The Hidden Connection Between Japan's Competitiveness and Agile Development

I am Kunihiko Monbun, CEO of GNUS Inc.

"Japanese companies need digital product capabilities for DX." Working as a DX consultant in both Japan and the US, I've observed that while US companies are actively driving transformation through digital products, many Japanese companies remain focused on transforming their operational foundations.

For Japanese companies to achieve transformation centered around digital products going forward, it will be essential to shift from system implementations led by traditional IT or information systems departments to business unit-led digital adoption and operation.

In this series, titled "What You Need to Know About Digital Products Today," I aim to deliver content focused on DX and digital products in a format that is neither overly technical nor overly lengthy. If you, dear readers, have any requests or topics you'd like to hear about regarding this theme, please let me know.

GNUS Inc.: Established within the Dentsu Group in 2019 as a partner for business growth and transformation through digital products. We support clients from planning and PoC through development, operation, and growth of digital products—key to DX for new and existing businesses—by assembling optimal teams from our network of over 600 members globally and applying agile project management.

The Bottleneck in Japan's Competitiveness

Right off the bat, have you ever considered the hidden relationship between Japan's competitiveness and agile development?

We've seen news reports about Japan's ranking in the IMD World Competitiveness Ranking. Japan, which held the top spot globally until the bubble economy burst, has now dropped to its lowest position ever—38th place—in 2024, 30 years later.

This competitiveness ranking calculates an overall score based on four major categories: "Economic Performance," "Government Efficiency," "Business Efficiency," and "Infrastructure." For Japan, "Business Efficiency" ranks 51st, dragging down its score across all four categories. Furthermore, "Government Efficiency" ranks 42nd. It seems fair to say that these two areas, particularly "Business Efficiency," are the bottlenecks in Japan's competitiveness.

Based on IMD's "World Competitiveness Ranking" 2024 edition, created by GNUS Inc.

Looking deeper, including the 2023 results, we see that within "Business Efficiency," rankings are low for: "Speed of corporate decision-making (64th)", "Awareness of changing markets (58th)", "Quick response to opportunities and threats (62nd)", "Flexibility and adaptability to change (63rd)", "Digital Transformation in Enterprises (50th)", and "Use of Big Data Analytics in Decision Making (64th)".

*Reference: Mitsubishi Research Institute https://www.mri.co.jp/knowledge/insight/20231030.html
 

To deliberately and forcefully summarize, I believe the low rankings of these two items—"organizational decision-making ability in response to change" and "digital utilization"—represent the bottlenecks in Japan's competitiveness.

The emerging relationship with agile development

Changing the subject, at GNUS Inc., we increasingly utilize agile development methodologies in our product development services. Agile development differs from traditional software development by iteratively implementing and testing in small increments, improving through dialogue not only within teams but also with users. Experts involved in establishing this methodology published the following development manifesto:

*A document published in 2001 by 17 experts active in the field of software development, following discussions about their respective principles and methodologies.
 

Rereading this, I feel I can see parallels with the challenges evident in Japan's competitiveness rankings.

Indeed. The bottleneck in Japan's competitiveness lies in the very values emphasized by agile development. In other words, many Japanese companies struggle with the fundamental values and approaches underlying agile development, and this is contributing to their loss of global competitiveness.

At GNUS Inc., our mission is "Products that drive business." Here, "driving business" has two major meanings: one is that digital products enable our clients' businesses to grow. The other meaning is that building our clients' capabilities to drive digital products contributes to Japan's overall competitiveness.

The value of the services we provide lies not only in the digital products themselves, but even more so in the capability to create and continuously improve them. To use a common analogy, we constantly strive to be "a partner who teaches how to fish, not one who provides the fish" when it comes to digital products.
 
Thank you for reading to the end.

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Kunihiko Bunbun / Representative Director and CEO, GNUS Inc.
After joining Dentsu Inc., he was assigned to the Sales Division. He worked on marketing strategies for foreign consumer goods manufacturers and IT companies. In 2009, as part of Dentsu Inc.'s new business division, he launched the digital magazine sales app Magastore and served as its Product Manager. From 2011 onward, within Dentsu Inc.'s newly established New Business Development & Consulting Division, he promoted digital transformation and new business consulting for the media, financial, automotive, and sports business industries. From 2017, seconded to Dentsu Holdings USA in New York, primarily responsible for digital marketing consulting and new business planning for major Japanese manufacturers, driving the development of software services utilizing AI. Returned to Japan in 2019, founded GNUS Inc., and assumed the position of CEO.