Nakano

We announced the JT Group Purpose in February 2023, following a process that took nearly four years from when we began discussing ideas for it. JT tends to pursue the essence of things, in other words, commit to in-depth, thorough discussions when instituting a new framework. Since I became Senior Vice President in charge of Corporate Strategy in October 2019, we have been bringing leading executives together to talk about the Purpose over and over again. These talks brought up “fulfilling moments” as a key concept.

We also talked a lot about why we should formulate a specific Purpose, and to what extent. After asking ourselves what values we cherish and have been offering, we concluded that “fulfilling moments” would be our key phrase. Once that decision was made, our discussion revolved around this central concept. We also invited the tobacco business executives to the discussion to help us clarify whether “fulfilling moments” would be convincing enough to motivate JT Group employees worldwide and initiate positive action. Through a long series of talks, we reached consensus on the Purpose, “Fulfilling Moments, Enriching Life.

So the phrase “enriching life” was added. How did employees respond to this Purpose?

Nakano

The phrase “enriching life” carries the image of becoming more aware of and attentive to the diverse values and feelings that individuals hold, and striving to realize them beyond what was previously considered, aiming for their fulfillment. That’s why we will need to continue evolving, which we see as a commitment that we must meet in order to fulfill the Purpose of “enriching life.”

At first, we announced the Purpose only to the corporate divisions. While we heard many supportive responses, we also received questions about what the phrase “fulfilling moments” specifically means, given that it could be interpreted in many ways. So, we explained the background of the Purpose and our process in creating it, and discussed it with employees many times.

Anticipating that the tobacco business and others would respond to the Purpose in the same way the corporate divisions did, the President and Executive Vice Presidents have shared the task of visiting all Group business sites, in the year following the announcement, to communicate the Purpose in person. After stepping up these efforts, I feel that understanding is growing among employees. It will take time to establish complete understanding among all employees, so I am relentlessly continuing that effort.

Shimayoshi

The Purpose describes why the JT Group exists, and we intend to honor that over the long term. Because our employees are not always conscious of the Purpose at work, we’ve created an action guideline to help everyone work with a sense of ownership

It would be too easy to say that the guideline can change everyone’s actions right away. However, since we didn’t create it from scratch but by refocusing on the values we’ve long cherished such as “fulfilling moments,” we believe that everyone can understand and put it into action gradually. Even though there may be only limited opportunities at work for our people to be fully conscious of the Purpose explicitly, I’m confident that we will be much closer to fulfilling it in 20 or 30 years, if everyone acts within the framework of the Purpose on a daily basis.

Nakano

To truly understand “fulfilling moments,” I think we first have to undertake some introspection. Individuals experience this kind of fulfillment in uniquely different ways, but there are certainly common threads. It’s important that, individually, we ask ourselves, without worrying about what others think, what we really like and dislike and what we want to do. We can then look for the common threads in everyone’s answers. Without clarifying our own thoughts and feelings, communication and discussion with others is harder. So, I often say that the starting point of a dialogue is to have a clear thought and share that with the other party. This kind of dialogue with employees is very important, something we, as management, should be doing constantly.

Shimayoshi

In addition to daily actions and attitudes, to fulfill the Purpose, it’s important to follow through on the strategies we’ve set for each business and build positive results in our efforts to achieve the goals of our business plan. So, we created separate Business Purposes for the tobacco, pharmaceutical and processed food businesses, drawing on the essence of the JT Group Purpose and applying it to their operations.

For example, the tobacco Business Purpose is “Creating fulfilling moments. Creating a better future.” This expresses our intent to help create a better future for our consumers and society by offering products and services that provide fulfilling moments.

The pharmaceutical Business Purpose is “Respecting science, technology and people, we will contribute to patients’ lives,” expressing the specific value the business exists to create. Pharmaceuticals are regulated under strict quality standards, their market success rate is low, and when they succeed it’s only after a great deal of time in development. Because this is inevitable in this industry, we make extensive efforts to develop pharmaceuticals bearing in mind that value creation is only possible when we stay focused, make the most of the latest science and technology, and collaborate closely with coworkers and many others.

The processed food Business Purpose is “Bringing Joy to Meals and Fun to the Table.” This expresses our intention to deliver through our food products not just nutrients that are safe, reliable, and delicious, but many happy surprises, culinary discoveries and joyful occasions with special people and smiles around the table. We believe that promoting these Business Purposes will lead to fulfilling the Purpose.

A range of discussions are going on in the corporate divisions, without reference to divisional boundaries, on ways to realize the Purpose. One result of the discussions from a medium- and long-term standpoint is the JT Group Sustainability Targets, announced in February 2024. Through our work to achieve those 25 targets, we hope to embody the Purpose as we increase value for our stakeholders.

In addition, to contribute directly to fulfilling the Purpose, we have D-LAB, a corporate R&D organization conducting multifaceted research centered on fulfilling moments as well as exploring prospects and creating seeds for future business.

Nakano

It started with the awareness that the JT Group needs more new businesses. Our main operation is and will remain the tobacco business, which I believe will still grow, notably the RRP (Reduced-Risk Products)^* segment. However, looking at our direction over a longer time span, as well as taking into account the tobacco operating environment such as the trends in product demand, regulations, and changes in taxation, it raises the need for supplemental businesses beyond the existing businesses.

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RRP (Reduced-Risk Products): Products with the potential to reduce the risks associated with smoking

Shimayoshi

Tobacco is just one way to deliver the value of the Purpose to consumers in the form of fulfilling moments. To explore other product categories and services that can achieve the same, we decided to create D-LAB to exclusively focus on the Purpose.

Nakano

D-LAB has been operating for over 10 years, first as a project within the Business Development & Corporate Strategy Division for seven years, then as an independent organization as of 2020. It conducts multifaceted research centered on fulfilling moments, explores business prospects, and creates ideas for future businesses. Over 100 projects are taking place simultaneously.

In this multifaceted research, we work with other companies and universities to deepen the understanding of the value of fulfilling moments. To explore business prospects, we have set aside a fund for investing in startups, currently standing at about 200, mainly in Europe and the United States, that we think are compatible with fulfilling moments. To create ideas for future businesses, we are starting projects from scratch. Some of these projects are already running trials on new products and services, and some have actually put products on the market, providing fulfilling moments to consumers.

We do not expect these projects to become profitable in the short to medium term; instead, we are cultivating a wide range of projects with a long-term view.

How do you decide which projects to take on at D-LAB?

Nakano

At the moment, we are interpreting “fulfilling moments” quite broadly, in part because the reference to “Fulfilling Moments, Enriching Life” in the Purpose is broad in its implications. As I mentioned, everyone feels fulfilled on different occasions, and our ideas about such moments can shift with cultural differences, the times and society. So, we apply this value in a broad sense and carry out a wide range of initiatives to promote it.

What is your primary judgment criterion? Is it just whether something can help create “fulfilling moments?”

Nakano

Yes, exactly. Offering fulfilling moments through products and services is the primary value of the JT Group, regardless of where the market is. We think constantly about offering the value of fulfilling moments through all our forward-looking operations, going beyond what it is now and making sure we stay close to fulfilling moments for people and society, even as they change in diverse ways over time and for each individual.

What can you tell us about the people and organization at D-LAB?

Shimayoshi

In 2013, when plans related to the initiatives currently going on at D-LAB came up, I was an HR vice president and saw that the personnel would need to be reorganized for new projects. JT has a high execution capacity. Once a decision is made, the Company tends to powerfully push things forward all at once, like a big machine turning on. To bring “fulfilling moments” up from the idea stage to tangible reality, we thought we would need people with diverse ideas and working methods to be involved in the whole process leading up to the final decision-making. So, we expanded our horizon in recruiting both new graduates and experienced people, and put together a group from a wide range of backgrounds. We continued discussions to create optimal working conditions and organization to help all our people make the most of their individual talents.

For the actual initiatives, we as senior management stay out of the way and leave all the decisions to the people on the projects. As Mr. Nakano mentioned, I want them to have as many options as possible to try.

Nakano

I basically accept all they want to do and give them free rein to conduct research. I don’t interfere much when they set up small startup projects, either. I get more involved when they reach the stage of needing funding to follow through, but I give them a lot of freedom there, too. In starting a new business, there are standard protocols, from a specific concept to feasibility studies and test-marketing. Following these protocols, they can make decisions on their own, with certain limitations, on whether to take the next step.

We’ve only just started, moving steadily forward from zero to one. To go from one to ten, then reach a hundred from ten, we’ll need different capabilities. Scaling up and speeding up will be the next theme, and we will tap further into the experience and knowledge we’ve built jointly with our outside partners.

What are the D-LAB initiatives going forward?

Nakano

The results of the research are gradually transforming into products, including the fufuly cushion that “breathes,” and COLDRAW, a technology platform that efficiently extracts the flavors and colors of botanical ingredients for non-alcoholic beverages. We will be taking on more initiatives offering tangible results to stakeholders like these, as manifestations of fulfilling moments that will contribute to the JT Group’s profit growth in the long run. These initiatives are designed to go forward over long timescales, so short-term returns are not a priority.

Shimayoshi

Our core tobacco business still has good growth potential, and we hope to offer products in a wider variety of forms, including HTS (heated tobacco sticks), to meet consumer needs. If efforts inside the tobacco business to explore such prospects organically overlap with D-LAB initiatives and develop into collaborations, there may be a significant increase in the opportunities where we can offer fulfilling moments.

Nakano

I’ve been speaking mainly about D-LAB, out of my commitment to create new businesses to fulfill the JT Group Purpose. Let’s not forget that the tobacco business is also designed to provide fulfilling moments, and that business is in a way a precondition for the Purpose.

D-LAB will naturally work on new business prospects. That’s a long-term effort, however, and the Company’s current daily focus will remain on the tobacco business. I understand that our initiative to promote the understanding of the Purpose within and outside the Group requires long-term efforts. I will continue discussing this and establishing initiatives for better understanding and broader support.

Shimayoshi

We conduct our businesses primarily for better financial performance of the Group. With that in mind, we often do it purely for the joy of what we do. We enjoy fulfilling the Purpose, and conduct our business as a means to that end. We hope to start more businesses to offer fulfilling moments, as well as expand existing ones.

We will manage the JT Group’s current and future businesses with the aim to bring our vision for “Fulfilling Moments, Enriching Life” into reality.