Broadening Scope ofWell-being Activities
DIALOGUE 07

A K I R A S AT O

REIKO KOJIMA

Potential for Well-being That Extends Outside of the Company
Former leading securities analyst and current investor Akira Sato believes the excitement an organization exhibits is an intangible asset. Joined by Reiko Kojima, CWO, company physician, and proponentof well-being management at MARUI GROUP, he explores the meaning of this statement through anintellectual examination of topics ranging from the definition of well-being to the Group’s future direction.

Improvement of Well-being through Empowermentand Excitement

Akira Sato
Co-Founder and Representative Partner, Value Create Inc.
Akira Sato joined Nomura Securities Co., Ltd., in 1987, where he became
a securities analyst in 1989. He co-founded Value Create Inc. together
with Masahiro Mitomi, a certified public accountant in Japan and theUnited States, in May 2001. Over the years, he has held a number ofpositions, which have included being a part-time lecturer at theDepartment of Management of Technology of the Tokyo University ofScience and director of WICI Japan. He also held director, outsidedirector, and corporate auditor positions at overseas asset managementcompanies, Rheos Capital Works Inc., long-term investment firm
Commons Asset Management, Inc., Fuji Pharma Co., Ltd., and othercompanies. In 2016, Sato became general manager of the Investment
Research Department at MARUI GROUP.
Reiko Kojima
Director, Executive Officer, and CWO (Chief Well-being Officer)
Company Physician
General Manager, Wellbeing Promotion Department, MARUI GROUP CO., LTD.
A physician by profession, Reiko Kojima spent roughly 10 years as acompany physician at a major manufacturer. She began working at theoccupational mental health unit of Kitasato University Graduate Schoolof Medical Science in 2006, receiving her Doctor of Medicine in 2010.
Kojima became a company physician at MARUI GROUP in 2011, laterassuming her current positions of director, executive officer, CWO, andgeneral manager of the Wellbeing Promotion Department in 2021.

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Photographs show Sato and Kojima walking at
the Four Seasons and Waterside Gardens biotope at Nakano Marui.

Kojima: The Constitution of the World Health Organization(WHO), which was written in 1946, uses the word “well-being”
in its definition of the word “health.” The full definition of theconstitution is “Health is a state of complete physical, mental
and social well-being and not merely the absence of disease orinfirmity.” In 2016, MARUI GROUP started up a Companywide
project team based on the theme of health, which would eventually become the Wellbeing Promotion Project Team. I havebeen sharing the WHO’s concept of well-being with project teammembers since this time. However, the idea of well-being was
not one that was well known in Japan even just a few years ago.
Not until recently did you hear people talking about the subject.
Sato: It is similar to the concept of outcome as it relates to theprocess of creating corporate value. It was only just recently
that people have started to assess outcome for this purpose.
Companies create products as their output, and people havenow begun emphasizing the outcome of that output, such as
the positive impacts they create for society. However, it wasonly just five years ago that this idea of outcome would be met
with question marks. Even when I was still an analyst, I did not
believe that quarterly financial results were directly linked tocorporate value. For that reason, I found no excitement in thefinancial explanations at financial results briefings. I was moreinterested in going to factories to talk to engineers and otherfrontline workers. Seeing their enthusiasm gave me a better
sense of the potential outcomes of a given company.
Kojima: Management academic Sumantra Ghoshal explainedthat the competitiveness of a company flows from the front lines.
Sato: Yes. And I wasn’t the only one who felt this way. Many
investors who were focused on the fundamentals also turned
their attention to non-financial factors. I, personally, look at factors
like a company’s strengths, strategies, culture, the differences in
the quality of its human resources, and employee turnover rates.
Kojima: Over the course of two decades, I worked as a company physician at a number of companies. My examinations ofemployees revealed that addressing an individual’s healthissues did not necessarily contribute to their happiness. Meanwhile,

people who were motivated to immerse themselves in their workor hobbies had a certain energy to them. This experience convinced me that empowering people and granting them a senseof excitement was a clear route to improving their well-being.

Well-being as Viewed from the Idea of Ecosystems
Kojima: When promoting well-being, selecting appropriate
indicators is something that requires special attention. If we areasked what indicators are linked to improved profitability, ourexplanations become very abstract and roundabout, with nohard, direct link established. There are a lot of elements that
contribute to well-being. It is therefore not as simple as saying,
we launched a Companywide project and it resulted in thisspecific improvement in financial indicators. What are yourthoughts regarding financial indicators for well-being, Mr. Sato?
Sato: There are two factors I would like to touch on in thatregard. The first is technological progress. It has gotten a loteasier to quantify various changes. The pace of technologicalprogress is such that we are substantially closer to the desired
technologies today than we were even just five years ago.
One example of new technology for quantifying well-being isHappiness Planet, a smartphone app that measures happinessscores. I understand that you have used this app in the past,
Dr. Kojima. We have also recently seen the emergence of websites
like OpenWork, a review and recruitment website that allows
employees to post reviews of their companies. A number ofcurrent and former employees of companies use such websites
to score their employers. Moreover, we are now able to perform
analysis that reveals when a rise in a certain indicator has
contributed to higher sales or stock prices, even after a period
like 18 months. I suspect that we will see an increase in suchtools going forward. The second factor is the idea that, perhaps,
we don’t even need to look at the numbers. What I mean to say
is this, value is not about one-to-one relationships, where asingle action has a direct impact on a single indicator. Rather,value is born out of what is more like an ecosystem. I want totalk with institutional investors about things like the reasons
behind certain decisions or why they chose to emphasize aspecific indicator. I believe that such conversations can give95

a more overarching picture of these subjects. As opposed tofocusing on the mechanics of companies, like how much input
resulted in what output or what something’s absolute value was,I think it would be better to look at companies like ecosystems.
Kojima: I believe that we are currently seeing the spread ofsuch thinking.
Sato: MARUI GROUP advisor Yoshiki Ishikawa speculated thatwell-being should be defined as “when you feel like things aregoing well.” I think he touches on something incredibly insightful. It is important not to break things down too far. One way tolook at this is to think about the forest of Meiji Jingu shrine.
This forest was engineered by forestry expert Seiroku Honda
with a vision for its completion 150 years later. He assembled avariety of trees from across Japan: tall trees, short trees, broadleaf trees, conifer trees. He planted these in an inconsistentpattern while picturing how they would grow in this environment to get an idea of the completed forest that would emerge
150 years later. As a result, the Meiji Jingu forest is a lush andthriving forest today, 100 years after Honda started it. However,if Honda had broken down his view of the forest to look atthings on a lower level, I do not think we would have the forest
we have today. The same goes with finances. What others call“non-financial information,” I call “pre-financial information.” Thisis because I do not think we should look at aspects of a company as being either “financial” or “non-financial.” Rather, I thinkthat these two categories have more of an “and” relationship, as
what is currently “non-financial information” may become anindicator of future performance if we look far enough down theline. This is why I brought this ampersand-shaped (&) decoration to today’s discussion. “Non-financial” factors like well-being
and impact will eventually have a financial impact. This is why
I refer to information on these factors as “pre-financial information.” Corporate value is predicated on the betterment of society.
For this reason, we should look at the benefits for society,including those that do not immediately translate to corporate
value, as elements of future corporate value. This value is somethingthat cannot be accounted for when you gauge corporate valueon the short time frame of one quarter or one year.

Analogy of Organizations as Bodies
Kojima: I can totally agree with the idea that we should not lookat non-financial information and financial information in termsof an “or” relationship. For example, health issues are somethingusually categorized as non-financial information. The COVID-19
pandemic is a major health issue, but it has also had a massive
impact on the financial performance of companies. Humanrights issues are also something viewed as non-financial. However,as we have witnessed with the Black Lives Matter movement,
human rights issues can also impact a company’s business. As
seen in these relationships, as well as in the recently emerging
concept of dynamic materiality, this is not an “or” relationship.
I think that a good analogy can be made between
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organizations and people’s bodies. Every cell and every organ
does not only act based on the commands of the brain. They
function with a degree of autonomy based on feedback fromthe organism to work toward its own goal of survival.
Sato: I agree. Cells are at the same time individual organisms
as well as parts of a larger organism. In this manner, there is arelationship between the individual and organization. I think
I have heard something about a person’s bowels having a mindof their own.
Kojima: What you are talking about is the gut–brain connectionin which intestinal flora have a major influence on one’s physicalcondition.
Sato: So, it wasn’t cells, but bacteria.
Kojima: Yes, intestinal flora.
Sato: So, it is bacteria that is the source of the impact. Thereis perhaps something that can be learned by thinking aboutcompanies from that perspective.
Kojima: There is definitely a lot that can be learned. If all organs
fulfilled the same function, there would be no problem withpeople being like slimes. But this is not the case. Livers haveliver cells. Skin has skin cells. Because each cell has its own
characteristics, the collective of these cells that is us is able tofunction as a single human. Cells themselves are always working and being replaced via metabolism. When we think of it like
this, we will see that the human body is definitely the best
analogy for an organization.
Sato: What you are saying resembles the idea of dynamic
equilibrium put forth by Japanese biologist Shinichi Fukuoka. It
would be great if we could link this mechanism to corporate value.

Future Direction for Well-being
Kojima: A lot of Japanese companies still expect employees toleave their values at home, put on their work face, and do what
they are told. If MARUI GROUP can escape these conventions
and show how it can succeed without them, other companies
will be able to use this as an example. This would also move theGroup closer to accomplishing its mission of bringing happiness to its employees.
Sato: One’s physical and mental health as well as their happiness are all related. It is therefore odd to expect one to leave
their values at home. How are conditions for MARUI GROUP
employees in this respect?
Kojima: We still have a long way to go in this regard. MARUIGROUP has been fostering a corporate culture of voluntary
participation for about a decade now, and the ratio of employeesparticipating in the Company’s various voluntary opportunities
had risen to 80% in the fiscal year ended March 31, 2021. Ourcurrent task is to help employees express their personal values
as a lingua franca and to encourage them to share these values
with their colleagues so that everyone can feel joy in their work.
To this end, the Companywide Wellbeing Promotion Project
Team held a purpose workshop for around 200 employees.

Sato’s favorite “&” decoration(Learn its secret in the discussion!)

Project team members mentioned how they hadn’t had anyopportunities previously to think about the overlap between theirpersonal values and their work goals, and 95% of participants
said that the workshop was a beneficial opportunity.
Sato: That is great.
Kojima: MARUI GROUP aims to foster a corporate culture
founded on autonomy, in which employees are able to express
their personal values as a lingua franca and turn their preferences and aptitudes into work.
Sato: What do you think should be MARUI GROUP’s next
step forward?
Kojima: The next step should be to use MARUI GROUP’s initiatives and businesses to promote increased well-being throughout society. In 2020, the Wellbeing Promotion Project Team
partnered with students from Otsuma Nakano Junior & SeniorHigh School, which is located near the MARUI GROUP head
office in Nakano, in an effort to energize the community.
Students and employees prepared more than 1,400 cards
containing messages of appreciation for their families andfriends as well as for healthcare workers. These message cards
were displayed in Nakano Marui, where they could be viewed bycustomers. The employees who took part in this event in aneffort to contribute to the happiness of the community statedthat they also felt more empowered as a result.
Sato: They got joy from seeing the joy their actions brought tomembers of the community.
Kojima: Exactly. Rather than just trying to promote well-being in
the isolated environment that is a company, it is better to try
and bring joy to society, an approach that can also contribute tohigher employee engagement. The Nakano Marui event provedthat people get the most joy by bringing joy to others. This isone of the reasons MARUI GROUP aims to help employees use
their preferences and aptitudes in their work. For example, byhaving employees develop businesses based on their owninterests, whether that be anime, K-pop, or something else, wecan attract customers with similar interests and thereby bringjoy to both customers and the employees. Our well-being initiatives should not be limited to employees, but should rather beadvanced on targeting all stakeholders, including future generations, to bring joy to a wider range of people. This is the direction I think we should take in our well-being management.
Sato: I think the time frame we consider is important. Analysts
tend to only formulate performance forecasts for a two-yearperiod. However, if you only look to generate earnings on a
two-year basis, it will be tempting to push your employees
forward, even at the expense of their well-being. Conversely,some say that more than 60% of the corporate value of a company can be explained by its cash flows 10 years down the line.
If we take this perspective, the physical and mental health of
employees becomes more important than the earnings of agiven fiscal year or the three-year plan of a company. If employees, and society as a whole, are not healthy, a company will notlast 10 years. Based on this perspective, I think MARUI GROUP
has chosen the right direction.
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