Corporations struggle to catch up to digitally savvy consumers in Japan

Japanese consumers have always been on the front line to embrace new technologies, and digital service experience has been no exception. This article looks into why corporate Japan struggles to catch up with consumers despite robust growth in corporate digital transformation spending.

Japanese consumers have been known to be early adopters of technological innovations. In their purchases, they look for convenience, efficiency, and connectedness. Their purchase needs to be more than a product; it must be a personalized, unique experience. Having said that, these very consumers are served by Japan Inc., known as the “Kings of Hardware” and who don’t seem to see the urge to move on to soft solutions. While this perception covers a more nuanced reality, it may explain why digital transformation in general, and the digital transformation of marketing in particular, has been lagging behind the robust demand of tech-savvy consumers.

Marketing, the frontrunner in digital transformation

In line with international trends, marketing, the sector and function closest to the consumers, has been on the front line of digital transformation in Japan as well. Marketing automation and data management platforms have enjoyed brisk sales and “Digital Marketing” departments have been springing up in corporations. It is surprising to find then, that according to a Fujitsu survey, over half of the companies with top sales performances were still hesitating whether to digitalize their marketing function or not even planning it within the next five years.

Obstacles to transformation

Why are companies reluctant to innovate? Many respondents to the survey questions showed strong dissatisfaction with the results of implementing digital transformation. Their dissatisfaction is certainly aimed at IT service providers who help facilitate this transformation, but reading between the lines also points to those utilizing and applying these new technologies.

On the supplier side, a strong proclivity towards the latest advances in technology – as opposed to what is best for the customer – is leading to product-driven development. Consultative collaboration with the customer is lacking or insufficient, and thus user needs will not be incorporated into their services. Adding to this is weak project management – projects are often open-ended, with no KPIs such as milestone or return on investment requirements. There is also little or no integration of in-house teams and external consultants.

Survey data also tells a story of customer-side disengagement. Well into the second decade of the 21st century, in the era of smart cities and self-driving cars, nearly half of the survey’s respondents foresee no or little changes to come from the digital revolution in the next 3 to 5 years (!). This lack of strategic vision on how to compete in the digital revolution leads directly to transformation projects being introduced without consideration of higher objectives, ending up with large budgets being spent with little to show for it. It is no wonder, then, that an overwhelming majority of the survey respondents who implemented a digital transformation of their marketing function (63%), reported seeing no positive outcomes at all. 

Conflict with Digital Customer Trends

Both individual consumers and corporate buyers have already embraced digital shopping and procurement concepts. The majority will check information on goods and services online. There is also a strong tendency to make inquiries by email or through a web platform. The most industrious customers will go to great lengths to check price and specifications online before making a contact, to the extent of often being more knowledgeable about services then the vendor’s counterpart!

Bottom Line: Impatient customers may look to new entrants

Technology-biased innovation or belated adaptation of innovation leaves the landscape open for new entrants driven by a focus on customers, rigorous execution methods, and speed. To prevent this, IT solution services providers should adapt design thinking, implement a closer customer focus right from the planning phase, and engage the customer through an iterative-consultative design process.

On the other hand, corporations still comfortable with "legacy operations" may also want to feel the urgency and look into the near future for new directions. Their customers may not be as patient.

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