Japan is the third largest economy with a “top education system, leadership in sectors such as industrial and automotive manufacturing, high-quality infrastructure, as well as a professional culture infused with a strong work ethic and repeatable methods to produce high-quality goods and services (McKinsey). At the same time Japan is way behind when it comes to its digital competitiveness. An unfortunate example of this are the local authorities in Tokyo who are still using floppy disks as part of their data storage process. 

In order to catch up on digitization, Japan needs to invest heavily in IT. While Japan might be strong in the hardware area, software is an area that is severely lagging. But how can Japan catch up in a market that is already facing a severe talent shortage? That’s been the case for years and with an overaging and shrinking population, this trend will continue. One area where the talent shortage is most prominent is IT. When we look at the different job functions, we can see that as of July 2021, there were 9 job openings for every one job seeker in IT. So let’s see what Japan can do about this shortage and how to best tackle the challenges that come with it.

Source: https://doda.jp/guide/kyujin_bairitsu/

The Local Talent Pool

According to a survey by the Ministry of Economy, Trade and Industry from 2019 found that the demand for IT professionals would exceed the supply by 300,000 in 2020. That shortage is expected to grow to up to 450,000 by 2030. Now add to that the fact that only 23% of system engineers in Japan actually studied computer science or IT. That is substantially lower than other countries such as India with 73%. So not only do we have a shortage of IT engineers, many of the engineers around also lack the educational background to be able to provide cutting edge technology.

Now, new technology spreads online where the common language is English. With Japan’s low average English skills, the vast majority of local Japanese IT engineers do not have access to those new technologies simply because of the language barrier. That means in order for new technology to spread in Japan, the reliance is on bilingual and technically capable IT engineers who comprehend the new technology. That is a severe bottleneck and creates a time lag. 

Welcoming Foreign IT Engineers

As we have seen, Japan cannot solely rely on the local talent pool. The quantity as well as the quality of the Japanese IT engineers just won’t help Japan get ahead. That means, Japan needs to embrace foreign IT engineers. The best example for this is Rakuten. The CEO of Rakuten,Hiroshi Mikitani. implemented an “Englishnization” strategy almost 10 years ago because he wanted to have access to the best talent pool globally, and not limit himself to the best talent pool of Japanese speakers. There aren’t many Japanese IT engineers who speak English and there are also not many foreign IT engineers who speak Japanese.

There are also other companies that focus more on the technical skills and less on the language skills in order to secure the right talent such as Paypay. One important thing to note here is that both Rakuten and PayPay are both Japanese companies, not international companies with local subsidiaries in Japan and yet they aspire to provide an environment that allows them to attract and retain the best global IT talents.

Challenges To Face

We have seen so far that Japan cannot catch up, let alone get ahead, in IT with only local talent and luckily there are many companies who openly embrace foreign professionals. 

However, overcoming the language barrier alone is only one part of the bigger picture. It misses out on the fact that while diversity comes with a lot of benefits, it also comes with a lot of challenges. Those challenges go beyond just language barriers and expand into different ways of working. That can manifest in areas such as short term vs. long term thinking, risk appetite vs. risk aversion, flat hierarchy vs. strict hierarchy just to name a few. Having a shared language is a great starting point as it allows you to have conversations about these topics. Unfortunately, in many cases those conversations are not taking place. 

Language itself is simply a tool, but just because someone speaks another language doesn’t necessarily mean they know how to conduct business within that culture. 

How To Overcome The Challenges

There is no magic bullet that instantly solves all of Japan’s problems in this area. However, there are a lot of things that can be done. If you are running a business here in Japan or are managing a team,  here are five steps for you to get started. They work equally for you as an individual as well as for you as a manager to share with your team:

1. Awareness: Raise awareness of the cultural differences. That’s where it all starts. Once there is a certain level of awareness that there are differences, the differences become more obvious and people can start acknowledging them.

2. Observation:  As a next step, it is important to observe these differences without any judgement. Just notice that there is a pattern where one person or group of people approaches something in a different way. Take a mental note of it but do not judge or generalize.

3. Verbalization: After enough observations have been made, it is about verbalizing them. This could be in a one on one setting or group setting. Share that you noticed how you approach things differently and that you want to understand more. This part is important. It is not about forcing your own way onto the other person but understanding where they are coming from and then finding common ground. Be curious and ask questions to understand the reasons and logic behind certain behavior. It is important here to not make this an accusation but a genuine inquiry to understand the behavior better.

4. Shared pool of meaning: Although we might see or experience the same things, we are not experiencing things the same way. Therefore, it is important to create a shared pool of meaning by sharing our observations. After sharing where you are coming from and what you observed, invite the other person to share their perspective. Again, listen empathetically without judgement. Try to truly understand where they are coming from.

5. Common Ground: Work collaboratively to identify commonalities and agree on a way moving forward. The goal is not to force your way on the other person or completely change your ways of doing things to fit someone else’s preference. But it is about finding a hybrid that works for everyone (or at least most of you) involved.

It is important to note that this is not a one time exercise that will solve all your problems at once. It is a starting point but in order to get the most out of it, it is important to revisit the conversation periodically. It is a cycle of experiencing, conceptualizing and experimenting.

Conclusion

So, how can Japan catch up and potentially even get ahead when it comes to digitization and IT? Firstly, by opening the doors and embracing foreign IT professionals. Secondly, by providing an environment where Japanese and foreign IT professionals can thrive together and really harness the benefits of diversity. For example, foreign IT engineers might be technologically stronger while their Japanese colleagues understand the local customers better. 

In order for that to happen, companies need to invest in their employees by equipping especially managers and leaders with the right tools. Investing in your employees is always a good investment. In a market that is known for its war for talent, it is not a luxury but a prerequisite in order to attract and retain the best talent.

In addition to typical management training, it is of utmost importance that managers as well as non-managers are trained on cross-cultural communication. It will lead to better cohesiveness within teams and across teams. That in return leads to better engagement, motivation, productivity and ultimately business results.