The Journal The Authority on Global Business in Japan

Robot Taxi and the Japanese government have announced that next year they will be testing self-driving taxis on Kanagawa roads.

Passengers in the city of Fujisawa, Kanagawa Prefecture, will be able to ride the cars—in which there will also be a driver and assistant to ensure safety—to and from a local supermarket.

It is one baby step on the way to the government’s goal of getting the roads driver-free.

At the 44th Tokyo Motor Show (see page 17) this year, automakers displayed their concept vehicles for our driverless future: Nissan had the IDS; Honda is working on its Sensing System; and Toyota has its eyes on 2020 as the date for its first market-ready vehicle.

It seems all but inevitable that we are going to confine taxi drivers to the scrapyard of history within a few years.

SMART CITIES
Preparing for our sci-fi future, however, are more than automakers. The government in Tokyo has placed information communications technology at the center of its most recent update of the Abenomics plan to resuscitate the Japanese economy.

Having a smarter city in place by the time of the Tokyo 2020 Olympic and Paralympic Games is part of the city government’s goal.

Tokyo Governor Yoichi Masuzoe says the metropolitan government aims to “conceive a grand design that takes a hard look at Tokyo’s future and to deliver bright hopes to the people [of the city].”

For its part, Tokyo will develop smoother transport links, make facilities more accessible, and make more use of public spaces.

What the private sector will do is more difficult to see. Companies large and small will be expected to work to help create a society that makes more use of information technology, artificial intelligence, and big data. But how? And will the advances be of any use?

Soren Jones, a senior consultant at Deloitte Touche Tohmatsu Limited, sees the use of open data—public information that can be manipulated by anybody with the appropriate skills—as essential.

“How are tourists going to react to subways during the Olympics?” he asks. “I can imagine it’s going to be pretty crazy.”

That can be resolved by utilizing data to the full, he argues. “When I search for a train line, I get answers for the cheapest way and the fastest way.

“But maybe I want to go the least crowded way; maybe I don’t want to be crushed like a sardine.

“That data is available. The train operators know which trains are most crowded at what times of day.”

An app that could find the quietest way to get from A to B, even if it took more time, says Jones, would be a smart innovation that could prove essential for the likes of pregnant women, the disabled, and the elderly.

MARKET DRIVERS
One problem with trying to foster an ICT revolution from the top down is that if companies do not need to upgrade equipment, they do not do so.

Jim Weisser, co-founder and CEO of PBXL, a company that offered telecommunications and IT services via cloud computing, says his company found that needs vary by industry. In November, PBXL joined BroadSoft to become BroadSoft Japan K.K.

According to Weisser, there are two types of companies that are upgrading to cloud technology: Those that move offices and update their systems; and those that are just starting up and, never having operated on unconnected technologies, are sometimes called “cloud leapers.”

In other sectors, however, such as construction, there is simply no need to move away from current technology.

For all its faults, a fax machine, for example, can serve the interests of many in Japan.

“The fax machine remains strong [here] because it is an easy-to-use device for one-to-one communication, especially if you are not used to keyboards,” he says, “even if there are lots of negatives about it.”

Confronted with such circumstances, officials have few options. “The government can do a number of things,” Weisser says, “but unless they send people to each office to say ‘thou shalt use cloud,’ there has to be a market driver for adoption.”

That is not to say Tokyo is at a standstill. His company has seen growth each year since its 2006 inception, barring 2009—when the chaos triggered by the Lehman Brothers bankruptcy was at its peak.

OPPORTUNITY CALLS
Analysys Mason Ltd., a consultancy based in London, believes that Japan has huge potential if it uses data correctly.

According to a report it wrote for Google Inc. last year, the data driven economy could grow from more than ¥7.2 trillion in 2014 to ¥15.1 trillion by 2020.

“Japan has the right technological and economic foundations to benefit greatly from data-driven innovation,” the report states.

“Traditionally strong sectors, such as manufacturing and transportation appear best placed currently and, in the future, increased adoption should enable more gains.”

For manufacturers, the gains are obvious: Electronic measurement can improve efficiency, which means better margins and higher competitiveness.

In other areas, the Olympics provide a big opportunity.

“Any time you have a surge in the number of people, you are going to stress city resources,” says Weisser.

“The things that people will be surprised about on the tech front will include the lack of free Wi-Fi.

“Another is [inefficiency], in terms of hotel capacity. In terms of private transportation—taxis and what have you—it’s effective, because public transportation is so good.

“I expect in 2020, just due to [scale], you are going to have issues with how long it takes to get from A to B to C.”

That means companies making use of the cloud—such as Uber, the ride-booking service, and room rental site Airbnb—could see sharp growth and adoption, as the city simply looks for a way to raise its capacity.

REGULATION AND RISK-TAKING
Regulations, however, could prove a stumbling block. A recent article in the Asahi Shimbun points out that tourists staying in apartments, which they rent through the Airbnb website via a legal grey zone, are already irking surrounding residents.

As with self-driving cars, which raise questions of responsibility in the event of an accident, establishing liability in other areas of a data-driven economy is tricky.

Deloitte’s Jones, however, views data with a sense of urgency, believing that the industry’s infancy means finding what works is a matter of trial and error.

“If people are producing value, [data’s] use will accelerate more.”

If Airbnb works, then so be it. But in his experience, companies can be reluctant to part with information, and that is impeding the development of hardware and software that, as yet, we cannot imagine.

“How do we put data into the hands of entrepreneurial people in a way that it can be used commercially?” he asks.

“If the private sector is unwilling to take part in that conversation, huge chunks of data will be missing that are needed to make Tokyo the most accessible city it can be.”

HighTech

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Richard Smart has been living and writing in Japan since 2002.

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