Since the establishment of Dentsu Communications and Dentsu Marcom in 2003, and Dentsu Creative Impact in 2005, Dentsu Inc has been steadily expanding its business in India through the three full-service advertising agencies. In January this year, the Tokyo-headquartered agency — one of the largest advertising conglomerates in the world and the No. 1 ad firm in Japan — purchased the 26 per cent equity stakes held by Mogae Consultants in the three agencies established as joint ventures between Dentsu and Mogae. During his maiden visit to India after assuming chairmanship of Dentsu India Group, Yuzuru Kato spoke to Alokananda Chakraborty about the agency’s post-acquisition strategy and how Dentsu Inc plans to incorporate India into its global network. Edited excerpts.
Japan’s ad economy has been stagnant for some time now and it has recently slipped behind China’s. How do you think the current crisis in Japan will affect the advertising and communication business in the country? How soon before your India operations start feeling the ripples of the crisis in the country?
Japan has certainly been greatly affected by the recent tragedy. It is inevitable for Dentsu’s India operation to be impacted by the crisis, because the relationship between Japan and India has been deepening. However, that will not alter the way we look at India and kind of importance we attach to our operations here. We are most confident that Japan will come together as one nation and recover from the aftermath of the crisis. It would take a few months maybe.
“Wakon Yosai” — Western technique, Japanese spirit — is the underlying principle of Japan’s international industrial success. Does it work in a ‘people business’ like advertising?
Certainly! Wakon Yosai also works quite well in a people business like advertising. This is because the Japanese are very resourceful and inventive. They also adapt quite well. Actually, when the Japanese adapt to something new, they analyse it and put in effort to improve it and make it better than before. Additionally, the spirit of hospitality in the Japanese service industry, which is highly regarded overseas, can be applied equally well to the advertising business.
Dentsu has tried numerous strategic alliances with Western agencies over the years, none of which have borne it much fruit. Please comment.
In the early days, there were trials and errors. But every experience, irrespective of whether it was successful or not, brought in immense learnings which were imbibed and incorporated henceforth. We have investments in networks outside of Japan which work very well from an investment point of view. However, the effect of synergy was not so prominent. It was then that we founded Dentsu Network West, and delegated authority, while promoting knowledge sharing within the global network to build up the group’s expertise.
As you just mentioned, last year Dentsu pooled all of its North American, Latin American and European businesses (excluding Russia) into one giant operating company, Dentsu Network West. This certainly marks a break with Dentsu tradition, which has always stressed tight Japanese direction out of the Tokyo HQ.
Yes, Dentsu Network West was the result of one of our learnings. The appointment of Tim Andree as the first non-Japanese executive officer in the agency’s 100-plus year history was a step in this direction. Andree leads Dentsu Network West and is supported by regional management teams in North America, Latin America and Europe (excluding Russia). Our presence in non-Japan markets leverages the respective region’s talents and insights along with global expertise. It is like geographic customisation. This approach has worked well for us.
Shall we see something similar in the Asian region?
It is too early to say. Perhaps someday the Asian business may also get integrated like Dentsu Network West. While we may be considering such a move, no such decision has been made now.
If we look at the Dentsu tradition, it has been very controlling — you also admit that. Given the moves in Europe and Latin America can we conclude there is now much greater devolution from Tokyo — especially in the matter of strategic acquisitions?
In the past, perhaps we were. But now, it is no longer so. We have been quick to learn from the past. Decentralisation is moving forward in some areas especially in business and management, and we are aggressively transferring authority to the regions. However, centralised networks remain active for in-group communication and knowledge sharing. In a nutshell, we are trying to make the best use of the two. I believe it makes Dentsu’s corporate culture stronger and more universal.
Coming to India specifically, Dentsu got into a partnership with Sandeep Goyal way back in 2003. What took you so long to set up your wholly-owned subsidiary? Why is now such a good time?
The growth opportunity in India triggered this move. To be able to develop new business operations and the necessary investment for it requires free discretionary powers to make and implement business judgements rapidly. So we moved to 100 per cent.
Our India acquisition is part of our plan to expand our unique business model globally. The turn of the decade saw us strengthening our frameworks in the US, Europe and China. Enhanced presence in these markets brought promising results. Starting 2010, we turned our focus on solidifying and expanding our bases in growth markets such as India. The idea was to reinforce Dentsu India to enable it to truly partner clients in this rapidly changing country. We also wanted to raise the bar on our service deliveries and client offerings.
We accelerated our investment in India to expand our service range.
Does the new ownership pattern change anything — in terms of Dentsu’s growth trajectory and strategy in India?
Certainly yes! The new Dentsu India Group is taking off on its next phase of growth. By taking up 100 per cent ownership, greater integration with Dentsu’s global strategy is possible. We can now link our India business more closely with our global network. It also becomes possible to advance interchange among our human resources in a positive way.
One can expect sweeping changes in the new Dentsu India Group. There will be infusion of what we call “the Dentsu Way” — a fresh culture that is Indian and at the same time 100 per cent Dentsu in spirit and action. There will be a strong orientation towards our global domain strength of integrated communication design. Our approach will be more client-centric and we will up the ante on service and solution competencies.
Dentsu is a latecomer to India, so the path to success would have been arduous? How much of your success would you ascribe to Sandeep Goyal?
Western agency networks have had a long history and presence in India which made the Indian advertising industry western-style. In 2003, Dentsu Inc was looking for a partner to establish a joint venture in India. At that time India was drawing attention in the Japanese business world as a strong emerging market and people were starting to talk about more investment in the country.
Sandeep Goyal was one of the several candidates we had discussions with back then. Goyal has spent a large part of his career in Rediffusion DY&R, which was and still is Dentsu’s other joint venture in India, and was a somewhat familiar figure to Dentsu and its top management. In that sense Dentsu Inc had faith in his commitment to the task. Indeed, Goyal led Dentsu’s business in India supported by a very able, fully dedicated, committed and motivated team. As a late comer, we needed to cause a disruption and speed up the process. Also our goal was not only to service Japanese businesses, but to create a large base of local business as well. We have succeeded in having that groundwork in place.
You just spoke about the Dentsu way. What are the pillars of the Dentsu way? How does Dentsu Inc plan to bring the Dentsu way into India?
For us, the Dentsu way is a way of life. It defines our existence. The Dentsu way is fundamental and integral to all thinking and all functioning at the Dentsu Global Network. It is difficult to describe the Dentsu way in short — it not just one single thing but it is the core, the guiding beacon which we apply to and follow for anything that we do. The Dentsu way originates from our philosophy of ‘good innovation’. ‘Ideas’, ‘technology’ and ‘entrepreneurship’ are the three pillars of ‘good innovation’.
To try and describe it in short, we at Dentsu are client-centric. We do whatever it takes to help our partners achieve their goals, even inventing new communications media and venturing into new business fields if necessary. That’s our definition of entrepreneurship. As an organisation, we believe that only those with a spirit of adventure can add real value to their business. That is why we encourage our people and partners to think outside the box and explore new opportunities with us.
The ‘Cross-Switch’ model mentioned in The Dentsu Way book illustrated with case studies is one of the prime examples. (see extract from the book — “Media mix vs cross communication”)
Where does India fit in Dentsu Inc’s overall scheme of things? And what does Dentsu bring to the table?
India is one of the most important markets for us for an obvious reason that it is the fastest growing market in the world next to China. The turn of the decade saw us strengthening our frameworks in the US, Europe and China. Enhanced presence in these markets brought promising results. Starting 2010, we are focusing on solidifying and expanding our bases in growth markets such as India among some other Asian countries.
A robust player in the Asian economy, India has a flourishing consumer market with buoyant industry sectors that reflect increasing consumer affluence and spending capacity. India is also rapidly emerging as a hub for innovations with several high-value, low-cost concepts. The nation has a strong, highly educated talent pool and also growing infrastructure. Indian companies are growing. They are venturing into global markets. New companies are coming into India.
The advertising market reflects this buoyancy. Client needs for integrated service are coming to surface.
The key to our growth and India success lies in the collective strength of our highly specialised talent force, coming together as one people.
And what are Dentsu Inc’s focus areas in the country?
Now that it has become our 100 per cent subsidiary, we will link the new Dentsu India Group more closely with our global network. Our client roster in India is already 50 per cent Japanese and 50 per cent non-Japanese. We will look for opportunities to work for Indian clients as well as global clients from other parts of the world.
Our immediate focus is to step up service and solution deliveries, activate talent development programmes and infuse a client-centric philosophy as our raison d’être in the country. While we see opportunities to tap new industry sectors and explore new advertising-related services in India, this would be secondary to our immediate priority.
How is the Japanese way of functioning different from say the American or the British?
I can tell you a little about how the Japanese function. The Japanese culture and value system, unlike other modern cultures, is based primarily on honour and dignity. The Japanese intrinsically, as individuals have a deep sense of respect and loyalty. They are a very resourceful, innovative and highly disciplined people.
The Japanese believe in quality. They are very collaborative. They strongly believe in teamwork. Within a team, all members work as one and put in their best to meet one single objective. Each member of the team has true belief in that one objective and contributes towards it whole-heartedly. The Japanese have great faith. Within a team, each member places true and deep trust in his counterpart.
The Japanese are very meticulous, have great foresight and operate with great focus to detail. They are very analytical and anticipate all possible scenarios during the decision-making process and ensure planning ahead to safeguard against contingencies. They use their analytical skills to unearth deep-rooted insights.
Rooted in culture, incorporating old world traditions and values along with new world technologies, the Japanese make the best of the now in every age with their resourcefulness and ingenuity.
