The Hunt for DX Champions
Despite being a nation renowned for assimilating advanced machinery and technology into everyday life, the reality of Japan’s IT workforce paints a very different picture. But Robert Half Japan is supporting clients undergoing digital transformation and is seeing promising progress.
Japan faces an uphill climb when it comes to digital transformation.
From left: Marcus Aakerholm and Lyndsey Hughes (Photo: Shelley Mae Photography)
Despite being a nation renowned for assimilating advanced machinery and technology into everyday life, the reality of Japan’s IT workforce paints a very different picture.
According to a survey of companies conducted by the Ministry of Internal Affairs and Communication, Japan’s information and communication technology (ICT) sector is falling short when it comes to digital transformation (DX). This is largely due to a lack of qualified technology talent. In 2018, there was a shortage of about 220,000 ICT workers, and the shortfall is expected to reach 450,000 by 2030.
At the same time, Japan’s economic landscape is experiencing a generational shift, influenced by new government policies and changing regulations designed to elevate the country to the global DX standard.
Slow Road to DX
Robert Half Japan supports clients undergoing digital transformation and is seeing promising progress.
“In many Japan-headquartered global companies, the pace of change has tended to be slow and incremental,” said Managing Director Lyndsey Hughes. “But this has started to shift over the past few years and momentum is building.”
“Even prior to Covid-19, we had started to see signs of large Japanese corporations incorporating their DX agenda into their corporate vision and hiring ‘disruptive’ senior executives from outside the organization—even from outside Japan—to expedite transformation,” he said. “It seems now there really is an appetite and a glimmer of commitment from corporate Japan to transform their global businesses.”
The 2022 IMD World Digital Competitiveness Ranking ranks Japan 29th out of 64 countries examined in terms of know-how, development of digital technologies, and preparedness to exploit digital transformation. Asian countries finishing ahead of Japan include South Korea (8th), Taiwan (11th), and China (17th).
Hughes noted that many companies have been stalling in their DX initiatives, often because they lack real commitment from the top, face resistance from middle management, or are short of know-how on how to manage global functions. They may also struggle to attract, and appropriately compensate, ‘new’ skill sets to implement the change.
DX touches every area of an organization, he explained, and while every company faces its own unique set of challenges, there are consistent themes that Robert Half is hearing from its customers. These include overhauls to human resources policies to adopt pay-for-performance compensation to attract specialized talent.
Robert Half is seeing companies start to take diversity, equity, and inclusion initiatives seriously, and many are ready to pay higher agency fees to prioritize the scouting of female talent as well as hiring, and even importing, more foreign talent. And while there is still a long way to go to embrace all types of diversity, at least the conversations have started, Hughes said.
In addition, large Japanese companies are beginning to move away from in-market IT to globally distributed IT functions that allow them to benefit from scale, respond more quickly to market changes, and mitigate cybersecurity risks.
There has also been a surge in the hiring of chief data officers to centralize data and analytics expertise, as well as breaking down data silos and harnessing the power of data across an organization.
Too many companies are entering uncharted DX territory, Hughes pointed out, and often lack the skills and expertise to deliver on such projects. This is where Robert Half and its business consultancy subsidiary, Protiviti, come in.
Helping Hand
“At Robert Half Japan, we have a strong focus on placing bilingual technology talent with foreign affiliates in Japan to bridge with their HQ, or to global Japanese firms looking to bridge their overseas subsidiaries,” explained Marcus Aakerholm, division director of business transformation. “As an enterprise, we have a unique capability to support DX initiatives in different ways, whether by placing permanent employees across various functions, specialist contractors to jump into different projects, or through Protiviti.
“In many cases, we offer a tailored and blended solution of outsourced consulting assignments combined with project contractors and permanent resources,” he added. “This allows us to respond flexibly to the fluid and diverse needs of our customers, across their global operations.”
Aakerholm has witnessed firsthand the unique market conditions affecting DX in Japan.
“A typical scenario for our team is assisting foreign-affiliated organizations that need to undergo a corporate-wide system update,” he said. “In these cases, the US office will send an internal team to implement the changes but, due to the unique market requirements here, their efforts are rarely implemented or understood by domestic teams. Our bilingual project managers and functional experts bridge that gap.”
Robert Half supports many Japan-headquartered clients that require bilingual talent with subject matter or technology expertise to interact with overseas subsidiaries.
In one example, Aakerholm’s team helped a global media company by bringing in a specialist consultant with the required language abilities, project management skills, and knowledge of system implementation to complete the introduction of finance modules of the Workday system.
Look Within
“When a company needs to evolve, it’s not just about bringing in new people,” said Hughes. “Organizations also need to create a culture of internal evolution so they can continue to adapt to changes in the market, customer needs, and so on.
“Generally, organizations think in functional silos, and those silos are often lacking a specific skill set,” he said. “But those skill sets may exist elsewhere in the organization. There are all sorts of capabilities floating around in every company, perhaps in a different function or a different market, so there isn’t necessarily a need to rush out and hire quickly.”
Smart leaders are adept at unearthing the hidden potential in an organization, he added, and creating an environment of empowerment to enable the enablers.
One Robert Half client innovated by introducing a “chief future officer” role and invited a relatively new hire to join the company’s transformation steering committee, alongside senior leaders from across the business, to bring a fresh perspective and add a new voice.
“People new to the organization often have the clearest minds to and come up with innovative solutions,” Hughes said. “Younger generations want their voices to be heard, to feel they are contributing, so tapping into their passion and capabilities is very important and can be a key catalyst for successful DX.
“Often, a manager thinks the candidate they need is a reflection of who they are and their own skills,” he said. “But they need to identify where they and their organization are coming up short and then find the person to fill that gap.”
The deficiency might be a hard skill set, such as expertise in a new technology stack or building global enterprise architecture standards, but it might also be the ability to champion new ways of doing things, exposure to different industries, or diversity in hiring to bring in better creative problem-solvers.
“I believe leaders need to be deliberate in understanding the current skill, personality, and knowledge gaps,” Hughes said. “And then ask themselves what their team members can do to help drive the transformation, what unique talents can they bring to the table.”
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Healthy Makeover
ChatGPT may be all the buzz right now, but it's just one of the digital tools transforming virtually all industries, including healthcare. ACCJ leaders share their views on how digital transformation can benefit patients as well as those charged with caring for them.
How are digital transformation tools changing healthcare in Japan?
ChatGPT, that large language model that is stealing the headlines these days, may be all the buzz, but it’s just one example of how technology is rapidly changing the way we work and do business. And while the artificial intelligence (AI) bot may represent a leap forward, the deployment of digital technology across an organization’s operations has been on the rise in all industries since the advent of the World Wide Web in 1989.
Today, we call it digital transformation (DX), and it is bringing computation, Big Data, AI, other digital applications, as well as connected devices, to bear on how products and services are made and/or delivered, in industries as diverse as education, finance, and logistics.
Healthcare could also greatly benefit from these incredible advances, and the industry is undergoing its own DX revolution—including in Japan. Here, healthcare DX is gaining traction in part due to the advocacy efforts of the American Chamber of Commerce in Japan (ACCJ).
However, speaking to The ACCJ Journal, industry insiders—including members of the chamber’s Healthcare Committee—note that adoption of healthcare DX in Japan lags that of other countries, especially those in North America and Europe.
“I think the current situation is that [Japan is far behind] compared with countries such as Denmark or the United States,” said Makoto Kawai, director of government affairs at Zimmer Biomet G.K., a global medical technology company. Kawai is also co-chair of the ACCJ Healthcare Committee.
Maya Mamiya and Diogo Rau share similar sentiments. Mamiya is an associate director of global public policy for Asia at Eli Lilly Japan K.K. and a Healthcare Committee vice-chair, while Rau serves as Eli Lilly’s chief information and digital officer.
Also sympathetic to Kawai’s view are healthcare industry expert and committee Vice-Chair Eiji Sasahara, and Go Ikeda, a senior manager in the Healthcare Economics and Government Affairs Division of medical devices maker Medtronic Japan Co., Ltd.
Data Utilization
Dr. Sasahara noted that healthcare DX in Japan—especially optimal utilization of Big Data—is still low. Why? It is in large part because “operations heavily depend on manual and paper-based processes,” he explained. “It’s not easy to utilize [the] merits of digital technologies, such as accessibility, scaling, and automation.”
However, optimizing Big Data use in healthcare is important for a variety of reasons. One area where its effective deployment is critical is in determining the health outcomes of patients, the experts pointed out.
Rau identified even more areas where optimal use of DX tools can make a difference. In the case of Eli Lilly, Big Data, AI, and machine learning can be used to:
- Develop digital connectivity for clinical trials and therapeutics
- Deploy solutions to manage patient-specific digital information
- Speed up the discovery of new life-changing medicines
- Design and implement clinical trials
- Increase accessibility to and diversity of medicines
- Obtain more accurate efficacy/safety data
- Improve patient experience
- Improve the safety and effectiveness of medicines
- Manage and interpret patient data from connected therapeutic devices
Medtronic’s Ikeda agrees. “In order to link personal health records [(PHRs)] and medical information, it is necessary to build a platform and take measures to shift data ownership and management to individuals,” he explained.
“By connecting and sharing data such as PHRs and medical information, the value of medical care will be improved, allowing for early diagnosis and prevention of disease progression.”
“By connecting and sharing data such as PHRs and medical information, the value of medical care will be improved, allowing for early diagnosis and prevention of disease progression.”
To provide better healthcare while maintaining universal access, the current fee-for-service health insurance system should be shifted to value-based healthcare (VBHC), Ikeda suggested. “DX of healthcare is an important precondition for VBHC.”
Sasahara refers to this new paradigm as “citizen-centered care”—a form of healthcare that not only makes use of digital tools such as Big Data, but also puts patient outcomes at the core of the industry.
Healthy Prices
The upside of deploying healthcare DX can be enjoyed not only by patients and the private sector, but the public sector, too, the experts noted.
Government ministries and agencies—as well as the hospitals and other healthcare institutions and research and development (R&D) centers they fund—will be able to reduce costs through the effective deployment of DX strategies.
Ikeda noted: “DX will promote R&D and enable outcome-based reimbursement evaluation, supporting a reduction of medical and nursing care costs. It can also support the healthcare workforce shortage [to] benefit patients overall.”
Data Security
Improving data security is another benefit the DX revolution will confer on the healthcare industry, according to the experts. This is especially the case when securing the privacy of patient records, an area of concern many of them highlighted.
Healthcare DX, they said, should adhere to international standards of security. These standards are based on interoperability of systems and use of platforms such as cloud computing. In Japan, however, patient data is usually stored on premises and in stand-alone systems, which are not necessarily secure.
“With regard to data storage, the current mainstream on-premises, stand-alone system has increased security risks, and it should be considered that an open mechanism using the public cloud paradoxically improves security,” explained Ikeda.
Lilly’s Rau added: “Some of the key concerns include ensuring the confidentiality of this data when tied to a patient and the integrity of the data when billing and making care decisions.”
Sasahara agrees. He also noted that, in Japan, there is a lack of in-house security expertise. “It is usual that there is no [chief information security officer] at Japanese hospitals.” Kawai held a similar view.
However, this opens up an opportunity not only to acquire the necessary human resources but also to “develop and utilize emerging privacy-enhancing technologies,” Sasahara and Kawai agreed.
Securely digitizing patient records will be key to realizing the potential of healthcare DX.
Prevent and Cure
The reach of healthcare is broad. It includes the prevention, diagnosis, and treatment of diseases, injuries, and ailments, and encompasses a wide area of professions and fields—from doctors to nurses to medical researchers—as well as facilities such as hospitals, clinics, and research institutions.
In the healthcare technology space, a few themes are emerging at the forefront. For Ikeda, three areas of particular note are:
- Grand design
- Value assessment
- Private–public partnership (PPP)
Regarding the path to implementation, Ikeda shared: “We believe that it is necessary to first illustrate a grand design for the overall picture of what the platform should be in order to realize medical DX, and then the process for building that overall picture should be presented.” It is the remit of the government, working with stakeholders across society, to provide that grand design or vision, he added.
“DX will promote R&D and enable outcome-based reimbursement evaluation, supporting a reduction of medical and nursing care costs. It can also support the healthcare workforce shortage [to] benefit patients overall.”
As for value assessment of digital health technology, Ikeda noted that this is difficult to properly assess under existing medical service reimbursement systems.
“To reduce the burden on medical professionals, as a new evaluation perspective unique to digital health technology [emerges], to equalize and improve the efficiency of technology, and to evaluate products that match the speed of product development and improvement, it is necessary to build a new evaluation system by referring to overseas cases and the utilization of non-insurance combined medical care systems,” he explained. Here, stakeholders in Japan and abroad can learn from each other.
And what of private–public partnerships? To enhance PPP, Ikeda added, it is also necessary to set up new forums for information sharing and discussion among the public and cross-cutting private sectors. “I am expecting that the ACCJ could be the hub of PPP.”
Sasahara mentioned three more trends to keep an eye on as paradigms change in the healthcare industry:
- Citizen engagement
- A shift from reactive treatment to data-driven prevention
- Utilization of gamification tech for patient care
The ACCJ Healthcare x Digital program focused on empowering elderly patients through digital health in 2022.
Advocating for Change
To keep abreast of fast-changing developments in the industry, the ACCJ Healthcare Committee was invited in March to an event hosted by the American Medical Devices and Diagnostics Manufacturers’ Association (AMDD).
Led by Ikeda, who is chair of the AMDD’s Digital Health Committee, the event featured Dr. Kengo Miyo of the National Center for Global Health and Medicine, a hospital and international medical research and healthcare training facility located across Tokyo. Miyo is the director of the institute’s Department of Planning Information and Management.
Ikeda explained that the event was organized to realize medical DX in a situation where the environment is changing, and technology is progressing rapidly. “Cooperation among stakeholders toward a shared goal, and understanding of medical DX as a whole, are indispensable,” he stated.
Future Ready
If Japan is to remain globally competitive and secure its future economy, overcoming the digital talent gap is a must. To find out where Japan is on the road to readiness, _The ACCJ Journal_ spoke with corporate leaders about the current state of talent acquisition and retention.
What must Japan do to ensure that its workforce can compete in a digital world?
We’ve been living in a digital world for quite some time. More than three decades have passed since the World Wide Web began connecting us through zeros and ones. For most of that time, it’s been possible to straddle the line between digital and analog. But if the first quarter of 2023 has made anything clear, it’s that we’re at an inflection point when it comes to technology.
If Japan is to remain globally competitive and secure its future economy, it must embrace digital transformation (DX).
Despite increased efforts to push DX, Japan dropped to 29th place in the 2022 IMD World Digital Competitiveness Ranking, an annual report published by the Switzerland-based International Institute for Management Development that assesses and compares the digital competitiveness of countries based on their ability to adopt and explore digital technologies.
More concerning is that Japan ranked 41st in the talent subcategory and 54th in future readiness.
Overcoming this digital talent gap is a must. For companies, the required skill sets are shifting, impacting not only talent acquisition and retention, but also the country’s education system and overall workplace culture.
To find out where Japan is on the road to readiness, The ACCJ Journal spoke with corporate leaders making DX possible, as well as those helping companies and talent come together for success in today’s digital-driven world.
Widening Gap
Talent acquisition has become a pressing issue for companies across Japan. In a 2022 survey conducted by the Ministry of Internal Affairs and Communications (MIC), 67 percent of Japanese respondents cited a shortage of information and communications technology (ICT) personnel as a roadblock to their DX efforts.
Surveys conducted by recruitment site Doda show a sharp rise in the monthly number of job openings per candidate for engineers and other tech professionals—from 3.44 in March 2019 to 9.54 in March 2022. The Ministry of Economy, Trade and Industry (METI) projects a shortage of 450,000 ICT workers by 2030.
“We have a big problem. It’s a serious talent crisis that is going to get much worse,” said Daniel Bamford, associate director of technology for Asia–Pacific at specialized recruitment agency Robert Half Japan.
Changing Workplace
Faced with a dwindling talent pool and fierce competition, the Japanese labor system must change within a few years if Japanese companies are to acquire good talent, Megumi Tsukamoto, senior adviser at global consultancy J.S. Held Japan LLC, told The ACCJ Journal. The country’s traditional human resources model, according to which compensation is based on age and seniority, has exacerbated the digital talent shortage.
A 2016 comparative survey by METI found that the average annual salary of ICT personnel in Japan was roughly half that of their US counterparts. Workers in their twenties in the United States earned an average of $77,990 per year, while their Japanese counterparts took home just $31,300.
“Workers in their twenties in the United States earned an average of $77,990 per year, while their Japanese counterparts took home just $31,300.”
Tsukamoto noted that, in a bid to obtain and retain talent, some Japanese companies are beginning to offer salaries two to three times higher than previous packages. Some are offering much more than that. This is the result of ICT professionals either moving abroad, or choosing to work for such foreign companies in Japan as Google.
However, higher salaries are just one piece of the puzzle, said Victoria Ryo, associate director at Robert Half. In-demand ICT tech workers expect more.
“A company that provides workplace flexibility, along with benefits, interesting projects, and an international environment, is going to be more attractive,” she explained.
Ryo pointed to innovative initiatives that catch the attention of potential ICT workers. As an example, she mentioned the financial services organization Money Forward’s Culture Hero campaign, which awards employees who epitomize the company’s inclusive culture. But Bamford warns that a good diversity, equity, and inclusion (DEI) policy is not enough to attract these in-demand talents.
“For them, it’s a base expectation, not something that will win them over,” he said. “But if you’re not providing a diverse and inclusive environment, you will lose people.”
Looking Abroad
To address the domestic talent shortage, companies such as Fujitsu Japan Limited have accelerated plans to hire non-Japanese engineering researchers in the wake of recent mass layoffs in the US tech sector.
While skepticism remains that ICT workers from abroad can thrive in Japanese workplaces, where language—and sometimes insufficient DEI culture—remains a barrier, Tsukamoto cites Mercari, Inc. as a domestic player that has found success hiring international talent.
The thriving e-commerce company began its full-scale efforts to recruit overseas talent in 2018. Today, more than 50 foreign nationals are working at Mercari’s Tokyo office, according to their FY2022 sustainability report.
Last year, the company opened a subsidiary in Bengaluru, a hub for IT companies in southern India, with the goal of recruiting IT workers. As of last July, it had attracted 45 new graduates from the Indian Institute of Technology.
The school has been a popular source of tech talent for Japanese companies such as Rakuten Group, Inc., whose Bengaluru base grew from six engineers in 2014 to more than 1,000 in 2020.
The Japanese government has responded to this trend by launching two new visa schemes in April that target highly skilled foreign workers, such as researchers and engineers, as well as graduates of highly ranked universities.
The Japan System for Special Highly Skilled Professionals, or J-Skip, visa allows researchers, engineers, and business managers to bypass the points-based system used to award visas to skilled professionals.
Meanwhile, the Japan System for Future Creation Individual, or J-Find, visa allows graduates from highly ranked universities to live in the country for up to two years while they find employment.
Evolving Workforce
The Japanese government also pledged last October to spend ¥1 trillion over the next five years on reskilling workers to address the shrinking pool of tech talent.
In January, Japanese Prime Minister Fumio Kishida said that guidelines will be drawn up in June to increase labor market flexibility to encourage workers to move to high-growth sectors.
Major companies are also contributing. Amazon Web Services Japan G.K. (AWS) has invested more than ¥1.3 trillion to help its Japanese customers modernize their IT systems and to overcome their digital skills gap through education programs, training, and certification.
“Cloud and cybersecurity skills will be the two most sought-after digital skills by Japanese employers by 2025,” said James Miller, the company’s head of public policy. “AWS has trained over 400,000 individuals in Japan with cloud skills since 2017, providing them with in-demand skills and best practices to help learners and organizations innovate in the cloud.”
Miller—an American Chamber of Commerce in Japan (ACCJ) governor who also serves as co-chair of the chamber’s Digital Transformation Committee and vice-chair of the Secure Digital Infrastructure Committee—shared an example of how AWS extended a 21st-century hand to a 19th-century company.
In 2021, the company helped Toppan Printing Co., Ltd., the 122-year-old Japanese global juggernaut, embark on a full-scale digital transformation. More than 1,600 of its employees received AWS training over three months and 1,050 pursued AWS certifications in a single year.
Room for Movement
As businesses make DX a point of emphasis, having a range of skill sets has become more important. In terms of hard skills, such as cloud and DevOps, Bamford noted that recruitment has gone from a T-shaped model, where someone has broad awareness and one deep specialization, to a V-shaped one, where the candidate’s deep specialization is complemented by medium-depth knowledge in other areas.
“The other side is that the soft skills aspect is really focused on being able to bridge global and local, while also bringing technical and people skills,” he added.
While senior managers who can lead a company’s DX efforts are in demand, companies should look inward for potential employees who they can elevate, according to Bamford. He pointed to a client that was looking for a certified ScrumMaster and, rather than hiring someone already at that level, found success in ambitious young candidates who the company could train to be certified.
“Since there will be that much more demand, and that much more shortage, the secret is to unlock the skill sets of the people you currently have. Experience is nice, but learning mindsets are even better.”
“Since there will be that much more demand, and that much more shortage, the secret is to unlock the skill sets of the people you currently have. Experience is nice, but learning mindsets are even better,” he added.
Ryo noted that this can help companies retain their technical talent. “I think the number one reason people leave an organization is because they don’t feel they have the opportunity to grow.”
Preparing Future Generations
While reskilling offers companies a path to overcoming current DX issues, Japan’s new ¥10 trillion national endowment fund to boost research at universities in strategic priorities such as artificial intelligence (AI), biotech, and quantum technology is expected to help train the next generation.
However, Matthew Wilson, dean and president of Temple University, Japan Campus, believes that changing student mindsets is arguably more important to reversing the tech talent drain.
He contrasted students in the United States, who define their future goals by jobs they want to pursue, with Japanese students, who aspire to work for specific companies.
“If your goal is to work at a company, your pathway is going to be a lot different,” he said, noting that the practice of job rotations at Japanese companies, in which employees are transferred from department to department every few years, provides fewer incentives to focus on specific fields.
Wilson also noted that Japan’s public education system is “very conservative, which is difficult to change,” but is optimistic that the government’s push for DX and the advent of new AI technologies, such as ChatGPT, the conversational large language model developed by OpenAI, will accelerate change.
“It’s going to force people to educate differently and to assess differently,” Wilson said. “The point isn’t catching somebody who just did their essay with ChatGPT. Rather, it’s how to educate somebody so they have the skills and the knowledge they’re going to need for a job five years down the road.”
Unified Response
Steps have been taken to reshape the country’s education system with last year’s release of the Roadmap on the Utilization of Data in Education. A joint statement issued by the Digital Agency, MIC, METI, and the Ministry of Education, Culture, Sports, Science and Technology states that, by 2030, the government aims to create “a society where anyone can learn in their own way, anytime, anywhere, with anyone.”
While Wilson recalls similar government ambitions, such as former Japanese Prime Minister Yoshiro Mori’s “one student, one computer” initiative more than two decades ago, which had little success, he is optimistic about the Digital Agency and Minister Taro Kono, whom he praises for being “energetic and constantly finding ways to challenge processes and procedures.”
But he also noted that, while things are starting to move, “it’s going to take a while to get Japan to the digital utopia that they’ve been talking about for 25 years.”
Surf the DX Wave
A digital transformation (DX) wave is sweeping across Japan, but learning to surf that wave takes experience. Another group of islands that know a bit about surfing, and have ridden DX to their advantage, could be a guide.
Five big lessons for Japan from Hawaii
As Japan’s fledgling Digital Agency finds its way through its second year of existence, and the Tokyo Metropolitan Government’s new start-up strategy takes hold, a digital transformation (DX) wave is sweeping across the country. Learning to surf that wave takes experience, however, and another group of islands that know a bit about surfing, and have ridden DX to their advantage, could be a guide for Japan.
How the Hawaiian tourism industry found renewed life through digital transformation was the subject of a February 28 event held at Tokyo American Club and online, and entitled How to Surf the DX Wave: Five Big Lessons for Japan from Hawaii. The American Chamber of Commerce in Japan Tourism and Hospitality Committee luncheon—co-hosted by the Digital Transformation and the Information, Communications, and Technology Committees—welcomed Mayumi Nakamura and Mike Birt of Ascent Partners, LLC to discuss the restructuring of Hawaii’s tourism management system.
When the Covid-19 pandemic forced a total shutdown of travel, tourism hot spots such as Honolulu, which had welcomed a record 10.4 million visitors in 2019, went from overtourism to dead empty in just a few days. The islands fell quiet. And when tourism returned in 2021, it was not the same.
Recovering from Wipeout
“As people started coming back, the domestic travel industry was just a madhouse,” Birt explained. It was clear that the pandemic had left Hawaii’s tourism industry scarred and unprepared for the influx. Change was needed.
The seeds for change were planted even earlier. When heavy storms hit Haena State Park, on the island of Kauai, in April 2018, major access roads were shut down and neither tourists nor locals could enter.
It was a needed pause, however. Before the disaster, some 3,000 tourists had visited daily, leaving little room for Hawaiians. “There was some conflict there, and many people couldn’t enjoy their own homeland,” Nakamura explained.
While the storm was a multi-million-dollar disaster for many, others saw it as divine intervention, an opportunity to reappraise the management of state parks and give greater consideration to the balance of tourists and locals.
When the decision was made to transform the system, the Hawaiian government approached Ascent Partners for help. Nakamura led a team that designed a timed-entry reservation system. Entry was restricted to those with reservations, and daily tourist admission was capped. This allowed locals more opportunities to enjoy their own land. Greater emphasis was also placed on hiking the trails and evoking the experience of the natural land as the Native Hawaiians saw it.
Due to the pandemic, all the work had to be done remotely. The Hawaii project was run from Seattle, while the software development team was in India and various support staff were scattered across the US mainland.
The project was a great success. Not only were there societal benefits, but economic ones as well. The state brought in 250 percent of its projected tourism revenue in the first year.
The island of Kauai, home to Haena State Park
Model for DX
Birt believes the fact that this project could be carried out remotely with such great success shows the potential for adapting the approach to other countries, with each following their own philosophy of reimagining post-pandemic tourism.
“It became a model for how to scale and develop very effective software digital transformation projects that can literally span the world,” he explained. “Destination management is a key element—and this isn’t just Hawaii. Venice, Iceland, Amsterdam … there are a number of [places] that have really had to work on how to manage their destination so that it doesn’t become overrun, and the community can still enjoy where they live.”
“It became a model for how to scale and develop very effective software digital transformation projects that can literally span the world.”
Birt and Nakamura said they learned a lot during their three years working with the Hawaiian state government. They shared five lessons which they believe Japan could put into action to transform its own post-pandemic tourism.
Lesson 1: DX requires leadership and vision
“Without a vision, none of the people around [you] can support the project. In the case of Hawaii, it was a return of aloha spirit,” Nakamura said. What made the project possible, she added, was that both the state government and private individuals were on board and committed to using the pandemic to take a bold step.
Lesson 2: DX has customers—and adversaries
“The state parks are literally part of [Hawaii’s] soul; Hawaiians think of their parks as almost a living thing,” Birt explained. Undertaking such a large-scale project, therefore, brought together many parties with a vested interest, whether emotional or financial.
Naturally, with this came those who strongly opposed the transformation. But nobody, Birt and Nakamura acknowledged, knowingly played the role of adversary; they resisted change simply for self-preservation. What saved the project from failure was that powerful friends in the Hawaiian state government shared the vision and supported it from the start.
Lesson 3: Technology is powerful
DX is not a simple one-and-done operation. It is an everyday effort that must be constantly analyzed and adjusted to fit the needs of the project. The DX wave does not stop or slow down. Everyone must be skilled and educated to properly participate in the journey. Questions must be constantly asked. In the case of the Hawaii project: Where are the tourists going? How are they going? How could communication be improved? What could smooth entrance into the parks?
Lesson 4: Expectations change
While the aloha spirit is the genuine treasure of Hawaii, it must always be met in balance with malama, the respect for the state and environment, as well as the customs and culture that come with it. You receive the generosity of Hawaii, but you are obliged to pay it back in appreciation. The same balance is sought in DX, where it has the potential to bring revenue and benefits, but we must be careful to not kill the goose that lays the golden eggs.
Lesson 5: DX waves won’t stop, learn to surf them
Lastly, there must be an emphasis on change, and an understanding that there is no final resting point in DX. Nakamura referred to the decline of Facebook and the rise of the artificial intelligence tool ChatGPT as examples of the unpredictable nature of technology. “You have to be ready to ride the waves as they comes,” she said. “Be adaptable, be adjustable. Don’t think of it as a destination, but as a journey.”
Big Moves Moving
Transformations take time. Reaping rewards can take longer. For Japan, shedding analog processes is critical for future prosperity. The ACCJ is bringing together the broad expertise of its membership to reassess the JDA 2030 and assist with the push for digital transformation.
Two years into the JDA 2030, ACCJ leaders take stock of progress.
Transformations take time. Reaping rewards can take longer. For Japan, shedding analog processes is critical for future prosperity, and the American Chamber of Commerce in Japan (ACCJ) is bringing together the broad expertise and experience of its membership to assist with the push for digital transformation (DX).
In early 2021, the ACCJ unveiled a comprehensive white paper entitled Japan Digital Agenda 2030 (JDA 2030) that outlined 11 big moves which could position the country as a global leader as we dive deeper into the 21st century. Produced together with McKinsey & Company, the JDA 2030 presents technology use cases and describes how Japan could realize a transformation that would put the world’s third-largest economy on equal footing with leading digital nations.
These measures to bolster DX in Japan call for concerted steps by major industries and stakeholders in areas such as digital talent, industry transformation, digital government, and economic renewal. And in the two years since the paper was published, the need for cross-industry collaboration to make many of the JDA 2030’s big moves a reality has become increasingly clear.
An Evolving Proposition
What has also become clear is that the pace at which digital everything is infiltrating all aspects of business and society calls for a reassessment of the JDA 2030. The ACCJ’s new Digital Forum, confirmed by the Board of Governors in April and led by Chair Mitsuhiko Ida, along with Vice-Chairs Kristopher Tate and Scott Warren, will be leading this task, working with the various digital-related committees to coordinate the chamber’s voice and position on DX.
And with DX impacting all organizations, not just those in technology fields, everyone has a role to play.
“The question is swiftly becoming, Is there such a thing as a non-tech field?” Warren told The ACCJ Journal. “We are seeing technology being applied in almost every business. I think the application of technology is almost too alluring—and necessary to keeping a competitive edge—to be ignored.”
ACCJ Digital Transformation Committee Co-Chair Jim Weisser agrees. “All businesses are digital or have a DX component. Trying to figure out which piece to transform—and how to do it—is a problem for all companies.”
“All businesses are digital or have a DX component. Trying to figure out which piece to transform—and how to do it—is a problem for all companies.”
Fellow co-chair and ACCJ Governor James Miller added: “The most important thing for members to keep in mind is the cross-sectional view versus the deep dives. There are sets of concerns that are technology specific, but we are continuing to focus on sharing what sets of issues business leaders should prioritize that are cross-sectional.”
Already, the chamber is looking at a variety of mechanisms to bring together the insights from the JDA 2030—and those continually being developed by the ACCJ’s committees—to refine its position and recommendations to provide the best guidance in a rapidly changing environment. This effort, supported by the work of the digital committees on technology-specific issues, is focused on teasing out the common positions across the broad range of committees to bring the whole chamber to bear on DX.
A question about the big moves outlined in the JDA 2030 is whether they might require a longer timeline to be realized than the seven years that remain until the original target date. This has spurred an effort to learn from the chamber’s landmark 2009 white paper Achieving the Full Potential of the Internet Economy in Japan, how progress was achieved, or efforts stalled, and how the digital agenda itself can evolve.
While a lack of dialogue or substantive business input may have slowed progress, the Great East Japan Earthquake and Tsunami of March 11, 2011, reignited interest in resilience. Similarly, former Japanese Prime Minister Shinzo Abe’s focus on the role of data at the 2019 World Economic Forum Annual Meeting in Davos has since proved to be a major lift for the JDA 2030.
Data, Trust, and Talent
At the center of Abe’s Davos proposal was Data-Free Flow with Trust (DFFT), something which Japan and its allies have struggled to define in the years since, said Warren, who is also co-chair of the ACCJ Legal Services and IP Committee as well as vice-chair of the Information, Communications, and Technology Committee.
“How we achieve [DFFT] will be one of the main topics discussed during the G7 conference. The real challenge, I think, is that the definition cannot be static, as it is very dependent on the type of data—critical infrastructure data versus other data—and the question of how much you trust the receiving entity and country. I think the true answer has to take those factors into account.”
Ida, an ACCJ governor, noted that the establishment of a new organization to promote DFFT was agreed at the G7 Digital Ministerial Meeting held in Gunma Prefecture in April. “For this, governments want private sectors to share our experiences, needs, and suggestions for policymaking. This is just one case in which the ACCJ can contribute,” he said.
Another area of great importance to successful DX is the acquisition and training of digital talent. But for a company to build a deep bench of world-class talent, with the digital know-how that is increasingly critical to success, takes time, Weisser said.
Megumi Tsukamoto, a vice-chair of the ACCJ Task Force on Economic Security, said that it is likely to take five years or so for Japanese companies to establish their digital bench once they recognize the need and begin fostering this talent. First, they must overcome major challenges in their operating cultures to provide levels of compensation expected by these professionals.
She also notes that opportunities are emerging that might enable Japanese companies and IT vendors to build their digital talent sooner. One is the sudden availability of personnel following the recent restructuring in the IT sector, both in Japan and in key markets overseas. “They’ll do it because, without IT talent, it is very difficult to compete with other global companies. It is an urgent issue,” Tsukamoto emphasized.
Companies are also increasingly aware of the business opportunities digital can drive, and are developing their people to realize them. Tsukamoto points to one Japanese service provider that is working to create tools, some powered by artificial intelligence, to help staff who lack digital skills. By pooling specialists in planning, user interface design, and the core product—and combining these with dedicated IT support—they are able to develop in-house software that can enable service staff to focus on the highest value tasks while leaving the software to automate others. She also mentioned a Japanese manufacturer that is already pairing robots with its production line workers to realize mutual benefits.
Now Is the Time
New tools such as these show that technology concerns are not the biggest obstacle. “Oftentimes, it is the business thinking that we should be focused on,” said Miller. “A lot of tools can be used to reduce risk and mitigate concerns in a way that was not conceivable a decade ago.”
Japan also brings to the table a high level of competency in science, technology, engineering, and mathematics, or STEM disciplines, that enables it to leverage a strong legacy of engineering capabilities. “Combined with being the world’s third-largest economy, the level of scale and scope of opportunities seen in Japan are really unrivaled,” added Miller.
“Combined with being the world’s third-largest economy, the level of scale and scope of opportunities seen in Japan are really unrivaled.”
These insights are the basis for plans to coordinate DX leaders across the ACCJ’s various digital committees. The goal is to
understand the high-level points and the depth of topics, ranging from talent acquisition to cybersecurity.
“Now is the time to work together,” Miller concluded. “We’re seeing dramatic changes in Japanese policy and company environment that we haven’t seen for 30 years. We are seeing a lot more combined interest in [the US–Japan] partnership.”
The ACCJ, with its diverse and multinational membership, is one of the few organizations that can pull such voices together and bring industry views to both the US and Japanese governments, noted Ida. “We can partner with both governments to support their policymaking by providing our experiences, needs, and technical assistance.”
Warren invites all ACCJ members to get involved in shaping the chamber’s digital advocacy.
“The ACCJ has consistently espoused, for years, that whatever new policies are created in Japan must be fairly implemented across both domestic and international companies,” he said. “As for specific policies to implement related to digital transformation, the ACCJ is in the process of gathering those. If you have ones you think important, please submit them to one of the many digital policy committees or to your committee leadership.”
Have an idea? Get involved!
The ACCJ has a range of committees working on leadership and advocacy for Japan’s DX journey:
Digital Transformation • Digital Economy Task Force on Economic Security • Secure Digital Infrastructure • Information, Communications, and Technology • Healthcare • and many more
Cracking the Code
As digital transformation touches every aspect of how we work and communicate, businesses face ever more complex challenges. The evolution of cybersecurity means that companies must rethink how they hire for this critical task. Robert Half shares how to secure the best cybersecurity talent.
Recruiter Robert Half shares how to find the best cybersecurity talent.
From left: Robert Half cybersecurity team members Fabrizio Fumagalli, Steven Li, Kani Taeng, and Naoto Hamada
As digital transformation (DX) touches every aspect of how we work and communicate, businesses face ever more complex challenges when it comes to protecting data—whether it is their own or that of customers. The evolution of cybersecurity means that companies must rethink how they hire for this critical task.
Steven Li, senior division director for cybersecurity at recruitment company Robert Half, told The ACCJ Journal that they see a lot of companies going through digital or IT transformations to shared service models, including for security.
“One of the challenges with security is that it’s all about data, and it’s all about being able to see your entire ecosystem or environment using a single source of truth or a single tool,” he said. “And a problem you may face is how to bring different business units that you’ve acquired onto a common platform for security operations and vulnerability management, so that when someone asks, ‘Are we impacted by this incident?’ you can answer with a degree of confidence.”
Robert Half advises clients on how to do just that and helps them find the right people to lead that transformation.
Expertise Matters
From a people perspective, previously siloed teams are being consolidated on a group level to create a centralized point of contact for cybersecurity that then provides support to each business unit, Li explained. Instead of outsourcing technical tasks to consultants, companies are now looking to hire specialists for their internal teams. But with much of this talent coming from outside Japan, domestic salaries are an obstacle.
“Employees here in Japan are typically rewarded based on tenure and age instead of merit and skill,” he noted. “To get around this, some companies have started to offer contracting solutions. They’ll say, let’s do a fixed-term contract. And with this fixed-term contract, we can step outside the bounds of our salary structure and give the specialist what the [global] market is paying, and a little bit more.”
This is important as there is an estimated shortfall of 190,000 cybersecurity professionals in Japan.
“Our clients are sharing that they need people who are application security engineers and can dynamically test the code.”
“Japanese companies are not used to hiring mid-career security professionals. They are used to hiring graduates, so to bring in someone mid-career, they don’t know how to do it, where to find them,” Li explained.
“Good cybersecurity engineers don’t typically fit the traditional model of an IT person. They may not have finished university, but they are adept at problem-solving and seeing patterns that other people might miss. We’ve placed people like this, and our clients have been absolutely happy with them,” he added.
Recruiting Manager for Cybersecurity Naoto Hamada shared an example of how Robert Half successfully placed a candidate who made a big difference for their client. But to do so, they had to overcome a challenge common in Japan: hesitation to change jobs.
“It was for a key project, and closing the role was a high priority. However, it’s challenging to find this talent in Japan,” Hamada explained. “We were able to find a match, and he received a competitive offer. But just one day before the deadline, on a weekend, he messaged me and said, ‘I can’t take this.’”
The problem wasn’t the offer but that he felt sympathetic towards his current manager should he leave.
“After receiving the message, he asked me to come meet at his station in person. I outlined the benefits of joining this international company and how it would provide him the career growth opportunities in line with his goals,” Hamada explained. “In the end, the key element was that we helped him visualize his priorities, then compare them to his current company. Based on this exchange, he decided to sign the offer and is now a key member in the newly created incident response team at his new company.”
Working hands-on in this way is at the core of Robert Half’s approach to recruitment. An important part of that are cyber risk meetups, which they host to bring together security professionals to share information and experiences which can help bridge the gap in cyber skills. A recent senior leaders’ meetup at Deloitte focused on ransomware resilience, and a public security meetup at Microsoft focused on software supply chain security.
“If we all share best ideas, best practices, and experiences, and implement those, perhaps we can improve cybersecurity maturity in Japan,” Li said.
Changing Regulations
Another thing to consider is the impact of changing regulations. Fabrizio Fumagalli, Robert Half’s recruiting associate director for cybersecurity, pointed out changes to ISO 27001, an international standard for information security management systems.
“This was updated in 2022, and companies have three years to comply,” Fumagalli said. “There are a few notable requirements on code security and the code supply chain. Companies need to be extremely careful about what’s in their code and conduct appropriate audits to assess where vulnerabilities may be.”
On average, about 80 percent of the code in a typical application is open source, Fumagalli noted, so it can be difficult to know what vulnerabilities may be hiding there. As a result, companies will need people in security who are proficient in software development.
“Instead of relying on documents from an external vendor, companies need a specialist who can check the code to ensure it is secure. Teaching security is easier than teaching the development side, so that is where companies’ priorities should be,” he added.
Specific to Japan, he said, is the need for mid-career cybersecurity talent. “You cannot randomly reassign, or do rotations, as most Japanese companies do. Due to the specific set of skills needed for the role, there is an urgent need for individuals who are experts in cybersecurity.”
Li added: “Our clients are sharing that they need people who are application security engineers and can dynamically test the code, play around with it, see if they can break it. Or do static analysis by reading the code itself and figuring out where the logic problems are. These skills are in extremely high demand.”
Partner for Success and Security
In closing, Li said that Robert Half is working to change the perception of recruitment in Japan and to help clients look beyond the numbers and the next quarter. If you are reassessing your cybersecurity, Li, Fumagalli, Hamada, Taeng, and the Robert Half team are ready to expand upon this approach and partner with you to build the best teams for today and the future.
Register now to learn, connect, and get inspired by Robert Half Japan networking events: roberthalf.jp