Developing Digital Talent
By Malcolm Foster
As Japan embarks on the digital transformation of its society and business world, hiring and developing tech talent is probably its biggest—and most formidable—task. It has never been simpler to hire people with technological expertise from around the globe or to grow talent locally by leveraging the many online courses and large amount of code available.
And yet this appears to be a tall order for Japan, stymied by barriers in its education system, hiring practices, corporate structure, and overall culture—from its reliance on paper to a general risk-aversion that hinders innovation.
In contrast to its economic might, Japan remains well behind other advanced economies when it comes to digital competence. It has a shortage of technology professionals, with the country ranking 27th in digital competitiveness globally, and seventh in Asia behind Singapore, Hong Kong, and South Korea.
Prime Minister Yoshihide Suga has made digital transformation a key priority, even setting up a new digital agency. But how far and fast these hoped-for changes will extend into industry and Japan’s education system—which is geared to meeting corporate needs—remains to be seen.
Big Obstacles, Big Moves
Boosting digital talent is the first of 11 big moves that Japan needs to make to catch up and meet its future needs, according to Japan Digital Agenda 2030, a comprehensive study published in February by the American Chamber of Commerce in Japan (ACCJ) in partnership with global management consultant McKinsey & Company, Inc.
Yuko Yogo
Strategic HR consultant
Vice-chair Human Resource Management Committee
The report highlights ways in which Japan has fallen behind. Globally, the country ranks 38th in its ability to develop, attract, and retain digital talent. It has a surprising dearth of software developers: about 787,000, or 62 per 10,000 workers in 2019, compared with 156 per 10,000 in the United States. Overall, tech professionals make up only one percent of the workforce, compared with three percent of the much larger American labor force.
And on the university level, just one percent of Japanese undergraduate students were enrolled in computer science courses in 2019 compared with four percent in the United States, and graduate degrees in fields such as software engineering are limited.
The ACCJ Journal gathered views from HR representatives and education experts—within and outside the chamber, young and veteran—on how Japan might achieve the first three “big moves” proposed in the Digital Agenda report:
Develop a deep bench of world-class talent literate in cloud tools, software development, and artificial intelligence
Build digital skills across the labor force by shifting from traditional to adaptive learning
Drive end-to-end digitization of the education sector from preschool to tertiary education
Covid Catalyst?
Accomplishing those objectives will be a huge undertaking and is likely to upset established business practices that have been in place since at least the end of World War II. It will also inevitably lead to some job losses as automation spreads.
But it will also create plenty of new demand for software developers, data scientists, machine learning engineers, cybersecurity experts, cloud engineers, and others whose professions did not exist a few decades ago. Even then, Japan will face a shortage of 430,000 digital experts by 2025, the government predicts.
As Japan’s population and labor force shrink, digital offers a path to reignite Japan’s growth and productivity, the ACCJ study notes. Yet there seems to be little urgency for change given the high quality of public infrastructure and services.
The Covid-19 pandemic, despite its obvious toll, may have proved a catalyst for change. It has forced workers to adopt technological tools and prompted companies to abandon a longstanding reliance on paper, hanko (personal seals), and fax machines, according to Yuko Yogo, an independent strategic HR consultant and vice-chair of the ACCJ Human Resource Management Committee.
“This is great, great progress. If there was no Covid, that probably would have taken 10 years,” Yogo said. “I’m an optimist, so I see some positive impact from the pandemic, and this paperless direction is one of them.”
Software Shortfall
Mark Davidson
Director of government and external affairs Amway Japan GK
Co-chair Education Committee
One main reason that Japan has a shortage of software programmers is that, historically, corporations and the government emphasized hardware, mechanical, and electrical engineering, which were critical to the nation’s economic growth from the 1970s through the 1990s, the ACCJ report points out. “Software is viewed as the ‘glue’ or the ‘support,’ rather than the core component of the business,” it says.
Universities have geared themselves to meeting corporate needs, so the relatively low demand for software experts has meant limited university offerings and fewer graduates with the relevant training.
“Japanese universities are in lockstep with corporate interests,” said William Swinton, director of international business studies at Temple University’s Japan Campus and co-chair of the ACCJ Education Committee.
Many corporations tend to pay little attention to applicants’ degrees or areas of expertise, caring more about what school they graduated from. “Right now, university students are responding to the signals they’re getting from the market,” Swinton said. “They are reading from Japanese corporations that they don’t need a computer science degree.”
And until recently, there really wasn’t a pressing need for tech experts within a company, Yogo said. In Japan’s lifetime employment system, new employees grew as generalists rather than specialists, she explained. Companies typically train new employees in their own computer systems and rotate employees through various departments. They don’t keep them in one area such as IT.
That may have worked in the past, but these days “technology is so sophisticated that, until you become an expert, you really can’t learn everything you need to,” Yogo added.
William Swinton Director of international business studies
Temple University, Japan Campus
Co-chair Education Committee
ACCJ governor
The dearth of Japanese digital specialists is evident at Amway, the health and wellness products social commerce and e-retailer with a huge IT department in its Japan office. And yet the majority of staff are non-Japanese, mostly contracted from the Indian subcontinent or China. “We can’t find the talent, so we have to import it,” said Mark Davidson, director of government and external affairs at Amway Japan GK.
Ultimately, the private sector—not the government or universities—must be the driver of Japan’s digital transformation, Davidson, Swinton, and others said.
“We need to have more of a pull demand from corporations,” said Swinton, who is also an ACCJ governor. “If companies say, ‘We’re only going to hire your graduates if you have more sophistication in these areas,’ that will allow universities and their students to respond.”
The Three Ks
Another factor is that IT jobs have a bad reputation among young people, said Tsuyoshi Domoto, the 32-year-old co-founder of the nonprofit organization Youth Who Code. He holds a master’s degree in educational technology from Harvard University.
Traditionally, young Japanese have shunned “three-K” jobs—those that were considered kitanai (dirty), kiken (dangerous), and kitsui (tough). But in recent years, software and IT jobs have come to be associated with another set of three Ks: kitsui (tough), kaerenai (can’t go home), and kyuuryou ga yasui (low pay).
“Of course, if you’re a college student and you hear that reputation, you’re not going to major in that field,” Domoto said. “If there’s no incentive for Japanese students to specialize in that field, then you can major in almost anything and still get that job.”
Changing this perception will be one task facing Japanese companies, although there’s anecdotal evidence that rising demand is lifting IT salaries. Yogo said she knows of cases where tech experts have demanded annual salaries of $200,000—quite high by Japanese standards.
Entrepreneurs Flourished
To enact changes, Japan may need to recapture the entrepreneurial spirit of the post-war period, when young innovators such as Soichiro Honda and Konosuke Matsushita started business that have grown into today’s behemoths, said Davidson, a former diplomat who served at the Embassy of the United States, Tokyo, and is co-chair of the ACCJ Education Committee.
Nancy Ngou
Head of organizational change and diversity & inclusion, EY Strategy & Consulting Co., Ltd.
Co-Chair Human Resource Management Committee and ACCJ governor
“Deep down in Japan’s DNA, you look at the immediate post-war period, and there was an extraordinary effusion of innovation, like Honda playing around with motorcycles in his workshop. That was a period of tremendous entrepreneurial flourishing,” he said. “Japan has incredible strengths. The potential here is as high and promising as in any country on Earth.”
What Japan lacks—and what’s inhibiting its digital revolution—is a self-generating ecosystem similar to that of Silicon Valley or to the tech hub around Boston that brings together talent, ambition, investment money, and a culture of experimentation and risk-taking—all built around top research universities. “Japan just doesn’t have that,” he said.
To embrace the digital age, Japanese corporations need to change their self-perception. Even its vaunted manufacturers may need to view themselves less as making physical products and more as providing digital solutions, Davidson said.
“Toyota has to stop thinking of itself as a company that builds metal cars and think of itself as a company that provides transportation solutions,” he said. “As the technology moves, for example, in the automotive sector toward autonomous mobility, Japanese companies will see that they’re not just metal-bashing companies. They’re software companies.”
Swifter change will come with a new generation of corporate leadership, which Swinton believes is already appearing. “We are on the verge of the 40-somethings taking over Japanese corporations,” he said. “I think that we’re going to find that they’re more tech savvy and internationally savvy than their predecessors.”
Immigration
Another change that Japan needs to embrace if it wants to enrich its education system and nurture innovation is to promote international exchange and allow more immigration, Davidson and Swinton said. Just as Silicon Valley draws driven, talented immigrants from around the globe.
“We see around the world that immigrants bring a different view, they look at things from the outside, they bring their young and scrappy view of the world, a belief in bettering themselves,” Davidson said.
Japan is resistant to immigration, partly because it is disruptive to a society that prizes order. But that very disruption often sparks innovation and flexible thinking that Japan needs to transform itself, he said.
Tsuyoshi Domoto
Co-founder Youth Who Code
Japanese universities, the core engine of future talent development, also need to do a better job preparing their graduates for the digital age. An expansion of computer science classes is needed, and Temple University Japan is starting a program in computer science and information science and technology, Swinton explained.
But more broadly, universities need to train their students in critical thinking and creative problem-solving. “We have to understand that the talent needed in Japan is not purely technical,” Davidson said. “It’s creating liberally educated, technically competent young people, confident and capable of challenging the status quo.”
That affects the kind of instruction professors provide, raising the engagement of university students and promoting more international exchange—welcoming more overseas students and sending their own to study or work abroad.
One step that colleges can take is to expand the number and duration of paid internships for their students at major companies—not the more typical two-week kengaku (observation) stints, but real work experience, Davidson said. “There’s a suspicion that somehow this pure alabaster tower of academia will be sullied if it comes into contact with the private sector,” he said. “We have to break that down.”
Holistic Approach
Most of all, Japan’s education system needs to modify its entrance examination process—not just for colleges but for high schools and middle schools as well, contributors have said.
These fateful tests shape the lives of millions of youngsters from as early as age 10, when many start attending cram schools, which emphasize rote memorization and test-taking, not the critical thinking or creative problem-solving that a digital world requires.
“We have to understand that the talent needed in Japan is not purely technical … It’s creating liberally educated, technically competent young people, confident and capable of challenging the status quo."
These exams also shape their futures, as companies tend to prioritize the university’s brand name over even the applicant’s major or educational experience.
Instead, at both the university and corporate levels, Japan needs to adopt a more holistic evaluation of an applicant’s strengths and achievements in various areas, not their performance on a standardized test taken on one day. “All students do is try to get into prestigious universities,” said Domoto. “Once they’re in, they just sit back and do anything they want.”
Again, any changes to Japan’s entrance examination system need to come from the corporate level, contributors said.
“If companies should start to say, ‘We’re going to begin looking at you as an individual: What are your values? What sort of extracurricular activities did you do during college? How did you serve the community?’ Then, if you can start evaluating people based on their humanity, not just a single test, you can extract real talent,” said Domoto.
Government Initiatives
Real change needs to originate with corporations, but the government does have a role to play, too, contributors said. In Japan’s hierarchical society, people tend to follow the pronouncements and guidelines coming from their leaders, and Domoto believes the government could enact change through new rules or laws.
“If the government makes a law saying something like starting from next year you can no longer base someone’s eligibility to enter university purely on their test score, that you have to make sure you look at other aspects, then universities would have to follow,” he said.
To promote computer literacy in the younger grades, the government has launched several initiatives, including plans to provide one laptop per child by 2023, according to the ACCJ report. It has also announced the introduction of programming education in elementary, middle, and high schools in 2020, 2021, and 2022, respectively.
But the problem with that latter initiative, Domoto said, is that some public schools don’t have adequate human resources to carry out that initiative. The science or math teachers who are usually called on to teach computer programming classes have not received enough training, or they feel the extra class demands are stretching them too thin. “Many teachers are feeling overwhelmed,” he said.
Generational Divide
Training corporate staff to become more digitally competent is something that Nancy Ngou, head of organizational change and diversity and inclusion at EY Strategy & Consulting Co., Ltd. is talking about with clients regularly these days. And she definitely perceives generational differences.
Some older employees are worried that they can’t learn the new technology and that they might lose their jobs as a result. Some younger workers, meanwhile, are frustrated by the slower embrace of digital tools, prompting some to even quit, she said.
To help both groups and reinforce the strengths each group offers, Ngou recommends “two-way mentoring,” in which both sides can teach and learn from each other.
“Newer employees don’t have that business savvy. They don’t know how things work,” she said. “Often, digital natives prefer to learn by listening to those with more experience, rather than reading books.” Through two-way mentoring, “the older generation feels valued, and the younger generation can help them understand the technology. It’s win-win.”
To train staff in new tools or systems, many companies are adopting digital academies—online, self-paced training sessions—said Ngou, who is also co-chair of the ACCJ Human Resource Management Committee and an ACCJ governor. “A lot of the time it’s voluntary; you don’t force digital training on people. But you make it special, where people can get certified in certain things.”
One problem Ngou has seen is staff sometimes relying too much on the tech consultant to set up a new system, instead of fully learning and understanding the technology themselves.
For example, an employee may start to use robotic process automation (RPA) that collects data from various sources to generate a monthly report. But when they want to add a new account, they don’t know how to do that because they don’t fully understand how the program works, so they contact the consultant. “We’re trying to help the clients understand how to use it as opposed to just setting it up and calling the consultant every time they have a change,” Ngou said.
She advises clients to view their company’s digital transformation as unfolding on three levels:
Upgrading employees’ skills
Using digital tools at the leadership level
Changing the overall corporate culture
If any one of those lags, the whole process stalls. “We tell them that they can’t just do digital,” she said. “They need to become digital.”
Gender Divide
Domoto believes that technology can also help rectify gender inequality in Japan, a problem he believes is holding back the country. Digital solutions can address a number of big social problems that affect women much more than men, such as a shortage of childcare centers and nursing homes for the elderly, as well as sexual harassment at work, he said.
There’s an assumption in Japanese society that mothers do most of the child-rearing, which for working women means dropping off and picking up their kids from daycare, as well as caring for elderly parents. There’s also an assumption that women don’t go into technology.
“All these female-oriented problems are unresolved,” he said. “We live in such a wonderful, blessed country. Yet people are still unhappy. How can we fix this?”
Domoto is convinced that empowering women and girls, and equipping them with technology, is key to resolving these problems. This idea—empowering young students and girls in technology—is emblazoned at the top of the Youth Who Code website. The nonprofit, which Domoto helps lead, seeks to increase access to technology-based education and resources for youth.
At a recent hackathon, they taught international students the Python computer language, which the youth then used to create solutions to everyday problems, such as an aid to help record students’ temperatures when they get on the school bus in the morning.
“That’s why I’m trying to promote entrepreneurship. Because with entrepreneurs, your job is to help solve an issue in front of your eyes,” he said. “But right now, I don’t see that happening for Japanese women.”
One example of this is the online booking system CareFinder, created by a woman, that connects mothers with domestic helpers who can come clean your house or care for your children.
“I really hope that tech-based solutions will help resolve some of these issues,” Domoto said. “It’s little things like this that can add up.”
THE JOURNAL
Vol. 58 Issue 4
A flagship publication of The American Chamber of Commerce in Japan (ACCJ), The ACCJ Journal is a business magazine with a 58-year history.
Christopher Bryan Jones, Publisher & Editor
