dentsu Japan CEO Sano Speaks on Business Transformation and the Cutting Edge of BX

The "Xplorers" conference, exploring the forefront of business transformation, was held on Tuesday, August 27, 2024. This conference, where 100 leading transformation leaders gathered to present and deepen discussions on business transformation, new business creation, and DX, featured presentations by Mr. Suguru Sano, CEO of dentsu Japan and President and Representative Director, Executive Officer of Dentsu Inc., and Mr. Yuichi Toyoda, President of BX and dentsu Japan BX, and Executive Officer of Dentsu Inc., Ms. Yumiko Yasuda, Executive Officer of Dentsu Digital, Mr. Kazuomi Goto of Dentsu, and Mr. Shingo Yamahara. – BX, President of dentsu Japan BX, and Executive Officer of Dentsu Inc., Yuichi Toyoda; Executive Officer of Dentsu Digital Inc., Yumiko Yasuda; and Dentsu Inc. executives Kazuomi Goto and Shingo Yamahara took the stage.

Takeshi Sano, CEO, Speaks: What is the True IGP that Dentsu Japan Aims For?

The keynote session featured four CEOs discussing "The Initiatives and Direction Each Company Pursues for Transformation and Creation." The speakers were: Taro Fujie, President and Representative Executive Officer of Ajinomoto; Kei Urushi, Director, President and Representative Executive Officer, and CEO of Mitsubishi Electric; Tatsu Nakajima, Executive President and Group CEO of Sumitomo Mitsui Financial Group; and Takeshi Sano, CEO of dentsu Japan and President and Representative Executive Officer of Dentsu Inc.

dentsu Japan, playing a crucial role globally

Mr. Sano began by introducing the Dentsu Group's purpose: "an invitation to the never before." He stated, "This is the purpose for the entire Dentsu Group, including our global operations. It serves as our shared message that all members of the group multiply diverse perspectives to contribute to the development of society and our corporate clients."


"Some may perceive Dentsu Inc. as a Japanese company, but the group operates globally across approximately 120 countries. Overseas revenue accounts for about 60% of the group's total gross profit." Within this global footprint, dentsu Japan, overseen by Sano, accounts for about 40% of the group. It is a business brand comprising approximately 150 domestic companies and around 23,000 employees. Specialized companies like Dentsu, Dentsu Digital Inc., DENTSU SOKEN INC., Septeni, and Cartal Holdings collaborate to provide solutions addressing challenges across diverse fields.

Dentsu Japan, considered a source of innovation and strength within the group, has declared its expansion beyond the advertising domain and broadened its business scope. Currently, its core business domains are "Marketing (advertising and CRM)," "Transformation (business transformation and DX)," and "Contents (entertainment and sports)." Prefacing that "the boundaries between what is advertising and what is not are becoming increasingly blurred," it stated that revenue from outside the advertising domain now accounts for 40% of its total.

"The Blooming of Diversity" is Key to Dentsu Japan's Transformation

Regarding the main theme of "driving transformation," Sano emphasized that a crucial management perspective is recognizing "people" as capital. "We have been pursuing human capital management long before it became a widely discussed concept. For dentsu Japan, which possesses few factories or products, valuing 'people' as capital has always been a constant priority." To further advance this human capital management, the greatest effort is focused on "blooming diversity" through corporate culture transformation.

"The maximization of the capabilities of our approximately 23,000 employees is the very source of our competitiveness. I believe that multiplying these capabilities, rather than simply adding them, unleashes tremendous power. Crucially, this multiplication must involve diverse capabilities, not uniform ones," he emphasized. Through the growth and unleashing of the capabilities of each diverse individual, and the multiplication of these efforts, the company aims to become an entity that drives the growth of client companies and injects vitality into society.

"That is the vision dentsu Japan pursues: 'The True Integrated Growth Partner,'" stated Sano.

He highlighted two key elements for achieving this: "DEI" and "Integrity." Led by Chief Diversity Officer Atsuko Kuchiba and Chief Branding/Culture Officer Yuko Yoshiwa, who assumed their roles in January 2024, this initiative is being advanced by the entire management team. "Proclaiming a good purpose is meaningless if people don't act on it. Taking action is more important than just stating the purpose. Regarding DEI, we are concretely advancing various activities to empower employees to take action," he stated.

dentsu Japan's DEI Initiatives

Regarding "Integrity," he explained, "I understand integrity as the inherent nobility and ethical sense within each individual, demonstrated through actions grounded in sound knowledge and imagination. Our ability to freely and vigorously exercise our capabilities fundamentally depends on the integrity of each person. Naturally, I myself, along with our employees, discuss and reflect on our own integrity. We are promoting the internalization of integrity through the establishment of various guidelines and 17 specific measures."

dentsu Japan's Integrity Initiatives

Summary of Cultural Transformation and dentsu Japan's Vision

During the subsequent discussion, when questions arose about revitalizing the Japanese economy and what is needed for global competitiveness, he noted that while Japanese talent may be individually capable, they sometimes struggle to win as a team compared to global talent. To unleash individual abilities and generate powerful teamwork, he emphasized the importance of leadership and a culture that enables people with a spirit of challenge to share a common vision and maximize their collective strength as a team.

The various companies within dentsu Japan are beginning to receive high recognition in various corporate rankings based on external surveys. "However, we are still only halfway there. One of my favorite sayings is, 'If you want to go fast, go alone. If you want to go far, go together.' Together with the diverse members of dentsu Japan, I want to continue evolving as a partner for transformation for society and for all of you (the audience)," he concluded his presentation with renewed determination.

※OpenWork " Best Companies to Work For 2024 " Dentsu Inc. 3rd place, OpenWork "Companies with Improved Growth Environment Evaluation Chosen by Those in Their 20s" Dentsu Inc. 3rd place, OpenWork "Japanese Major Companies with Excellent Teamwork Ranked by New Graduates" Dentsu Inc. ranked 4th, OpenWork " Companies Recommended by Young Employees Who Joined as New Graduates " DENTSU SOKEN INC. ranked 1st, OpenWork " Companies Evaluated by Managers " Dentsu Inc. ranked 3rd

The Driving Force and Passion Behind Sustained Transformation

Closing the conference was a presentation on BX by Dentsu Japan. Under the theme "The Driving Force and Passion Behind Sustained Transformation," it addressed the current state of challenges in corporate and business transformation and key terms crucial for change.

Driving Holistic Transformation

Yuuichi Toyoda, who oversees BX for the Dentsu Group, kicked things off. He discussed the overall framework of BX at Dentsu Japan, the "Holistic Transformation Model."

 
The diagram above represents the "Holistic Transformation Model," which defines the scope of BX at Dentsu Japan. Centering on purpose, it supports comprehensive transformation across all domains—from corporate foundations and organizational HR to business operations, sales, and marketing. These domains are not isolated; as the arrows in the diagram indicate, they are closely interconnected. "For example, driving business transformation may sometimes require changes to corporate culture or organizational HR. In other words, transformation in one area may not be achievable through that area alone. Dentsu Japan comprehensively and holistically addresses corporate and business transformation challenges and provides support," he stated.

Three unique strengths underpin dentsu Japan's BX approach to this "Holistic Transformation Model." The first is "Creativity." This refers to broad-based creativity applied throughout the entire transformation process: re-framing challenges from new perspectives, devising strategies unique to the company, and embedding these within the organization. The second is "The Power to Move Hearts and Change Behavior." People here encompass all stakeholders, including employees. Ultimately, people drive transformation. The third is "execution capability" – the strength to execute and accompany clients until results are achieved. These three elements form the core strengths.

The final element of the overall framework is a system enabling holistic (comprehensive and integrated) support. "For example, Dentsu Digital Inc. combines creativity with data; DENTSU SOKEN INC. offers system integration, consulting, and think tank functions; Ignition Point Inc. excels in new business creation... Seven companies with specialized expertise in the BXDX domain collaborate, forming the optimal team structure to accompany companies through their challenges," it was introduced.

The "Second-Round Challenges" Emerging on the Front Lines

Mr. Yamahara of Dentsu Inc., who supports transformation for various companies and businesses, discussed challenges emerging on the front lines of transformation, observed through direct dialogue with executives and Dentsu Inc.'s proprietary research. In short, he stated, "The second-round challenges of transformation are arriving."

"It's precisely the companies that have undergone various transformations that are experiencing these 'second-round challenges,'" Yamahara stated.

"For instance, many companies are now entering the 'second round' of business development," he explains. While two or three years ago, the focus was often on developing businesses as isolated outposts unrelated to the core business, now in this second round, the emphasis has shifted. Companies increasingly aim to develop "flagship businesses" adjacent to their core operations, leveraging their fundamental strengths, DNA, and untapped R&D potential. "However, developing robust new businesses in these adjacent areas is no easy task. Such ventures naturally require time, but within companies, the environment often changes after just a few years, frequently triggering a strong pull back toward the core business," Yamahara explains.

The perception of internal transformation within companies is also entering its second cycle. Dentsu Inc.'s proprietary survey, "The Second Employee Survey on Corporate Transformation (2024)," also yielded results supporting this challenge. The combined proportion of the "transformation promoters" and "transformation followers" – those actively supportive of change – is only about 30% of the total workforce. This represents a decrease from the first survey (2021). Instead, the survey found increases in the "confused about change group," the "status quo affirming group," and the "change is someone else's problem group." Reasons cited for not taking action include "management's change proposals haven't permeated" and "a vague sense of unease" stemming from the feeling that they are merely being forced to change. These results suggest that, entering this second phase, it is becoming more difficult to drive change that truly engages employees.

For companies entering this second phase of transformation, it is crucial to define the fundamental purpose: why achieve this transformation? What corporate vision are we pursuing? What value will we create for society? It is vital to articulate this through a clear, powerful transformation concept and a simple strategic scenario that resonates with many within the company and serves as a rallying point.

Next, the specific approaches used by dentsu Japan were introduced.

Supporting Companies' "Autonomous Transformation"

As a concrete solution approach, Mr. Yasuda, who is advancing DX-driven "ambidextrous management" support at Dentsu Digital Inc., spoke about their "unique program to foster autonomous transformation."

While DX is indispensable for corporate and business transformation, Yasuda noted, "Too often, it becomes 'forced transformation' where the means (How) – simply digitizing everything – becomes the end goal. Now, as second-wave challenges emerge, we need 'autonomous transformation' where every employee understands the Why and carries the What they should achieve in their hearts." The proprietary program to foster "Autonomous Transformation" consists of three components: "DX ARROW" for formulating transformation strategy, the "Will Being Program" for cultivating employee mindset, and "Business Translator Development" for enhancing data and business skills.

*Ambidextrous Management: A management theory emphasizing the importance of simultaneously achieving "continuous improvement in core businesses" and "realistic action toward new ventures." Proposed by Professor Charles A. O'Reilly of Stanford Graduate School of Business and Professor Emeritus Michael L. Tushman of Harvard Business School.

"DX ARROW" is a framework that consolidates three elements—Key Issues, Key Success Factors (KSFs), and Use Cases—to address complex challenges in transformation. It is designed as a co-creation program where companies can independently develop solutions aligned with their specific issues. "Here's an example from our support for a major manufacturing company. The highly challenging new business development project faced intractable issues: scattered key issues, too many decision-makers causing delays, and inconsistent enthusiasm for the project... In response, we aligned everyone's beliefs and perspectives before strategy development, ensuring shared direction and commitment. We then thoroughly discussed the sequence of services. This process enabled the creation of a strategy that resonated internally." Only after this alignment did discussions on how to utilize digital and data begin.


"As the company embodying the Dentsu Group's digital transformation, we will continue applying the lessons we've learned to support our clients' fundamental growth," he concluded.

Unique to Dentsu Japan: BX Support Through Creativity

Another solution perspective presented was "BX Support Through Creativity." Speaking on this is Kazuhito Goto of Dentsu Inc., who supports BX through creativity. "This isn't creativity as advertising expression," Goto began. "It's creativity as a driver that generates the 'power' and 'passion' for business transformation."

"Creativity's capabilities can be understood in various ways. What is its power in business transformation? One aspect is the 'power to visualize and concretize'," said Goto.

This "power to visualize and concretize" becomes the driving force and energy that accelerates business transformation. Modified lignin was introduced as a concrete example. Modified lignin is a new material developed from Japanese cedar, a tree unique to Japan, using chemical agents. It offers excellent workability, high heat resistance, and durability. Achieving properties equivalent to petroleum-based plastics, it is gaining attention as a bio-based material that can be processed into everything from electronic circuit boards to tennis shoes.

When visualizing "what kind of society can be realized" to promote the utilization of this modified lignin by engaging various stakeholders, the power of creativity was significantly demonstrated.

Before: We pondered whether there was a way to convey the benefits more intuitively.

After Visualized the sustainable society enabled by "modified lignin" in a single image.

"When things are visualized and made concrete like this, with higher resolution, people suddenly become directly involved," says Goto. "That becomes the driving force for transformation."

The case of the "Space Food Industry Co-creation Consortium." The approach taken in this project involving numerous stakeholders.
 

Visualizing a shared vision that everyone could aim for propelled the project forward in one fell swoop.

This exemplifies how genuine buy-in into the direction led to proactive member actions and successfully engaged those around them. Finally, Mr. Goto stated, "I believe the driving force of transformation isn't just top-down and one-sided. It progresses by cyclonically drawing in the passion of the various stakeholders involved. Creativity contributes to generating that driving force."

Finally

What is truly needed to sustain this passion? As survey results showing "change fatigue" indicate, it is no simple task. When discussing the most effective approach to boost dentsu Japan's passion, Mr. Goto emphasized: "A shared dream, a vision that resonates deeply, becomes the core of passion." (Mr. Goto). Regarding that vision, "I believe it's crucial that the vision explaining 'why we must change' is directly connected to the founding principles and DNA. Since how that manifests differs by company, I think carefully accompanying them through that process gradually increases employee passion," (Mr. Yamahara) stated.

"Indeed, surveys* show that about 95% of executives agree culture and passion are vital. But measuring that passion is tricky. That's where our 'Culture For Growth' solution comes in, providing a structured program," introduced Yamahara.

*Dentsu Inc. proprietary survey: "Survey on Corporate Culture Transformation Among Management and Strategic Planning Department Personnel (2024)"

Furthermore, "While transformation should certainly involve negating the present, it's equally important to identify and preserve the good aspects worth keeping. Discovering these strengths is something we excel at in advertising and marketing," stated Mr. Yasuda.

Finally, Mr. Toyoda emphasized, "In corporate and business transformation, attention often focuses on system infrastructure and reforming various systems. But equally important is moving people's hearts and changing their behavior." He concluded his presentation stating, "We aim to support this by combining the power to move people, cultivated as an advertising and marketing company, with the specialized expertise of each dentsu Japan company."

Having accompanied numerous corporate and business transformations, we've identified the "second-round challenges" that emerge. To tackle these increasingly complex issues, we combine the creativity honed in advertising and marketing—which captures people's hearts—with the expertise of our seven specialized companies to provide ongoing support. This presentation highlighted the unique BX (Brand Experience) approach of dentsu Japan, which values people and champions diversity in its management philosophy.

For more on Xplorers: https://xplorers.jp/
*The 2024 event has concluded.
 

Transformation - dentsu BX Introduction Page
https://www.dentsu.com/jp/jp/services/transformation