Handing the company to an outside professional, not the family (2012)

Don’t pass it on — bring in the expertise you lack

The heart of this decision is that a founder who had built a chain in a single generation did not take the route of passing the business to his own family, but brought in from outside the expertise in dispensing-pharmacy management that his company was thin on. The high-density dominance inside Kanagawa was Yamamoto’s own strength, but as the separation of prescribing from dispensing advanced, turning that density into earnings called for experience in handling prescriptions and in building a format that bound dispensing to food. Yamamoto stayed on as chairman, keeping his gravitational pull and his shareholding, and handed day-to-day command to a pharmacist who had served as president at other companies. That a successful founder himself sought his successor outside the family is what characterizes this succession.

That said, bringing in a president from outside does not by itself make the transformation happen. Hirose’s “medicine and food” format more than doubled the share of stores with a dispensing counter in thirteen years and widened revenue from about ¥170 billion to more than ¥450 billion — and that was possible because Yamamoto secured his back as chairman, with shares and confidence, and handed over the foundation of the store network built in Kanagawa. To whom does a family company built in one generation in its home region entrust the next management — to family, or to an outside professional? Create SD’s choice is instructive in that, just before the turn toward scale, it made the design of the succession itself the subject of management.