Introduction

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What is the key to creating new value?
New business to learn from 10 articles
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What was DX in the first place?

Even if you say DX in a nutshell, you may hear that "the definition is different for each person", so let's first reconsider the word DX just a little. For reference, the definition by the Ministry of Economy, Trade and Industry is as follows.

 “In response to drastic changes in the business environment, we will utilize data and digital technology to transform products, services, and business models based on the needs of customers and society. and establish a competitive advantage.”

If you dare to summarize this content in one word, DX = "digitalization" seems appropriate. However, what I would like to point out here is that digitization itself is the goal.

In fact, some people may have heard of cases such as "I lost sight of the goal point while aiming for DX, and the plan fell through." Although the definition of the Ministry of Economy, Trade and Industry also includes “transformation,” the basic goal of DX is considered to be desirable, such as “creating new business value from the customer’s point of view.”

Although it is such a DX, there are various forms as a reality.

For example, it is common to see cloud services that manage bills, business cards, etc., as data, improve work efficiency, and encourage employees to engage in more creative work.

On the other hand, one of the policies I would like to recommend is "promoting DX with a view to creating new businesses." The above example is mainly for improving the company's own business, but it will be more important in the future to aim for the future and promote DX to further develop the company.

Importance of New Business Creation and Three “Types”

So why is new business creation important? Let us take as an example a so-called Tier 1 manufacturer, which operates as a primary supplier (manufacturing and supplying parts, etc.) in the automobile industry.

Customers of Tier 1 manufacturers are OEMs (automakers). What should be noted is that in the recent automobile industry, the development of technologies such as autonomous driving and electric vehicles (EV) is extremely remarkable. This in itself is good news for the industry as a whole, and various OEMs are actively working on it.

However, it is difficult for Tier 1 manufacturers to predict whether their existing business partners, OEMs, will grow or decline in the future, regardless of how excellent their products may be. There is a risk of being

That's why it's important to develop new customers that we haven't been able to touch until now. to do).

We have categorized this new business creation into three “types”. The figure below shows them. “Operational improvement (lower left in the figure)” refers to initiatives to improve operational efficiency, mainly for the company and existing customers, as mentioned earlier.

Classification of new business and innovation creation

Innovation can be divided into three types: core application type, zero start type, and business expansion type, depending on the target customer and its area.

Recently, we often see “business expansion type” (bottom right of the figure), which is done with existing customers. However, at our company, we believe that it is important to start with "business improvement" and then advance to "core application type" as a method that is relatively easy to work on and easy to produce results.

DX royal road pattern

Among these, it can be said that the method of connecting business improvement to the creation of new core application type business is the royal road pattern of DX that is easy to work on and easy to produce results.

"Core shift" extracts the areas that have been successful in improving the company's operations and the good points of the core technology that it originally possessed, and uses this as a base, so it is possible to provide and convey the successful experience to customers as it is. There are benefits.

In businesses involving DX, it is not uncommon to say, "I don't know the cost-effectiveness (value and expected value)." Therefore, having a high resolution of business prospects will work as a big advantage not only in the company but also in the interaction with customers.

Examples of DX co-creation at our company

Here, we would like to introduce two examples of companies with which we have collaborated with DX products.

Business expansion by improving operational efficiency with AI Sompo Risk Management

The first company is Sompo Risk Management. The company provides consulting services related to various risks, and its customers include factories and distribution bases.

The theme at this time was "dangerous driving detection". The background to this was the approximately 2,000 work-related accidents (including fatal accidents) caused by forklifts each year. In addition, although warnings are issued based on the video of the drive recorder at the site, there is also the problem that it is difficult to visually inspect all the video with human power.
Dangerous driving detection using AI was adopted to solve this problem. The use of AI has mainly brought about the following benefits.

・ Significant reduction in video confirmation time for employees (because AI detects only dangerous driving locations)
・Reduction of overlooked visual checks

 Sompo Risk Management pays more attention to the safety and damage risks of its client companies by expanding its risk assessment business (risk estimation and analysis, etc.) in addition to its existing business of non-life insurance contracts. I thought that was the value of doing DX.
As a result, due to the realization of operational efficiency using AI, Sompo Risk Management increased the number of risk assessments it could perform, leading to business expansion.

Increased sales opportunities by streamlining the estimation process Koiwai

The second company is Koiwai. The company is a company that mainly deals with casting parts, and is engaged in prototyping business using 3D printers, etc., and AM business (manufacturing metal parts).

The theme here is "Efficiency of Quotation Work". The problem is that when we receive a request for an estimate for a prototype, we have received many orders for similar projects in the past, and despite the fact that we have accumulated a large amount of data, we are unable to make use of this data, and it takes time to make an estimate. Or, it was that the correspondence was dependent on the individual.

Therefore, the company has introduced a system that can search for information on similar projects in the past based on 3D data received from users. As a result, the reduction of in-house work and the elimination of dependence on individual skills made the estimation work more efficient, leading to an increase in the number of proposals for receiving orders.

Use success stories, not technology

The point of the two cases I introduced is that we succeeded in cultivating new customers through DX by taking on the challenge (core shift) to the "core application type" mentioned above.

Sompo Risk Management has been able to develop services for factories and distribution bases that it had not been able to touch until now, while leveraging its existing business capabilities. In addition, Koiwai was able to introduce a highly versatile system for 3D data search, which will improve the efficiency of its own estimate work and will be advantageous when developing new customers.

In DX, it is important to make full use of technologies such as AI, sensors, and the cloud, but in this way, it is important to create a "high yield" in your company and express it as value to new customers. ” is considered to be the royal road pattern.

Some companies survived the predicament of the corona disaster with DX

The last part of [Part 1] is the story of DX in the corona disaster. As you already know, the impact that this infectious disease had on the world was too great.

The figure below shows the operating profit growth rate of listed companies in the fiscal 2020 financial results announced in May​ ​2021. According to this, the economic trends (positive and negative) at that time were largely divided by industry like the letter "K".

Unprecedented Pandemic Impact on Businesses

In May 2021, the fiscal 2020 financial results of listed companies were announced across the board, and the economic trend became an unprecedented "K-shaped".

Specifically, as a result of people refraining from going out, e-commerce (EC) and communication infrastructure grew significantly, but transportation, travel, and dining out declined significantly.

However, even among companies in industries that experienced a significant decrease in sales and profits, there were certainly some that showed growth (increased sales and profits as a single company). Therefore, we have independently analyzed companies that have incorporated DX / AI into their business strategies while this is true (whether or not they have incorporated DX / AI is determined based on securities reports).

Analyzing the trend of companies that have grown their business performance in an industry with decreased sales/income

As a result, a total of more than 100 companies “achieved increased sales and profits despite belonging to an industry with decreased sales and decreased profits” and “incorporated DX / AI into their business strategies”, and 32 of them were in business. We were growing over 10 % on a profit basis.

32 of the companies working on the DX/AI strategy have grown their operating income by 10% with the ``increase in sales and profits in an industry with declining sales/declining profits''

In fact, I can't see how much impact the DX / AI strategy had on the profit and loss statement (PL), but the culture of "always responding quickly to the coming wave" is the key to growth in this difficult situation. It is thought that it was supporting

In addition, the image below is a selection of some of the companies that meet the above conditions.

In particular, Company S in the apparel industry and Company I in the cosmetics industry, which were hit hard by the coronavirus pandemic, made great strides of 65.4 % and 115.3 %, respectively, while other companies faced an unprecedented pinch.

The above case can be said to be a good example of the clear results of business innovation through DX, such as the rapid conversion to digital advertising, the launch of an original EC site, and the development of products using AI. There are various types and initiatives of DX, but it is thought that it can be one of the means to counter unforeseen situations such as the corona disaster as well as to grow companies.

The contents of [Part 1] are as above. In [Part 2], we will introduce the details of the 10 articles when starting a new business.

Information on the white paper that summarizes the points of DX promotion & AI introduction

In addition to the main points of this article, we have prepared a white paper that summarizes the "implementation of AI" that we highly recommend for the efficient promotion of DX.
If you want to learn more about DX promotion, please take a look at this opportunity.

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