Japan’s digital transformation opportunity: When a customer-first culture embraces a digital-first future, amazing things are possible
Japan has historically been ahead of the curve when it comes to technological innovation, so it might surprise some people that in recent years, the country has lagged in digital transformation.
That is, until COVID-19.
Now, Japanese firms are waking up to the need for digital customer experiences and overcoming the cultural factors that have slowed digital transformation efforts. Executives say their digital agendas are suddenly being prioritized, and they are poised to revolutionize the way they interact with customers as they offer more digital experiences.
The question is, how fast can they move into the digital space — and how will they get there?
Japan’s lagging transformation
COVID-19 shined a spotlight on business processes in Japan that are antiquated and inefficient. For example, at some Japanese banks, opening an account or getting an ATM card is a painful, paper-based process that can take weeks. But online banks, which are becoming popular in Japan, are disrupting that model, delivering ATM cards to new customers in just three days. Eighty percent of Japan’s population has a smartphone, so consumers are poised to embrace digital-first and mobile-first experiences — and that creates opportunity.
One of the biggest barriers to doing business in Japan is document workflow, which often requires a physical stamp as a signature. When COVID-19 hit, employees engaged in document workflow had to go into the office just to get stamps. If they stayed home, workflows would stall. In some cases, the reliance on stamps stopped businesses from functioning. The Japanese government is overhauling its rules to make the switch from paper to e-signatures possible. It’s an important step — but it’s also just the beginning.
Many organizations in Japan didn’t have the digital capability to suddenly put infrastructure in place that allowed employees to engage with customers and each other virtually. One example is the pharmaceutical and medical industry, which relies heavily on face-to-face interaction. The sudden shift to telemedicine highlighted digital gaps and forced companies to start innovating.
Assessing digital readiness
Adobe Japan is seeing a big uptick in demand for solutions related to digital workflow, document workflow, or e-signatures. We had to pivot our own resources in response to a complete shift in market requirements among our customers and partners.
But the needs of Japanese companies aren’t limited to technological solutions. Many are also looking for advice and expertise. Our customers are increasingly turning to Adobe’s Digital Services Group for assessments of where they are in their transformation and what they need to do to build great digital experiences for their customers and employees.
Again, the pharmaceutical industry is a prime example. Some companies had thousands of medical reps engaging in person every day, and overnight that stopped. There was an urgent need to figure out how to engage with prescribers and monitor patient behavior in this kind of environment, which has a huge impact on strategy and investment in research and development. To solve these needs, Japanese companies will need to look beyond Japan for use cases and best practices.
Adobe’s own transformation story
Because we are a digital organization, Japan-based companies are asking us, “How did you do it?” We’ve been going through our own internal transformation over the last decade. Adobe began as a business that sold software in a box — through distributors — and had very little engagement with customers. When we changed to a subscription model, we began to digitally engage with customers and get real-time feedback about our products. That helped us determine a strategy for research and development, innovation, and growth.
The shift was very disruptive, and many stakeholders were against it, but CEO Shantanu Narayen had a vision and the conviction that it was the right thing for the business. He was looking at a horizon of 3 to 5 years, not 6 to 12 months, and he had confidence because the vision was deeply rooted in data. Today, Adobe.com is one of the biggest e-commerce platforms in Japan.
Many Japanese organizations are also moving to a services or subscription model. In addition to creating a rock-solid, data-driven vision, they all need to ask what is required from a leadership perspective. The answer: Conviction and confidence in the vision.
What’s next for Japan-based companies?
Japan today has one of the biggest opportunities in the world. Across industries, its companies stand out for their exceptional level of customer service. When the country takes that service experience and makes it digital, it will separate Japan from the rest of the world. We’re in the midst of that opportunity right now.
Globalized companies are leading the way. Japanese airlines, for example, are realizing they’re fighting for customers not just in Japan, but all over the world. The in-person service experience on a JAL or ANA flight already differentiates those companies from their competitors. The job now is getting to the point digitally where they can compete globally. When they do, these global organizations become success stories that show what’s possible to execute in the Japanese market.
COVID-19 is accelerating these digital transformations. For example, Japan is very traditional in its heavy reliance on face-to-face and building relationships, so a shift to 100 percent digital meetings was unthinkable a year ago. But because of COVID-19, we and our customers are finding that we are more productive and more efficient with digital meetings because we don’t spend time traveling.
There’s definitely a gap without face-to-face engagement. Going forward, there will almost certainly be a hybrid model where, for example, many customer meetings could take place over video, along with separate dinners where people can be more relaxed and build relationships.
Innovation, efficiency, and the digital-first future
Change can cause anxiety for many people, but it’s also exciting because change usually means opportunity.
COVID-19 pushed Japan off the path it was on, and we’re never getting back on it. The pandemic has forever changed how consumers engage with organizations, how we engage with employees, and how we engage as citizens. Organizations that can’t make this digital transformation, which now comes with a huge sense of urgency, will probably fall by the wayside.
But it’s also an incredibly exciting time in Japan. The ability to sign documents via e-signature or fingerprint is going to create a lot of innovation and efficiency, and quality of life will improve with this shift to digital experiences. There are so many creative and amazingly innovative people who are going to create new businesses, new markets, and new industries. I believe we will look back and see that COVID-19, with all its disruption and difficulty, served as a forcing function to get the best out of Japanese organizations and launch them into a digital-first future.