Integrated Report 2020: Stakeholder Dialog

Morikawa: Mr. Fukutani, you have been giving valuable opinions since before you became an outside director.

Fukutani: We have been acquainted for more than fifteen years.

Morikawa: In the beginning I asked for your advice on strategies almost every month.

Fukutani: It was like an extension of small talk, but it was important to you, lol.

Morikawa: I understand that a leader should remain true to its words no matter what happened in the frontline, but I still care about the details. If you ignore it, you will have to pay for that later. So, I try not to change the roots, but when that foundation is shaken, Mr. Fukutani will ram it down, will you? I'm counting on it.

The Avant Group Has Been Changing for Growth. Appropriate Advice at Each Milestone

Morikawa: Certainly around 2003, we felt that we had hit the wall. We have done what we wanted to do with founding members, but we wanted to keep it that way? I was troubled to build an organization as a "public institution," an ideal that we have held since our foundation. That was when I met you, Mr. Fukutani.

Fukutani: By discussing the matter, you were finding your own answers, weren’t you? While being a timid in a way, you cannot make a manager without passion. Every time we met, you would bring up a different version of "Shouldn't we do this?" and at first, I felt uncomfortable. Looking back, however, it was your passion, and in fact, they were thought of in a neat and orderly manner, and I am impressed by the fact that all is connected up to the present.

Morikawa: There was also a story of an alliance with this foreign-affiliated company. When we developed our business as a global software vendor, we focused on “made in Japan.” However, while we saw a variety of limitations, including strength and culture, I thought that it would be a growth opportunity to do it together with foreign capital. It was your first iron hammer (smile) when you said, "Is that the level of commitment you're willing to make?"

Fukutani: You were a little bearish at the time, weren't you? The moment you took the words, I felt that you had been open to your eyes.

Morikawa: When we subsequently joined with Internet Disclosure (ID), I received another accurate advice.

Fukutani: I think the reason why the advice worked was that you were so organized that you "wanted to do it in this way" for a company that would last for 100 years, rather than going with a single spear of economic rationality. You said you welcome this company because you needed it. Looking at this stance, I saw you grown as a manager of a group company, not an owner of a start-up company anymore.

Time for Diversity. The Avant Group Set Diversity a Driver for Further Growth

Fukutani: I just mentioned Passion. Could you once again tell us your thoughts on management?

Morikawa: You spend a long time building a trusted relationship and propose solutions through creative dialogue to address the issues that customers face, I think the organization can also create sustainable value. In this context, we believe that the management information platform can serve as the platform for creative dialogue. From this perspective, we have adopted the management philosophy of "spreading accountability."

Fukutani: That philosophy is connected to the current group management.

Morikawa: Starting with the consolidated accounting system venture DIVA, the number of Group companies has increased including ID, ZEAL, and FIERTE, and the scope of business has expanded. Currently, Avant takes the form of a pure holding company. Rather than expanding its business with the concept of investment, we have done our utmost to draw out the potential of each company by looking at each business on an equal footing. Our customers not only highly evaluate individual proposals from Group companies, but recently they also say that it would be more useful if Avant could contribute its collective strength of their various solutions. In other words, at present we have entered a phase in which we can consider the types of services that can be used to respond to these opinions and adapt to the changing business environment for the Group as a whole to make a concerted effort, as well as synergistic effects. Since we have been working on the theme of group management for a long time, we would like to create our original business model.

Fukutani: There are many hurdles that we must clear, such as further strengthening governance and sustainability management. First, it is very reliable that we have a spirit of creating a model that incorporates the various elements and strengths of the company as Avant.

Morikawa: In the age of diversity, if creative discussions with a wide range of stakeholders are expanded more, it will be positive for society. To this end, if we share management information appropriately together with people with various ideas, what we have never thought of before will increasingly arise. With this in mind, I am convinced that the context of management that emphasizes current sustainability and dialogue will be stronger in the context of the popularization of management information, which has been advocated since the Company's founding. In other words, I strongly feel that we have come to a position where we can enhance our customers' economic, social, and environmental value by having the businesses that the Avant Group as a whole function well, and I am proud that we have created that frontier.

Fukutani: Toward a group management that responds to the demands of the times, do you feel that "it's time!"

Morikawa: It's just like “My time has come!”

Fukutani: In this process of growth, how do you evaluate the role of outside directors, including myself?

Morikawa: Outside directors always make me aware of something with various but frank opinion.

Fukutani: I believe that the significance of the existence of outside directors is to state tough things while understanding the nature of the company's business and the thoughts of its management. Meanwhile, I feel that the quality of conversations has changed considerably over the past six to seven years.

Morikawa: What do you think has changed?

Fukutani: Instead of "What shall we do about this problem?" and "Please approve it," more fundamental arguments based on the so-called purpose, such as "Where should the company go from now on?" and "What are we doing for?", have increased, haven't we?

Morikawa: I think we are rightly positioned to tackle what kind of business model should we develop to realize our management philosophy, in other words, mission-driven management. We have adopted a holding company structure that does not expand through investment. Rather, we are doing our utmost to increase the potential of each company, and we have set the environment that does not allow for runaway or negligent management.

Fukutani: What matters do you consider important in order to adhere to the management philosophy at the Board of Directors meeting?

Morikawa: "Human resources" and "Growth investment" have the greatest impact on management, so I often consult with them in order to fulfill our accountability to them. In fact, at the outset, I thought it was the role of the CEO to determine such a focus. Demonstrate leadership, set on a policy, and lead discussions with my own explanation. The most important thing, however, is to decide what should be done, and then decide how to place people. Then backs them up. I realized that the CEO's role is to continue to communicate that he or she never cease to be committed to support subordinates until they succeed so that they won't discouraged. The story jumps a little, but at the moment I learned that this is the succession plan. Founders tend to be too influential, and the next person tends to be hard to make. Accordingly, we have decided to adopt the form of a holding company. If there is an environment in which a new business can be launched or spun off, it is possible to develop human resources with the potential as managers while reducing my own areas of responsibility.

Fukutani: You are matured as a director of the board if you think in the form of assignment or authorization of power rather than the role of "I have to be a frontrunner." As the company grows larger in the future, we must consider whether it is good for the current form of a board of directors and what to do with the shareholder part of capital policy.

Morikawa: The Board of Directors has always given me the opportunity to think about what we should be, but I look forward to the evolution of our position that we must constantly change our perspective, saying that "it's not an extension of the present time, and something is different."

Grow Together with a Diverse Range of Stakeholders

Fukutani: Governance does not have a formula or definition. It is where each company will tighten in its respective business environment. You have a soul from the outset and are determined like "I am doing this with my own company," I believe that you should set your own governance objectives based on this as a pillar. In this context, I believe that your company's greatest strength is its stance of working together to grow the Group's businesses and strengthen governance.

Morikawa: Recently, I was asked to speak to the people who want to go public, so I talked about a variety of topics. When I was told "What does it mean by going public?" I answered, "Perpetual commitment to growth, that's the only point." I think the biggest difference between listed and unlisted companies is the spread of stakeholders. Considering how to contribute to a diversity of stakeholders, there is no choice but to sustain growth.

Fukutani: Originally, it does not relate to listing or unlisted companies, but listed companies need to give consideration to a diverse range of stakeholders, thereby enhancing their public responsibility. In my hearing today, I was convinced that we will grow together with our stakeholders from the growth of the Group. We will start management with a view to sustainable growth.

Morikawa: Thank you for all the stories. Finally, I would like to hear your expectations for Avant in the future.

Fukutani: The company is still growing, and the CEO, Mr. Morikawa, and all of our employees still have room to grow, so I don't think you will ever feel that it has grown any longer, but I hope you will believe in it and grow steadily. I think you all have the power and potential to do that, so I would like to expect that most.

Morikawa: They are encouraging words. Thank you for today.