Today, companies are required to reduce costs, enhance competitiveness, reform work styles, and fundamentally rethink their traditional business models through DX initiatives.
As Japan's largest comprehensive digital firm, Dentsu Digital Inc. has been pioneering the industry by continuously conducting the "Survey on Digital Transformation in Japanese Companies" (abbreviated as the DX Survey) since 2017. The latest edition was released in April 2023. Amid increasing instability in the corporate environment due to COVID-19 and shifting social conditions, what is necessary to achieve sustainable growth? We spoke with Kazutaka Kobashi of Dentsu Digital about the "Future Approach to DX" revealed by this survey. This interview is presented in two parts.
To Capture the New Trends in DX Promotion
Q. First, could you tell us about your career and what kind of work you are currently doing?
Kobashi: I serve as Group Manager in the Marketing Innovation Design Division of the Business Transformation (BX) Department. Our division provides consulting services to support customer-centric organizations. This includes introducing agile marketing, fostering cross-functional collaboration across multiple teams, establishing governance frameworks, and implementing CRM systems. Our goal is to drive the transformation from "product-centric" marketing to "service-centric" marketing in the digital age.
Before transferring to my current division, I spent over 15 years in the Marketing Solutions domain. My career backbone stems from extensive experience in strategic planning for advertising campaigns, branding, and digital marketing.
Kazutaka Kobashi, Dentsu Digital Inc.
Q. Could you elaborate on the background and methodology behind the DX survey?
Kobashi: Currently, numerous entities—including government agencies, corporations, and organizations—are conducting DX surveys, uncovering various topics. Among these, I noticed a surprisingly frequent analysis suggesting, "While the importance of DX is growing and more companies are pursuing it, tangible results remain elusive." I wondered: Is that really the case? There was no doubt that the COVID-19 pandemic accelerated DX initiatives, leading me to think, "Perhaps new movements are emerging within DX." We conducted this survey based on that hypothesis.
This marks the sixth year of our DX survey, yet quantitative research alone cannot capture everything. We believe that to grasp new trends, we must hear the unfiltered voices of those actually driving DX. Therefore, this year we also interviewed individuals from companies recognized as DX leaders. As we'll detail later, these interviews confirmed that DX-leading companies possess numerous compelling reasons for their reputation.
What the Trend in "DX Adoption Rates" Reveals
Q. The survey release emphasized that "84% of companies have started DX." What can we infer from this result?
Kobashi: In the 2019 survey, the DX adoption rate was 70%. It has since grown to 84%. However, the increase since 2021 is only 3%, showing a slowing trend and indicating we are approaching a ceiling. This result suggests that after the pandemic, "DX has become the norm for Japanese companies, and we are now entering a phase where its substance (quality) will be scrutinized."
Kobashi: So, what kind of substance (quality) is now required? When we categorized DX outcomes by type and identified areas with high growth rates since 2020, we found that alongside traditional improvement areas like "business process/system enhancement," the next highest growth rates were in outcome areas such as "strengthening cross-departmental collaboration," "organizational development/restructuring aligned with digital strategy," "Fostering and promoting an innovation culture," and "Human resource development, education, and recruitment to enhance digital skills." These areas now occupy the next highest growth rates, defining the characteristics of 2022. In other words, regarding the quality of DX, I believe the major watershed will be whether companies can move beyond the traditional "business improvement" domain and successfully enter the "company-wide foundation" domain encompassing organization, corporate culture, and human resources.
Q. The data certainly suggests Japanese companies' DX is transitioning to a new phase. Conversely, why was DX progressing so slowly before the pandemic?
Kobashi: Looking at the survey data, before the pandemic, bottlenecks seemed to be "investment costs" and "lack of digital/technology skills and talent." However, the pandemic forced improvements in "business processes/systems," resolving those bottlenecks. Consequently, we are now shifting toward transforming more fundamental aspects.
A mid-to-long-term mindset for spreading transformation from one department to the entire company
Q. You mentioned interviewing leading DX companies earlier. What characteristics emerged from those interviews?
Kobashi: We made various discoveries, but overall, I feel the defining characteristic of these leading DX companies is that they "comprehensively build a strategy encompassing all necessary DX elements and, adhering to that strategy, steadily advance toward company-wide transformation with a mid-to-long-term perspective, taking steps in phases." For example, one memorable interview highlighted that "the first two years (2019-2020) focused on instilling a new mindset within the newly established DX promotion department. The next two years (2021-2022) expanded this to the entire IT department. For the following two years (2023-2024), they are now working to roll it out company-wide—meaning they are thoroughly permeating DX throughout every organization and layer, from top to bottom." It is precisely because they have been advancing DX steadily and with a backward-looking perspective, considering the next five to ten years from the very start, that they are now recognized as a leading DX company.
Q. The "8 Key Success Factors (KSFs) for Creating DX Outcomes and Sustained Growth" presented in this DX survey are also key points to focus on. Were these "8 KSFs" also identified through interviews?
Kobashi: They were derived by comprehensively analyzing the results accumulated over the past six years from quantitative surveys and the content of this interview. Companies not seeing results from DX scored around 20-30% on each KSF, while those seeing results scored around 80%. There was indeed a significant gap . I'd like to discuss the "8 KSFs" in more detail next time .
DX extends beyond mere operational efficiency, impacting organizational restructuring and culture development. The pandemic has acted as a tailwind, propelling Japanese companies' DX into its next phase. In the upcoming second part, we will delve deeper into the common initiatives of "companies achieving DX results" and the essence of driving DX forward.
After joining Dentsu Inc., I was assigned to the sales division and handled media operations. Since 2008, as a Strategic Planner, I have driven strategic planning in advertising, branding, and digital marketing for clients across diverse industries. Following my secondment to Dentsu Digital Inc. in 2022, I currently engage in consulting work in the BX/CX/DX domains. Since 2020, I have served as a Public Relations Advisor for Shiojiri City, Nagano Prefecture.
