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Dentsu chief falls on the sword that he wielded

On October 17, every employee at Dentsu — Japan’s biggest advertising agency and arguably the country’s most influential company — received the same, catastrophic-sounding message from the company’s president, Tadashi Ishii.

“The approved way of working at our company cannot be accepted by stakeholders, including the authorities,” said the memo, according to media reports.

Coming a month after Dentsu was caught overbilling hundreds of clients, and just days after the death-by-overwork suicide of a 24-year-old graduate trainee had come to light, it was quite the admission. But it was all the more stunning coming from a corporate chief who had risen through, thrived in and proudly embodied the exact company culture he was describing.

This week, Mr Ishii went a step further. Taking responsibility for the suicide of Matsuri Takahashi, the 65-year-old president announced he would resign, amid raids on his company’s offices and a swirl of public debate over the broader perils of Japan’s overwork culture.

In a sombre press conference, he admitted that Dentsu’s culture was one that could not turn down business no matter how stretched the staff. “Everything about this,” he said, “was excessive.”

Taking the reins in early 2011, Mr Ishii oversaw the transformation of a company whose dominance of the Japanese advertising market was supported by the notoriously uncompromising expectations on its staff. It was Mr Ishii who engineered the £3.2bn purchase of Britain’s Aegis agency in 2013 — a deal that transformed Dentsu into a fully international business — and a steady stream of subsequent global acquisitions.

He was also the man in charge as Dentsu acknowledged that its dominance of the Japanese television advertising market was not a long-term growth driver, leading to the crafting of a digital strategy.

But continuing the traditions of punishing hours, lavish client entertainment, total devotion to the cause and relentless aggression in business, say current and former employees, were all seen as critical to this transformation and were led from Mr Ishii’s office.

Senior industry figures, noting Mr Ishii’s known proximity to Japan’s ruling party and Dentsu’s central role in the 2020 Tokyo Olympics, suggest his resignation may have come with the tacit approval of the administration of Prime Minister Shinzo Abe — a government desperate to present itself as worker-friendly and embarrassed by scandals at a key corporate ally.

Yet even with a foot out the door and his company being held up as the bogeyman of overwork and corporate despotism, Mr Ishii could not resist injecting a note of pride into the mea culpa: Dentsu, he said, demanded “120 per cent” from its employees.

It was a line that came from a corporate leader who had spent his working life striving to deliver that impossible percentage. Mr Ishii — media-shy, calculatedly low-profile but a supreme networker at the highest level of Japanese business and politics — had not always been deemed the perfect heir to the Dentsu empire.

An outlier from the start, Mr Ishii aggressively pursued Dentsu’s global and digital transition without being bound by corporate taboos and tradition, according to people who have worked with him.

His appointment in 2011 shocked clients, since he was the first chief executive to come from its domestic sales and marketing operations. Since Dentsu’s founding in 1901 by war correspondent Hoshiro Mitsunaga as a dual news and advertising agency, Mr Ishii’s 11 predecessors all had a newspaper advertising background — a longstanding quirk to satisfy Japan’s two biggest new agencies, Kyodo and Jiji, which were Dentsu’s main shareholders.

Analysts say the selection of Mr Ishii, who graduated from the internationally focused Sophia University rather than the elite, domestically-focused universities from which Dentsu usually recruits, signalled the group’s ambitions to expand beyond its traditional strongholds in domestic newspapers and TV to overseas markets.

On Mr Ishii’s watch, Dentsu’s overseas sales rose to 54 per cent of Y819bn ($7bn) in total sales, from 18 per cent before the Aegis acquisition. Digital ads account for 34 per cent of total sales.

That has been part of the problem, say people close to the company: both the move abroad and the shift to digital have exposed flaws in the Dentsu way. Mr Ishii just happened to be in charge when they came to light.

But for all his apparent mould-breaking, Mr Ishii was as much a creation of the culture as he was its unbending guardian. Dentsu’s “approved way of working,” say analysts, had been specifically approved by Mr Ishii and generations of predecessors.

Mr Ishii, like every other employee, had mastered the Dentsu way from an internal handbook known as the Oni Jussoku — “the devil’s 10 principles” — laid down by a former president in 1951. The most notorious of its instructions: “Never give up on a task till you reach your goal, even if you die in the process.”

Via FT