He stood up, walked to the whiteboard, and picked up a marker to draw two boxes.
"The left side is input, and the right side is output. The person in the middle is the executor," he said, tapping the whiteboard. "If we have someone in our company who is particularly adept at handling external relations and can achieve the greatest results with the least amount of money, then keeping them in the Sales Department or the Logistics Department would be a waste of their talent."
Nakayama Takuya turned his head to look at Director Yoshikawa, who was sitting to his side and slightly behind him.
"Uncle Yoshikawa, hasn't your Public Relations Department been complaining about being understaffed? If there are people with such smooth interpersonal skills among the staff, they could be transferred to your department to specifically deal with politicians and third-party vendors."
Yoshikawa chuckled. "Takuya, you're trying to sneak people into my department under the guise of helping. But that said, if there really is someone who can smooth out relationships and make sure every penny is well-spent, my Public Relations Department would welcome them with open arms."
"This is the core purpose of my establishing the Audit Committee," Nakayama Takuya said, walking back to his seat. "I don't fear spending money; what I fear is money being spent without clear reason. If PR expenses are incurred but the results fall short of expectations, we must have clear records to review."
"Was it because not enough money was given? Was it because the key person wasn't reached? Or was the method of public relations wrong? Or, even worse, did the person executing it line their own pockets?"
" He sat back down and scanned everyone at the long table.
"Since the Japanese business environment is the way it is, there's no point in burying our heads in the sand. Let's bring these gray-area things out into the light and analyze them. Only when we've analyzed them thoroughly will we know where the company should invest its funds and how to manage its talent. If even the Ministry of Foreign Affairs can make public the fact that they pay spokespeople in other countries to speak well of Japan, then surely us just keeping clear internal records of these things is relatively discreet."
Director Suzuki adjusted his reading glasses and spoke up: "The Managing Director means to make these expenses completely transparent?"
"Exactly. Of course, this is only transparent to finance, audit, and superiors," Takuya Nakayama nodded. "Take Director Yoshikawa, for example. In all of Sega, whose public relations expenses are higher than his? A trip to the United States to visit congressmen and lobby universities—which of these items doesn't require hard cash to pull off?"
Yoshikawa picked up his teacup, unable to hide his smile.
Being used as a positive example in front of everyone pleased him greatly.
"But why has the Board of Directors never questioned Director Yoshikawa's spending?" Nakayama posed the question and gave the answer himself. "First, every penny Director Yoshikawa spends brings tangible returns. Cooperation with the disaster prevention department,"
"The positive feedback from the legal system and the cultural promotion by local governments all enhance Sega's image; they are Sega's intangible assets. Everyone feels that this money was well spent. Second, and most importantly, Director Yoshikawa's accounts are crystal clear."
Takuya Nakayama pointed to the financial materials in front of him.
"Transparent information allows everyone present here to avoid unnecessary speculation and hesitation when making decisions. There's no need to guess whether this money went into private pockets, and no need to agonize over whether there is any conflict of interest in this project. With the rules established here, everyone acts according to the rules, and efficiency naturally goes up."
A low murmur of discussion filled the conference room.
The pressure brought by PricewaterhouseCoopers was skillfully transformed by Takuya Nakayama into a discussion on management logic.
There was no naming and shaming, no harsh reprimands, but every word struck at the pain points of the relevant personnel.
Department Head Yoshimura kept his head down, looking at the scribbles he had made in his notebook.
He knew very well that the 'Company A' mentioned was the Kansai Region under his command.
Takuya Nakayama had let him off the hook today and hadn't exposed him publicly, which was a gesture of respect for a veteran employee.
It also meant that from now on, the old tricks of cooking the books by exploiting information asymmetry and personal connections would no longer work at Sega.
Richard cut in at the perfect moment, proceeding to explain the next case study.
This time, a financial model regarding inventory backlog and premature revenue recognition was displayed.
It was the same coded language, the same cold data analysis.
The members of the Audit Committee began to take notes diligently.
Those confidants and protégés installed by the directors, who originally only intended to make an appearance, were now showing full, undivided attention.
They had grasped the layout of Takuya Nakayama's strategy.
This young Executive Managing Director was using a brand-new set of international standards to reshape the rules of power at Sega.
The two-hour meeting ended quickly.
Richard closed his laptop and left with his team from PricewaterhouseCoopers.
The directors also rose from their seats one after another.
Director Suzuki walked over to Takuya Nakayama and patted him on the arm.
"Takuya, you're even more sophisticated than your father was at your age. This dual-track system, combined with what you said today, has really brought these arrogant troops into line."
"You're too kind, Uncle Suzuki. If Sega wants to expand overseas, we can't afford any trouble at home. I'm just straightening out things that should have been in order." Takuya Nakayama packed up the materials on the table.
Department Head Yoshimura walked to the door, paused, and turned back to bow deeply to Takuya Nakayama.
"Managing Director, the Sales Department will immediately conduct a self-audit once we return. We will compile a detailed explanatory report on those irregular accounts from the past and submit it to you as soon as possible."
"Thank you for your hard work, Department Head Yoshimura." Takuya Nakayama didn't say anything more, just gave a slight nod.
Watching Yoshimura's slightly stooped back disappear down the hallway, Director Hoshino walked over and handed him a fresh cup of barley tea.
"This really breaks the situation wide open. Since Yoshimura has voluntarily bowed his head, the other departments won't be able to make any waves."
"This is just the first step." Takuya Nakayama took the barley tea and drank it in one gulp. "Auditing the accounts isn't the goal; establishing a self-evolving internal control system is the key. Please keep a close eye on the training progress. I want everyone on that Audit Committee to become experts who can read the bottom line of financial statements within six months."
Director Hoshino accepted the task and turned to arrange the follow-up work.
While Sega was carrying out sweeping internal audits and reshaping its management system at its Tokyo headquarters, Nintendo's main office in Kyoto, far away in the Kansai region, was finally seeing some long-awaited clear weather.
In the Development Division's hardware lab, the blinds, which were drawn all year round, were rolled up for the first time in forever.
Sunlight streamed through the glass, hitting a black prototype console in the center of the workbench.
Genyo Takeda had dark circles under his eyes, and was clutching a thick final test report in his hand.
After countless nights of overtime and endless back-and-forth negotiations with the engineers at Silicon Graphics, this next-generation console, code-named "Project Reality," had finally completed its final system-on-chip tape-out and operational testing.
Yamauchi Hiroshi had come to the laboratory in person.
The president, who had always cared only about results and never the process, had made an exception today by walking into a room filled with the smell of rosin and soldering flux.
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