Turning Technology into Business: DENSO's New Initiative for Social Innovation

We live in a world where the future is uncertain and difficult to predict. What changes will the world undergo around 2035, approximately 10 years from now?

In recent years, we have faced frequent natural disasters attributed to climate change, prolonged pandemics, and sudden regional conflicts, all of which have disrupted global food, material, and energy supplies. Along with these challenges, the emergence of revolutionary technologies like generative AI is starting to significantly alter our lifestyles, communication styles, and values.

These unpredictable changes are expected to continue. This means there will be a growing demand for resilient systems that can maintain social activities regardless of environmental changes, decentralized mechanisms that cater to diverse values and notions of happiness reflecting regional characteristics, and a wide range of product offerings.

What should we focus on now to build such a society?

DENSO, which has been engaged in manufacturing, announced its commitment to realizing a well-being cycle society by 2035 to further contribute to people's well-being.

To fulfill universal human values such as the natural environment and peace of mind while striving for a better society, DENSO focuses on the Five Flows surrounding a mobility society. By developing technologies and products to optimize these Five Flows and transforming them into major business ventures, DENSO aims to create a society where people's happiness circulates globally and into the future.

By combining and applying DENSO’s extensive and deep-rooted technology to the Five Flows—Free Movement of People, Flow of Goods, Energy Utilization, Minimization of Resource Requirements, and Flow of Data—the vision of a well-being cycle society becomes clearer.

What challenges do each of these Five Flows address, and how do they aim to solve them? Let’s examine each flow individually.

Providing value through the Five Flows signifies a departure from traditional manufacturing, evolving from a one-time sales guarantee business to a lifetime warranty business. The company aims to offer value throughout the entire product lifecycle, from supporting customers during product use to ensuring that products are transformed into new ones at the end of their lifecycle. In 2023, a new unit was established to create the new standards of 21st-century manufacturing: The Social Innovation Business Development Function Unit.

The goal of this unit is to make DENSO a company that will be needed by society 100 years from now. It has embarked on a journey to create a well-being cycle society, where finite energy and resources are circulated and human creativity can be expressed more freely. Mitsuru Kato, the head of this unit, describes the background of its establishment as follows:

“There is no future for a company that simply keeps making good products without change. We need new social systems and businesses that circulate what we create and connect it to new values and new products. With this vision in mind, we established the Social Innovation Business Development Function Unit.” — Kato

To realize the vision outlined by the unit, it is essential to proceed quickly yet carefully through each step from development to commercialization. Additionally, combining various ideas and assembling them into large-scale businesses requires a robust support system to enhance the likelihood of successful commercialization.

What is important here is the Gate Review for Commercialization, commonly known as Stage-Gate Discussion, which maximizes the individual’s passion and action toward realization within the organization.

"The Stage-Gate process is divided into stages 0 through 2. In Stage Gate 0, we select whether the concept should be pursued. In Stage Gate 1, we evaluate prototypes while developing products that offer high value to customers and society. In Stage Gate 2, we estimate the potential scale of the business and make the final decision on commercialization." (Kato)

A key feature of DENSO’s gate review process lies between Stage Gate 0 and 1. In Stage Gate 0, DENSO leverages its strength of diverse personnel by keeping the entry criteria broad. For the selected concepts, immediately after Gate 0, the size of risks and obstacles, the estimation of necessary resources, and the potential social impact are thoroughly discussed by all senior management. They then decide whether to advance as an organization.

"Engaging in a business venture comes with commitment and responsibility. We do not place this burden on the individual. At DENSO, we tackle challenges with ‘team pride’ and a shared sense of responsibility."

"What should be done to ensure that the person who proposed the concept can run single-mindedly towards the goal? Everyone should approach this with a sense of ownership, providing support and encouragement as a team. While we will sometimes withdraw a selected concept, this is a decision made by the organization and not a reflection of individual responsibility or evaluation."

"It is essential to have active personnel who can grasp the essence of social issues and take immediate action. We want to create a system and organization that fosters such talent." (Kato)

In projects that advance to Stage Gate 1, we explore customer and market needs through repeated demonstration experiments. From an early stage, we involve the R&D Division, integrating the cutting-edge technologies they have developed to enhance product viability. Differentiating ourselves technologically from other companies and maintaining advanced capabilities are important perspectives for fostering our customers' sustainable growth and driving societal innovation.

"What kind of world do we want to create? What technologies are necessary to achieve that? From the early stages, the technology and business sides sit at the same table, aligning their perceptions and values while developing together. Close collaboration between technology and business is a crucial element in turning technology into business. Therefore, we are also developing company systems to facilitate smooth collaboration." (Kato)

Through team-wide activities using these Stage-Gate Discussions, we bring DENSO's various technologies into business. This is one of the important roles of the Social Innovation Business Development Function Unit.

To realize a well-being cycle society the transformation of people and organizations is essential. DENSO itself needs to undergo significant changes.

In DENSO's main business field of automotive parts, thanks to the efforts of our predecessors, we always have customers to deliver our parts to the market, so it’s safe to say our market, customers, and product ecosystem is already established.

"In the area of social innovation, unlike before, even if we have the technology, there is often no market, or even if we create a product, it is not integrated into the social system, resulting in few customers. In other words, we must foster the market, customers, and products together, ensuring they all align properly with the technology. This is a significant challenge for DENSO, and I believe we need an organization where market development, customer development, product development, and technology development collaborate seamlessly." (Kato)

The organizational structure of the Social Innovation Business Development Function Unit is designed to materialize the vision of new markets and products quickly.

"For each commercialization concept, three teams are working in tandem: the commercialization team (vertical integration function) deeply engages with customers to form markets and plan products; the development team rapidly translates market and customer feedback into prototypes and standardizes technologies across all concepts; and the execution support team (horizontal integration function) oversees the organization, proposing acceleration or deceleration of concepts and optimizing resources." (Kato)

Furthermore, Kato continues by emphasizing that to accelerate business development, it is crucial to focus on creative performance and knowing one’s company.

"To pioneer unknown territories, Kato conveys to the team that it is necessary to engage in creative performance, which involves interpreting market and customer voices and trends, creating ideas and realization stories that surpass market and customer expectations, and acting boldly. This is in contrast to regulated performance, where one simply completes tasks proposed or instructed by superiors."

"Additionally, Kato emphasizes to the team the importance of knowing one's company. In the process of creating value that impacts society, it is crucial not to advance solely based on personal desire but to deeply understand DENSO's strengths and technologies. By combining this understanding with one's own passion, value can be created. By fully leveraging DENSO’s trusted brand and broad technology lineup, we believe it is possible to achieve a resonance and reverberation that goes beyond mere empathy." (Kato)

Kato expresses his vision for the future of the Social Innovation Business Development Function Unit, responsible for creating new businesses: “I want to create a world where the prosperity of today does not become a constraint on the future, and where the creativity of future generations is not hindered.”

"Energy and resources are depleting. The Earth is warming. Creating new things is causing the loss of the planet's sustainability—such constraints are something I absolutely do not want to create. I do not want to make a world where future generations cannot freely engage in creative endeavors. Sustainable & Creative is precisely the vision we are striving for—we who love creating things." (Kato)

This kind of world cannot be created by DENSO alone. Therefore, Kato continues, it is important to boldly challenge ourselves toward this vision by drawing a future that includes many partners both within and outside the company and working together to realize it.

"I feel that we are gradually seeing more partners, including those across different ecosystems, who resonate with the new vision of society that DENSO is creating. We aim to foster co-creation, realize it quickly, and develop products and technologies that perfectly align with new markets and 21st-century values. At the same time, we want to support customers who resonate with our vision, continuously enhance their value, and grow into a business that innovates society with a sense of scale."

"Currently, the Social Innovation Business Development Function Unit is advancing its efforts based on the Five Flows. However, we also aim to create new flows that do not yet exist. To continue being a company that society needs, we will continue pushing boundaries with our colleagues and partners." (Kato)