Japan’s tryst with AI, Analytics and IOT

Japan has always had a fascination for robots. In fact, the country has been using robots in restaurants, schools, hotels etc., for quite long time now.

Even Japanese movies and cinema have been early adopters of robots with fair degree of emotional and artificial intelligence. One Japanese film, Cyborg She, is about a man who falls in love with a girl who turns out to be a robot. Another Japanese animation, Chobits, is about a student who befriends a robot, and analyzes the relationship between humans and robots.

The land of the rising sun may be the only country where people seem not to be overly worried about job losses due to automation. Japan’s shrinking working population, the lack of skills availability, and the high cost of labor present a strong case for adopting automation. Japan has always led the world in industrial robots, leads in process automation and now continues that leadership with workforce robots. It is also one of those countries that has not done too much offshoring (to reduce cost and optimize service delivery) and yet has consistently increased its spend on third party vendors.

It surprises me, therefore, that a country with such advanced experience in robots seems to be lagging (e.g. US, China) in taking a lead in AI, IOT and Analytics.

Japan has a huge potential for emerging technologies. Forecasts estimate the Japanese AI market to reach USD 209 billion by 2020. With so much potential and history of lead in robots and automation, Japan has not taken the lead in other technologies.

How can Japan take a lead in AI, Analytics and IOT?

Mitsuru Ishizuka, who is a professor at Waseda University, once famously claimed that the Japanese model focuses on solutions that addresses social issues rather than creating global solutions. Experts blame the innovation decline on Japan's homogenous work culture. Japan is home to a culture that frowns on failure.

But Japan can still take a lead in technology innovations. If Japan has to maintain or regain its lead in the manufacturing and automotive space, it has to quickly converge technology with operations.

As Japanese firms start adopting cloud, ML, AI and IOT-based solutions, they need to leverage more external vendors and set up an operating model that allows Japanese companies to tap into new technologies and solutions at a low cost, to remain competitive. In short, Japanese firms need to adopt a global shared services model that allows them to set up regional hubs that will act as delivery centers, COE and innovation hubs.

Japanese firms need to adopt a global shared services model that allows them to set up regional hubs that will act as delivery centers, COE and innovation hubs.

We are already seeing examples of Toyota, Mitsubishi, Hitachi and a few others adopting technologies rapidly into their business and operations. We also observe that many Japanese firms have set up offshore operations in S.E Asia, India, Europe etc. However, most of the offshore units are focused on operations and manufacturing. It is time that Japanese firms set up regional hubs to tap into technology and innovation, too.

Japanese firms need to shift from a traditional, hierarchical delivery model to an agile services delivery model

In order to take a lead in emerging technologies, Japanese firms need to shift from a traditional, hierarchical delivery model to an agile services delivery model. Through regional centers (shared services units) they should be able to set up COEs, build capability in IOT, AI and Analytics, and leverage these services to support various operating units. This requires a mindset change to adopt a new operating model.

The Bottom Line: Japan needs to adopt diversity to generate ideas; and global services delivery models to tap into technology and innovation.