Leveraging "right-brain talent" is key to further enhancing corporate functions.

In this article, Katsuhiko Fukuda of Dentsu Consulting Inc., who has long supported group organizational reforms and functional reorganizations at various companies, reviews trends in group organizational restructuring and explains the importance of 'right-brain talent' in the future advancement of corporate functions.

<TABLE of Contents>

▼Shift in Trends for Group Organizational Restructuring

▼Trends in Corporate Function Efficiency and Advancement

▼Considering Corporate Function Efficiency and Advancement Using the Dentsu Group as an Example

▼Utilizing "Right-Brain Talents" to Further Advance Corporate Functions

▼Conclusion: Right-Brain Talents Are Especially Needed in Corporate Departments

Trends in Group Organizational Restructuring

Trends in group organizational restructuring have evolved over time, influenced by economic conditions, technological trends, and domestic/international political dynamics.

Comparing trends from 20 years ago, 10 years ago, and recent developments reveals distinct underlying contexts and objectives.

The Koizumi administration's structural reform agenda was driven by accelerating economic globalization and prolonged financial instability following the bubble economy collapse. Deregulation in the 2000s was one of its symbolic policies. As epitomized by the slogan "from government to private sector," neoliberal economic policies were adopted, aiming to maximize private-sector vitality alongside a smaller government.

Companies pursued restructuring measures to address accumulated overinvestment and operational inefficiencies, streamlining non-core businesses and functional subsidiaries. More firms actively adopted group reorganization and associated M&A, including subsidiary consolidation or spin-offs, business carve-outs followed by absorption into separate companies or new company formation, and business sales to other companies.

Furthermore, the widespread adoption of the Internet spurred the rapid growth of so-called "IT-related" startups and became an opportunity for new management techniques led by a new generation of executives to become commonplace. Their growth potential and management style, focused on profitability and swift decision-making, socially legitimized investment in and withdrawal from businesses, as well as corporate acquisitions and divestitures, as "natural means."

Simultaneously, this fostered a societal atmosphere accepting "surgical measures" – previously considered taboo – to dissect and restructure bloated organizations.

The 2008 Lehman Shock rapidly cooled all markets, both domestic and international. Global credit contraction tightened lending to businesses and households. Financial institutions, struggling with non-performing loans, adopted a strict stance toward their corporate borrowers.

Manufacturing industries heavily dependent on exports, such as automobiles, electronics, and precision equipment, were particularly hard hit by the sharp decline in demand from their major export markets in the US and Europe. They were forced to implement fundamental cost reductions involving large-scale production cuts and workforce reductions, along with the efficient allocation of management resources.

Furthermore, the 2011 Great East Japan Earthquake continues to leave deep scars on overall corporate activities to this day, due to the prolonged recovery process and irreversible changes in energy policy.

Companies that had already been operating in overseas markets for a considerable time responded to the rapid changes in the market environment by reviewing their local sales channels and production bases. This led to the consolidation of regional holding companies and subsidiaries, as well as a reevaluation of their management structures in each region.

Naturally, significantly overhauling organizations that had been nurtured locally for a long time meant changing group governance, and companies promoting "inward-looking transformation" to strengthen the headquarters' centripetal force became prominent.

"Defensive restructuring," aimed at strengthening financial health and streamlining operations, further accelerated the divestment of non-core businesses and the concentrated allocation of management resources to core operations. Competition among companies seeking to survive in mature markets fueled a boom in the M&A market.

To ensure accountability to shareholders regarding the strategic intent and progress of M&A investments, which involve significant capital, companies simplified and reorganized complex group structures. Transitioning to a holding company structure was a frequently observed means to achieve this.

The impact of the novel coronavirus had a profound effect on people's lives and daily routines. The extreme restrictions imposed on consumers and workers dealt a devastating blow to all corporate activities.

The previously office-centric work style was forcibly reevaluated, and remote work rapidly spread across all corporate activities. Concurrently, the digital shift in corporate activities accelerated dramatically: DX (digital transformation) investments sped up, crisis management systems and security were strengthened, data utilization increased, and IT organizations were restructured.

As DX progressed across all corporate activities, the importance of data handled in various operations increased. Furthermore, as the means to analyze and utilize this data became tangible, enhancing competitiveness in IT and digital fields came to be recognized as the most critical management challenge.

Today, companies utilize diverse data—from the management status of group companies to the front lines of operations—and are developing talent and organizational structures to leverage this data for strategic decision-making.

Furthermore, through capital alliances and operational collaborations with startups excelling in new technology development, as well as reorganizing group companies centered around these startups, they are tackling the development of new technology applications and their implementation into group activities.

Trends in Corporate Function Efficiency and Advancement

The first step companies take in productivity improvement measures, both historically and today, is "reducing fixed and indirect costs." Since the widespread adoption of IT in businesses 20 years ago, corporate function efficiency has remained one of the central imperatives of group reorganization.

The widespread adoption of ERP(※) systems in many companies, which made management information visible, accelerated corporate efforts to improve operational efficiency.

※ERP (Enterprise Resource Planning) = A methodology and concept for enhancing management efficiency through centralized management of business resources, often referred to as "people, goods, money, and information."

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ERP implementation projects often involve concurrent activities such as business process inventory, standardization, and workflow review. These activities heightened the momentum for adopting BPO (Business Process Outsourcing) and SSC (Shared Service Center) utilization. These were adopted as operational efficiency and cost reduction measures in areas like IT (represented by offshore operations), call centers, and back-office functions such as accounting and HR/payroll.

Companies overseeing BPO and SSC operations are separate legal entities from the parent company. This allows them to establish distinct salary structures and personnel systems, functioning as a measure to control labor costs.

Furthermore, revisions to the Worker Dispatch Law in 1999 and 2004 significantly expanded the scope and industries covered by temporary staffing. This facilitated the transfer of tasks from relatively high-cost regular employees to temporary staff, primarily for back-office and routine operations.

The full-scale adoption of cloud technology and big data analytics, coupled with the integration of digital infrastructure across group companies, further accelerated management decision-making and streamlined business processes.

While BPO and SSC became widely adopted, their roles evolved as the volume and variety of data collected from corporate activities increased substantially. Companies began focusing not only on cost reduction but also on organizing more specialized business processes and improving service quality when utilizing BPO and SSC.

Furthermore, as companies accelerated their entry into global markets and faced intensifying local competition, more firms established SSCs (Regional SSCs) locally to enhance financial and supply chain efficiency. Regional SSCs enabled adaptation to region-specific business practices, operating environments, languages, and regulatory differences.

The COVID-19 pandemic dramatically changed how business professionals work, leading to the widespread adoption of remote work across all operations. Remote work requires digitalization as a prerequisite for every business scenario, from individual tasks to multi-person meetings, creating an environment that further facilitates the visualization and standardization of operations.

Among these, SSCs—which handle routine tasks while consolidating specialized functions—offer the most conducive environment for advancing DX. Their scope includes initiatives such as RPA (Robotic Process Automation), AI-driven task automation, and data analytics. Consequently, SSCs now play a vital role in supporting high-level decision-making by executives and management, thereby enhancing overall corporate performance.

Considering Corporate Function Efficiency and Advancement: The Dentsu Group Example

Let's now examine the efficiency and sophistication of corporate functions using the Dentsu Group as an example.

Having worked at several consulting firms and observed corporate departments across various companies as a consultant, I believe—though I may be biased—that the Dentsu Group is a prime example of effectively streamlining and enhancing corporate functions.

DENTSU CORPORATE ONE INC. (DC1) was established in 2022 by integrating the corporate departments of multiple companies, including Dentsu Inc., and specialized corporate companies within the group.

It aims to cover a wide range of corporate functions for the approximately 150 companies within the Dentsu Group, as well as their clients and stakeholders.

DC1's vision extends beyond mere efficiency; it simultaneously seeks to achieve the "advancement of operations" across each domain supporting the corporate divisions. Currently, it enhances expertise across eight business domains to provide corporate functions in a unified manner.

A key feature of the organizations integrated into DC1 is that they include not only so-called back-office and administrative functions like HR, accounting, legal, and IT, but also strategic management departments such as corporate planning, M&A, startup support, and group corporate branding.

As the holding company function of the Dentsu Group was streamlined, and organizational restructuring and governance were strengthened, it was determined that incorporating the corporate planning department of dentsu Japan (the business brand overseeing domestic operations within the globally expanding Dentsu Group) into DC1 was the most rational approach to establish a structure capable of overseeing the entire domestic group. This led to the current configuration.

One distinctive feature of DC1's functions is its involvement in the field of startup support.

Dentsu Inc. has undertaken various activities in response to the government's "Five-Year Plan for Fostering Startups" announced in 2022. These include the joint fund (Dentsu Ventures SGP Investment Limited Partnership) established by Dentsu Inc. and its corporate venture capital fund, Dentsu Ventures. In January 2024, we expanded this framework further by establishing a new organization within DC1 focused specifically on "entrepreneurship": the Startup Preparation Office.

The background to this is the increasing sophistication of information value driven by technological advancements like AI and the metaverse, alongside shifts in social structures and lifestyles. Creating next-generation businesses requires capturing the needs and future of an increasingly intelligent society and developing innovative businesses and services with diverse partners.

Furthermore, to contribute to business innovation in Japan and create an environment where society, companies, and consumers can develop together from a medium-to-long-term perspective—beyond merely creating businesses and services—promoting "implementation-oriented" entrepreneurship and company formation is effective.

Within this context, the Startup Preparation Office is positioned as an organization that supports and promotes new serial entrepreneurship, leveraging Dentsu Inc.'s strengths in innovation and its culture of challenge, with "Speed" and "Openness" as key concepts.

We are advancing initiatives to provide end-to-end support, accompanying projects from the initial launch phase of startup proposals submitted by business units (Dentsu Group companies) through the phase of nurturing them as independent companies, all the way to the phase focused on achieving profitable growth.

It is not uncommon for companies that have consolidated corporate functions at headquarters or SSCs to support new business launches within their business divisions. However, such support typically involves back-office functions like legal and risk management (including regulatory compliance for overseas markets), finance and treasury, accounting, HR, and IT. While the Startup Preparation Office is still in its early stages and its role within DC1 is not yet significant, its involvement in actual "startups" is rare. This could represent one approach to advancing corporate functions in the future.

DC1 was established by integrating nearly all corporate functions within Dentsu Inc., along with Dentsu Management Services and Dentsu Works. As the core platform for the domestic group, it leads the strengthening of corporate functions across the entire group and supports business transformation for each group company.

Leveraging "Right-Brain Talent" to Further Advance Corporate Functions

Most corporate functions likely evolved into their current form through logical organization, comparison, and analysis of external case studies and company-specific circumstances—from standardizing operations to integrating and transferring functions. And they are likely still pursuing similar approaches to further advancement.

However, incorporating elements like "visuals," "intuition," and "flexibility" into support functions is often an area where many corporate functions struggle.

In an era where corporate functions are increasingly expected to proactively support executives and business units, we believe leveraging "right-brain talent" with strong creative aptitude can drive further sophistication.

Let's consider scenarios where "right-brain talent" can thrive, using several fields as examples.

[Marketing and Brand Management]

There are numerous opportunities to leverage the creativity of right-brain talent in creating marketing materials and conveying brand messages.

As generative AI evolves at an accelerating pace, right-brain talent should excel at creating innovative content that reflects management's vision, the company's values, and the brand's core principles, while leveraging new tools.

As communication environments become more sophisticated, visual expression diversifies, and content management/control technologies advance, consumers will increasingly encounter corporate marketing materials. This means the quality of marketing materials will become more directly linked to business success or failure. Therefore, we believe consolidating and enhancing the creative capabilities of right-brain talent within an organization is a critical management choice.

【Data Visualization】

As DX advances, handling vast amounts of data—from frontline operations to management oversight—has become one of the most critical management challenges. However, aren't the outputs from organizing and analyzing this data often still traditional graphs and tables?

The more complex the analysis results become, the more they rely on the reader's comprehension. Even a slight misunderstanding carries the risk of leading to significant misjudgments in management decisions.

However, if organizations can systematically enhance their ability to present such data in a more visually understandable way, this risk can be significantly reduced.

This involves using multiple presentation patterns from the data compilation stage to provide visuals that appeal visually and intuitively. Or, going beyond mere lists of numbers and graphs, presenting executives with "story-driven data representations" that aid decision-making. This is precisely where right-brain talent can excel.

In an era of handling vast amounts of data, creatively expressing data through right-brain thinking should not only deepen data understanding but also contribute to strategic decision-making and the discovery of new challenges.

[Redesigning Operations Using Design Thinking]

Corporate functions, by their very nature, bear the constant mission of "streamlining business processes," and this importance will not change in the future. Therefore, whether it's small improvements or major transformations, they must meticulously examine current operations to identify areas for improvement.

However, it is challenging for the frontline staff and members of the responsible departments, who are directly involved in the existing processes, to analyze them without bias or propose new operational models.

To optimize with fresh perspectives, we need to leverage right-brain creativity and design thinking. This enables us to design more user-friendly and intuitive processes and services from the viewpoint of customers and employees.

Summary: Right-Brain Talent is Essential for Corporate Functions

Right-brain talent can excel in various areas within the advancement of corporate functions, leveraging creativity and intuition for tasks like business redesign, customer experience enhancement, data visualization and storytelling, and strengthening organizational culture.

We believe the time has come to actively consider utilizing right-brain talent to evolve from a support organization focused on routine tasks into one that proposes innovative, creative value leveraging new technologies.

At Dentsu Consulting Inc., we champion the integration of right-brain, left-brain, and unconventional thinking. We value a multi-dimensional perspective, combining not only the left-brain background of our consulting-trained professionals but also incorporating the right-brain, creative strengths inherent to the Dentsu Group.

Related Article:

"Consulting Firms" and "Advertising Agencies": Competing and Converging!?

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Interested in right-brain talent? Contact Dentsu Consulting Inc.
https://www.dentsuconsulting.com/
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