Column

Digital transformation in Japan

3 steps that CIOs are taking to accelerate DX initiatives across their companies

digital transformation japan

At one of the largest industrial painting companies in Japan, 98% of processes are handled manually and tracked by paper and pen. The organization’s CIO knows this is unsustainable and that more efficient, smarter ways of working are readily available.

“I know we need to change,” he said. “But not today, not now.”

Around the world, digital transformation is an imperative to survive in fast-changing markets, but it’s a difficult journey that requires buy-in at all levels of an organization. For Japanese companies operating in a consensus-driven culture with an aging workforce, the obstacles to digital transformation are particularly high.

They are not, however, insurmountable. The so-called 2018 work culture law (hataraki-kata kaikaku), passed by the government of Prime Minister Shinzo Abe, shows there is appetite for change. It also shows that top-down action aimed at encouraging innovation and increasing productivity is possible. However, this requires clear vision, strong leadership, and more than a little political savvy.

Besides, the recent crisis created by COVID-19 further emphasizes the necessity of immediate transformation for business continuity.

These are also requirements for driving digital transformation within an organization. CIOs can and must do so by working within the existing framework and setting the groundwork to move beyond it as well.

Here are three steps Japanese CIOs can take right now to drive digital transformation in their organization:

Step 1. Articulate a clear vision

Part of the above CIO’s reluctance to transform stems from his understanding that several members of his team would resist the shift to digital processes and approvals. Their approval is critical to the project’s go-ahead.

In Japanese culture, the CIO and top-level executives do not make decisions without the consensus of middle and lower-level managers. Thus, the CIO knew he would need the buy-in of his direct reports.

[Read also: How industries transform]

By laying out a clear vision, this CIO allowed his managers to be part of the process in a way that got them on board with his recommendations.

The vision was detailed in a transformation roadmap that showed:

  • Where the company would be in three, five, and 10 years. This provided the visibility that employees needed to take ownership of the plan.
  • The benefits and goals of this transformation in both the short and long term.

By creating a detailed path to transformation, CIOs can orient the organization around their vision, instead of the other way around. Even changes to the plan still center around that plan. Over time, CIOs can gain the trust needed to move beyond slow, consensus-seeking operations.

Building this roadmap is often difficult; some CIOs may consider hiring an outside consulting firm to help them design their digital transformation.

However they choose to do so, the journey must begin. It’s time for Japanese CIOs to articulate a vision for their organization’s future. Otherwise, the role of the CIO is more figurehead than strategic leader.

Step 2. Identify small wins and make them happen

Once a CIO’s vision is clearly explained and accepted, the emphasis shifts to getting results. Here, CIOs would do well to identify a few easy wins and, in doing so, immediately show the value of digital transformation. These small wins are invaluable in building necessary momentum and overcoming internal resistance.

At one of the largest electronic component manufacturers in the world, the IT team sought to digitize the customer-support process. Typically, in Japan, customers go directly to the salesperson for product support. But sales teams often lack visibility into these issues, which are handled through manufacturing and quality control (QC). That means sales must contact manufacturing and QC, creating an unnecessary back-and-forth that often negatively impacts customer satisfaction.

Instead, the electric components manufacturer’s IT team wanted to give salespeople a tool to look up products and find the latest information on issues or defects. By working with a counterpart in quality control, an IT manager identified four products out of thousands and developed a proof of concept that delivered immediate value.

In the same way, CIOs should identify partners within their organization who are open to a new way of operating. They must then work with them to make small, fast changes.

Often, a few good wins can help build the momentum needed to sustain digital transformations.

Step 3. Promote IT to other leaders

Small wins can act as a proof of concept. They also help build organizational trust in the IT team. This matters immensely because IT teams in Japan are often perceived as troubleshooters or “IT janitors” rather than as strategic partners. For CIOs and their teams to drive digital transformation, that perception must change.

CIOs are as much advocates (for themselves and their teams) as they are technologists.

One Japanese aircraft company hired a new CIO from the outside and gave him a small mandate. That’s fairly typical in Japan, where CIOs are not generally seen as peers to the CEO or COO. But after some initial success, this CIO convinced the CEO and other leaders of his value and was given a budget to execute on the transformation strategy he had presented.

The lesson? CIOs are as much advocates (for themselves and their teams) as they are technologists. By completing initial projects and celebrating those projects widely, including to shareholders and board members, small wins lead to larger projects and eventually help complete digital transformations.

In Japan, these transformations are not so much a choice as a necessity, just as they are for organizations around the world. But for Japanese enterprises facing overseas competition, a shrinking workforce, and generational change, the imperative of transformation is that much more acute.

There is plenty of innovative spirit among younger Japanese professionals entering the workforce. The big question for Japan is whether companies and society will nurture this spirit or allow it to die by clinging to stale, legacy management styles.

Japanese CIOs can help answer this question by acting as change agents to help drive digital transformation initiatives throughout their organizations.