JSR’s Eric Johnson: ‘I encourage people to tell me exactly how they think’

When Eric Johnson took over as CEO of leading semiconductor supplier JSR three years ago, he planned to split his time between his native United States and the company’s Tokyo headquarters. The aim was to build on his experience running the US business to expand the group’s global footprint.

But the next three years would drastically change those plans.

Just weeks into his job, amid a row with Seoul, Japan banned the export to South Korea of ​​photoresists, the thin layers of material used to transfer circuit patterns onto semiconductor wafers. Johnson’s JSR is the world’s leading supplier of the material: it has up to 40 percent of the market, which is expected to be worth $14.2 billion by 2029. Its customers range from Samsung to Taiwan’s TSMC, the world’s largest contract chipmaker.

Johnson says he used JSR’s “global infrastructure” to navigate the dispute between South Korea, where the company has major customers, and Tokyo “without addressing the concerns of the Japanese government.”

Then, in 2020, the onset of the pandemic disrupted global supply chains, causing delays in the production of electronic goods. Johnson was placed under house arrest in Tokyo.

But perhaps the most difficult task he faced was handling the company’s original elastomers business, which focused on manufacturing synthetic rubber for tires. It was no longer competitive but continued to eat up resources needed for capital-intensive semiconductor operations.

“We couldn’t properly feed all these companies,” Johnson says at JSR’s headquarters in central Tokyo. Holding a large, round silicon wafer in front of him, his face lights up as he explains the engineering behind the latest semiconductor technology. “But also in terms of the organizational mindset, you could see two divergent cultures. And management’s focus was on two different types of companies,” he adds, comparing the mainly domestic, slow-growing rubber business to higher-growth global segments that include semiconductor materials and biomedical devices.

In no country would it be easy to part with a business on which a company had been built. But getting it done in Japan — by a foreigner amid the pandemic-induced semiconductor chaos — had to present tremendous challenges, from potential employee resistance to customer and shareholder resistance.

Even without this pressure, foreign executives in Japan have not always had it easy. Examples range from Nissan’s Carlos Ghosn and his infamous escape from the country in a box, to some senior American and British executives at brokerage firm SMBC Nikko who have been accused market manipulation. But from the start, Johnson downplayed any notion that being a foreigner was a factor in his leadership.

“It is often assumed that a non-Japanese CEO is brought in to disrupt an organization. That was not the case at all in this scenario. I’ve been with JSR for 20 years, and when JSR started working through the transition and looking for the next CEO, I was part of that process,” he says. Johnson studied chemical engineering at Stanford and spent the early part of his career at Nikon before joining JSR to build a new life sciences business and oversee its US operations.

Given the dilemma surrounding the rubber segment, Johnson said the key for him was taking an organic approach and working from problem to solution with an open mind. At first, his team focused on trying to restructure the company and later looked for a buyer “that would allow them to get the investment.”

Johnson focused his approach on two elements that are critical to making a difference in a Japanese organization: Nemawashi and hon. The former refers to an – often slow and laborious – process of consensus building and raising grievances. hon means someone speaking their mind: a trait often in short supply in Japanese companies, especially larger ones, which can become highly political and isolated, divided by internal rivalries.

“I’m teased. Many people say that my favorite Japanese expression is hon. . . I encourage people to tell me exactly what they’re thinking, and they trust me enough to do that,” Johnson said.

To gain their trust, he moved to Japan to focus on reorganization. “I had to make sure I was very closely involved with the people who would be most affected. . . to be able to stand right there, give them very open, honest answers about how we came to these decisions.”

He adds that the Ministry of Economy, Trade and Industry (Meti), which closely monitors industry leaders, especially in sensitive areas, has been “part of the discussion” although “they never said do this or do that”. . .

Dealing with customers and other stakeholders was also an important part of the process, he says. “We have held the discussion very transparently with all interested parties, including some key customers – these relationships go back a long way and obviously the value of the company depends on them and our reputation also depends on how they feel about it.”

Johnson’s team spent more than a year in discussions with dozens of different companies and eventually settled on Japanese refiner Eneos. JSR completed the sale of its elastomers business in April with an enterprise value of 115 billion yen (US$845 million).

Despite many factors at play, Eneos wasn’t a difficult choice, Johnson says. “They ticked a lot of boxes – mostly because they would present the best opportunity for this business to thrive. They made our client much more comfortable, and Meti was much more comfortable with that scenario.” He adds, by the time the decision was finally made, “there was already consensus”.

“Obviously I’m not Japanese, but I appreciate the process of allowing people to engage and voice their concerns transparently, and it’s up to me to make a decision. But I never felt like ramming that thing down anyone’s throat,” he says.

Three questions for Eric Johnson

Who is your leadership hero?

As a hero, I think first of Nelson Mandela. He embodied the ideal that leadership is not about you, it is about the people you serve, and was literally willing to give his life for those people. This is really heroic.

What would you be if you weren’t a CEO?

The practical answer is that I would become an engineer. I like to learn how things work and try to improve them, but if I were to let my imagination run wild I’d say a national park ranger. I love hiking and the idea of ​​being able to work in and protect a natural environment is pretty cool.

What was the first leadership lesson you learned?

determination is important. But it must come at the end of the process, after enabling a real and open flow of information. Good news is always fun to hear, but it’s far more important to let bad news and criticism flow freely and quickly.

Being able to have such an open conversation about a very sensitive topic was made possible by a high level of trust among senior management and an effective governance structure. “It’s important that JSR’s leadership has been very progressive from the start and we take that very seriously. We make sure we have a very well-functioning board,” Johnson says.

Analysts covering the stock, such as SMBC Nikko’s Miyamoto Go, agree, citing four powerful and knowledgeable outside board members and a share price that has more than doubled from about 1,500 yen to about 3,500 yen since Johnson acquired the company Has .

Johnson emphasizes that JSR’s DNA contains the ability to “reinvent itself every two years” with the innovation cycle in the semiconductor industry, where there is intense pressure to constantly develop smaller chips. He emphasizes the need to be adaptable while being “comfortable, uncomfortable.”

When he starts talking about JSR’s new investments in quantum computing, the engineer in him comes out. “At the moment there is no business model for quantum. If someone asked me to justify these investments, I couldn’t do it. As with any exponential, you can find yourself on a flat part — but it’ll tip very quickly,” he says. “They can take problems that are unsolvable today in the field of materials science literally and optimize them and find new possibilities. This is an example of how we think.”

JSR’s Eric Johnson: ‘I encourage people to tell me exactly how they think’ Source link JSR’s Eric Johnson: ‘I encourage people to tell me exactly how they think’

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