How can a general trading company adapt to changing times?

In 2016 my department was asked to consider, from a cross-departmental perspective, what steps our company could take in response to recent technological progress in fields such as AI and IoT. A committee was formed for this purpose, and our six months-long collaboration with BIOTOPE started. The reason we chose a design firm like BIOTOPE rather than a strategy consulting firm, was that we felt our company needed some kind of shock treatment in order to achieve the fundamental changes we wanted.

Design thinking emphasizes the importance of motivation arising from within

Proposals from strategy consulting firms are usually created through logical analysis of the problem at hand. In contrast, BIOTOPE’s proposal emphasized the importance of having the motivation to solve a problem arise from within. Such an approach seemed necessary if we wanted each individual employee to enjoy their work and feel a sincere desire to act, so BIOTOPE was a natural choice for us. We also sensed that our company’s approach to business needed to change. The traditional mindset of a trading company is trying to provide something good and desirable to the customer, but we needed an approach that starts with the customer’s needs and works backward from there. Design thinking seemed like it could offer us such an approach.

Change your mindset to see things from the customer’s point of view

Our company was facing a big challenge. We are living in an age of changing customer needs, where new technologies are tearing down the boundaries around industries and destroying traditional business models. To a company that has built its success around a product-based vertical silo structure, these trends are threatening. If we keep sticking to our old ways, we will eventually crumble. Our project with BIOTOPE aimed at transforming our company’s mindset to one where knowledge is shared across departmental lines, allowing us to identify our strong points and look for solutions from the customer’s point of view.

“A shock as if a hammer struck me in the head”

However, suddenly creating company-wide collaboration between widely separate departments is easier said than done. We needed a way to identify recent changes in society, and create a shared sense of urgency to adapt to them. To cultivate such a sense of urgency in each of us, we reached out to a wide range of experts from the Singularity University and other institutions in the first half of the project, and asked them for input. We arranged for former Rakuten employee Hiroaki Yasutake to hold a lecture, and in a survey one of the audience described the experience as “a strong shock, as if a hammer had struck me in the head”. For me, the lecture made it painfully clear that, while the business world pioneers had used to be the trading companies, today’s cutting edge has moved to the digital realm. Many other participants shared my sentiment.

Identifying the value that only a trading company can create

In the latter half of the project we progressed to prototyping. Using the insights on societal change from the first half of the project, we came up with new ideas and shaped them into concrete proposals. One of the strengths of a general trading company is the breadth and variety of its assets, which span a range of industries. We had each department create new proposals internally, and then share them with everyone else, together with their own internal data assets. The final step was to combine all of this information into new ideas. I think this helped the participants notice that a trading company, with its many different business models, can create new value by taking something here and something there, and combining them. During the prototyping stage when we were still polishing the proposals, we showed them to the customer to ask for feedback. I remember well when a participant asked, “Are we really going to show this half-finished proposal to the customer?”

Conceiving of a new future through a grand prototyping process

While each department was busy creating concrete proposals with wisdom gathered from throughout the company, corporate management was taking a bird’s-eye view and thinking about the future of the company as a whole. Through Kobayashi’s facilitation, this project let us conceive of an entirely new future. It all started with our company’s leadership noticing that the cutting edge of business was on the move, and signalled that it was time for us to change. Perhaps this project can be described as one grand bottom-up prototyping process for figuring out how to visualize and realize this change.

Towards organizational reform and new business creation

Out of our company’s approximately four thousand employees, only 36 were invited to participate in this project (2 from each division). Merely learning a new process didn’t enable us to suddenly change an entire organization. But this project did allow its participants to experience the power of creating new solutions from the customer’s point of view, and of going beyond the company’s product-based silo structure by combining cross-departmental expertise and assets to create new value. They then brought this experience back to their own departments, which I think is of great importance. To accelerate this trend, the Strategy Lab for IoT and Big Data was launched shortly after the project’s end, in April 2017. The lab’s purpose is to enhance existing business with digital technology and to take the lead in and support the creation of new business models. In 2018 its name was changed to the Department of Digital Innovation, and we are currently working hard on new business creation.