Breakthrough Thinking: Driving Transformation Across Companies and Industries [2]Breakthrough #2: What is New Business Transformation (BX)?
How does "Breakthrough Thinking"—which drives transformation across companies and entire industries—emerge, and what future does it bring? The original program "Breakthrough Thinking" delves into untold stories to uncover insights for tomorrow's business.
This time, we delve into the approach of Dentsu Group and Dream Incubator Inc., which formed a capital and business alliance this May to drive "Corporate and Social Transformation."
Moderated by Norihiko Sasaki (Principal, NewsPicks NewSchool). Guest MC: Akiyoshi Iriyama from Waseda Business School. Joining us are Dentsu Inc.'s Suguru Sano and Dream Incubator Inc.'s President and CEO Takayuki Miyake, exploring the potential for BX (Business Transformation) emerging from their partnership.
※This article is reprinted from NewsPicks.
What new value will emerge from this partnership?
Sasaki: In November 2020, an article published on NewsPicks became a hot topic.
Its title was "[Dentsu Inc.] We Are No Longer Just an Advertising Agency." It covered the breadth of Dentsu Inc.'s business domains and how it leverages them to contribute to corporate growth. What were your thoughts after reading this article, Mr. Iriyama?
Iriyama: I thought I understood that Dentsu Inc. wasn't just an advertising agency. However, reading the article made me realize anew that we are no longer in an era where business is compartmentalized into domains like advertising or marketing.
We must think about our client companies across every conceivable domain, and within that context, I sensed that Dentsu Inc. itself is also undergoing significant change.
Sasaki: I agree completely. Now, six months after that article, I'd like to hear today about what specific initiatives are currently underway. Sano, what are your thoughts on that article?
Sano: We are redefining our own domains—AX (Advertising Transformation), BX (Business Transformation), CX (Customer Experience Transformation), and DX (Digital Transformation)—to align with our clients' expanding domains.
Having it covered in that article provided a valuable opportunity for Dentsu Inc. employees to recognize this renewed focus as well.
Iriyama: I think DX is the only one generally understood. What do the other A through C stand for?
Sano: Simply put, AX means elevating the advertising world we've long been involved in. BX means transforming the company and its business itself. And CX means transforming and elevating the experience of our customers (consumers).
Sano: Consider the example of the "S-curve" of growth. When an innovation occurs and growth accelerates, but then slows down at a certain stage, it becomes necessary to generate another transformation—another innovation—to create the next curve.
We aim to support and accompany you through both this "transformation" and "growth."
Iriyama: In this diagram, the cyclical rotation of AX/CX/DX (the green section) represents 'growth'—meaning that the business keeps turning. However, relying solely on this will eventually hit a ceiling. That's where Dentsu Inc. steps in to support the 'transformation' (the blue section) of the entire business.
Sasaki: Today, to specifically discuss the BX aspect, we've invited Takayuki Miyake, President of Dream Incubator Inc., who just formed a capital and business alliance with the Dentsu Group this past May.
Mr. Miyake, could you briefly explain Dream Incubator Inc.'s business areas?
Miyake: Dream Incubator Inc. is a consulting firm, yet it's a rather unusual company in that we don't do orthodox consulting like operational improvements or cost reduction (laughs).
So what do we do? We call it "business production." We specialize in large corporations, committing ourselves to creating new businesses on a scale of 100 billion yen, 300 billion yen, or even 1 trillion yen.
When creating businesses at this scale, what's crucial isn't strategy itself, but the vision that precedes it. That is, ideas that transcend individual companies—like "society should be like this" or "we must transform the industry structure this way." To achieve this, we build alliances, advocate for policy and regulatory changes when necessary, and actively shape the industry itself.
For example, we worked with manufacturers and the Ministry of Economy, Trade and Industry to change systems and subsidy structures, ultimately spreading LED lighting—something once deemed impossible to popularize in Japan.
Sano: That's fascinating. Dentsu Inc.'s approach has traditionally been to work with individual companies, striving for the best within their specific contexts. So, the sheer scale of aiming to transform entire industries is truly intriguing.
On the other hand, we also define ourselves as an "Integrated Growth Partner," driven by the philosophy of improving society as a whole through corporate growth. This is precisely where we align with Dream Incubator Inc.
Miyake: Honestly, when the partnership with the Dentsu Group was finalized, there were many surprised reactions, especially outside the company. But actually working together, I've realized how closely aligned our cultures are in this "growth-oriented" mindset focused on top-line growth, compared to other companies that are all about improvement and refinement.
Sano: Our DNA is similar. We both possess that tenacity to see things through to the end. We've already had numerous meetings, and every time, we just can't stop talking—we could go on for hours (laughs).
Iriyama: It's like we're totally in love with each other, isn't it? Well, maybe that's just how it is when you're first starting to date (laughs).
How to Commercialize Initiatives Addressing Social Issues
Sasaki: So, what kind of value will emerge from the partnership between the Dentsu Group and Dream Incubator Inc.? This is precisely what I'm most eager to learn about today.
Sano: Dream Incubator Inc. has a very strong perspective focused on industry and society. In corporate terms, they're a company with exceptionally strong R&D capabilities.
On the other hand, we've been discovering opportunities and creating demand from the market and consumer perspective. We believe that the collision of these characteristics can lead to creating new value or even creating new markets/industries.
Iriyama: In management studies, there's something called Structural Hole Theory. This concept posits that the people and companies occupying the hubs between clusters are the ones who generate the most value.
Our partnership embodies this concept. We can become a hub bridging seeds (Dream Incubator Inc.) and needs (Dentsu Inc.) across Japan, aiming to create new value there.
Sano: Thank you for that brilliant explanation!
Miyake: Honestly, we're amazed at how many ideas keep coming from Dentsu Inc. after hearing our pitch. And hearing those ideas gives us new perspectives, making our vision evolve rapidly.
Iriyama: I believe value creation is innovation, and innovation is combination. Even with existing things, unexpected connections can spark new insights and ideas—something economist Joseph Schumpeter pointed out over 80 years ago.
Dream Incubator Inc. on the seed side and Dentsu Inc. on the demand side must each hold many concepts and insights the other hasn't yet recognized. I can't help but expect that going forward, we'll see a flood of ideas and "new words" we haven't even imagined yet.
Sasaki: By the way, will the two companies create the market themselves? Or will they partner with other companies?
Sano: Of course, we want to work with various companies. No market can be sustainable unless it becomes a viable business; otherwise, it just becomes a cost.
For instance, in areas like sustainability and decarbonization, the ideal is to create businesses and markets that truly become viable ventures, delighting both companies and consumers.
Iriyama: Addressing social issues is extremely important, but the challenge lies in how to monetize it.
Miyake: Exactly. Our ongoing theme is "creating mechanisms that continuously solve social issues."
We've actually been working on various initiatives, but the key point is how well we can create business models that recognize value previously overlooked and get people to pay for it.
One specific area we want to focus on going forward is business production that aligns with sustainability.
Topics like carbon sinks are relevant. While technologies like CCS (carbon capture and storage) exist, forests have a significant impact—specifically, replanting trees to increase CO2 absorption.
I want to work with Dentsu Inc. on how to monetize such initiatives, how to spread them throughout society, and how to turn them into viable businesses.
Iriyama: Hearing the specifics makes it sound really impressive.
Sasaki: It gives us some insight. By the way, while it might not be essential, what significance do you see in Japanese companies partnering together this time?
Sano: Well, since we're both Japanese-origin companies, we want to pursue this with a shared vision to bring happiness to Japanese companies, Japanese society, and Japanese consumers.
Miyake: I believe Japan possesses truly remarkable things, including its technology. Even with the COVID vaccine, while the decision-making process might be slow, once decided, things move at incredible speed. I feel the world should utilize Japanese companies more.
Iriyama: I believe another major transformation will occur in the next decade. Within a few years, the wave of digitalization will be joined by automated translation, potentially impacting Japan's service industries, which have traditionally been protected by language barriers.
Iriyama: In that context, the value that Japanese service industry players like Dentsu Inc. and Dream Incubator Inc. can offer lies in soft skills beyond language – passion, networks, and the ability to co-create ideas.
These are things that aren't easily overcome by digital means, and I expect both companies are strong in these areas.
Bringing Transformation Through "Visionary Power and Execution Power"
Sasaki: Finally, let's ask Sano and Miyake what kind of growth and transformation they want to bring about, in keywords. Sano, please go first.
Sano: Mine is "discontinuity." It's the "S-curve" growth I mentioned earlier. Japanese companies are often said to struggle with discontinuous growth, meaning innovation. I'm thinking about how we can help with that. By sustaining discontinuity, we can hopefully lead to sustainable growth.
Miyake: Mine is "South American-style soccer." You could also call it "the Pacific League batting style." I want to create a society where people can take bold actions—like shooting with full force over and over, or swinging the bat with everything they've got.
Japan is often said to struggle with challenges that break the mold. I want to build a society where everyone can challenge themselves wholeheartedly, again and again, and promote BX—business creation—that lies beyond those challenges.
Iriyama: What I sense from this pairing of companies boils down to "imagination and execution." Ideas that might sound like wild fantasies are precisely what Japan lacks most today.
Concepts begin with imagination and dreams. But what's absolutely essential beyond that is the power to realize and execute them. Many companies have imagination but run out of steam when it comes to execution, right?
I'm excited to see what fascinating things these two companies, both possessing this execution power, will create together going forward.
Sasaki: That's right. I look forward to hearing about the progress of various projects as they unfold. Today, we heard some fascinating insights about BX. Thank you all for joining us today.
Watch the program here.
Learn more about Dentsu Inc.'s business transformation here.
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Author
Sano Suguru
dentsu Japan CEO / President and Representative Director, Dentsu Inc.
After joining Dentsu Inc., spent many years in the sales division handling client business. Appointed as Dentsu Inc. Executive Officer in January 2021. From January 2022, served as Dentsu Inc. Executive Officer (Business Production Division Head) and Dentsu Group Dentsu Japan Network (now dentsu Japan) Executive Officer (BX/DX Consulting & Growth Officer Division Head). From January 2023, in addition to overseeing domestic operations (dentsu Japan and Dentsu Inc.), concurrently served as Group Executive Management at Dentsu Group and CEO of Global Business Transformation (BX). From 2024, assumed the role of CEO of dentsu Japan and Representative Director, President and CEO of Dentsu Inc.
