In 2016, Osamu Nagayama was leader of the board of Chugai and Sony. He talked to Brunswick’s Daisuke Tsuchiya
When we spoke to Osamu Nagayama in 2016, he was dividing his time between pharmaceutical company Chugai, where he held both the CEO and Chairman posts, and electronics giant Sony, where he was an independent director and Chairman of the board.
In an interview in a conference room in Chugai’s Tokyo headquarters, he noted that while the two businesses are very different, the responsibilities of their boards are the same, making the transfer of his skills from one to the other a natural step. In addition, working with the leadership of the two companies has allowed him to enhance his own experience and expertise, to the benefit of both businesses.
Sony and Chugai are both international companies and have governance structures that require external directors on their boards. Traditionally however, Japanese boards have been almost exclusively comprised of executives and insiders. Nagayama sees that changing quickly, despite cultural resistance, spurred in part by governance reforms instituted by Prime Minister Shinzō Abe’s administration.
Contrary to what most people might think, Nagayama said the main function of a board is not to make money for the company. Instead, it is to create transparency. The relationship between the board and executive management provides an important set of “checks and balances” to the benefit of all stakeholders, including shareholders.
In light of the board’s oversight function, Nagayama made the case that the CEO and chairman should be on good terms, but says a close friendship is “dangerous.”
Being CEO and Chairman of Chugai is a very demanding position. What led you to also take on the Chairman role at Sony?
I joined Sony’s board in 2010 and was appointed its Chairman in 2013. The management and Yotaro Kobayashi, Chairman at the time, invited me to consider the post. Because Sony is quite a large, diverse, globalized company, I instantly thought about the challenges I would face, being a board member. I knew I had a perspective to bring—life experience and business knowledge. I also thought that being on the Sony board might benefit Chugai, providing insight into ways to improve its management and governance. I was a little hesitant, but in the end, after some consideration, I accepted.
I have also been a fan of Sony for a long time. Over the years I have loved products such as the Walkman and its digital cameras. I had a Trinitron TV, for instance, and still use my Sony DVD/Blu-ray player. To be fair, I think it would be hard to find Japanese people who have not used Sony products. The company is somewhat iconic here. Some of the products, such as the Walkman, helped define parts of popular culture worldwide.