Shiseido’s Cutting-edge Approach to Innovation – WWD

Over the past 45 years, Shiseido has won more top awards from the International Federation of Societies of Cosmetic Chemists — 29 at last count — than any other company.

But it’s not content to rest on its laurels.

After opening a $400 million Global Innovation Center in Yokohama, Japan, in 2019, the company has reinvigorated its approach to R&D with a consumer-centric, multipronged strategy with actionable insights at its core.

Called S/Park, the facility has 17 floors and over 600,000 square feet of space. It’s a physical manifestation of Shiseido’s new approach, with the first two floors given over to public space. Here, consumers can drop by the café for a bite to eat, learn more about the company’s history via interactive exhibits and meet with specially trained researchers to create a product customized for their skin. There’s even an exercise studio, complete with locker room facilities, for use by those who work in the area and want to clean up after a run outdoors.

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The research areas span the fourth to the 15th floors — but the goal is for researchers to interact with the consumers who visit to develop a deeper understanding of their needs. Shiseido has about 1,200 researchers, half of whom are based in Japan.

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“We would like to be the beauty wellness company,” said Yoshiaki Okabe, chief brand innovation officer and chief technology officer. “We’re taking a people-first concept and our innovation program has three key pillars.” The three pillars are Skin Beauty Innovation, which covers concerns such as wrinkles, dark spots, sagging and the like; Future Beauty Innovations, which can be developed internally or externally and are often longer-term in scope, and Life Beauty Innovations, which look to meet more immediate consumer concerns.

Okabe’s appointment in January 2021 signals the importance of Life Beauty Innovations that extend beyond Shiseido’s core scientific expertise. Previously, Okabe was head of brand for Clé de Peau Beauté and chief brand officer of the Shiseido brand. He was appointed by Shiseido chief executive officer Masahiko Uotani “to be a bridge between consumer and researcher,” he said.

“We look at this pillar as being the bridge between consumers and R&D,” said Okabe. “Consumers have certain needs that they need met immediately and a timely reaction is essential.”

For example, during COVID-19, the frequent use of hand sanitizer led to excessive dryness. To combat this, Okabe led the development of Shiseido Ultimune Hand Cream when he headed up the brand side, launching it in just five months.

Okabe is eager to infuse that speed-to-market across the company, and has made it his mission to create a bridge between not just consumers and scientists, but between Shiseido’s research centers around the world.

Already the strategy is bearing fruit, as with the launch of Nars’ Light Reflecting Foundation, which was born from insights gleaned globally from consumers and formulated as a collaboration between the Global Innovation Center and the Americas Innovation Center. It is the biggest launch in the history of the brand, and by the end of 2022, Nars is projected to ship double the initial forecast based on its results thus far.

The other important role for Okabe is to redefine the strength of Shiseido’s R&D, and make it more visible and easy to understand, both internally and externally. He has created a framework for the company’s research approach called “dynamic harmony,” conducting interviews with over 200 researchers and stakeholders to define a structure for the entire organization to align around. There are five main concepts: First is “inside outside,” which looks to understand the connections between body, mind, skin and external environmental factors.

Second is functionality/Japan quality. “There are so many things that are high quality and low efficacy or vice versa,” said Okabe. “So to strike a good balance between the two is tricky and difficult.”

Third is science/creativity, uncovering latent subjective sensitivities and feeling through objective science. Fourth is premium/sustainability, creating unique, high-quality products that respect and coexist with people, society and the global environment. The fifth pillar of Dynamic Harmony is individual/universal, or what Okabe calls “personalization multiplied by science.”

The goal is to drive breakthroughs that are based on inner and outer beauty, health and wellness. “What we are defining with beauty is not just something that you can see from the outside,” said Okabe, “but also the health of your body. To maintain your good health, you have to have a good mind and sense of well-being. The skin, the health and the mind have to be combined, and what we think R&D should understand is how do we combine that and provide optimum benefits for consumers.”

Sustainability is a key component of Shiseido’s R&D agenda, and here, too, the company has tapped a marketing expert to drive meaningful innovation. Shihori Oyama is the department director, sustainability acceleration/R&D communication, brand value R&D Institute, a position she started in January.

Shiseido’s sustainability platform has three key components: product development, which encompasses packaging, formulas and ingredients; procurement, which is focused on supply chain, and environmental footprint reduction when it comes to manufacturing facilities.

“We don’t just think about reducing plastic or doing good for the earth,” said Oyama. “We want to bridge sustainability with product benefits, product efficacy and value for money.”

Shiseido has based its approach on the Ellen MacArthur Foundation Circular Economy Model, and Oyama talks about the five R’s: respect, reduce, reuse, recycle, replace. The company has set a goal of achieving 100 percent sustainable packaging by 2025.

“Circular means we have to take care of everything — from the ground up to the end of life,” said Akiko Nakamura, vice president, sustainability strategy acceleration department. “Our company name comes from the Chinese I Ching, and means, ‘praise the value of the earth which nurtures new life and brings forth significant value.’ It’s important to take care of the earth and generate new values.”

One way that Shiseido is going to achieve its goal is through accelerating the use of refills. Currently the company has about 1,200 stock keeping units that are refillable across its 31 brands. “As a Japanese company, we drive the market for refills and we want to expand this globally,” said Oyama. “Shampoos and body soaps are categories that are quite common. For skin care — not yet. But we are trying to penetrate this, from Japan to China to everywhere in the world.”

At the Shiseido brand flagship in Tokyo, the company recently unveiled its latest effort — a refill bar for Ultimune Power Infusing Serum, one of the brand’s best-selling products globally.

Consumers can bring in an empty bottle, which is sterilized and refilled on the spot. “It’s like making a small factory in the store,” said Oyama. “It’s difficult to achieve because of hygiene standards.”

In July, Shiseido inked an innovative joint venture with Sekisui Chemical and Sumitomo Chemical, the largest chemical companies in Japan, to chemically recycle plastic packaging. Because cosmetics packaging is usually made of different kinds of hard and soft plastics, it is difficult to compost or recycle. Under the new agreement, Shiseido will collect plastic packaging at its stores, which Sekisui will recycle using a technology that converts used plastic into ethanol. Sumitomo will use that to manufacture ethylene, a raw material for synthetic resins, which can be made into packaging.

Shiseido is also focused on ingredient-level sustainability, whether using ingredients that are hydroponically farmed for its new line Ulé, which was created especially for the European market, or Japanese-grown botanicals for Waso.

It’s also tapping into the power of science to advance ingredient transparency and sustainability. Last year, it introduced a new sunscreen technology, called SyncroShield, inspired by spirulina, an algae found in the ocean that proactively photosynthesizes. Inspired by that, Shiseido’s newest sunscreens react with water and sun to create a film on the skin that converts UV ultraviolet light into a green light that is beneficial to the skin.

That level of innovation is a signature of Shiseido’s R&D labs. Lately, researchers have been exploring the inner-outer beauty connection. “Some of the consumer insights that we’re focused on are how many people are feeling uncertain about the future. There is this feeling of ambiguous anxiety,” said Kentaro Kajiya, Ph.D, vice president of the business core technology center and Mirai Technology Institute. “We want to help alleviate that by offering the visualization of physical and mental conditions.”

As an example, Kajiya cited the negative impact that a lack of sleep or exercise can have on the skin. Kajiya’s team studies how the neuronal, vascular, immune and endocrine systems affect the skin. In 2021, the company reported a key finding about the role of touch and its impact on the skin. It discovered that the touch receptor, called the Merkel cell, is embedded in the skin. Researchers wondered if the nerve fibers have an impact on skin health, and discovered that active nerve fibers positively impact skin elasticity.

“It is well known that nerve fibers are weakened as one gets older,” said Kajiya. “Whenever we stimulate or activate the Merkel cells, it will affect the nerve fibers and also elasticity. This is why we want to activate or stimulate the Merkel cells.”

Further research showed that Merkel cells have a scent receptor that is especially stimulated by sandalwood.

“Our study started with touch — but through it, we came to understand that Merkel cells have a role to play in the skin beauty,” said Kajiya. “There are so many opportunities to connect all of the five senses with each other. This is how we want to achieve holistic beauty.”

Another recent breakthrough came when a researcher was focused on skin sagging. His primary subject was a truck driver. The side of the driver’s face that was closest to the window and repeatedly exposed to ultraviolet rays showed significant signs of aging. The researcher pioneered the use of 4D digital skin simulation to visualize the skin’s inner condition. For example — a sweat gland that is moving can be digitally isolated to show how it functions.

“So we were able to achieve visualization of the inner skin, not just the epidermal or surface of the skin. We identified the correlation between the inner skin and the surface of the skin,” said Kajiya. “We now understand that the inner skin will be affected by the whole body system. This is the research theme we have been working on.”

Already, results from that research have helped in the formulation of Clé de Peau Beauté’s Synactif Créme.

While the research areas that the teams are working on is diverse, a common thread runs throughout. “As a cosmetics company, we provide solutions for the current situation to improve,” said Okabe, “but we want to adopt the idea of prevention. By showing you the potential, we can help prevent future damage.”