What Can Dentsu Inc. Do for Startups? Discussing the Potential of Open Innovation with Dentsu Inc. Alumni

In recent years, collaborations between large corporations and startups have increased, aiming to develop new businesses and streamline existing operations. Dentsu Inc. Growth Design Unit (DGDU), which provides 360-degree business support services, also offers "CoNext" to accelerate such corporate-startup partnerships. DGDU itself operates as an internal venture, advancing its business by partnering with external companies.

What distinguishes an organizational structure relying solely on internal assets from a startup pursuing growth strategies through open innovation? We explore the necessity of open innovation through interviews with three former Dentsu Inc. employees now active outside the company.

From left: Keita Ito (Dentsu Inc. Growth Design Unit), Taiji Nanbo ( NORTH AND SOUTH ), Yusuke Okubo ( Global Mobility Service ), Atsushi Goto ( SHE ), Hideaki Haruta (Dentsu Inc. Solution Development Center, Dentsu Inc. Growth Design Unit)

The Key to Open Innovation Lies in "People"

Haruta: After leaving Dentsu Inc., you've all been active in startup companies. From a startup perspective, how do you perceive the necessity of open innovation?

Nambou: After leaving Dentsu Inc., I joined Mercari, where I handled marketing and corporate planning for nearly two years. I've now started a company focused on supporting ventures and startups through creativity. At Mercari, business collaborations with large corporations were commonplace. To accelerate business, crossovers between large corporations and startups are a natural progression.

Goto: I agree. The education startup I'm part of, SHE, is actively engaged in global open innovation. We were selected as the first Japanese startup finalist in the "Women's Initiative Award," an international business plan competition organized by Cartier and McKinsey & Company. However, during that process, I felt there were challenges in collaborating with large corporations for realistic business growth.

Startups struggle with shortages of all resources: people, goods, capital, and information. Rather than collaborations where large corporations dictate the direction and assume course corrections, we would greatly appreciate realistic partnerships where medium-to-long-term compensation structures are established, leveraging the human resources of large corporations to drive business forward.

Okubo: Global Mobility Service, where I work, is a company that has built its business model from the perspective of how to solve social issues. To advance business with economic rationality while solving social issues, relying solely on our own technology and human resources limits our potential. Building a sustainable business model requires cooperation with companies, local governments, individuals, and others. I believe that without embracing open innovation, new business models for the future simply won't take shape.

Haruta: Is it easier for a business to grow by collaborating with large organizations like corporations or local governments? Or is open innovation between startups also a possibility?

Nanbo: I believe the key factor is whether the pace aligns, regardless of whether it's a large corporation or a startup. In that regard, startups tend to be a better fit. That said, if there's business affinity, the leverage gained can outweigh the difference in pace, so I do see benefits in partnering with large corporations.

NORTH AND SOUTH Representative Director / Marketing Director: Taiji Nanbo

Goto: As Mr. Nanbo mentioned, I feel the assets and credibility large corporations possess are immense when scaling a business. Partnering with them to leverage these resources ultimately accelerates societal change. If the business affinity is high and a large-scale business can be scaled in the shortest possible time, then there is value in the partnership.

Okubo: We tend to view large corporations as a single "entity," but they actually have diverse departments and harbor a wide range of technologies and resources. Ideally, we should identify the specific strengths—whether in technology or people—and connect them with startups.

Goto: Ultimately, business moves forward through people. The key to future open innovation lies in how well we can match compatible individuals and put realistic technologies into action. It's not about companies saying, "Let's strategize together, let's do something new." What's important is connecting individuals with individuals.

Open innovation requires not just matching but also operational execution

Haruta: While partnering with large corporations to grow a business is possible, startups often lack the information to know whom to approach within those companies. DGDU provides the solution here. What potential do you see in DGDU?

Nambō: What's new about DGDU's newly launched collaboration support service "CoNext" is that it finds value in "matching." And it would be interesting if they could match startups with companies that ordinary businesses wouldn't even think to connect with.

Goto: Consulting firms and financial institutions may act as intermediaries, but they primarily focus on matching executives. The actual drivers of business advancement are middle managers on the front lines. If the passion of startups doesn't resonate with those in those positions, the match won't succeed.

I feel Dentsu Inc. has a distinct advantage in terms of having extensive connections and the discernment to select the right people. I believe "CoNext" also holds significant potential.

Jun Goto, Executive Officer / CMO & COO, SHE

Ito: So it's not just about matching companies; operations are crucial too. Even if executives agree to collaborate, the partnership will fail if the people actually running the business don't share the same perspective. At DGDU, we examine both large corporations' and startups' businesses, including cash flow. Based on that, we support aligning their perspectives.

Nambō: An advertising agency's strengths lie in execution capability and proper operations. These skills come only with experience, making them knowledge often lacking in startups. That's where Dentsu Inc.'s advantage lies. However, the Dentsu Inc. organization is too large; outsiders likely didn't know where to access it. Having DGDU as an entry point should make it easier for startups to engage with Dentsu Inc.

Goto: Stepping back from Dentsu Inc., I realize how fortunate I was to be surrounded by such talented seniors and juniors. I hear DGDU has a performance-based compensation structure, so having professional marketers and creators support startups within that framework is a significant strength.

Okubo: Even during my time there, I heard that "Dentsu Inc.'s strength lies in its network and connections." That said, in terms of the sheer "number" of contacts, many other companies have comparable client bases. So what sets Dentsu Inc. apart? I believe it's the "quality" of those networks. Beyond having a broad network, the relationships with those contacts are close. By valuing that "quality" and connecting large corporations with startups within these closer relationships, I believe the potential for business opportunities increases significantly.

Global Mobility Service CEO Office Director Yusuke Okubo

The Significance of Advertising Agency Dentsu Inc. Engaging in Business Consulting

Ito: Dentsu Inc. is an advertising company, but through DGDU, it's engaging in business consulting beyond that framework. What significance do you see in Dentsu Inc. supporting startups?

Goto: We understand that Dentsu Inc.'s fundamental role is to contribute to expanding corporate profits. However, many people likely aren't aware that Dentsu Inc. has a proven track record of growing businesses, including in non-advertising areas. Highlighting that fact should encourage companies to seek our consultation, right?

Nambō: That said, the number of Dentsu Inc. employees actually committed to business growth isn't that large, is it? We need credible actions, service lines and staff capable of engaging with businesses, and we need to showcase those cases.

Goto: What does commitment to the business mean? It means growing the business together, including areas beyond those directly profitable for Dentsu Inc. Business operations aren't just about vision setting or branding. When partnering with startups, I believe it's necessary to realistically consider the entire spectrum of business resource management – including customer service, sales, customer database management, talent acquisition, and even something like fixing a toilet.

Ito: Startups inherently face constant risk of resource depletion—people, money, information—due to their fluid nature. Meanwhile, large corporations see their existing businesses shrink, making new ventures essential for survival. DGDU goes beyond mere matching; we support business creation and growth. What are your thoughts on this?

Keita Ito, Project Leader, Dentsu Inc. Growth Design Unit

Goto: Your strength is accompanying startups through business growth to the very end, regardless of the means. Few other companies can do that, so it's a competitive advantage and there's high demand. With performance-based revenue sharing, even startups with limited funds can easily request your services, right?

Okubo: Using external organizations to optimize teams based on a startup's phase and funding capacity should lower the barrier to engagement. What DGDU is currently pursuing is a performance-based revenue share model focused on the next five years, right? It keeps initial costs low while offering significant returns, making it a model well-suited to the growth trajectories startups envision.

Ito: At DGDU, we're experimenting with a guild system that assigns the optimal personnel for each project, regardless of whether they're internal or external. Dentsu Inc. was a company specialized in the market communications domain. From the perspective of the startups requesting services, there might be a concern that Dentsu Inc. lacks a strong image of actually launching businesses and handling finance. This could lead to uncertainty about what business owners really seek from investors during fundraising.

Therefore, we bring in advisors with hands-on business owner experience to incorporate their insights into our support. On top of that, we optimally allocate functional expertise based on the phase and challenges of the startups or large corporations we're working with. Adopting a guild system broadens our own expertise and allows us to provide consulting that aligns with current trends.

Leveraging Dentsu Inc. alumni expertise to expand the value of open innovation

Haruta: We often see examples where former employees and their former companies successfully network. While you are Dentsu Inc. alumni, do you think you can build a network between Dentsu Inc. and its alumni?

Dentsu Inc. Solution Development Center, Dentsu Inc. Growth Design Unit, Hideaki Haruta

Nambō: I feel Dentsu Inc. hasn't yet cultivated a culture of connecting with its alumni. However, with the existence of the DGDU department, I expect networking will accelerate going forward.

Goto: At SHE, Recruit alumni make up 60% of the staff. We sometimes get work-related inquiries through the alumni network, and talent exchange for side gigs is also active. If DGDU takes the lead and promotes collaborations with external companies, wouldn't that also help build networks with alumni?

Ito: DGDU's primary value is growing client businesses. Beyond that, I believe its value lies in being a platform where information flows freely across creative, marketing, business development, and other areas, completely free of sectionalism.

While we have members with diverse functional expertise, we will inevitably encounter areas beyond our current knowledge. By incorporating insights from Dentsu Inc. alumni active across broad fields, we can expand our skill sets and enhance our value proposition. If we can form teams with these alumni, who have accumulated experience and knowledge, we can maximize value for our clients. This also represents an exciting future direction for Dentsu Inc. Is there potential for you to collaborate with DGDU?

Okubo: This ties back to what we discussed earlier. Dentsu Inc. possesses numerous high-quality networks. Even with open innovation, the goal isn't merely meeting people; true innovation occurs only when it drives societal change. From that perspective, I also have high expectations for Dentsu Inc.'s execution capabilities, as mentioned earlier, and I hope we can find opportunities to collaborate.

Nambō: Dentsu Inc.'s greatest strength is its creativity. Proudly proclaiming creativity as a core strength is unique to the advertising industry. That's precisely why I believe both current employees and alumni possess special value and distinctiveness. It would be great to build connections in that area.

Multiplying creativity could generate diverse ideas not only for business but for all aspects of corporate management, couldn't it?

Ito: What are your thoughts on the future direction of DGDU?

Goto: I think the service content and the worldview it aims for are impeccable. The next step is how to execute growth design. I understand DGDU has the strength to flexibly assign excellent colleagues who fit the job functions within Dentsu Inc., which has diverse talent. I think it's important to solidify that foundation and refine the operations.

Okubo: Many startups out there are looking to services like DGDU. On the other hand, Dentsu Inc. can sometimes be constrained by its past success in media business models. I think it would be good to highlight the external expectations for DGDU and drive change within Dentsu Inc.

Nambō: Deepening the network with Dentsu Inc. alumni could also enhance the value of DGDU and "CoNext." We will build a cooperative framework, and we sincerely hope Dentsu Inc. will forge strong bonds with its alumni as well.

Haruta: This discussion with all of you has provided excellent insights into what startups expect from Dentsu Inc. and what new value Dentsu Inc. can offer large corporations. I also hope we can further deepen our relationships with everyone in this field. Thank you all for today.