sustainability in Japan

Digital Transformation in Japan - is it "cutting-edge"?

Japan is well-known by its cutting-edge technology development, significant support and investments in R&D inside and outside the country. Being conservative when it comes to work organization and administration, this country changed its habits and opened its mind to the remote work culture, allowing DX and ICT technologies penetrate into daily life and making Japanese society more open to the ICT innovations development. According to the JMA (Japan Management Association) research, almost 90% of Japanese companies have started DX process or are at the stage of discussing.

However, DX process in Japan is not as smooth as it expected. This connects to the “formalities” culture and management style with too difficult and slow decision-making process, making new values, new technologies, ideas and innovation difficult to implement broadly.

Ministry of Economy, Trade and Industry (METI) announced in December of 2020 its DX policy in DX Report 2, emphasizing the need to break away from “legacy company” culture, that means transformation of Japanese traditional corporate organization with its inflexible rules and formalities, lack of cooperation and communication between departments, making company too rigid for new ICT technologies and innovations. The other aspect, stated in the report, is promotion of co-creation between “user”(deliver products to the end-user) and “vendor” (suppliers for sale) companies, that for now are rather co-dependent on each other and reached some level of stability, however, can’t be efficient enough to grow in digitizing environment. Instead of co-dependence, these both types of companies are support to generate new values and share their experience and technology with each other via cross-sectors platforms. However, this transformation might be difficult, first of all because some level of already existed stability and lack of enough financial power to take a risk, shortage of highly-skilled up-to-dated staff. As well as changing relationship between user and vendor companies may lead for the last one to become unnecessary.

METI offers for corporate management 6-level evaluation system to evaluate current corporate DX stage and form a framework for further commitment.

Level 0  Not started yet
Level 1 Partial sporadic initiatives
Level 2 Partial strategic initiatives
Level 3 Cross-department promotion of DX, based on corporate strategy 
Level 4 Continuous initiatives, based on corporate strategy
Level 5 Digital company on the global market

As a part of domestic and foreign SDG activities, JICA (Japan International Cooperation Agency) takes part in ICT promotion projects in Japan and developing countries.  Particularly, telematics services (automobile, remote network) in Aomori Prefecture aiming fuel saving, implementing fintech technology in Kita-Kyushu, agricultural products  traceability projects in Okinawa prefecture. In Gifu and Kanagawa Prefecture prefecture JICA started projects with smartphone sensors, which help to detect troubles on the road and provide maintenance in time.   Other initiatives: smart bike sharing with mobile integration in Tokyo; Statistical data collection about current population with the help of smartphone location data across the whole country;  Predictive type crime prevention camera with  AI, big data and statistics use in Kyoto Prefecture.

JICA initiated lots of  SDG projects in Southern Asia and Africa. Implementing IT technology in agriculture logistics in Indonesia, improving education in primary school with the help of ICT in Africa, real time monitoring system for climate change data aggregation. Both private companies and universities are joining these projects.   

What about famous Japanese technology giants?

Fujitsu announced its Fujitsu Technology and Service Vision 2022 together with Sustainability research report in July. Sustainability transformation through the Digital innovation will be a priority for the company in the next ten years.

Sustainability research was conducted in 9 countries in 10 different industries and showed more than half 67% of companies agreed that DX is a key to sustainability transformation success and around 60% are actively planning investments and initiated DX processes in their companies.
Fujitsu based its vision on three factors: “human centric”, “data driven”, “connected”, emphasizing the importance of digital literacy and technological partnership with outside ecosystems. The company is planning to focus its resources on computing, network, AI, data security, converging technologies (CTs) and partnership with other companies, universities and research organizations.

Hitachi is planning to increase DX related revenue to 50% and R&D investments to 30%  by 2024, shifting to the in DX and Decarbonization  high-performance products. Hitachi also developed its original digital training system and is aiming to teach up to 98,000 workers about the newest DX technologies in the nearest 3 years (+50%). 20, 000 from them are planned to procure from foreign countries. Previously the company has provided DX education at its training facilities, R&D center and Hitachi Information Academy, but in 2019 these three facilities formed into one educational company, focused on DX, Operational Technology and Business Education.

To sum up, despite of being late in DX implementation process, especially on the policy level, there are plenty of promising projects and initiatives inside and outside Japan. Cooperation with foreign experience and work forces might be a key for Japanese authorities and business  to stimulate more speedy development of DX in Japan.     
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