively broadening our network with

01 Our Vision and Business Strategies▶DIP organizational structure

DX Strategy Office

Formulates and promotes Group-wide DX strategy

DX Human Resources Development Department

Recruits and cultivates DX human resources and updates human resource
systems

DX Consulting Department

Advances and promotes participation in digital shift projects and formulates
disruption countermeasures

Data Solutions Department

Promotes data usage at each in-house company

Digital Marketing Department

Promotes digital marketing at each in-house company

IT Governance Department

Formulates and promotes IT strategy, and improves the quality, cost anddelivery standards for IT-related development, costs and personnel

Infrastructure Solutions Department

Gives technical support for the establishment and operation of IT
infrastructure and DX promotion

Corporate System Solutions Department

Develops and operates Group-wide systems and the administrative
departments’ systems

Out-of-School Learning Business Company’s
System Solutions Headquarters

Develops and operates systems for the Out-of-School Learning
Business Company

School and Teacher Support Business Company’s
System Solutions Headquarters

Develops and operates systems for the School and Teacher
Support Business Company

Nursing Care and Childcare System Solutions
Department

Develops and operates systems for the Nursing Care and Childcare
Business Company

Kodomo Challenge System Solutions Department

Develops and operates systems for the Kodomo Challengebusiness

SCM Department

Designs, builds and operates the procurement, production and logistics
infrastructures to support business operations

Benesse BASE COM Co., Ltd.

Builds, operates and improves systems for sales management, logistics
management and student assessment for Benesse’s school business

Benesse Hong Kong Co., Ltd.

Improves the quality, cost, delivery and safety standards in the development
and procurement of educational toys

venture companies, thereby making the Benesse Group
more open to approach by a wider range of parties. Goingforward, we will shift our focus to the improvement of skills
for DX promotion and the generation of synergies for thecreation of new businesses. Powerful venture companies
can provide us with great value through their technologies
and growth potential, and the Benesse Group will be able

to offer even greater value to society by achieving growth
together with such venture companies. We have alreadysuccessfully launched some collaborative projects thatutilize advanced technology of investee companies. We willcontinue to offer the Benesse Group’s long-accumulated
expertise and know-how to the greatest extent possible tothese partner companies to achieve mutual growth.

▶Partners that have received investment and support through the DIF
Code Chrysalis Japan Co., Ltd.

Hmcomm Inc.

Fourth Valley Concierge
Corporation

Paiza, Inc.

Arsaga Partners, Inc.

LearningBOX, Inc.

LX DESIGN Inc.

beBit, Inc.

Natee Co., Ltd.

Benesse Report 2023

32

CDXO MESSAGE

CHAPTER

Making more effective use ofgenerative AI

can therefore use the service safely with peace of mind.
The chat service is facilitating verification and planning for
the use of generative AI by each business department andhas led to the launch of many projects. For example, inJune 2023, the Next-Generation Contact Center Project was
launched, which was followed by the provision of the Jiyu
Kenkyu Otasuke AI service in July to assist elementary school
students with independent research in the Shinkenzemi
business. Further, we launched the Next-Generation Website
Project as well.
When starting a project of unprecedented innovation,some might think it is necessary to clarify the purpose of
the project first. However, for DX, it is also important to try astring of emerging technologies first, and then think about
their specific usage. I think we need to use the technologies
ourselves to truly understand the opportunities and risks
they might bring about. Although we have improved ourinternal environment so that employees can use such newtechnologies proactively over the recent year or two, I would
also like to build a corporate culture that allows Group
employees to use such technologies even more freely andproactively.
For the corporate transformation and cost structurereform as described in the Transformation Business Plan,
I am convinced that the effective use of generative AI will
help us generate innovation. As an organization to facilitate
this, we established the Operation Transformation Officewithin Benesse Corporation in June 2023.
In the face of the decreasing birthrate and further
diversification of society, the Company needs to transform
its conventional business models, change its way of
doing business, and increase its productivity, thereby
further evolving its business. By promoting automationand mechanization, we will be able to provide customers
with necessary information and solutions in an even more
timely manner and can also reduce the time required for
employees to do their jobs and shift their focus onto morecreative operations. I also think that promoting DX not only

The technological innovation of generative AI has been
attracting much attention, and the Benesse Group thinksthat such innovation could pose serious threats, butalso bring about great opportunities to its businesses.
Accordingly, we are working to promptly acquire external
knowledge and the development of new partners toincorporate new generative AI technologies into theGroup. We also hold discussions on generative AI regularly
between the management team and staff of DIP.
One specific measure involves starting the operation of
the AI-based Benesse Chat service for Group employees in
April 2023. It took only two weeks for engineers from DIP todevelop this in-house service, which is intended to provide
employees with an environment that helps them to increase
their business productivity and conduct examinations for
new products and services. This chat service is provided ina closed environment to offer high security and ensure thatno information will leak outside the Company. Employees

Initiatives and services based on the use of generative AI
Step 1
Start of internal use (from April)

Step 2

Step 3

Increase the efficiency of internal operations (from June)
Accumulate knowledge while using AI in internal processes

Launch of a service for customers(from July)

Benesse Chat

Next-Generation Contact
Center Project (from June)

Next-Generation Website
Project (from July)

Jiyu Kenkyu Otasuke AI

Provision of the Benesse Chatapp to 15,000 Group employees
and promote its use in a highly
secure environment

Improve customer experienceand operational efficiency byusing generative AI at thecontact center

Launch the Next-Generation
Website Project by using
generative AI to drasticallyreform the existing online
operational process, thereby
improving both customer
experience and the productivityof the existing website

Based on internal expertise ingenerative AI, develop a service
using AI that does not give
answers for elementary school
students, and offer it free ofcharge to help children enhancetheir ability to think on theirown

Shinkenzemi

33 Benesse Report 2023

01 Our Vision and Business Strategies

DX strategy and priority measures (FY2023-2025)
Promotion of DX in amanner that matches
each business phase1

4

Digital shiftproject

DX Strategy
Accelerate the Benesse
G r o u p’s b u s i n e s stransformation bypromoting the DX ofeach business andimproving eachorganization’s DX
ability

Improvement of organizational DX ability

2

6Effective useof data3

Enhancement

5

Optimization of
the architecture
7

Renewal of
infrastructure
Security measures

IT strategy andgovernance
8

Disruption watch(DIF)

Developmentof DX humanresources

Enhancement

DX ofadministrative
functions

9New

Renewal ofvalue chain

helps us to make effective use of AI but also to enhance
the services that only human beings can offer, in which
Benesse’s strength lies.

this fact gives us a great advantage in the recruitment andretention of DX human resources, for which there is intensecompetition among companies.

Development of human resources
for DX

Policies for DX strategy in fiscal 2023

As for the development of DX human resources, we first
defined the skills required for different job types andintroduced a process to optimize the assignment anddevelopment of personnel. Specifically, we identified theseven job types that are essential for the Group’s DX andhave visualized the level of skills required for each of thetypes in the form of a skill map. We have also identified
DX-related jobs for which we will face labor shortages
in consideration of our future business plans, and arepromoting the reskilling of existing employees for the jobs.
We will give priority to such reskilling even if it takes a longtime, and will employ experts from the outside only if westill have a shortage of personnel for the jobs after making
the reskilling efforts.
In fiscal 2022, the number of employees attending
the DX training program reached 6,504, up 180% year on
year. We created about 60% of the content of the programinternally, and employees themselves serve as lecturers forthe program to share their own related experiences withtrainees. In general DX knowledge, we are making effective
use of Udemy as a self-learning tool for employees. We
also plan to provide the know-how to develop DX humanresources at other companies through the Udemy business.
The Benesse Group is engaging in a wide range ofbusinesses and can thus provide DX personnel with lots ofgrowth opportunities. The Group offers services to infants,
students, working adults, and senior citizens and has abroad range of business models. We can therefore provide
DX personnel with an environment where they can honetheir business skills from various aspects and create a rangeof business value based on their accumulated skills. Indeed,In fiscal 2023, we will focus on the development of humanresources through reskilling, the implementation of priority
measures set for fiscal 2023, and on the enhancement of
our organizational strength for DX. The Benesse Group is
conducting businesses that are deeply related to social
issues. Amid dramatic changes in society, we need totransform ourselves as a precondition to make our business
transformation strategy more persuasive: no strategy,
even if it is a good one, will be widely accepted unless it
is supported by evidence. I therefore think it is critical toshow how our DX promotion measures are linked to thebetterment of our business performance.
We have no goals for DX. In response to changes in
the world, we need to make use of new technologies tochange our businesses and services to continue providing
customers with new value, and I regard it my role as CDXO
to pursue the methodology to respond to environmental
changes and transform our organization into one that cancontinue to grow.
The Benesse Group has expanded its business scopegradually from the education business. As the corporate size
increases, I am afraid that its ability to respond to changes insociety is diminishing. In this unpredictable age of VUCA, weneed adequate ability to respond to changes in society asa prerequisite for sustainable growth. If we can recover thatability once again, we will be able to increase our service
quality even more in the future. By launching DIP and
putting DIF on track, the Group’s business transformation
speed has steadily increased. Going forward, we will further
reform the entire Group’s business foundation and boost thegrowth of its businesses.

Benesse Report 2023

34