How Japan's Culture Of Business Teaches Us About AI Transformation

October 01, 2025 00:16:56
How Japan's Culture Of Business Teaches Us About AI Transformation
The Josh Bersin Company
How Japan's Culture Of Business Teaches Us About AI Transformation

Oct 01 2025 | 00:16:56

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Show Notes

This week I’ve been in Asia and in this podcast I describe how Japan’s economic history teaches us about AI transformation in our careers and our companies. I also describe my experience using Galileo on my 7 hour flight from Japan to Singapore.

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Additional Information

Get Galileo: The World’s AI Assistant for HR and Leaders

The Rise Of The Supermanager: A New Role In The World of AI

The AI Revolution in Corporate Learning (new research)

The AI Revolution in Talent Acquisition (new research)

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Episode Transcript

[00:00:00] Good morning, everyone. Today I want to give you some insights from my recent trip to Japan and reflect on how what's going on in the Japanese economy and some of the companies in Japan teach us lessons about the AI transformation going on around the world. So if you look at the Japanese economy in general, most of you may know that in the 1980s and the 1970s, the United States felt quite threatened by Japan. The automobile industry in Japan was threatening the American automobile industry. [00:00:32] Companies like Sony and other electronics companies in Japan were doing a really amazing job of penetrating the US Market. And there was a little bit of a situation similar to the way we feel about China today here. My father actually worked with a bunch of Japanese companies in his business and felt at the time that the Japanese business people were essentially at war with the United States. You know, I'm sure that wasn't exactly how they felt, but that was the way he perceived it. But since then, the Japanese economy has been almost flat. And so today, while it's one of the largest economies in the world, is now smaller than the economy of California. And India has surpassed it in size, and Germany has surpassed it in size. And if you look at the history of the GDP in Japan, you can see that it sort of stopped its significant growth sometime in the mid-80s and has been somewhat stagnant since then. And the Japanese people know this. This is not a big surprise to them. In fact, they're very humble people. The people that I met over there. Very smart, very hardworking, you know, business culture. But they're dealing with some very significant demographic and business and economic issues. The first is the country is aging. And because Japan doesn't really support a lot of immigration, and because people imagine in Japan don't speak English or other languages, it's hard to immigrate into Japan. Almost a third or more of the workforce is now over the age of 65. Now, the positive thing is that Japanese people actually have a lot of longevity because they're very healthy. But nevertheless, it's hard to find young people. And most of the companies we talked with are struggling to attract young people out of college because there aren't a lot of young people going to college because the birth rate is so low. [00:02:20] Um, that implies that has also impacted the housing market. There's a lot of houses for sale that nobody wants to buy. And so the issue of investment, if you're a large global investor and you want to invest in a country or an industry or a, you know, a market, would you invest in Japan? If so, where and what part of Japan would you invest in? Now, on the opposite side of this whole story, I've learned a lot about business from Japanese intellectual property and Japanese people. If you look at Lean, Six Sigma, the Amoeba Organization, Agile Flattened Organizations, empowerment of individuals, training and development strategies, quality control, so many of these ideas come from Japanese leaders. There are a lot of very, very smart Japanese business executives that have taught many of us many of the things that we take for granted every day. So there's no lack of business thinking here, and there's no last lack of business strategy. But the culture of working for the same company your whole life, you know, not having a lot of immigration and just generally building a somewhat inwardly focused economy is slowing that country down. Now, interestingly enough, I was at a lot of meetings here with LinkedIn and some other companies, and one of the statistics that came out from the Japanese government is a study was done amongst Japanese workers on how they feel about their careers. And there were three questions asked. Do you feel that you should work for the same company your whole career? Do you feel that it's okay to change companies if things are not optimized for you? Or do you feel you should be jumping around from company to company to advance your career as fast as possible? And what the data shows is that while the trend is towards the latter, 75 to 80% of Japanese workers today still believe they should work for the same company their entire career. That number is going down, but it's still a very, very high number. You know, I would say in the United States, if somebody did a similar survey, it would be extremely low. You know, maybe 5% or 10% would feel that way, or 15. Now, one of the reasons that people believe they should stay in the same company is the way salaries and careers work. There's a similar data set that came out in the same study that shows that if you look at a linear curve of wages or earnings over the years of tenure in a company or years of tenure of a worker, and you look at it by country and you see that, you know, in most countries, there's a steep increase in wages early in your career. There's a plateauing process when you get into the middle of your career. And then some people, it goes back up later when they get into senior leadership. Well, in Japan, that curve is very consistent with other countries, but the curve tips way up at the latter years of your career, because in Japanese companies, you are rewarded for longevity regardless of your performance. [00:05:25] So there's a economic reason why people would not want to leave the company they're in because they know that if they hang around long enough, they will get more and more wage increases and they'll be able to retire at a better and better level. Now, you know, there's good reasons for that. It has to do with the Japanese companies wanting to have tenure and wanting to have experience and wanting to have skills in their workforce. But all of that is dependent on an industry or an economy where companies last a long, long time. If you look at the US market and the number of years a company survives on the s and P500, it's dropping and dropping and dropping. The level of disruption and business change within and between companies is extremely high. Mergers and acquisitions and startups and innovative disruptors. There aren't that many companies that last hundreds of years. There are many that do. And, you know, that was my book was all about that, about what I call enduring organizations. But even Japan has to deal with the fact that, you know, old companies do get disrupted sometimes they fall behind. Sometimes they have lots of sort of legacy products and services that they have to maintain, and that in and of itself holds them back. So they, they're very good, by the way, a lot of the, you know, the big companies like Fujitsu and Hitachi, they have many, many companies within them. So they're very good at spinning off new businesses, creating new businesses, sort of isolating innovation in new areas. But nevertheless, this, this tenure issue creates rigidity and, and slowness in the workforce. And that in turn makes it hard for investors to invest in new technologies and new companies in Japan because people don't move around enough. So what does that have to do with all of us? Well, first of all, I'm not too worried about the Japanese economy because the people that I know or have met in Japan are extremely smart and are very aware of these issues. So I think they're slowly going to be addressed over time. But this is exactly the same thing that goes on in every other company, in every other geography in the world. You know, what AI does, and this is been reinforced by all the meetings I've had over here in Asia, is it forces a company to innovate everywhere. Every employee, every worker that has access to AI has the potential to reinvent what they're doing. Marketing, sales, finance, HR operations, virtual research, product management. All of the business functions that we silo into job families will be reinvented and are being reinvented by AI. The CEO of Walmart made that point the other day that every single job in Walmart is being impacted by AI. And what we need to do to re engineer our companies is to allow experimentation to take place and to develop new ideas, new business processes in the world of this technology that operates very, very differently than anything we've ever had before. And of course the technology advances almost every month, so it isn't like you do it once and you're done. This is a continuous revolution going on inside of our companies to find more and more innovative solutions to re engineer how we go to market. One of the companies we met with while we're here, Lixel, for example, is very, very far down the curve on this. And they have really embraced this idea of experimentation all over the company. And we found out that one of the business units at Lixel, Lixel sells plumbing products, discovered they didn't like doing inventory every week or every month of all the thousands and thousands of products they have in their warehouses. They hacked together an AI system with help from it, but done by the business to use their camera to take photos and videos of the inventory and automatically do inventory electronically to save them hours and hours of painstaking work every quarter or every month to do inventory of their products. That was not done by some corporate IT department, that was done by the business itself. And that's really the magic here of this re engineering process is we, we don't know yet at the corporate level all of the innovations that are even possible with AI. And the vendor community hasn't built totally integrated AI solutions yet either. So we have to facilitate this re engineering all over the company through individuals experimentations. If people don't feel comfortable with the reinvention of their job, they're worried, they're afraid, they're nervous. They either don't do it, they're afraid to do it, or they don't feel empowered to do it. The whole company suffers. And the whole super worker effect and super manager effect that we talked about, we've been talking about all week here or two weeks, is about each one of us, including all of us in hr, discovering how and where we can apply AI to revolutionize what we do, talking with our peers, creating multifunctional solutions between the different agents, and then working with it to find and buy and build the AI solutions that are going to allow our companies to grow at an even faster rate. That is going to happen. That is happening. You can see it in the productivity curves of the countries that are growing the fastest, that have the most technology. The Middle east is investing very heavily in AI infrastructure. Obviously the United States is almost a trillion dollars was invested in the United States so far this year in AI infrastructure. You know, we've got Microsoft, OpenAI, Anthropic, Google, Amazon, all going after the corporate market. All of our HR tech vendors, friends are doing this. You know, Galileo is basically growing like wildfire. Everywhere we go. People are trying to find, are finding new opportunities to use AI at an individual level within hr. And, and this stuff is just getting smarter and smarter by the minute. So my lesson sort of to reflect on for you relative to Japan is if you have a culture of stasis, if people are not, do not feel comfortable reinventing their jobs, if they don't feel comfortable moving around, if they're expecting to be rewarded for tenure, if managers are holding onto their positions and they don't want to lose their corner office and they don't want to lose their executive parking place or what it is they have that is going to get in your way. Because every one of us is affected by this. Senior leaders, we had a long, long dinner last night with a bunch of senior leaders. Senior leaders are going to have vastly different jobs and access to information with AI that they never had before. My life is, is completely changed. I'll tell you something else that happened to me. So I'm flying from Tokyo to Singapore. It's about a six and a half, seven hour flight. I'm connected to the Internet and I'm using Galileo, connected to OpenAI and I'm asking it questions about the Japanese economy. [00:12:18] And step by step, query by query, I'm getting the data on the gdp, the data on the workforce, the data on employee and business turnover. And I'm coming to these conclusions about the industries in Japan that are going to be the highest growth industries and the industries that are going to be falling behind based on my hour or so of chatting with OpenAI through Galileo, through my computer on the plane while I'm flying from place to place. You could never do that before. You would have had to outsource that little project to an analyst. The analyst would have gone off for three weeks and come back with a report and then you'd ask him or her a bunch more questions and go back and forth, you know, so think about a finance leader, a cfo, a head of operations ahead of sales, any senior person in any company, the amount of information that they're going to have access to and the ability to use their own intellectual curiosity to get to better solutions. This is happening everywhere, so nobody's job is secure in a sense, but but maybe the positive is that everybody's job is kind of more exciting and more interesting than it's ever been before. And just like the IBM PC gave us all access to computing in 1981, this is exactly the same. We all have access to vast amounts of information and analytic knowledge that we never had before. In fact, I was telling somebody, I was telling Bill Yester that in some ways this is a little bit like the launch of the PC. And most of you weren't around then, but I was. When the IBM PC was launched in 1981, no one ever had had access to a computer before. All we had was dumb terminals. And the initial reaction to the IBM PC amongst many executives was, well, I'm too busy to use that little toy. I'm going to have my secretary use the PC and she or he can do it for me because I'm not really a computer person. [00:14:11] Well, obviously that changed because what started as a single use product, by the way, the PC originally was mainly used for word processing and then later spreadsheets, and then Mint and later hundreds of other things. It started as a specialized tool, became a general purpose, must have productivity system that is a mandatory part of your business and professional career. That's what's going to happen with AI guys. You are going to live your life through your use of these agents. And the slower you are to adopt it or understand it or feel comfortable with it, the more likely you are to slip behind or just miss out on the opportunities you have. And that happened back in the 1980s. I remember quite vividly how quickly people suddenly realized, wow, I need to learn how to use this thing. So anyway, I think the Japanese people are just incredible. I love Japan. It's a beautiful, just wonderful, wonderful country. You know, other than the language barrier, it is a wonderful place to do business with people. They are very aware of these issues. This is not a secret to them or anybody else. And so there's a lot of work going on in Japan to build new career pipelines, employee development, and to improve the mobility across companies and the whole job market. I don't know what's going to happen to the Japanese demographics over time. That's a little more complicated issue. And maybe immigration will open up. I think the language barrier is a big part of this. But, you know, even language is easier because you now have access to instant translation. I, you know, I got a bunch of slides from people over there and looked at a whole bunch of materials and just stuck it into ChatGPT, stuck it into Galileo, stuck it into Google Translate and immediately could, you know, deal with all of it. So, you know, language barriers are going to be broken down, too. Anyway, so this is the super worker and super manager story. Japanese Reflections. I will fill you guys in on a whole bunch of other things going on in the next couple of days. We have a big series of announcements next week going on with SAP, which I'm very excited about, and I'll talk about that over the weekend or early next week. And Galileo is really everywhere. We encourage you, if you are an HR person and you want to read some of this new research we're doing, you can download some of it from our website, you can buy a corporate membership, or you can just get Galileo and learn how to use it. Because I think it's just essential that we learn how to use these agents and really become facile with the capabilities that they have. Every single one of us at every levels of our career, whether you're a young person, a software engineer, an HR person, a recruiter leader, whatever it may be. Okay. I hope that was interesting and a little bit enlightening and talk to you guys again soon.

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