Steven's Blog

2018 Predictions

I love making predictions, so here is my list of ten predictions for 2018.

  1. Business leaders will take reform into their own hands at an increasing rate while Abe’s third arrow remains stymied. The most successful business leaders I know never wait for the government before taking action in their own business. They change business models, bypass established distribution, disrupt competitors, and leverage technology to their advantage. Even within the confines of Japan’s labor regulations, companies have tremendous flexibility in how they hire, reward and fire employees. It is more a matter of courage in using that flexibility in unconventional ways when it serves the best interests of the business and those involved.
  2. Rates of entrepreneurship among young people will outpace all other age groups. I am encountering a surprising number of Japanese men and women in their twenties who have started businesses, whether retail shops, wholesale companies, or professional services. The salaried job has lost allure for these people, and part-time work holds little appeal. Many of their businesses use digital technology in remarkable ways with success.
  3. Women will make headway in senior leadership positions, and inspire their juniors. In 2017, in two client companies of mine, top-level women in management positions, both of whom are Japanese, were promoted to CEO in their respective organizations. Promoting women to senior executive level positions is a trend that while not yet entirely visible or widespread by any means is occurring in all businesses in Japan, and it will accelerate. In my experience, seeing that there is a path to the top for women in more junior positions, lights a fire in those who are ambitious.
  4. English ability among non-salaried workers and students will increase at a faster rate than among the salaryman class. I am increasingly finding elementary school age children asking me questions in English without hesitation when they are curious about me. Unlike many adult salarymen I know, children show no tentativeness and merely want to communicate. Taxi drivers practice English with me, which they are studying on their own. When I am in shops and restaurants in Tokyo, it is the university student part-time workers who engage with me in English, and appear to like doing so. I noticed a similar change in France from the 1980s to 1990s. By the 1990s in France, attitudes toward learning and using English had changed remarkably, and so had English ability in general. When the non-salaried class starts something, it is usually the salaryman class who will follow.
  5. Attitude toward Japan among younger Chinese will continue to grow increasingly positive no matter what surveys say or politics may indicate. I often hear about anti-Japan sentiments among the Chinese, but you certainly would not know it observing the large number of Chinese tourists, students, and professionals in Japan. Prejudice from afar does not often survive real contact. I don’t believe Chinese tourists are coming to Japan just because the shopping in Ginza is good. I see elegant Chinese women imitating Japanese fashion, and a fascination for all the culture and food Japan has to offer. Chinese students in Japan are not here just because of linguistic similarities, but there is another attraction. Ultimately, warming attitudes of individuals will impact relations on an international scale.
  6. People will reject androids as a viable solution to the labor shortage in services. Japanese robotics and android technology is fascinating and has a kind of science fiction novelty. However, no one prefers dealing with a robot routinely, no matter how good the AI or how human-like the appearance. The idea that this is a solution to the problem of an aging population is a pipedream. There is no ersatz for human contact.
  7. Rates of productivity in Japan will increase despite prognostications against it. There are two ways to increase productivity. You can do more of the same, or you can do things differently. More of the same has reached its limit of overtime and headcount. The only way to grow will be by doing things differently. Businesses that do not innovate or at least change will ultimately fail or otherwise be acquired by a company that does, even in Japan. Low productivity businesses in Japan are not going to succeed in this world.
  8. Company leaders and their employees will take work style reform into their own hands and not wait for government action. Work style reform is not a regulatory issue; it is a leadership challenge. You cannot legislate work style because you cannot legislate leadership. Any manager with staff, however, can dramatically increase productivity among the people he or she leads while ensuring reasonable working hours if done right. Good leaders already know that, and will act on their own.
  9. Corporate scandals will continue at an increasing pace and indicate a positive change in business practices in Japan. While many see the raft of corporate scandals in Japan as a negative indicator of governance and ethics in Japanese businesses, my view is the opposite. Internal employees appear to be more willing to call out corporate malfeasance at an increasing rate rather than turning a blind eye. Their managers are responding. As there are increasingly visible cases, employees at other companies will be inspired to take similar action. Managers who might otherwise consider malfeasance will begin to police themselves.
  10. Japan will remain the top business growth opportunity in the world for many overseas businesses who will continue to invest aggressively in the Japan market. Surveys of business leaders in Japan indicate bearishness about the Japan market. The most recent one I know noted only fourteen percent of leaders are bullish. However, all of my clients are experiencing rapid growth, some at double-digit rates, and are bullish on the Japan market for their business, no matter what the economic data say. While some are market leaders, many have a relatively low market share and have ample opportunity to expand in what is among the most significant developed markets in the world. For those who have been successful everywhere, Japan remains the most substantial growth opportunity in the world. It is for your business too!
These are the business trends you need to keep an eye out for in 2018. Click To Tweet

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