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News Stories · Digital

Japan at heightened risk for digital disruption, top executives say

Based on data from “The Digital Vortex”, an award-winning IMD book now released in Japanese
October 2017

Digital disruption is having a more immediate and significant effect in Japan than in almost any other country or region, according to a survey of business leaders carried out by IMD in support of the book “The Digital Vortex: How Today’s Market Leaders Can Beat Disruptive Competitors at Their Own Game”. Originally released in 2016, “Digital Vortex” has now been updated and released in Japanese by the Global Center for Digital Business Transformation, an IMD and Cisco Initiative.

The data for Japan paints a picture of a country being drawn into the vortex of digital disruption more quickly than the world’s other regions.

More than 90% of Japanese executives believe that digital technology is having a major or transformative impact on their organizations. This figure is almost double what it was when data was first collected on digital disruption in 2015.

Japanese executives estimated that four of the top ten companies in their industries would lose their standing due to digital disruption in the next five years, which was on par with estimates from other Asian economies, but higher than the average for the rest of the world. Executives in the country are significantly more concerned for their own companies than other regions, with nearly 60% convinced that disruption is already happening, compared to only 35% in other countries.

Japanese business leaders are more worried about disruption coming from inside traditional industries and incumbent companies rather than outsiders and startups.

 

With data on par with other regions, digital disruption is a current major concern for boards and c-suite executives in Japan.

Thirty-seven percent of Japanese managers feel that their organizations’ are taking a ‘follower approach’ when it comes to digital disruption, significantly higher than the global average. A further 34% commented that their companies were not reacting appropriately at all.

Overall, the “Digital Vortex” data points to a country ahead of the curve when it comes to disruption, but struggling with how to leverage digital opportunities or respond to threats. Japan’s strong technology foundation places the country in a solid position to excel in an increasingly digital world. However, its traditional organizational culture may inhibit its ability to respond quickly or appropriately to digital disruption at home and abroad.

Globally organizations’ willingness to respond to digital disruption is improving. In 2015, only 25% of executives claimed their organizations were actively responding to digital disruption. This number jumped to 31% in 2017. Nevertheless, 40% still feel their leaders do not understand the threat, or are responding inappropriately, only a slight improvement from 2015.

The latest research draws on survey data from more than a thousand executives, along with quantitative data, such as where venture capitalists are placing their bets.

The authors of “The Digital Vortex” are IMD Professor Michael Wade and Jeff Loucks, James Macaulay and Andy Noronha of Cisco.

Order the Japanese version of the “Digital Vortex” now.
Click here to view the full report in English.

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