Japan's software revolution is making up for lost time

Japan has been a leader in consumer electronics for about half a century, particularly in developing and manufacturing electronic devices for home use. In the 1970s and 1980s, video games became a viable and marketable product, leading to a booming industry. However, the market was saturated with low-quality games, leading to the Great Video Game Crash of 1983. Nintendo, Sega, and Sony emerged as major players, establishing a lasting foothold in the international games market. This led to the creation and growth of game developers in Japan, and Japanese culture and aesthetics influencing game design. This has continued to give Japanese developers an advantage in the industry. The success of Nexon - one notable example of a successful Japanese software company founded in 1994 - highlights how a Japanese company can thrive in the software sector, especially in the gaming industry, leveraging innovation and a global strategy.

Reimagining the Future: Japan's Journey in Software Development

Japan's software industry stagnated during the PC revolution due to a focus on integration and customization rather than innovation. Japan is implementing the “zero defects" approach which contrasts with the risk-taking countries (US, Israeli, South Korea...) in incubating disruptive, creative start-ups and unicorns.

The story of Japanese software is not about the quality of software, but about the innovation itself. Japanese software has a poor quality by international standards, but it is a result of economic events and political forces. 

Japan has traditionally been a leader in technical perfection, with a master/apprentice model (senpai/kohai) and a focus on kaizen. However, in the software industry, the cheap, try-it-and-see model, leading to a lack of innovation, has led to a poor state of software. The article also touches on power structures, with the author questioning the attribution of this obsession to culture.

Naturally, many Japanese software development firms have engineering teams of pitiful quality. Japan is famous for taking technology and improving upon it. Some say Japanese technology is imitative, not innovative. 

Japan's Software Renaissance

However, recent developments in cloud computing and smartphones are fostering a new wave of respect for software developers and startups in Japan, signaling a potential shift towards a more competitive software market.

Japan's Digital Transformation

As of 2023, Japan is catching up in the global software market, with declining power of traditional systems integrators and increased investment in startups by both government and established companies. There is a sense of optimism regarding the future of Japanese software development, with potential for new economic miracles driven by a combination of startups, enterprises, and academia.

Why doesn’t Japan excel in software as they did in hardware?

There are a few reasons why Japan has not gained the same level of success in the software industry as it has in the hardware industry:

They don't speak English

Naturally, when you are not fluent in English, the tools and development techniques you use will be those that have made their way down from English sources because of the generosity of people who are willing to give their time to translate articles and documentation (from English to Japanese).

At any given time, the cutting edge of software development in Japan is 6 months to 7 years behind the rest of the world.

Organizational culture and management practices

Japan's corporate culture, which emphasizes hierarchy, consensus-building, and long-term employment, is often seen as less conducive to the faster-paced, more agile and innovative software development model. This culture can make it challenging for Japanese companies to move quickly and adapt to rapid changes in the software market.

Cultural Perceptions

Software development was viewed as low-skill work, resulting in a lack of respect and career opportunities for developers compared to hardware engineers.

Hardware First: Japan's Delayed Embrace of Information Technology

The traditional career path in Japan has emphasized more prestigious technical fields like electrical engineering, mechanical engineering, and applied physics. Software engineering was a relatively new field that didn't have the same prestige and institutional backing.

Engineering talent imbalance

Historically, Japan has placed more of an emphasis on developing world-class software engineers than hardware engineers, with the former being trained more extensively. Japanese businesses have found it more difficult to develop robust software development capabilities as a result of this talent imbalance.

Software engineers in Japan are generally perceived as having lower status because their wages have historically lagged behind that of other technical roles and are perceived as being less lucrative.  

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  Working Conditions in Japan

• Japan offers a variety of work hours, including 10-7 hours with an hour lunch.
• Meritocracies exist, with some companies willing to change contracts to a meritocratic one.
• Japan has mandatory holidays, with 10 days a year, with a few public holidays.
• Contracts are short, usually requiring a minimum of 10 days.

As digital technology and software have become more important in Japan in recent decades, this dynamic has been gradually shifting. These days, a lot of big Japanese companies are investing more in their software engineering departments. However, there is still some remnant of software engineering's inferior standing.

Silicon Shadows: The Slow Dance of Japanese Corporations in the Digital Age

Ecosystem for venture capital

Compared to places like Silicon Valley, Japan's ecosystem for venture capital and startups historically has been less powerful. This has made it more challenging for start-up software companies and creative concepts to secure the capital and assistance they need to grow.

Risk aversion

Compared to the entrepreneurial spirit present in nations such as the US and Israel, Japanese business culture is frequently described as being more risk-averse. Because of this, Japanese businesses may be less willing to make significant investments in innovative software technologies.

Language and cultural barriers

Japanese companies are at a disadvantage because a large portion of the global software industry is concentrated in the English-speaking world. These barriers can make it more difficult to collaborate internationally and market software products globally.

The Challenge of Self-Expression in a Harmonious Society

"The nail that sticks out will be hammered down” means conformity and individualism in Japanese culture. This message is very clear: you will encounter resistance if you are unique and "stick out," that is, if you deviate from the majority's normal norm.

Software tends to be more of a creative "lone wolf" or small team endeavor, and Japan's culture isn't particularly oriented toward that (in fact, adding more programmers to a project can make it take longer to complete). As they say, "The nail that stands out gets hammered down."  

Japanese cultural traits are not "naturally lean"

Japanese culture has several cultural traits that may hinder the adoption of lean and kaizen principles. These include command-and-control leadership, fear of failure, rigidly following rules, and a focus on the answer rather than the problem-solving process.

• In Japan, there is a strong focus on loyalty, seniority, and climbing the corporate ladder. This may make it harder for software engineers, who switch employment more frequently, to be treated with the same respect and have equal prospects for career advancement.
• Fear of failure is a barrier to global competition in Japan, as it encourages the wrong behavior in people.
• Strict adherence to regulations can also stifle originality and critical thought. A Japanese corporation with a significant market share avoids regulations and management in response to cultural norms that stifle creativity.
• Focus on the answer rather than the problem-solving process is another cultural trait that can hinder the adoption of lean and kaizen principles. Japan's educational system places more emphasis on rote memorization than critical thinking. Young children are rewarded for knowing the solution rather than the steps taken to get there.

Toyota, a leading firm in hardware business, has found a way to change the function of hierarchy from one where people look to the leader for answers to one where leaders set the direction and help their people work towards the goal. Toyota allows for experimentation and failure as long as it results in learning.

Japanese culture does not equal Toyota culture, and the principles of kaizen are not a typically Japanese business leadership mindset. There are several Japanese traits that support kaizen and a Toyota-inspired culture, and others that make them harder to embrace.

Cultural traits supporting lean include the concept of kata in every-day life, which guides daily living and makes following "standard work" seem more natural for Japanese people.

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  Japanese culture and lean culture are not always the same. Why?

The author of "Tree Ring Management: Take the Long Term View and Grow Your Business Slowly," Mr. Tsukakoshi, offered some insightful remarks regarding the differences between Western and Japanese cultures.

His illustration of the distinctions between trains in Japan and Europe was a fascinating look into Japanese culture from a businessman who is Japanese.

There are several times your ticket is checked at Japanese train stations: when you arrive, when you pass through several gates, when you board the train, and once more when you leave the station.

In Europe, on the other hand, it is typically assumed that travelers purchase the appropriate ticket for their intended route, hence tickets are rarely examined there.

This is intriguing since, on the whole, Japanese people follow the law and are quite honest. As Mr.

This is interesting because overall, the Japanese are very honest, rule-abiding people. Hardly anyone trying to jump on a train.

This is an example of how Japanese thinking or business practices are not necessarily Lean. All of the checking in Japan is an example of over-processing.

 

Software development is a reversed pyramid scheme

Most technology consulting firms who are awarded contracts do not actually have developers - or have only a handful at hand. They will subcontract their job to companies lower on the hierarchy, who will then subcontract it to yet lower companies.

Consumer preferences are incredibly conservative

Japanese companies are still employing incredibly outdated website designs. Visit www.jalan.net, Japan's largest internet travel agency. 

The reason Japanese websites don't appear shabby is that this was intentional design choice. Their appearance is what appeals to Japanese viewers. The large, obtrusive, flashing banners appeal to them. They like the overwhelming amount of text. They seem to enjoy what you and I may refer to as rough and unpolished advertisements that appear as web content.

There's a very popular English phrase in Japan, "Simple is best". But Japan is also incredibly complicated and full of contradictions. 

As a software outsourcing vendor, you can either create modern designs that will bring in international attention, but alienate domestic users (Japanese), or serve your existing customers as you have been doing for decades.

The rising of developing countries in the tech industry

China

Over the last thirty years, China has had to bear with and take in harsh criticism from consumers over the quality of its products. Nevertheless, it views this as a period of grace during which it can gradually improve the quality of its labor force. Chinese people are aware that they must escape the trap of "perfection" since they have lived through a century of humiliation and twenty years of cultural change.

China is quickly catching up with Japan as a leading force of science and high technology in Asia. 

Korea

Koreans are adept at imitating and distilling the essence of Western and Japanese culture. Koreans adopt new technologies with courage and agility. Although Koreans have had great success in the car business, very few people have heard of their painful motorcycle failures.

While Japan is known for its focus on quality and "zero defects," Korea embraces risk-taking and innovation.

Vietnam

Smaller-scale industrial nations, like Vietnam, which opened up late in the early 1990s, had no access to advanced industries, making it effortless to rebuild everything from the ground up (zero build). As a result, there was no pressure to dispose of the massive legacy like Japan's once-prosperous industries. Vietnam has become an incredibly tolerant nation as a result of the leapfrogging and streamlining strategies combined with a solid foundation in fundamental scientific subjects (such as math and philosophy), readily available to accept new ideas and evolve with current events. By assimilating important theological and philosophical doctrines (such as Buddhism, Confucianism, and Catholicism), Vietnam further demonstrates its adaptability and agility in responding to the ever-changing demands of the volatile, uncertain, and peaceful world.

In order to benefit from the labor force in the nation and improve IT cooperation with Vietnamese partners, many Japanese businesses hope to extend their operations in Southeast Asia. Vietnam is currently the second-largest partner of Japan in the field of software and information technology services. 

The collaboration between two nations could lead to innovation in Japanese companies while instilling a "zero defects" mindset in Vietnam firms, benefiting both nations economically.