The seeds of innovation are always within the company.

Dentsu Inc. CDC Creative Director Shinji Muto graciously accepted the invitation to this dialogue from President Co., Ltd. President Yoshiaki Nagasaka graciously accepted the invitation to this dialogue from Dentsu Inc. CDC Creative Director Shinji Muto. President Nagasaka, who interviewed top executives of renowned companies for many years during his tenure as Editor-in-Chief of President magazine and continues to maintain close ties with them, engaged in a wide-ranging exchange of views with Mr. Muto on challenges facing corporate organizations, necessary countermeasures, and the "Company Design" initiative being advanced by the Dentsu Inc.

President Co., Ltd. President Yoshiaki Nagasaka (left) and Dentsu Inc. CDC Creative Director Shinji Muto (right)

 

In an era where even large corporations face declining performance,
Toward an "inverted pyramid" organization that prioritizes the front lines

Muto: President Nagasaka, who deeply understands the evolution of Japanese companies, how do you perceive the current situation?

Nagasaka: Companies are living organisms, but today even the most excellent companies can fall ill. Technology evolves at breakneck speed, rendering once-leading skills obsolete overnight. Markets and consumer psychology constantly shift. Work-style reforms are being demanded, and productivity must increase. I believe every executive realizes that "the old ways won't cut it anymore."

"Boosting motivation and unlocking each individual's potential is essential for strengthening the company" (President Nagasaka)

Muto: I often speak with executives, and they all seem troubled. Lately, I'm frequently consulted about "people issues" – specifically employee motivation and recruitment – seeking fresh ideas from a creator's perspective.

Nagasaka: When the world changes, a company's ultimate asset is its people. Back when I was editor-in-chief, we positioned 'President' as a "human-focused magazine centered on people," so I've always considered people extremely important. Incidentally, I believe the difference in people's abilities is at most 1.5 to 2 times. However, motivation can be 10 times greater or even negative. Boosting motivation and unlocking each individual's potential is essential for strengthening a company.

Muto: I feel that "focusing on frontline employees" is especially crucial in today's era. It seems to me that all the answers lie within the company itself.

Nagasaka: Companies today might need to transform their organizational structure into an inverted pyramid. A triangle with frontline employees at the top and top management at the bottom. Unless we transform into a structure where opinions and wisdom from the frontlines trickle down or pour down from above, I don't think we'll find the new answers for this new era that lead to innovation. After all, the points of contact with customers are at the frontlines. Innovative businesses like Uber and Airbnb were born from a frontline perspective – "I can't get a taxi" or "I can't book a hotel."

Muto: Our recent interviews also revealed that companies driving innovation today are actively engaging with their frontline employees.

Nagasaka: Even major domestic trading companies are now creating mechanisms to gather opinions from diverse people. For example, they hold internal business idea contests where external judges decide on investments. We need to design systems, mechanisms, and incentives as a package, right?

The ability to translate and convey the company's philosophy
The ability to listen to frontline voices

Muto: Another common theme among the executives we interviewed was the importance of "philosophy." Why do we work? What does this company offer society, and how does it make people happy? They emphasized that without clearly defining and sharing this, you cannot build motivation among millennials, who form the core of frontline employees.

"You also need 'editing skills'—the ability to create value by selecting, discarding, and combining elements," (Muto)

Nagasaka: Our generation won't be motivated just by dangling incentives like results or targets (laughs). Recently, when we ran a "Human Potential" feature in President magazine, young people actually read it. I sense their interest in fundamental, philosophical questions like "Who am I?", "Why do I work?", and "Why must I live?" is deeper than we realize.

Muto: I believe our creative strength—which has been focused on devising ways to deliver product and service specifications and value to the world—can now help embody a company's philosophy and DNA.

Nagasaka: Years ago, when an automaker wanted to sell hybrid vehicles, the top executive at the time said, "Cars fall into two categories: environmentally good and environmentally bad. Our hybrids are environmentally good. Increasing environmentally good cars will significantly improve Japan's CO2 problem. Therefore, selling these benefits society, the company, and ourselves." I believe this kind of "translation ability" is increasingly demanded in our era. It is the era of diversity, after all.

Muto: On the other hand, if you try to receive all the voices of frontline employees from the top of the inverted pyramid, you also need "editing skills" – the ability to select, discard, and combine information to create value.

Nagasaka: If one person works 8 hours a day, just having 10 people above you means 80 hours' worth of information coming in. It's no longer a case of simply changing the organizational structure or creating new systems and calling it done – we've entered an era that requires considerable effort (laughs). Top management must think hard and desperately.

Key Insights Gained from This Dialogue

Through our conversation with President Nagasaka, we gained strong conviction in the hypothesis championed by the Dentsu Inc. Company Design Team: "The source of a company's originality lies in the 'on-the-ground capabilities of its employees.'"

Part #01 of this series is here. Part #02 is here. Part #03 is here.
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