Sei-katsu-sha Interface Market Forum 2021: Beyond Digital Transformation

Dec. 2, 2021
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Amid all the hype about digital transformation (DX), companies are starting to realize that going digital does not produce value on its own. The challenge now is what you do on the other side of your digital transformation. So what is Hakuhodo doing to provide answers? Here are Hakuhodo President & CEO Masayuki Mizushima’s thoughts on the subject, from his opening address at the recent Sei-katsu-sha Interface Market Forum 2021, “Beyond Digital Transformation: How the Convergence of Data, Technology, and Creativity Empowers Your Brand.”

The Sei-katsu-sha Interface Market is growing even faster than expected

New COVID cases have plummeted in Japan, and the streets are slowly coming back to life. But our lifestyles have changed a lot compared to pre-COVID days. The pandemic has turbocharged digitization. Video conferencing systems, for example, haven’t just transformed the office. They’ve been the catalyst for social acceptance of many different working arrangements. The spread of handy food delivery services hasn’t just altered how people do housework. It’s given them more free time. COVID hasn’t just sped up technological progress. It’s revolutionized our lives. Even as COVID winds down, this lifestyle transformation will continue as long as digitization keeps accelerating all around us. Everything is going digital and becoming networked. And this ongoing process whereby all aspects of life are becoming digitized will change the way companies interact with sei-katsu-sha, a term we use to describe people not simply as consumers, but as fully rounded individuals with their own lifestyles, aspirations and dreams. By enabling communication between networked objects and the sei-katsu-sha who use them, it will turn what were once mere touchpoints into interfaces, with information flowing both ways.

Let me elaborate. As objects, devices, stores, media, and so forth evolve into interfaces, it will become possible to assess sei-katsu-sha’s needs by leveraging data. What are the challenges facing individual sei-katsu-sha and their families? What social challenges lie behind them? Companies will then be able to offer services optimized to those needs. In other words, the transformation of everyday objects into interfaces will allow value to be created and delivered via the give and take of information between companies and sei-katsu-sha. That will mark a new stage in the evolution of their relationship. This new form of relationship between companies and sei-katsu-sha is emerging in many different areas.

We’ve coined the term “Sei-katsu-sha Interface Market” to describe this explosive proliferation of interfaces and the resulting possibilities for new value creation. In the previous two forums, we suggested this market has tremendous potential. Not a day goes by without a mention of digital transformation. Our lives are steadily going digital as COVID accelerates digitization. The digital transformation of life is proceeding even more rapidly than we expected, and with it the growth of the Sei-katsu-sha Interface Market. Today I’d like to talk about the secret to conquering this new market. What should companies keep in mind in order to prevail in it?

Building a stronger brand through value-creating digital transformation

The secret to prevailing in the Sei-katsu-sha Interface Market lies in value creation. Thanks to the digitization of touchpoints with sei-katsu-sha and their consequent evolution into interfaces, companies are now able to view sei-katsu-sha data in greater granularity. And doubtless they’re trying to do a more efficient job of marketing by leveraging that data. But just pursuing greater efficiency hardly counts as fully capitalizing on the potential of the Sei-katsu-sha Interface Market. More and more brands and companies are rushing to initiate a “value-creating digital transformation.” That means creating new value via the give and take of information with sei-katsu-sha—new value for both companies and sei-katsu-sha.

Take Nike, for example. Besides merchandise like running shoes and sportswear, Nike also offers a running app and a host of other digital services. That’s because its goal isn’t just to get users to buy its merchandise. It wants to get more people interested in and actually doing sports via its app. Through its digital services, Nike furnishes a platform where people can find running buddies to enjoy a workout with, where they can compete against each other and urge each other on. It’s changing the way people engage in sports by bringing them exciting services that enhance the fun and exhilaration of running. It bonds with sei-katsu-sha by delivering a compelling experience as a brand. This is a classic case of value-creating digital transformation.

We at Hakuhodo are working on an increasing number of value-creating digital transformation initiatives. A case in point is Mobility-as-a-Service (MaaS). We’re working on solutions to the mobility challenges facing smaller communities in Japan. With drivers getting older and many of them surrendering their license, more and more seniors are becoming stuck at home. Meanwhile, public transit is in the red. Convenient services that transport people efficiently can be delivered with technology. But that’s not enough to solve the real issues facing communities. So we asked ourselves, “How can we reduce the number of seniors stranded at home while solving the problem of not enough drivers?” We hit on the idea of “community mobility.” When driving to the station or to a hospital some distance away, it’s a time-honored practice to ask your neighbor whether they want to come along. Well, we digitally revived that practice of giving someone a ride in modern guise, in the form of a mobility service called Nokkaru. Not only does this solve the problem of too few drivers and no means of getting around. Through the power of digital technology, it creates a more close-knit community, where people are considerate of one another and help each other out.

Even seniors unfamiliar with digital technology feel at ease hitching a ride with someone they know. In Asahi Town, Toyama Prefecture, where the service has already been rolled out, seniors are happy to use it. One person told us they went out for the first time in a decade, which we were delighted to hear. So this service doesn’t just make it easier to get around. It instills a desire to get out of the house. That’s an example of rising to the challenge of value-creating digital transformation.

COVID has made it harder for customers to visit bricks-and-mortar stores. Now, more and more clients are turning to us and asking whether digital technology can be used to solve that problem too. Digital services that address that challenge by leveraging the latest technology are becoming more common—for example, using live chat to serve customers, or letting them try out a product in augmented reality (AR). But do such technologies really deliver the exciting shopping experience that actual stores once gave customers? Hakuhodo DY Group has developed a virtual fitting room service called “Jibun Runway.” Using the latest 3D avatar technology, this lets you have fun virtually sashaying down the runway like a fashion model, in the form of an avatar dressed in different outfits. It offers the convenience of being able to try on clothes without visiting a bricks-and-mortar store. But even more, by leveraging the power of digital technology, it delivers the fun and excitement that shopping is all about. It’s an example of attempting to establish an emotional bond with sei-katsu-sha by transcending anything in the real world and creating a truly compelling shopping experience only possible in digital.

Delivering such compelling experiences by providing a service is not the only way to go beyond simply enhancing efficiency and create new value. Here at Hakuhodo, work has already begun on a wide range of other such initiatives. These include creating value by making sophisticated use of data, and creating businesses and entire industries by harnessing technology.

Implementing value-creating digital transformation will have a transformative effect on companies and brands. As touchpoints with sei-katsu-sha evolve into interfaces, brands that understand the significance of this change, and succeed in creating new value as a result, will become stronger for it. They will build a more enduring relationship with customers. The important thing now is to reinvent your brand by establishing a new relationship with sei-katsu-sha. That means not just engaging in advertising-based branding as in the past. It also means developing businesses and services by harnessing digital technology. At Hakuhodo we call this “brand transformation,” a process we’ve started recommending to clients.

Transform your brand by synergizing data and technology with creativity

Value-creating digital transformation and what lies beyond it, brand transformation, require a higher order of integration. Not only do you need advanced expertise in handling data and technology. You need to synergize it with the kind of creativity that strikes a chord with sei-katsu-sha. That means combining data and technology with creativity, science with human nature.

What we’re interested in is not simply manipulating advanced technology. That’s because our greatest asset is creativity. You can’t create new value and then take the next step, brand transformation, just by leveraging data and technology. You can only do so by synergizing them with creativity rooted in true empathy with and understanding of sei-katsu-sha.

Take Nokkaru, which I mentioned earlier, for example. This doesn’t just make use of data and technology in the form of geodata and AI routing. It combines it with the idea of getting members of the community to help each other. It thus delivers a completely new mobility service: giving someone a ride somewhere since you’re going anyway.

Sei-katsu-sha are after more than just convenience and efficiency. They want to spice up their everyday routine by getting fun out of life, enjoying themselves shopping, going out and meeting people, or finding a hobby they can truly call their own. But are we as companies meeting those wants? Companies, as entities dedicated to serving the individual aspirations of sei-katsu-sha, need to work on bonding and building trust with them. Doing that takes creativity—the creativity to turn those aspirations into ideas and actual services by truly understanding sei-katsu-sha and knowing how they think. Hakuhodo, we believe, possesses that creativity.

Amid the massive changes being brought about by digitization, the greatest advantage that Hakuhodo offers you is this. We enable you to transform your brand by establishing a new relationship with sei-katsu-sha while developing new businesses and services—not to mention engaging in advertising. The goal: go beyond merely enhancing efficiency with your digital transformation. Create new value through it.

We look forward to helping you tap the growing Sei-katsu-sha Interface Market as a new source of growth.

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