In discussions with senior management at major Japanese companies, the issue that has most frequently arisen is the inability to create and grow new 0-to-1 value.
The major organizations in question will have talented employees, as well as their industry’s unparalleled intellectual property, knowledge, and networks. At the same time, they will have at their disposal human resources and consultants with strengths in digital technologies.
Yet, invariably, it will be businesses that are outsiders which will disrupt industries. So why is it that companies can’t by themselves achieve such transformation?
Among the wide range of issues the team at Dentsu Business Design Square (BDS) tackles, many are related to corporate transformation. Among these, we specifically focus on ways of enabling client organizations to generate new value in-house.
Business Ideas at Saturation Point
While more than a few senior managers may be saying that they lack enough new business ideas on which to draw, others will say that there are too many.
Over the past several years, many companies have promoted management policies that create discontinuous innovation to build new businesses, with internal divisions simultaneously undertaking 0-to-1 action.
The steps include launching new business development divisions; investing corporate funds directly in external startup companies, known as corporate venture capital; promoting open innovation with external divisions; hiring mid-career human resource specialists; conducting in-house startup contests; and providing business model training.
These efforts and more have been implemented to date, resulting in the adequate generation of ideas through a variety of projects. But in each project, independent efforts have been made to realize the same ideas.
Pertinent questions thus might be what approach companies should take to generate a massive 0-to-1 swell of ideas, what internal efforts should be made to integrate them, and how the integrated ideas might become a reality in the shortest time? At present, many companies are struggling with the steps involved.
Internal Elements Hinder New Value Creation
In many enterprises, we find that members of senior management have a number of ideas, having been involved themselves in preparing policies, new systems, and capital. So why do they lack the ability to generate the swell needed to launch efforts to promote them? The reason lies, we believe, in the innate characteristics of the companies themselves.
- Efforts are premised on the condition that existing business not be destroyed, particularly the core business
- Expectations for value are high and must show a competitive advantage
- Core business systems with a competitive advantage now are a hindrance
- Talented human resources are lost, their role not including the implementation of new ideas
In addition, companies face strong corporate structural and cultural barriers that currently provide competitive advantages, including approval processes, inter-organizational dynamics, and human resource systems, all of which are not easy to change.
Among the many barriers to overcome and issues to sort out, one must recognize that the challenge is not simply a matter of creating a separate organization, changing the rules, or creating a new company and transferring core assets.
Companies must dig down to the root problems, not be bound by company biases (customs and stereotypes), and be able to incorporate solutions into the company structure.
Since many barriers to the creation of discontinuous value are the source of current competitive advantage, not a few companies do not recognize them as issues but, rather, as strengths. Discovering the true barriers while uncovering cognitive gaps is an important step in overcoming challenges.
Balancing Sustainability with Corporate Growth
Corporate growth is no longer the only consideration, with corporate citizenship also required as a contribution to sustainability. While it is important to raise the score of various criteria, at present, companies need a grand strategy for balancing sustainability with corporate growth, as well as an action plan for creating contributions unique to each company.
Corporate activities must be carried out bearing in mind two factors: global environmental thresholds and the need to help keep environmental interference minimal. With corporate awareness of this kind is critical in guiding consumer choice, it sets the stage for major transformations.
Architecture Is Critical for Purpose and Vision
In future, companies must be defined according to purpose if they are to achieve the necessary business creation and transformation, and contribute to sustainability.
However, we frequently find that the explanation and realization of purpose, as defined by management, have been conveyed to business division managers as well as those in the workplace.
This leads to different divisional interpretations, which distort purpose to fit each division’s circumstances. To prevent this, it is critical that architecture (transformation design) be envisioned that enhances the attainment of purpose at management level.
Architecture is the element that pulls together sustainability contributions and discontinuous corporate growth, together with the internal transformations both require. It includes the brand strategies, structures, and processes needed to realize the transformation and achieve the goals.
The question now is how current business structures—that are complicated by behaviors, reactions, and complex causal relationships—can be disrupted and changed and, ultimately, what form they should take.
It is important to move steadily forward, coordinating with workplaces in each business division, based on architecture that clearly defines the internal shift.
“Creative beyond Logic”
The element our team emphasizes for resolving complexities is to be creative beyond logic. Based on this approach, we contribute to sustainability, the growth of existing businesses, the creation of new businesses, and corporate internal transformations.
Besides gathering information, identifying issues, and structuralizing them, we also verify the marketability of new businesses and simulate impacts on existing businesses.
Naturally, the logic required for such strategic consulting is important. Nevertheless, activities that positively impact the Earth, society, consumers, and companies are not created by an infusion of logic alone. Also required is creative power, if existing mindsets are to be substantially changed and solutions created.
To this end, we identify questions that need solid answers, discover solutions, and provide guided support so that results can be realized. We take pride in being a team of transformational partners.
BX Design Division
Shingo Yamahara is engaged in a wide range of advisory roles in the BX domain, including the formulation of: medium-term management and business strategies; new business creation planning; corporate transformation strategies and their execution; and human resource and organizational transformation plans for C-suites.
Having most recently served as a director, the projects he has overseen include those involving major global food manufacturers, global high-precision machinery makers, automotive manufacturers, major Japanese IT companies, luxury eyewear companies, among many other enterprises.