UX: The Cornerstone of Business Strategy – Learning from the Latest Developments in Europe and the US: DSquad Roundtable Discussion (Part 2)

Continuing from last time, we spoke with members of the task force "DSquad" (D-Squad), which supports corporate innovation: Naoki Mori of Dentsu Inc., Yasuyuki Hayashi of Dentsu International Information Services (ISID), Brandon Hill of btrax, Inc., and Yuichi Inoto of Infobahn. They shared their thoughts on service design and user experience (UX), which are gaining increasing attention, and their aspirations for DSquad.

From left: Brandon Hill (Btrax), Yuichi Inoto (Infobahn), Naoki Mori (Dentsu Inc.), Yasuyuki Hayashi (ISID)

 

How to Understand and Incorporate UX

――First off, how should we understand UX and how should we incorporate it?

Ito: When asked what UX actually is, I explain it simply, even if it might be slightly misunderstood: "Why not think of it as similar to what used to be called 'branding'?" People say, "Spending millions or tens of millions on UX design is unthinkable," but didn't Japanese companies once spend hundreds of millions annually on branding? That wasn't just for short-term profits; it was about building solid long-term corporate value.

Robert Fabricant, former Vice President of Creative at Frog Design, pointed out that branding and UX share similar ways of thinking. As technology evolves, channels become more complex, and contact points multiply, "design" now encompasses not just aesthetics but corporate value and management itself. Broadly defined design is increasingly taking on the role that branding once aimed to fulfill.

Mori: As is also the founding principle of DSquad, the background to user experiences and touchpoints becoming significantly more complex and widespread is the IoT-ification of everything. That's precisely why the service itself directly connects to branding.

Brandon: Especially with Mr. Hayashi from ISID here, I really want to talk about UX in Japan. There are way too many security elements—like confirmation pages for agreeing to terms and conditions, known in English as "load blocks"—that hinder a pleasant user experience. It's a bit excessive.

Silicon Valley startups often operate in legal gray areas. They gather users, succeed, profit, and then push to change the laws themselves – Google, Airbnb, Uber, all of them. They attack, attack, and drive innovation. Japan might not be able to go that far, but unless you push that hard, you might not be able to create anything new.

Mori: While legally required compliance is unavoidable in Japan, it seems some industries and companies have developed a habit of over-compliance. But since eliminating risk entirely is impossible anyway, greater understanding of UX benefits could drive improvements. As profit-seeking businesses, improving UX should be a rational decision that boosts competitiveness and reduces costs.

Itou: In Europe and the US, the public sector is leading the charge, actively improving and adopting UX design and service design. For example, they outsource entire service design projects, like digitizing job centers (like Hello Work) to create smoother service experiences. As a result, they can reduce staff numbers and infrastructure budgets, so even if they spend money on design and system development, it pays off in the long term.

If design is increasingly viewed from a management perspective, eliminating unnecessary elements and redirecting funds to essential areas may become even more drastic.

Brandon: That's a crucial point. While we often focus solely on profitability, the perspective of how much we can reduce costs is extremely important.

In San Francisco, startups within the city are actively collaborating and proposing ideas to the city government. It's like a union. They're implementing things like car-sharing or parking meters with time-based pricing that adjusts for events. Naturally, designers are part of these teams.

Ito: Last year, I visited about three service design companies in Scandinavia. In two of them, many of the designers were actually seconded from government agencies. People with degrees in service design were hired from ministries like the Ministry of Employment, the Ministry of Education, and the Ministry of Labor. Last year, NYC.gov, the New York City website that won awards in service design and various other design categories, represents the overall service design for the city's entire platform, including its official site. With service design principles so deeply embedded in the public sector, it's only natural that companies prioritize it too.

――Are there any examples of sophisticated UX you're paying attention to?

Mori: I often talk about Philips' LED bulb, Hue, in my lectures. It lets you enjoy variations in color and brightness, but the app's UX is well-designed, and the website is easy to understand. Traditionally, light bulbs were chosen based on price, color, and longevity. Philips innovated by proposing a new lifestyle experience delivered by the bulb. They transformed a simple light bulb into an IoT device, exponentially expanding the points of interaction between the bulb and the user, and skillfully channeled all of this into a cohesive brand experience.

Uber and Airbnb, which have already been mentioned, are also prime examples of innovation accompanied by outstanding service design.

Ito: We're shifting from an era centered on products to one centered on services. In the product-centric era, users paid for finished goods, exchanging value equivalently. But services only truly come together when users engage through collaboration or co-creation. Even Uber's business model is structured so both drivers and users continuously benefit.

Brandon: I believe more brands and companies like this will emerge. Like Tesla in the automotive sector, they become game-changers that rewrite the rules. For those who drive it not because it's an EV, but because it delivers an unprecedented user experience, Tesla is irreplaceable. The very concept of a car has changed.

Ito: Tesla might have the basic performance of a car, but it's not in the automotive industry; it's a new transportation platform. To be self-critical, if you confine yourself to your own business domain, you can't win.

Brandon: Automakers sometimes point out that Tesla's performance as a car isn't that high. But isn't that very statement indicative of their disconnect with users?

Ito: In the innovation case study for Alamo Rent A Car handled by the Doblin Group, an innovation firm, they thoroughly identified the needs of families renting cars for leisure. This included improving website usability, signage, providing space to organize luggage, and setting up kids' play areas where children could play while their parents handled paperwork. Rental car companies often view their touchpoints as just booking and dispatching vehicles... but from the user's perspective, there are many experiences: comparing rental companies, searching for airport shuttle buses to the rental office, worrying about kids wandering around while paperwork is being processed. Optimizing these user-centric experiences is just as important as, and sometimes even more important than, the actual act of renting a car.

By thinking beyond our traditional business boundaries, exploring areas where we can discover new experiences or expand into underdeveloped spaces, we open up possibilities. With digital evolution and IoT proliferation, we might invent entirely new methods using data.

Mori: Regarding creating entirely new industries, robots might unexpectedly have the power to create markets in surprising areas. If power suits for caregiving become affordable enough to buy readily, they could become widespread. After all, Japan was the one that popularized industrial robots on manufacturing lines.

Itou: Humanoid robots are starting to be used in preventive healthcare. For people who face barriers in communicating with others, like those with autism or advanced dementia, or for the elderly, it seems they find it easier to open up to simple interactions with these robots—whose design transcends age, gender, or identity. Opportunities exist in this domain, distinct from advanced medical procedures. It's crucial not to focus solely on technology, but to explore what is truly needed.

I believe the three essential elements for innovation are feasibility (technical viability), viability (economic viability), and desirability (user desire). Flexibly considering these elements is what gives rise to ideas like Tesla's.

Brandon: As this evolves, it seems technology companies will become competitors for every industry in the future.

Hayashi: It will be interesting to see what happens to the "quality" Japan has always prided itself on. The very definition of quality might change.

 

Supporting Japanese innovation step by step

――So, what value can DSquad provide to Japanese companies?

Brandon: We want to enlighten Japanese companies—that's Beatrix's primary goal in joining DSquad. Newly created value can never exceed the value of the company making the decision. No matter how good a design firm's proposal is, if it gets rejected, that's the end of it.

Ito: In Japan, there's a unique situation: companies want to innovate, but they must navigate distinctive decision-making processes, and multiple stakeholders and departments get involved, making it difficult to move forward. I have high hopes that having Dentsu Inc. lead will allow us to guide client companies effectively while considering these complexities.

Mori: Decisions like investing in a San Francisco company inevitably face hurdles. But if clients experience a competitive boost through an initial success, the situation could shift dramatically, allowing us to move forward. Dentsu Inc. aims to serve as that buffer.

Hayashi: When incorporating UX and UI, it's unrealistic to start by completely overhauling everything from servers onward. We'll likely proceed step by step. Ultimately, to provide scalable services to many consumers, we do need to properly establish the IT infrastructure.

Mori: Starting with design actually offers a broad entry point. Since making a sudden IT investment is difficult, while keeping the business goal in sight, I want to propose starting by changing the design. If we can take that first step effectively, then we can discuss development investments, like how the infrastructure needs to be built next. That's where having members like ISID, who possess the technical skills to actually deliver solutions, comes into play.

We especially want executives to recognize the impact design and UX can have, ultimately leading to solving business problems.