Japan’s steady digital decline continues
IMD has published its annual digital rankings and listed Japan at 29th position out of 63 countries, one spot down from last year. The five year trend line has seen a steady decline, and hardly any factor going into the evaluation has improved during this period.
While the overall ranking has declined by seven spots, across the three dimensions, Knowledge has fared worst and dropped 10 spots, with Future Readiness performing best and only dropping three spots. Technology ranks in between, giving up seven spots. The overall ranking and the factors are pretty much aligned, with none showing a bright spot.
Breaking down Knowledge further, the evaluation surely shows a Talent crisis with a drop of 14 spots over the last five years, and a ranking at 50th that is far below the overall rating. This while Training & Eduction as well as Scientific Concentration are holding up remarkably well.
IMD lists the pupil-to-teacher ratio in tertiary education and the use of robots in education and R&D as the overall top strength, while international experience and digital/technological skills are marked as the overall top weaknesses.
In Technology, there is a marked contrast between a very competitive Technological Framework, and a sub-standard Regulatory Framework. To put it in other words: the capabilities are there, but they get stifled by bureaucracy. Doesn’t this point to a very simple solution? Remarkably, Capital is the only sub-factor that has improved over the five year period, gaining one rank.
IMD calls out wireless broadband as the only overall top strength. There are no overall top weakness listed, although immigration laws are listed as 61st, near bottom, similar to international experience (63rd) and digital/technological skills (62nd) under the Knowledge dimension.
In Future Readiness, a lack of Business Agility, second from the bottom among all nations, kills off any positivity in Adaptive Attitudes and IT Integration. All three sub-factors have declined over the five year period.
IMD lists the world robots distribution and the lack of software piracy as the overall top strength, while opportunities & threats, agility of companies, and use of big data and analytics are marked as the overall top weaknesses.
Given that Japan ranks as the second largest market for software globally, and even acknowledging that software spend does not directly translate into progress in digital transformation, one is still left to wonder that Japan get very little bang for their yen. So it is not that there is too low an acquisition rate for (new) software, it is rather that the for true digitalization to take place, one needs to reengineer the business processes as well. Would this explain the lack of a transmission mechanism between spend and impact?
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