2023 CEO's Message

Last year saw significant changes in economic and social assumptions, with signs of improvement in economic activity, including the normalization of global supply chains and an increase in inbound demand, driven by infection control measures like COVID-19 vaccination and efforts to ensure continuity of life and business amidst the ongoing pandemic. Meanwhile, the ongoing conflict between Russia and Ukraine led to a rise in resource prices, which, along with a corresponding increase in the consumer price index and tighter monetary policies in various countries, triggered a chain reaction, resulting in heightened volatility across several macroeconomic indicators.

In the stock market, emerging IT stocks experienced significant declines, which negatively impacted the fundraising environment in both public and private markets, leading many investors to adopt a more cautious approach to startup investments compared to the previous year. On the other hand, according to JVCA, the total amount of funding for all startups in Japan in 2022 is expected to exceed 800 billion yen¹, and the cumulative amount of funding per startup and the number of participating shareholders are also increasing. At the same time, even unlisted companies are facing growing expectations to implement governance systems and achieve profit efficiency comparable to those of listed companies.

In this socio-economic climate, we at ROUTE06 plan to use this fiscal year to lay a foundation for stable growth in corporate value, focusing on establishing systems that will allow us to replicate and refine our unique strengths. We will strive to build an organizational culture that sincerely seeks to accumulate and improve knowledge gained from day-to-day operations, not only of software and various services for client companies, but also of various systems, including our own personnel system. We are committed to moving beyond the confines of a young startup to become a company that is trusted and valued by a broader range of stakeholders than ever before.

Market Trends Surrounding the Company

Examining industry trends around our company, it seems that many major corporations have prioritized digital transformation even more than in the previous year and continue to invest aggressively in IT, despite growing economic concerns. Real demand in the global economy remains strong, and many major Japanese companies are showing steady progress in sales and profits in their recent financial results. According to IDC Japan, the enterprise IT market in Japan is expected to grow to 11.998 trillion yen by 2023².

DX has also gone beyond a short-term boom and is now recognized as a term that includes not only the streamlining of existing operations through the use of digital technology, but also business model transformation. In DX projects promoted by traditional major companies, we are seeing more and more cases where they have moved from market research and As Is/To Be discussions to concrete "manufacturing" and realized continuous service improvement and business growth through agile product development. However, from a broader perspective, the shortage of skilled professionals capable of executing practical 'Monozukuri,' which is crucial for DX, is becoming increasingly severe each year, and the government has set up the "Basic Policy for the Digital Garden City Nation Concept (approved by the Cabinet on June 7, 2022)" to address this issue. The government has set a goal to develop 2.3 million 'digital promotion professionals,' including business architects, data scientists, engineers, and designers, by the end of FY2026³. Although currently highly dependent on external development partners and vendors, an increasing number of major companies will actively recruit software engineers, designers, and other human resources compared to the previous year, and will focus on building a promotion system with hybrid teams of internal and external personnel.

As for the various systems that form the foundation of DX, SaaS and packages from major global software vendors continue to boast a high market share and influence, but the change in demand for and acceptance of software services by major companies is creating more opportunities for start-ups. However, the demand for and acceptance of software services by large companies is changing, creating more opportunities for startups. In the enterprise space, we are seeing more and more companies selecting tools and vendors based on the balance between usability and cost, customizability, and the agility of the development team, while also taking into account name recognition and track record. With in-house digital specialists and experience of various failures and successes, the DX teams of major companies are demanding higher standards, and the speed of improvement and the overall level of service in terms of design, technology, and business are more important than ever before. The trend of more and more business opportunities being concentrated in companies that can attract "digital drivers" who are serious about manufacturing and produce high quality products and services is expected to accelerate in the future.

Guiding Principles for the Current Year

This month marks the start of a new fiscal year for our company, ROUTE06, and our fourth year in business. Last fiscal year, we achieved solid growth both in terms of revenue and organization. Starting with a case study of our parts procurement marketplace with Mitsubishi Corporation, we were able to announce the participation of a new shareholder through a Series A round of financing, and later the establishment and appointment of a new CTO. In addition, we have received a variety of new project introductions and inquiries in response to our publicity and recognition, and we have had many opportunities to be introduced to other departments, other projects, business partners, and affiliated companies by people from our client companies. It was a year in which we were able to realize that the manufacturing and service improvements that we have been honestly working on will lead to new opportunities. On the other hand, there were many challenges for both the company organization and the services we provide, and we experienced not a few lost opportunities due to the gap between the forecast of the recruitment plan and the actual results. While taking a sincere look at the current situation, we will work to resolve issues and promote growth for the entire company with the following guidelines so that we can provide more stable value to our stakeholders in the current fiscal year.

Manufacturing Culture

ROUTE06's corporate credo is "Be a disruptor" and we have been doing our best to help major companies achieve their digital transformation by leveraging the individuality and strengths of each team member since the early days of the company. While our members come from a variety of backgrounds and the industries and challenges of our clients are diverse, we believe that the common denominator of our organization is a culture of sincere commitment to practical "Monozukuri" that drives change, which is one of our great strengths. We have been committed to creating not only products and services for our clients, but also all kinds of products, services, and systems that emerge from our organization, from internal personnel systems to corporate-related workflows and systems (e.g., The Day One for new employees Box). In an era of constant change in the business environment and organizational structure of client companies in the DX domain, not limited to the enterprise, expectations for our comprehensive strength and agility in software services continue to rise, while the work styles and areas of expertise of individual employees and partners are also diversifying. In this environment, we have been concentrating on building the company since its early days. In such an environment, we believe that building on our efforts to design a remote-first system, which we have emphasized since the early days of the company, and to establish a company-wide workflow (company-wide use of GitHub) that incorporates the concept of distributed version control in software engineering, will contribute to the development of our customer service, human resource development, operational efficiency, and various other areas. We believe that these efforts will be the source of sustainable value creation and competitive advantage in a variety of areas, including customer service, human resources development, and operational efficiency. In addition to product development, this fiscal year we will focus on expanding the company-wide "Monozukuri" culture through the establishment of various systems and tools, such as our original target system (Company issues/CEO issues) and information sharing tool (Handbook).

Services and Software

To enable the vertical launch of digital businesses for major companies—a key theme in DX—ROUTE06 offers Professional Services that support practical agile development, along with foundational Platform Services that provide back-end systems and APIs. Our professional services offer comprehensive support, ranging from UX and operational design, UI design, and system design and implementation, to the growth phase, with in-house product managers, designers, and software engineers working as a cohesive team. We have been providing support from UX and operation design, UI design, system design and implementation, and the growth phase of the client's business. Among these services, we have been particularly appreciated by our clients for our quick operation design in the complex B2B domain, design services that include not only UI and UX but also creative elements such as logos, and our ability to make improvement proposals based on data visualization and analysis. This fiscal year, we will concentrate on expanding and enhancing our systems to elevate the quality of these services and accumulate knowledge that can be shared with our client companies. In the area of platform services, we have made the reinforcement of "Plain," our self-developed SaaS, a top-priority management issue, and have established a new Product Development Division directly under the CTO to further strengthen our engineering structure. In addition to expanding diverse and convenient functions for end users in the manufacturing and trading industries, Plain will focus on architectural design and API development to enhance front-end and design customization. Plain is a product that, like ERP, will be offered across a wide range of industries and operations in the future, so while placing importance on responding quickly to the apparent needs of client companies, it is most important to build up initiatives that will contribute to improving the medium- to long-term velocity of the internal product development team. We believe this will enable us to deliver high customer value in terms of price, quality, and speed.

Scalable Organization

In the last fiscal year, along with the Purpose Credo, we have been working to clearly state the guidelines for the work style that we recommend to our employees (Go root / Focus on the core, Connect anywhere / Remote first, 06-committers / Weave as a team). These differ slightly from the typical mission, vision, and values defined in corporate organizations, and, as of now, are not directly tied to goal-setting, personnel evaluations, or work rules; they are officially positioned as recommended guidelines. ROUTE06 emphasizes receptivity to the diverse backgrounds and lifestyles of the team in order to create a scalable organization with an eye on major trends such as industry structure, social culture, and so on. Rather than necessarily increasing the detailing and management of business rules, regulations, and standards, we will build an independent and scalable organizational culture through the clarification of guiding guidelines, transparent disclosure of discussions and decision-making processes, and consistency in output, such as specific systems and measures. In the current fiscal year, all divisions will formulate and improve various systems and measures related to the company's operations, one by one. In addition, with regard to information security, corporate governance, and financial/managerial accounting, we aim to exceed the standards of listed companies and major corporations, and will focus on strengthening our corporate structure and building efficient internal systems.

Based on the above guidelines, we will continue to do our best this year to become a more valuable company for our stakeholders.