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Digital in Japan: Another Olympics, another leap forward

Japan in 1964, and 2021

A rebuilt national stadium with an audience capacity of 50,000. A shiny high-speed Shinkansen (bullet train) departing from Tokyo station. Complex, layered, winding highway roads that run through the city. If you visit Tokyo today, you can still see all these iconic sights that are the legacy from the Tokyo Olympics in 1964. Japan was in the middle of redevelopment after World War II, and hosting this international sports event was an unmissable opportunity to showcase the country’s manufacturing capability.

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Fast forward to 2021, the summer Olympics are being held in Tokyo for the second time. The world has changed, and Japan doesn't seem to have the energy it had 60 years ago. Some even argue that the remarkable success of the 1960s Japanese economic miracle, indeed the legacy from the 1964 Tokyo Olympics, holds the country back from embracing the next level of much needed transformation — digital and social innovation. Will Japan continue to resist change, or could the Olympics be the foundation of another leap forward? Could it open a new chapter in Japanese society, focused on diversity, global integration and digital strength?

A shifting competitive landscape

With the Internet, the shift towards software has fundamentally changed the global competitive landscape. In the past, a domestic company (e.g. a car manufacturer) would be mostly focused on competition with similar companies in the same region. Now a new generation of digitally native companies like Google, Uber, Netflix and Facebook are operating across multiple domains and global barriers. Their offerings have transformed our expectations of quality digital services. Traditional companies cannot choose whether or not to compete with new digitally native businesses. Not only to stay competitive, but fundamentally to stay alive, businesses will need to go through significant change to become better digitally equipped.

In Japan, a company like Nintendo - founded in 1889 as a card games maker - continues to lead the video game industry. Sony - the leader in postwar manufacturing - has overcome its slump and maintains strong performance in gaming, entertainment and digital imaging. Yet other Japanese businesses continue to approach software and services with a manufacturing mindset, as those are the skills of the past that built Japan of today. The dynamics of software and manufacturing differ in many ways, particularly in predictability and planning. There are constant changes in software technology and customer expectations, which often makes the manufacturing mindset and optimisation of tools and processes less effective.

Trending "DX" (Digital Transformation)

Not wanting to be left behind, the Ministry of Economy, Trade and Industry (METI) began active promotion of digital transformation in 2018 . Since then, the term “Digital Transformation'' (DX) has been rapidly adopted by Japanese businesses. Corporations are rushing to secure IT talent and more DX projects are publicly announced. Yet, most transformation journeys seem to remain in a deep fog.

Most organisations tend to address one of two areas; either they focus on digitising current tools, e.g. the hanko (famous Japanese stamp based signature), or they improve their internal IT systems. This misses the fundamental point of digital transformation as an opportunity to rethink the organisation’s ways of working and entire business flow, or even, social systems in the context of digital tools and services.

Software development is also slow to change. Rather than forming autonomous Agile product teams, most software teams work in traditional, hierarchical siloes, despite glaring evidence that this model is flawed. Despite a strong appetite for change, most companies are still hunting in the dark trying to find the “DX” torch.

This situation might look somewhat puzzling. With the trend created by METI, countless seminars, talks, and workshops about DX and Agile are happening online and offline. So why aren’t we seeing any results? One observation we want to raise is that most of these events tend to focus on methodology, processes and tools. That precisely is their pitfall — because Agile development is all about mindset rather than processes and tools.

Factory's approach to Agile

Switching from a manufacturing mindset to a software development mindset is tough, and it's not a problem specific to Japan. However, there might be a reason why this shift is complicated in Japan. Our belief is kata (形) culture, which is, in fact, what made Japan strong in manufacturing.

Originating in martial arts culture, kata refers to things like "a set of movements", "form", "pattern", or "protocol". If you move to Japan, soon you will realise the entire country runs on protocols and rules manifested as laws, company policies, contextual etiquette - and even "unspoken air" you are supposed to read and follow on specific occasions. On the one hand, everything works smoothly when you follow the protocols; on the other hand, people emphasise following the "form" without doubting the implications of their actions, which often lacks flexibility.

Nevertheless, people respecting rules and practising protocols has been a vital source of trust in Japan. Deploying a proven kata often means that a certain level of quality is guaranteed. Japanese consumers love famous brands, as they unconditionally trust them, thinking, "They must have the right protocol to build the right products, so I can trust them." Seminars and talks are formed around processes and tools because people seek the next kata — that of digital transformation. If we could find just one perfect kata — it would restore our confidence, bring back a high level of trust, and allow us to maintain a thriving society for years and years. But wait - is this assumption true?

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Manufacturing mindset, software mindset

Finding the right kata - a protocol that works in a specific environment - and rigorously following it is probably the best approach as the manufacturing environment is relatively predictable. Meanwhile, the software development world is full of constant change; predictability is elusive. Think you can spend five years trying to design a perfect kata of your software? Sorry, too late, Google has done it already. Mastered the design process? Well, someone has suggested a better version of it. Both product teams and products are evolving day by day.

With this in mind, if we attempt to master DX or Agile by pursuing the perfect process, it is both likely to be inefficient and expose the business to risk. "Following kata" often brings a sense of security; it appears to be working and we do deliver some products. However, without a shift of organisational mindset, you may later find that the product doesn't provide meaningful value, or still takes a long time to reach customers, and that your budgeted DX project is not really paying off. So how can we navigate a world where having the perfect, fixed kata is a challenge?

Learn Agile kata as principles, not rules

Let's remind ourselves where kata originally came from — martial arts. Kata is often designed to crystallise fundamental principles into forms, and practitioners internalise them by practising them repeatedly. However, imagine yourself using kata, competing with opponents. They are not static. The environment constantly changes. You need to focus on the moment, using all your senses, analysing the situation and the opponent's move, thinking of the options you have, then picking the best one. You will lose if you chain yourself rigidly to the rules defined by the kata. At the peak of martial arts training is the belief that when you have internalised the principles, you can let go of the rules, and reach a sense of mastery where you break the rules and shape your style or approach.

Perhaps Agile is similar. It teaches us fundamental principles to be responsive in a rapidly changing world. Your team can set all the rituals and ceremonies that crystallise Agile principles, but performing the protocol perfectly doesn't guarantee the ideal outcome. Scrum, Kanban, XP and other frameworks bring a set of kata that help you practice Agile successfully. However, at the heart of Agile is a mindset of how you understand and practice the principles, not how well you perform the rituals. The rituals matter, but won't bring you true value unless you go beyond them, build on the principles, and adapt to the context.

Here are some tips:

  • Studying Agile as knowledge is like learning how to do martial arts by only reading books. Always learn by doing.
  • And this applies to stakeholders too. To make the organisation Agile, stakeholders - from product/project level to senior executives - should learn the new mindset by participating.
  • Pay attention to your team and find out what works. You will need some flexibility but without straying too far from the principles.
  • Always make time for reflection — this will give you a chance to focus on the moment, analyse your team and the situation, and decide what you can improve. Your team's kata should evolve dynamically.
  • Learn collectively — you wouldn’t have had the luxury of time to master one perfect kata as a martial artist in the 16th century. Hearing different experiences and perspectives and discussing them will accelerate your internalisation process.
  • It's a team sport. Having an excellent coach will help your team move forward. Unlike a project manager who often is good at keeping you to a set plan, a coach helps you navigate the unpredictable, stay on course, but adapt as needed. A coach is a person who can observe and guide the team through difficult change, both on an individual and group level.

Looking towards the future

This year karate - one of the many martial arts with a great history - made a debut at the Olympic games. How those world-class karate practitioners perform kata with deep concentration is fascinating; even when following forms, they take every movement like no other. Their mindset teaches us that kata culture was never about following the rules and simply repeating them. Perhaps in the development of industrial factory culture, the "follow the rules" aspect of kata was embraced while the "internalise principles" element was forgotten. Perhaps the current kata culture is only a variant of the traditional kata culture which was a much deeper, more flexible, and effective philosophy to stay Agile. It’s now time to stop for a moment and focus back on what we originally had.

The key is not to completely dismiss what Japan developed in the past, but to recognise and celebrate Japan's capability in manufacturing. We know that some elements of Lean and Agile practice can be traced back to Japan. Toyota's famous Production System proves that thoroughly improving processes and eliminating waste can achieve excellence in quality. And when the user interface (UI) of more digital software is embedded into physical objects like the Internet of Things (IoT), Japan's strength in manufacturing or robotic technology will shine.

The next step will be to build something even greater, a country, companies and individuals ready to respond in a world of uncertainty and complexity, with an emphasis on the harmony between software and hardware — a world where Japan can excel by honouring what kata originally taught us. Once the mindset shifts, Japan is always good at bringing it to a level of mastery. And that will be the moment we can say the game is on.