Dentsu’s new structure following on from acquiring the world’s 8th largest ad agency, UK’s Aegis Group, has been put in place since August 1st, and described in detail in the Nikkei here ($).
I had heard about some of their plans for post merger integration at the Association of Japanese Business Studies’ annual conference in Istanbul last month from JJ Ikegami, Associate Professor at Waseda University. Ikegami pointed out that Japanese service sector companies have been slow to go overseas because there is a need for effective global knowledge management, to overcome the gap between low context cultures (prevalent in US subsidiaries) and high context cultures like Japan
Ikegami focused on Dentsu in Asia, assuming that as it was high context to high context culture, Japanese service sector companies might find expansion in Asia easier, but found that actually Japanese companies in media (Dentsu), logistics, trading and retail all had problems with knowledge and culture transfer. Dentsu wanted to transfer its corporate culture to foreign subsidiaries as a precondition for transferring their knowledge mangement and business model. However they found that employees in Asia were not prepared to learn from their seniors in a tacit way, which would be the norm in most Japanese high context corporate cultures. There was no time as there were so few Japanese expatriate staff to do the teaching, and a high turnover of staff. So Dentsu set up a DNA College, using Asian non Japanese facilitators, who had a more interactive facilitative style.
As Ikegami points out, there is a chicken and egg problem, in that Japanese headquarters do not want to transfer power to subsidiaries until they are satisfied they have transferred their corporate culture, but at the same time foreign subsidiaries believe that not enough power has been transferred to them to empower them to transform their corporate cultures beyond the current passive mode.
So now Dentsu have set up a Dentsu Aegis Network, and a taskforce including 40 experts from around the Aegis and Dentsu networks around the world, to “reorganise its overseas operations to support Aegis’ business strategy”. Aegis have been flexible with their strategies to fit with local practices, which is probably realistic given the cultural differences in the media and advertising markets.
EVP Tim Andree, CEO of Dentsu Network will be the first non-Japanese on the Dentsu board and Jerry Buhlmann, based in the UK as CEO of Aegis, will also play a key role. This may mean that Dentsu have given up trying to transfer their high context DNA worldwide – on the other hand, if they are too laissez faire, can they really claim to their key Japanese clients that they can support them seamlessly globally, in the way they have been used to?
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