CEO Message: Taking on the role of “catalyst” in economic society to bring about a transformation that ushers in a new era

Takashi Nagata, Deloitte Tohmatsu Group CEO, explains the firm’s role during the current transition taking place in industrial structure and corporate management.

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Changing times are what give us a chance to win-“Philosophy” and “technology” are the keys

Rapidly developing digital technology and accelerating globalization are pushing Japanese companies to explore uncharted territory. Centered on powerful foreign “platformers”, various ecosystems that could upend existing industry frameworks are taking form. How should Japanese companies deal with this situation going forward?

Japan finds itself in a very difficult situation. Even if we can somehow hold up for five or ten years, we don’t know what comes after that. It will be necessary to discard existing concepts and past successes, boldly promote renewal of business and social systems, and create our own future. This is where it becomes important, both for the country as a whole and for individual companies, to develop a certain sturdiness—one that allows you to make clear what battles to fight and to establish your own position. In the end, that sturdiness is about having a firm grasp of both philosophy and technology. You cannot fight with philosophy alone, but a too heavy emphasis on technology will also make you lose sight of the big picture. Cultivating leaders and organizations with the ability to identify the essence of changes and balance these two aspects is an urgent task.

Do you mean that Japan has the technology but is lacking in philosophy?

I say “philosophy,” but I don’t mean anything too special. For example, “platform” companies in Europe and the United States base their strong visions on philosophical ideals, and are achieving rapid growth by bringing together cutting-edge technology and world-class talent. In other words, you can’t realize the essential meaning of the future that technology will create unless you go all the way back to a philosophical level in your thinking. The world of professional services, which Deloitte Tohmatsu is a part of, is also undergoing rapid, technology-driven change, leading to a situation in which you cannot fully compete globally if you stick to the existing framework premised on a traditional understanding of a “professional practice.” Unless you break away from thinking about the future as an extension of the present and start your process of thought by imagining the ideal society of the future, you are bound to lose sight of the essence of change and face gradual decline. I think this applies to other industries and types of business as well.

The power to be a “catalyst” for change

Surely Japanese companies also have characteristics that they should take advantage of to improve their global competitiveness in this age of great transitions?

The greatest strength that Japanese people and companies have is their organizational capacity and skills, which are best represented by the “self-propelled workplace.” I think we should take advantage of this when trying to rank as a global company. However, in terms of leadership, the tendency to lean on individual attributes has been and remains strong in Japan. My view is that there have been many cases in which brilliant individual executives have made remarkable accomplishments, but the organizational leadership required to take such achievements to the next level and bring about a great transformation has perhaps not functioned sufficiently.

What can Deloitte Tohmatsu Group do to encourage transformation?

As one of the largest professional services firms in Japan, with more than 12,000 members, we are an industry leader. In my opinion, we are more than just someone you come to for advice—we are a powerful catalyst that encourages transformations by actively influencing companies and society as a whole, heightening their intensity and commitment. By making full use of the global Deloitte network and its 260,000 professionals, we can solve the issues that stand in the way of change and truly promote transformation.

Solve complex issues by pursuing social fairness and using our combined capabilities as a group

There are other think tanks and consulting firms that advise governments and support the leaders of organizations. How does the Deloitte Tohmatsu Group differ from these?

Our corporate stance of pursuing social fairness and our formidable combined capabilities are what set us apart. Having originated as an audit firm, our group highlights integrity and a strong commitment to achieving social fairness as its core principles. With this commitment as a foundation, coupled with the ability to objectively quantify a wide variety of phenomena, we have been involved with a diverse array of initiatives to change social systems and advocate for rule-makings that supersede the borders of specific businesses.

This ability to build and conceptualize societal vision will be a significant advantage when transforming business in the future. Deloitte Tohmatsu also possesses formidable combined capabilities, which comprehensively cover all the specialized fields related to management. Our ability to deal with complex issues that stretch across the limits of thematic domains is a significant strength.

In order to function as a “catalyst” for great transformations, all Deloitte Tohmatsu Group members will need to change the way they think, won’t they?

That process is already underway, because today’s complex issues cannot be solved through individual efforts. In addition to professionals such as CPAs, consultants, tax accountants, and lawyers, we are actively hiring talent with differing skills, including data scientists, designers, and cyber security experts. The system of tearing down organizational boundaries to have “hybrid teams” provide services has become an obvious fact of life these days. Going forward, also by making use of digital technology, we will further accelerate the cross-cutting fusion of expert knowledge and solutions to pursue synergy at an even higher level. As the foundation for promoting this, we plan to establish an organization called Deloitte Tohmatsu Institute. I would like us to consolidate the group’s resources, cover everything from policy proposals and knowledge dissemination to the provision of innovative solutions while closely analyzing the coming age, and bring to light the true value of synergy that only Deloitte Tohmatsu can achieve. In a time of coexisting risks and opportunities, we will lead the way so that Japan as a country and its companies can sturdily and forcefully transform themselves and take the initiative in creating the future.

(Published on September 19, 2018) 

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