Currently, I believe the Board of Directors is required to serve two key roles: as a Monitoring Board and as a Management Board. The Monitoring Board oversees the executive side and is responsible for internal controls like compliance, playing a supervisory role in the overall management of the Company. The Management Board, on the other hand, goes beyond supervision by providing advice to the executive side on improving management and improving corporate value, actively participating in discussions leading to final decisions.

Given that the Company is at a stage where it is expanding globally and entering new fields, more detailed managerial decision-making and strategic planning are essential. Having extensive experience in managing publicly listed companies, I draw on that expertise to offer suggestions and advice from the Management Board perspective.

The Company has established the Group Management Committee under the Board of Directors to enhance decision-making and the quality of discussions. The Group Management Committee takes ample time to comprehensively discuss and scrutinize the proposals that are submitted to the Board of Directors. To further improve the effectiveness of the Management Board during discussions at the Group Management Committee and decision-making at the Board of Directors, it is crucial to bridge the information gap between internal and external directors. While external directors are expected to offer independent advice on management and business strategy, they cannot provide suitable advice or raise pertinent issues without sufficient knowledge of the Company’s businesses. Since my appointment as an external director in 2021, initiatives have been established to share the executive side’s discussions with us, and these efforts are highly appreciated. Specifically, for discussions in the Group Management Committee, the executive side provides not only meeting minutes but also video recordings of their discussions on each agenda item in advance. By reviewing the detailed information that may be missing from the minutes, we can fully grasp the background of each issue and the content to be discussed, which leads to more sophisticated discussions and efficient decision-making. External directors are encouraged to proactively contribute to discussions in the Group Management Committee, and since the introduction of video sharing, I feel there is a more vigorous exchange of ideas between the executive and supervisory sides.

Although the Company is owner-operated, as we engage in these active discussions, I feel that our decision-making is sound. I can confidently say that there is no undue influence from the owner, a concern commonly raised in owner-operated companies. While the Chairman and CEO each hold their own convictions, even when their views diverge, decisions are made appropriately after thorough discussions. The Company fosters a culture of respect for all directors’ opinions, including those of external directors, and as an external director, I am able to voice my opinions freely, thereby deepening the discussions. For example, the Phoenix Seagaia Resort was a business that the Chairman had a deep personal attachment to, but after numerous discussions aimed at maintaining an appropriate business portfolio, we decided to transfer the shares in May 2024.

While discussions and decision-making involving external directors like myself have deepened, I believe the next challenge will be strengthening global governance. The new medium-term plan, Welcome to the Next Level!, involves expanding our business in fields such as the overseas video game market and entering new fields such as the Gaming area, with active M&A strategies as part of the approach. As the Company expands its business areas, roll-out regions, and Group scale, it is essential not only to strengthen governance and PMI (post-merger integration) of acquired companies but also to manage the entire group appropriately based on effective portfolio management. External directors, including myself, consistently advise sharing information and holding discussions not just about individual projects but from a broader perspective, including the background and strategic positioning of each project. The executive side has responded well to those requests, and I sense that appropriate information-sharing has been progressing. For instance, when we acquired Rovio Entertainment Corporation in August 2023 and made it a consolidated subsidiary, the executive side explained the strategic position of the acquisition based on the business portfolio, highlighting the importance of mobile IP acquisition. They also explained the competitive advantage of Rovio itself and the nature of the mobile game market, enabling us to make a sound decision. Going forward, I believe that comprehensive management of this globally expanded portfolio will be indispensable for improving the Company’s corporate value.

Under the previous medium-term plan Beyond the Status Quo, while structural reforms in the European Consumer area during the fiscal year ended March 2024, the final year of the plan, led to losses, hit products such as Smart Pachislot Hokuto No Ken contributed to significant sales and profit increases in the Pachislot & Pachinko Machines Business, with consolidated ordinary income reaching ¥59.7 billion, exceeding the initial target of ¥45.0 billion. I evaluate this as a result of effective maintenance and management of SEGA SAMMY’s strengths, which lie in its complementary, diversified business portfolio.

 
The new medium-term plan, developed based on the achievements and challenges of the previous plan, strikes a good balance by considering both growth potential and risk management in each business. To properly maintain the portfolio for sustainable growth, it is essential to allocate future-oriented investments in both capital and human capital. Even when a business is currently a source of earnings, selling that business could be a valid decision if there is another business with more future growth potential. In that regard, I believe the decision to sell PHOENIX RESORT to focus on new growth areas was an appropriate one. Moreover, I believe the transferee was the best owner to maximize corporate value, and the decision also set PHOENIX RESORT up for further growth.

 
Regarding the reorganization of the European Consumer area, which was a challenge under the previous medium-term plan, I appreciate that sufficient discussions were held on preventing recurrence and strengthening the business base. Given the deterioration in profitability, it was not an option to leave the current business structure unchanged. I believe that in the Board of Directors, we were able to hold thorough discussions on basic policies and measures for the reorganization, including strategies to improve profitability and the division of decision-making roles between the executive side and the Board.

 
In the process of formulating the new medium-term plan, we—the external directors—proactively sought information and engaged in discussions on the balance between risk and growth, particularly regarding the allocation of capital and human capital. We spent considerable time discussing, among other things, our entry into the Gaming area, where future growth is expected. The discussions included forecasts for market expansion and measures for potential risks such as addiction and reputational risks, with external directors focusing on the finer details, allowing for a comprehensive discussion on the topic.

To achieve growth in global markets, it is essential to secure, cultivate, and appropriately allocate human capital with a global perspective. In this respect, I look forward to further promoting our human capital management. Particularly, human capital acquisition and post-acquisition management, including overseas M&A, are crucial.

 
Therefore, it is essential to accurately understand the gap between our current human capital portfolio and the one needed to achieve our business plans and to make steady progress in nurturing and recruiting the necessary human capital. Our industry requires a high level of expertise, and it is necessary to approach the appropriate human capital markets. Many of our current management members have rich networks in the industry, and I hope they will apply these networks to take proactive approaches. At the same time, expanding diversity in our human capital, including in our overseas subsidiaries, is essential for future growth. The number of female engineers in Japan is still low, and expanding our overseas operations will require expanding local human capital and managing them appropriately. To close the gap between our current portfolio of human capital and our vision for the future, I hope to continue holding strategic discussions within the Board of Directors.

Since my appointment as an external director in 2021, I have engaged with frontline employees at various levels within the Company. Through these interactions, I have come to feel that the Company is advancing technologically and that the employees are highly motivated. Business operations are thoroughly driven by IT in terms of products and services as well as in the “back office,” and engineers and other employees are actively engaged in their work. Looking at this organizational culture, I believe the Company has the strength to continue growing and achieving its goals. To attain that goal, it is essential that we take the appropriate risks and continue to challenge ourselves. As an external director, I will continue to advance discussions and raise issues to ensure that we can take the appropriate risks.
　
　
※This article is excerpted from the INTEGTARED Report 2024.