Japan's struggles to keep up growth and innovation

Shibuya Crossing in Tokyo, Japan 

This summer I visited Japan for the first time. It has been my country number 56 to visit, including dozens of times to many other Asian countries, but my first visit to Japan. The development in Japan has been remarkable since the end of the Second World War, but with emphasis on "has been". Japanese economy has not really grown since the economic bubble busted in 1991, almost a quarter of a century ago. China overtook Japan as the second largest economy in 2010, and Japan faces a decreasing population, expected to decline from current 127 million to as low as 90 million people in 2050 with 40% above 65 years old.

Yet, Japan is a super advanced society with one of the highest standards of living in the world. And the Japanese (men) are still hard working. In Hiroshima I met Masato and his family. He is the managing director of his own manufacturing business with twenty employees. He bought his own company 11 years ago and has since grown it with 30-100% per year, with export customers in many countries. As such, Masato is the living example of the dedication and hard work that has made Japan so successful: "I know I make sacrifices now, but I make good money now". I asked him, so what are your plans for the weekend? He replied: “I will work today, Saturday, and tomorrow Sunday, I go to Tokyo for a meeting”. I felt embarrassed when I told him how long (3 weeks) holiday many people in Europe take every year.

Shinkansen  high speed train

Onboard Shinkansen (the famous high speed bullet trains), the very symbol of Japanese efficiency and technology, I met Hiroshi, a retired IT engineer, now working as an independent consultant advising organizations on it-security. We discussed the implementation in Japan of a national identification number, similar to what Denmark has had for the last four decades with the CPR-number. "I am a workaholic", he told me, "I have always worked, so why should I stop now?". Hiroshi is not alone: 'Ghosts' continue haunting Japan incorporated, according to Wall Street Journal. Former chief executives continue to stay on the payroll serving as 'sodanyaku' or 'komon' meaning advisor or councilor. A recent dispute was on the 79 year former chief executive of Toshiba now serving as an advisor for the current chairman, despite being more than a decade ago he left his executive position. This makes it very difficult for new executives in charge to change wrong decisions of the past

Japan has been at the leading edge of technology but are now struggling to keep pace. Once Sony was the world’s leading electronic brand, but it has now been overtaken by Samsung and Apple. Once Japanese cars ruled the world, but now many European car manufacturers are again taking the technological lead. Japan is one of the most homogeneous countries in the World and most people speak little English. Combined with the old corporate governance codes, this may hinder the needed innovation to really move the country forward. As my good friend Soulaima Gourani puts it: As a country you should not ending up like Japan where more diapers are sold to elderly than to babies.