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A conversation with Santen’s CIO: What does an IT organisation need to survive and win in the global market? (Part 1)
2023-01-18
Santen Pharmaceutical Co., Ltd. (hereinafter ‘Santen’) has been striving to contribute to the optical health of people around the world for over 130 years since its establishment in 1890. Specialising in the field of ophthalmology, Santen conducts business in approximately 60 countries worldwide, and is currently accelerating the globalisation of its business, with its overseas sales ratio now reaching 32%. PwC Consulting LLC provides Santen with business support including CIO advisory, digital transformation strategy development and cybersecurity consulting services.
What role should IT organisations play in supporting global corporate strategy? We have invited Santen’s Corporate Officer, Chief Information Officer (CIO) and Head of Digital & IT Division Minori Hara to discuss Santen’s globalisation initiatives and what IT organisations should do to survive and win in the global market.
Participants
Minori Hara
Corporate Officer, Chief Information Officer (CIO) and Head of Digital & IT Division
Santen Pharmaceutical Co., Ltd.
Minori Hara began his career in the private sector in Japan before then taking up a position at the United Nations. For about 20 years, he was engaged in various IT roles at the UN to promote the Sustainable Development Goals (SDGs). He oversaw IT security strategy and governance at the International Telecommunication Union (ITU) in India and Switzerland, the UN Headquarters in the US, UN Volunteers in Germany and the International Atomic Energy Agency in Austria, before becoming the CIO of the International Training Centre of the International Labour Organization (ILO) in Italy in 2012 and the Deputy CIO of the Food and Agriculture Organization of the UN (FAO), also in Italy, in 2017 to promote medium-term IT and digital strategies. Hara joined Santen in 2018 and has been serving in his current position since 2020. He obtained a Master of Engineering at Sophia University and an Executive Master in Management of International Organizations at SDA Bocconi School of Management in Italy. He currently lives in Geneva, Switzerland.
Shingo Arai
Partner, Technology Advisory Service
PwC Consulting LLC
Yasushi Fujita
Partner, Digital Trust
PwC Consulting LLC
*Company names and positions are current as of publication.
From left: Minori Hara, Shingo Arai, Yasushi Fujita
Santen’s digital strategy and ‘Santen 2030’
Fujita:
First, please tell us about Santen’s digital strategy.
Hara:
To explain our digital strategy, I must first talk about changes in the external business environment. Today, the healthcare market surrounding Santen is undergoing rapid digital transformation, with non-traditional technology-oriented business players emerging. Our industry is no exception when it comes to the global momentum towards using massive amounts of diverse data to gain insights and develop new services.
Yet, the data and systems that pharmaceutical companies handle are subject to various regulations. Standards governing R&D, manufacturing and quality, as well as legislation on the protection of personal information, are becoming more and more strict in many countries around the world. When it comes to digital technology and data, therefore, we must accommodate both the accelerated pace of utilisation and tightening regulations at the same time.
Furthermore, the COVID-19 pandemic has changed people’s lifestyles dramatically. It is hard to predict what our post-COVID lives will look like, but the changes that have occurred during the pandemic are likely to stay to some extent.
Based on these circumstances, back in July 2020, Santen announced ‘Santen 2030’, our new long-term corporate vision for the ensuing decade and beyond. It clearly states our resolve to become a ‘social innovator’ so as to deliver happiness through optical health. To this end, we need to maximise the value of our existing business operations, while also proposing new value through corporate reforms.
Santen’s digital and IT strategy has emerged from the question of what an IT organisation should do to fulfil this vision. The role of an IT organisation is to provide support for global business from each region where the company operates and to offer digital solutions, thereby streamlining and accelerating the advancement of the company’s entire value chain. It is important for an IT organisation to identify trends in our rapidly changing social environment and help the company adapt to such changes.
Minori Hara Corporate Officer, Chief Information Officer (CIO) and Head of Digital & IT Division Santen Pharmaceutical Co., Ltd.
Shingo Arai Partner, Technology Advisory Service PwC Consulting LLC
Physical location is immaterial to a global CIO
Arai:
In your medium-term management plan ‘MTP2025’, which was released in May 2021 and covers the medium-term period ending in FY2025, Santen lists ‘establishing a global organisation’ as one challenge you face going forward, and pledges to ‘evolve into a true global pharmaceutical corporation by FY2025’. Tell us about your initiatives for globalising your IT organisation.
Hara:
First, we have completely wiped away the traditional notion about Japan being the location of the head office. Under Santen’s overall business strategy, the company conducts global business operations in five regions, namely Japan, China, the rest of Asia, North America and EMEA (Europe, the Middle East and Africa).
The IT organisation’s role is to provide support to our business divisions from the aspect of both global and digital strategies at the same time. Today, our business divisions are globalising at an exponential pace. When I talk about globalisation, I don’t mean only increasing the ratio of overseas sales or the number of employees in countries outside Japan. Our business approach and business model are also globalising rapidly.
To adapt to this business environment, the IT organisation itself must acquire the new capability of identifying future business needs and using this understanding to function as a business partner. If we were to maintain the traditional approach of using Osaka, where the head office is located, as the base of our business, it would limit the capabilities of our IT organisation.
Needless to say, our business operation in Japan is the largest, in terms of scale, the number of business sites and the number of employees. At the same time, even though Osaka is the official location of our head office in the corporate registry, there is no need for us to concentrate all of our head office functions in Osaka.
Fujita:
Over the last 20 years, you have served at international organisations, taking charge of drawing up overall IT strategies and overseeing security and IT service management as a whole. Did you apply these experiences to Santen when you relocated the CIO’s home base from the Osaka head office to Geneva, Switzerland?
Hara:
When I thought about the optimum location for maximising the organization’s capabilities, I found Geneva to be one of the most suitable locations.
The majority of my connections with other companies’ CIOs and IT businesses were in Europe, rather than in Japan. To me, Europe felt more like playing on the ‘home field’, while Japan was more like an ‘away game’. While this was only due to my personal background, it was still an important element of my business capability.
Also, only two of the IT organisation’s nine global leadership members, including myself, are based in Japan. The rest are spread across countries including Switzerland, the Netherlands, Canada and Singapore, managing the overall global operations from there.
Other additional factors I considered were the need to expand our options for IT companies that could become potential external partners, as well as the breadth and diversity of the local human resource market as a pool for recruiting future organisational leaders. The decision to choose Geneva was the result of careful and comprehensive considerations of these factors.
Arai:
When many Japanese companies set out to globalise, they tend to appoint a Japanese leader and set up regional branches directly underneath that person. I suspect it took a lot of courage for Santen’s IT organisation to decide to let you and the other leaders choose your own home bases, with a focus on maximising organizational capability.
Hara:
Some of our people apparently found my move to be completely outside the norm. People outside the company also often ask me if we are relocating the entire IT function to Europe. But I always tell them, ‘While I, as the Global CIO, am based in Switzerland, the organisational functions I manage are spread across the world. The organisation takes advantage of the technology available to us to establish a global network of collaboration.’
What’s in a name?
Arai:
The IT organization you manage has been renamed from the ‘Information Systems Division’ to ‘Digital & Information Technology Division’. Is this renaming also a part of Santen’s global strategy?
Hara:
The name change came about from our resolve to redefine the IT organisation, which has traditionally been known as ‘a system integrator that resolves business needs’, as ‘a business reform enabler that leverages digital tools and information’.
The renaming to the Digital & IT Division also coincided with the updating of the organisational structure to align itself to these new purposes.
More specifically, a group overseeing our business operations in Japan was created directly under the Global CIO, and a Global Operations team was created to govern operations in all five regions where we do business, including Japan. The rest of the organisation has been turned into a cross-regional establishment with the ‘Center of Excellence’ (CoE) functions promoting digitalisation, business solutions and more. The Global Operations team and the Global CoE work hand in hand, reporting to the Global CIO.
Arai:
Realigning the organisation to deploy suitable human resources to suitable positions according their capabilities and roles regardless of regional boundaries is a drastic move. Surely that would test leaders’ management capacity and employees’ adaptability.
Hara:
For those who had never worked in a global organisations, it was certainly a challenge to report to a non-Japanese supervisor in English or collaborate with parties in remote locations with time differences. However, we have created a mechanism for various communication opportunities, which has led to a workplace atmosphere where our people can enjoy this type of challenge. These days, many of our people are positively adapting to the changing environment and using it as an opportunity for their growth. As the CIO, I am very pleased to see this change, and I found it the most rewarding outcome.
Yasushi Fujita Partner, Digital Trust PwC Consulting LLC
The global search for global talent
Fujita:
How has this organisational globalization initiative affected your HR strategy?
Hara:
The biggest impact has been the broader options we now have in acquiring human resources. In the past, we recruited people who had the potential to acquire global capabilities in Japan, and let them accumulate experience in-house to build up their ability to contribute to our global business. But this ‘in-house development’ approach could not keep up with the rapid tide of globalisation, and had limitations in terms of inviting diverse forms of business excellence into our organisation. The Digital & IT Division has completely reshaped its recruitment approaches.
Specifically, even when recruiting one person for a head office function, we canvass potential recruits in Japan, Southeast Asia and Europe simultaneously, for example, to locally hire the person that is best suited to the requirements of the position. The person is then asked to assume the global role in their local office rather than having to relocate to the head office. This helps our organisation naturally grow into a cross-regional structure.
Arai:
When deploying business globally, there may be situations whereby the capabilities you need for common global functions could be different from the specific capabilities required for specific regions. How do you deal with such situations?
Hara:
Local offices that only handle local operations recruit local staff. For example, for positions that involve close collaboration with locally-hired factory employees or positions that support the sales and marketing operations in a specific region, we assign people who are well-versed in the region’s business practices.
In contrast, the roles of our global positions may not be easily fulfilled by people with only limited local experience. In our organisation, more and more teams currently serving global functions consist of people who are working in different continents in different time zones than their team members, supervisors or supervises. It is rare to find a team that is contained in one country or is made up of a single nationality.
Many companies based in the EMEA and Asia regions normally engage in multinational operations using global human resources to target the whole of Southeast Asia, Europe etc. Those who work in such an environment seem to adapt relatively easily to their companies’ business expansion and globalisation. This is why broadening the target job market for my organisation boosts our chances of discovering great talent.
Arai:
I see. Japanese companies tend to clearly separate their Japanese operations from their global operations, but many global corporations based outside of Japan view their market on a global scale and do not differentiate between operations in their own country and others. Employees in such companies are more aware of globalisation. By the way, are the people you recruit for global operations subject to a uniform set of evaluation and remuneration standards?
Hara:
That is a difficult issue. Different regions have different business practices and employment laws, making it hard to apply unified global rules. There are also regional variations in remuneration levels and job ranks in the respective job markets. Currently, under the strong leadership of the Global HR division, we are steadily improving these frameworks to support the company’s further globalisation.
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