Interview
A Leading Nation in Societal Issues: What issues does Japan face at present?

Japan faces a host of issues, such as an aging society and depopulation, that much of world has yet to encounter, positioning the country as a leader in societal issues. In addition to the Japanese central and local governments, many Japanese companies also make effective use of cutting-edge solutions that both domestic and international startups have developed to actively solve issues through innovation.

This time we invited Ms. Eri Tamagawa (hereinafter Ms.Tamagawa), a researcher from the Future Co-Creation Division of the Mitsubishi Research Institute which runs the Initiative for Co-Creating the Future (ICF). This initiative, the ICF, is an open innovation platform for resolving societal issues within and outside of Japan through business. Tamagawa talked about the current status of the societal issues that Japan faces as well as the corporate activities of advanced Japanese companies and their collaborations with overseas start-ups to resolve these issues (Interviewed on February 9, 2021).

Q: Please tell us about the ICF.

Ms. Tamagawa: The ICF is run by Mitsubishi Research Institute, one of Japan’s foremost think tanks that celebrated its 50th anniversary last year.

The Mitsubishi Research Institute is ever evolving to meet the needs of our clients and society, particularly the growing necessity for proactive proposals on our part that go beyond the traditional commissioned-research scheme for supporting existing and new business activities. As such, we have set out on a campaign to serve as a Think and Act tank, putting into real-world practice our proposals alongside clients and society at large.

To resolve societal issues together with various stakeholders, in 2017 we launched the Innovation Network for Co-Creating the Future (INCF), a precursor membership organization to the ICF. Currently, the network has approximately 600 members, including large corporations, startups, academia, central government, and local governments. Government programs funded by taxpayer money are not the only means for addressing societal issues; private companies too have the potential to tackle issues through business. The ICF aims to build a network where those who share the common goal of tackling societal issues through business can convene, collaborate, and see through with this resolve. The ICF also creates and publishes Resolving Societal Issues Through Innovation—Listings of Societal Issues to identify issues and forecast impact on both a domestic and global level.

Cover page of Resolving Societal Issues Through Innovation --- Listings of Societal Issues
(photo by Mitsubishi Research Institute)

Awards Ceremony of INCF Business Acceleration Program 2019
(photo by Mitsubishi Research Institute)

Q: Japan draws attention as a developed country facing societal issues. What are noteworthy issues in particular?

Ms. Tamagawa: Issues listed in the Resolving Societal Issues Through Innovation—Listings of Societal Issues are roughly divided into the following six areas: wellness, water/food, energy/environment, mobility, disaster prevention/infrastructure, and education/human resource development. These six areas have a huge impact on society and are issues that technology and innovation can help resolve. We regard them as noteworthy as Japanese companies look forward to creating businesses geared toward resolving these issues, rather than simply contributing to society.

Q: Specifically, which is the most remarkable societal issue among the six from a global perspective?

Ms. Tamagawa: The area of wellness can be said to be common to all countries.

For example, Sumitomo Life provides an insurance service called Vitality. Originally based on a service scheme that originated in South Africa, this service offers reduced premiums to policyholders who have improved their lifestyle through exercise. It is difficult to promote the prevention of lifestyle-related diseases without an incentives for participants. This service is expected to effectively help users, i.e. policyholders, enhance their health consciousness, get more exercise, and improve their quality of life. In Japan too, lifestyle-related diseases are a major societal issue, and this case offers a good example as it contributes to resolving an issue common to both Japan and other countries.

Q: Starting in the 2018 edition, the report developed a triad of global perspectives* to prevent the listings from being limited to a domestic approach to issues. Why have you incorporated such perspectives?

Ms. Tamagawa: The SDGs(Note1) were behind this. After they were adopted, we published the report, although at the time momentum in Japan for focus on the SDGs was not so strong as now.

About five years have passed since the SDGs were proposed. My impression is that, initially, the focus was on how to classify the existing businesses into the SDGs and how to apply the SDGs to them, but in recent years, people are taking things one step further to discuss what leads to real business based on proactively resolving societal issues. Such a transition is not limited to large corporations. Many people increasingly start businesses by focusing on the solution of societal issues. Awareness is growing for societal issues among both large corporations and startups.

Q: Are there any societal issues that have worsened because of the coronavirus crisis? Or, conversely, are there any areas for which the solution to issues has accelerated?

Ms. Tamagawa: I have created the table below by studying how societal issues have changed because of the impact of COVID-19.

[Table] Change in societal issues due to COVID-19

Six Areas	New Issues During Pandemic	Issues with Progress in Solutions During Pandemic
Wellness	Frailty risk increased as exercise and movement decreased under quarantine	Medical resources became more accessible as online medical examinations became widely available
Water/food	The primary industry was greatly damaged as tourism and the restaurant industry became sluggish	A new forms of consumption (e.g. consumers directly purchasing food from producers facing decreased demand
Energy/environment	Energy efficiency worsened as telework has become widespread, increasing power consumption at home	Accelerated shift to distributed energy
Mobility	Mobility was restricted to prevent the spread of infection; real experience and satisfaction were sought after	Increased convenience for consumers as needs could be satisfied at home via spread of telework and e-commerce
Disaster prevention/infrastructure	Prevention of infection or its early detection became an issue in preparation for the next pandemic	Widespread acceptance of the concept of services that can be used both in ordinary times and disasters
Education/human resource development	Disparity in IT at schools or in homes is directly reflected in educational disparity	Increased development of online services as tablet terminals were distributed to schools and the communication network was improved

Source: Mitsubishi Research Institute

Self-curfew, for example, reduced opportunity for exercise particularly among the elderly leading to their increased risk of mental and physical frailty typified by weakened legs. Such issues on staying healthy are getting more serious.

Conversely, the COVID-19 crisis accelerated the solution of issues. Online medical examination is a case in point. Although there was a need for it from the beginning, by facing the risk of human movement or in-person examination, people took toward the new technology thus accelerating its take-up and improvement.

While the primary sector was greatly damaged, the creation of new solutions has been accelerated. Among examples are services in which food, for which demand decreased, was directly sold to consumers via social media.

In the area of education, schools were shut down for a period of time, and online education has seen widespread implementation in Japan. However, growing disparity in educational opportunity surfaced due to existing disparities in the individual IT environments of households—a new issue laid bare by the pandemic.

While the COVID-19 pandemic worsened some issues, it also seems to have accelerated the solution to others.

Q: In what areas is Japan ahead of other countries in terms of resolving issues?

Ms. Tamagawa: The first area that comes to mind is the water infrastructure industry. Japan has rich water resources and enjoys established water infrastructure throughout the nation. Japan’s water circulation simulation system leads the world.

For example, GETFLOWS, developed by Geosphere Environmental Technology Corp., visualizes water resources in a specific region above and below ground to capture the amount of water resources in the hydrographic basin. It can also be used to simulate floods, tsunami, and other disasters. Further, by combining the demand for water in an area with the simulated current amount of water, you can discuss where the most efficient place is to build a water plant or how to allocate, integrate, or abolish water plants as population increases or decreases. This is technology developed in Japan, but it can be applied to regions plagued by water shortages around the world.

Q: Could you tell us about a case in which Japanese technology contributes to solving issues around the world?

Ms. Tamagawa: The Japanese approach to energy saving in the industrial area is said to be world class.

Japan is especially advanced in the use of heat waste. The world is currently struggling with methods to reduce, collect, or recycle heat that arises in power stations and factories. Takasago Thermal Engineering Co., Ltd., for example, has developed a compact yet high-performance heat storage system that can utilize heat waste under 100 degrees Celsius. It conducts real-world verification tests for practical use in which the system is transported between factories by truck.

Q: Is there any area that is seeing an increase in attention for resolving issues?

Ms. Tamagawa: Japan has a growing demand for offshore wind power generation, a phenomenon enjoying global attention. As an island nation, Japan has much potential for offshore wind power, and the government has taken promotional measures. Overseas companies also see Japan as a promising market for offshore wind power generation.

Q: Are there issues unique to Japan, and what about the solutions?

Ms. Tamagawa: In the area of water and food, in particular, Japan has completely different issues from other countries.

For example, Japanese consumers are very strict about food safety, which is an issue that requires an approach unique to Japan. Low capacity for food supply is also a unique issue because of the country’s aging workforce in agriculture and fisheries. Japan also features advanced forms of workstyle such as part-time farming. Thus, the state of issues in Japan is different from that in other countries.

Although there is concern about Japan’s falling capacity for food procurement, this does not mean that an explosive increase in population would lead to food shortage in the near future. Having said this, however, Japan may have difficulty in procuring food as the self-sufficiency rate in food supply is decreasing and agriculture and fisheries are rapidly aging.

For the problem of food loss, Japan has a different set of issues compared to other countries. In Japan, food loss causes issues at the level of retail and consumption whereas in developing countries food loss issues occur at the level of production and distribution. This is an example of how food loss differs between developing and more developed countries. Japan has strict standards for expiry dates that cause many people to throw away edible food thus escalating food loss.

Products and services developed in a country cannot be necessarily be horizontally rolled out as they are. However, those that receive low evaluation in a country can be conversely accepted as an effective solution that contributes to resolving societal issues in other countries. Although it is necessary to understand the fact that Japan has different societal issues and culture from other countries, products and services by overseas startups can have sufficient potential to become a new business that leads to resolving societal issues in Japan.

Q: Please tell us about specific cases in which Japanese companies work together with overseas startups to solve societal issues in Japan.

Ms. Tamagawa: For example, GA technologies makes use of the technology of Beike, a Chinese real-estate platform, to launch a service offering a 3D walkthrough preview of vacant houses.

The falling birthrate and the aging population have led to a considerable increase in unattended vacant houses, giving rise to a societal issue in Japan. The issue of abandoned houses can occur not only in Japan but also in other countries that will face aging populations. Though it is difficult to go and see vacant houses in remote places, VR offers an enticing means to preview such real-estate and helps to address the societal issue.

Q: Are there societal issues in Japan that overseas startups can solve in the future?

Ms. Tamagawa: 3D printed houses. Since Japan has a lot of natural disasters, it needs many makeshift houses. But there are very few cases in which 3D printed houses are built because they have to comply with the Building Standards Act.

I have the impression that other countries are advanced in terms of 3D printed houses. For example, the American startup, ICON Technology, has commercialized low-cost 3D printed houses and provides dwellings to homeless people. 3D printed houses will see implementation in Japan thanks to their low cost if they come to meet Japanese standards, such as earthquake resistance.

Q: What incentives do overseas startups have to work on societal issues in Japan?

Ms. Tamagawa: The aging population is one of the big issues for which they might choose Japan. A big issue means a big market, and startups that roll out products and services for the elderly are looking to Japan.

Q: What is the determining factor for overseas startups to choose Japan over other areas?

Ms. Tamagawa: Japan is highly technology sensitive meaning that both consumers and businesses have a high understanding of technologies. So overseas startups will test their products and services first in Japan to see how society reacts. Startups find this useful as it results in technologically advanced feedback that directly contributes to sophistication of their product. I’ve also heard of many startups that want to test their technologies in Japan where there are advanced technologies for natural disasters and disaster prevention.

US startup One Concern rolled out a disaster-resilient platform in Japan. This AI-enabled platform visualizes disaster risk evaluations to support decision making for disaster risk. Although Japan is advanced in the area of disaster prevention both technologically and academically, Japanese companies can find a completely different approach by utilizing technologies from startups.

Q: Finally, please give a message for overseas startups.

Ms. Tamagawa: Japan is gradually preparing to lift regulations and foster innovation in response to new issues that the COVID-19 crisis has caused in areas where regulations have delayed progress, such as online medical examination. Deregulation is tangibly picking up in speed.

New societal issues have surfaced amid the pandemic including worsened energy efficiency accompanied by the spread of telework, less exercise under self-curfew, and educational inequality due to IT environment. These issues require speedier solutions than ever before. We see cases for open innovation to resolve these issues rising in a number of areas.

Now is the optimal time for overseas startups to propose new solutions amidst such favorable conditions.

In 2017, Mitsubishi Research Institute, one of Japan’s foremost think tanks and consultancies, launched the Innovation Network for Co-Creating the Future (INCF), a platform aimed at accumulating and optimizing global knowledge through cooperation among government, industry, academia, and citizens. A precursor to the ICF, INCF was integrated with another internal membership organization (the Platinum Society Network) in April 2021 to expand membership base, accelerate and enhance efforts to resolve societal issues, and maximize societal impact, all under the heading of collective impact. Commenced in 2017 by the INCF, the ICF regularly publishes the Resolving Societal Issues Through Innovation—Listings of Societal Issues in order to bring attention to growing societal issues within and outside of Japan, to design solutions through innovation and business models, and to put them into practice. (Website)

Note1: The Sustainable Development Goals (SDGs), also known as the Global Goals, were adopted by all United Nations Member States in 2015 as a universal call to action to end poverty, protect the planet and ensure that all people enjoy peace and prosperity by 2030 (United Nations Development Programme) (Website) .