Japan's future competitiveness: Castles made of sand?

How Japan will compete globally was a topic of intense discussion at the Japan Roundtable, a kind of annual mini-Davos for leaders in Japanese industry, academia and government.

There were very few delegates attending who didn’t advocate that a sustainable growth strategy for Japan is dependent upon success outside of Japan. We’ve heard the reasons before: population decline, an ageing workforce and a government and corporate culture that do not encourage risk.

Questioning the assumption that Japanese people must focus on their English language skills to compete in the future, one senior Japanese banker (whose English was flawless) made the case that translation programs will improve rapidly via AI in the coming years. While English will always be an advantage, the skill itself won’t be as prized.

This banker asserted that the language of international communication will in fact be code: most know the names of the languages (C, Ruby and Java) but very few — particularly those over 30 — are fluent in any of them. Undoubtedly, Japan must become multilingual to compete. But the sell-by date may have passed on the idea that English is the most important language for young Japanese.

There are a few important implications for our industry if this banker’s prediction is even partially correct. First, if agencies think they will be able to supervise talented coders with seniors who speak vapidly about the ‘unlimited possibilities of big data’, they should think again. Talented coders will not stay at agencies for long if our management has little fluency in the languages that matter to them.

Second, nearly every company in Japan has leaders (Japanese and non-Japanese alike) who have been promoted faster than their otherwise more talented peers due to their facility with foreign languages. More so than in other countries, language skills in Japan have often been falsely correlated with intelligence, and experience outside of Japan and with non-Japanese people falsely correlated with wisdom. This is an important but unspoken barrier to growth in many companies. We should value multilingualism, but English and Japanese skills should take a backseat to brainpower and business prowess when evaluating leadership.

There were also a few important omissions in the conversation about Japanese competitiveness.

While there was a good deal of discussion about how Japanese companies will communicate, there was virtually no talk about what they should be communicating. Being able to communicate doesn’t mean much if your company doesn’t have something compelling and competitive to offer.

Another important omission concerned opportunities to drive growth through stimulating the domestic economy outside Tokyo and Osaka.

The belief that the most reliable way to generate growth is through success in international markets may be a false narrative for many Japanese companies. It’s certainly more prestigious to open an office in London or Singapore than in Fukuoka. But will you really get better ROI by investing in China rather than Hokkaido? Perhaps, but it’s not a given.

The case that Japan is hopelessly stagnant or declining as a market may be driven as much by self-fulfilling prophecy, coupled with the unwillingness of Japanese companies to invest domestically, as anything else.

This is not to say that international growth, English language skills and foreign experience are unimportant. However, if we base our future growth strategies on conventional wisdom without closely examining its basic assumptions, we cannot reasonably expect to succeed.

Barry Lustig is managing partner of Cormorant Group, a Tokyo-based business and HR strategy consultancy.