Since our initiatives began in 2021 on reinventing brand innovation, our overarching theme has been to explore a treasure trove of ideas derived from basic research and implement them in ways that generate brand growth and consumer value. First, we analyzed the strengths of our research and development (R&D) and the factors that differentiate us from our competitors to create an approach unique to Shiseido that skillfully fuses seemingly conflicting values. We call this R&D philosophy DYNAMIC HARMONY.

Today, this philosophy forms the DNA of all research and the language that all research staff now share to describe their work. The five research approaches we initially established, however, are the products of our past. But the pursuit of DYNAMIC HARMONY is a never-ending journey. With the addition of the sixth and seventh approaches, today our researchers are engaged in friendly rivalry to discover the best ways to drive our future forward.

In terms of structure, Shiseido has reorganized and integrated all of its R&D activities and created a one-stop system that links R&D to our brands. We also recognize the importance of engaging in dialogue and collaborating with external parties to showcase the exceptional quality of our R&D. As such, we have been committed to visualizing the outcomes of our basic research and actively sharing our R&D findings with the public.

In 2022, we launched our 2030 R&D VISION to accelerate the reinvention of brand innovation. We must stay abreast of shifts in consumer behavior and social trends to provide high-value-added products that exceed consumer expectations, and R&D is the engine behind this effort.

Under the 2030 R&D VISION, we have established the three pillars of innovation outlined below as our strategic structure, along with our approach of breaking free from the status quo which we call “De-monoculture.” The reforms that have been implemented are successfully transforming our product development and adding value to our consumers.

• Skin Beauty INNOVATION

  Based on Shiseido’s strengths and market position, our strategic focus will be on skincare, sun care, and base makeup to establish our business foundation. In 2023, we successfully introduced multiple innovative technologies into the market, and our products received numerous accolades and recognition from the cosmetics industry. One significant success was ELIXIR’s creams, which incorporate advanced technologies for reducing sagging and wrinkles that gained immense reputation, solidifying its No.1 market share. Additionally, SHISEIDO revamped ULTIMUNE, a serum developed from holistic research on sleep with an initial focus on skin immunity. Besides achieving significant sales growth, the product is also a testament to our ability to expedite product development, reaching the market in just six months.

• Sustainability INNOVATION

  Our aim is to solve environmental and social issues through circular value creation. This includes assuring sustainability across our raw materials, formulations, and packaging. “BeauRing” is one project making steady progress after its launch as a proof of concept in 2023. This initiative focuses on collecting and chemically converting plastic containers into recyclable resources. Additionally, our newly reimagined EUDERMINE, which was released in March 2023, became the world’s first cosmetic product to utilize the revolutionary LiquiForm^Ⓡ technology introduced in 2022. Not only has it demonstrated strong performance in the market, but has also received multiple beauty awards.

• Future Beauty INNOVATION

  To realize our goal of becoming a “Personal Beauty Wellness Company” and achieve medium-to-long-term growth, we are expanding into “inner beauty” and other new cosmetics-adjacent domains and categories, such as new skin beauty experiences based on data science and measurements. In February 2024, we launched the new inner beauty brand, SHISEIDO BEAUTY WELLNESS, applying our unique beauty algorithms based on the relationship between the skin, body, and mind. These algorithms were first presented at the IFSCC. During the first stage, we developed 14 products across three different brands. These include The Collagen, Shiseido’s renewed original brand that focuses on the collagen cycle, ROOTINA, co-developed with Japan’s No.1 vegetable drink company, Kagome, and TUNE BEAUTE, co-developed with Japan’s No.1 Kampo company, Tsumura—all products developed through collaborative efforts with other companies.

• De-monoculture

  At the Global Innovation Center (GIC) in Japan, we are not simply developing from basics to advanced research. Instead, we are building an R&D framework that fosters a wide range of innovations. In terms of the global structure, we are actively defining the roles of our five Region Innovation Centers (RICs) worldwide and delegating authority to them. This collaborative approach strengthens cooperation between the GIC and the RICs. In 2023, Shiseido received three awards for the first time at the IFSCC, including the best podium presentation pertaining to basic cosmetic research, which was awarded to a researcher at our Europe Innovation Center. The research focused on emotional communication through odors, affirming the Europe Innovation Center’s expertise in fragrances and aromas. We have also increased our investment in areas that present new challenges through external collaborations, embracing open innovation. Alongside joint development with Kagome Co., Ltd. and the TSUMURA & CO., we are partnering with the CHITOSE Group, a group of bio-venture companies, to obtain cosmetic ingredients and containers from sustainable algae for manufacturing that is oriented toward a circular economy. Internally, we are focusing on the development of our people to spur innovation of all areas. We are reinforcing our professional staffing system and investing in the growth of our researchers. We will also continue to build our over 30-year-strong overseas collaboration with the Cutaneous Biology Research Center (CBRC) at Massachusetts General Hospital by sending our researchers to work with them. Moreover, we are cultivating the next generation of R&D leaders by sending researchers to the Tomita Innovator Farm and other institutions. Through these efforts, we are designing training programs in Japan and overseas.

Starting from 2024, our primary focus will be on execution. In areas of research and technology, we will continue to develop bold science and technology that we consider strategically important, while also enhancing Shiseido’s overall competitiveness by leveraging technology across different regions and brands. With a well-defined roadmap for technology innovation already in place, we are committed to faithfully executing our plans moving forward. To accelerate our “De-monoculture” initiatives, we have strengthened the functions in China Innovation Center. We now aim to do the same in the United States, aiming to increase the ratio of basic and applied research that leverages the characteristics of each region. In addition, the Shiseido Global Innovation Center (S/PARK), which was established as an “urban open lab” in 2019, is poised to make significant progress in 2024. We are revitalizing and enhancing the center and its functions to transform it into a hub for comprehensive beauty and wellness experiences. This involves fostering co-creation and evaluation through the collaboration of consumers, enabling a truly interactive and inclusive environment.

In pursuing this strategy, we have created a systematic set of KPIs to track and visualize our progress at each stage. Here, we present KPIs that can be disclosed as output indicators. These indicators play a vital role in measuring return on investment, as they assess the production of intended outputs.

As a responsibility of the CM&IO, I felt it necessary to set KPIs not only to evaluate research, but also to measure market impact. Therefore, we have developed KPIs that address both technological advancements and market share. We understand that exceptional research alone may not be sufficient if it fails to translate into tangible business impact. So, we aim to ensure that the value of our technology is effectively realized. Additionally, we will adopt KPIs for intellectual property, which are considered as pre-financial indicators, as addressing environmental and social issues, and also as a seed for future advancements to create sustainable research leading to business success.

April 2024

Output Indicators

• Bold science/technology:
  Continuously generate multiple projects each year

  Measuring the status of science/technology creation defined as the top strategic priority

• Meet new product market share targets in priority categories in collaboration with brands

  An indicator that measures whether the research results generated have had an impact on business. Categories are set each year

• Achieve company-wide sustainability targets

  Sustainability
  (Strategic Actions and Medium-Term Targets)

• Ratio of patent applications in strategic areas:
  50% or more

  Indicators that focus on strategic areas while also maintaining innovation diversity

• Ratio of overseas patent applications:
  70% or more

  Patent metrics to support high overseas sales