Agile in Japan: tackling 8 challenges to Agile adoption

Agile transformation Business Agility Agile coaching
You might be aware that Agile has its roots in Lean, and Lean principles were partially developed at Toyota. Terms like "Kanban" (看板, board), "kaizen" (改善, improvement), and "jidoka" (自動化, automation) come from the Japanese language, along with numerous other Lean concepts originating from Japan, such as the famous 3 Ms – Muda (無駄, unnecessary work), Muri (無理, impossible work), and Mura (斑, uneven distribution). Additionally, the ShuHaRi (守破離, stages of mastery in martial arts) concept also hails from Japan. The list goes on!
If you haven't worked in Japan, you might assume that Japanese companies would be the most Agile. I've had this conversation many times, so instead of crying out loud, I'll shed a single, lonely tear and continue.
Regrettably, there is a significant gap between Japanese and Western companies when it comes to Agile. Some initial steps are being taken towards Agile transformation, but the majority of the companies I know still adhere to extremely waterfall-like methodologies. In most cases, it's textbook waterfall: project plans and Gantt charts, functional teams, hierarchical decision-making, silos, disconnection from customers, and other aspects we often criticize when comparing Agile and non-Agile worlds.
Indeed, Japanese companies excel in quality (thanks to Lean and kaizen!) but lag in innovation and customer centricity. Having lived and worked in Japan for over 12 years, I continually observe factors that prevent Japanese companies from becoming Agile. While some of these are easier to overcome than others, and I have been part of successful Agile transformations, nothing is impossible. However, the significance of these factors cannot be underestimated.

Obstacle #1: Confusing Outcome with Output

Japanese companies often reward output rather than outcome. You might have heard stories of overworked employees sleeping (or in extreme cases, dying) at their workplace. This happens because the more hours you work and the more exhausted you appear, the higher your chances are of getting promoted or receiving a bonus. You might spend your days manually inputting data from a written list to Excel, then taking a screenshot, inserting it into a Word document, printing it out, and faxing it to your colleague (no joke, I've seen that), or creating pixel art with tiny Excel cells (I've seen that too). As long as you work a few extra hours per day, look sleep-deprived, and keep a pillow on your desk for quick naps, you're good.
The situation becomes absurd when, if you devise an innovative solution (using a graphic editor instead of Excel) or streamline a process (sending Excel files via email, skipping Word and fax steps) and finish your work early, you face three choices: go home on time (and risk losing a promotion or raise because you're labeled "lazy"), stay in the office until your manager leaves while pretending to be busy (Excel pixel art, anyone?), or find another task, like creating PowerPoint presentations, to keep yourself genuinely occupied.
Rewarding output (number of hours, lines of code, produced documents, or launched campaigns) instead of outcome (solving customer problems, generating business revenue, increasing NPS scores, etc.) is a detrimental practice that is taken to the extreme in Japan, and this corporate culture is deeply ingrained. In my opinion, changing this mentality would be a deal-breaker for the success of an Agile transformation in a traditional Japanese company, and it is very difficult (but not impossible) to achieve.

Obstacle #2: Culture of Obedience

The samurai culture still permeates Japanese society. For many Japanese employees, the idea of questioning or challenging their superior's orders is unfathomable. While this mindset is gradually changing, thanks to younger generations, the majority of society still operates within a strictly hierarchical world where a manager's order is everything.
Even the Japanese language is structured to emphasize one's position in the hierarchy. For example, the verb "give" (and many other verbs indicating an action addressing another person) changes to "lift up" when addressing someone "above" you (a parent, teacher, or boss) and to "hand down" when addressing a subordinate or younger sibling. People pay close attention to each other's age and cohort (class in school or year of joining the company), and must obey those "above" them, while expecting obedience from those "below" them.
Unfortunately, women are often placed lower in the hierarchy than men, though this is gradually changing. I've observed that women frequently hesitate to voice their opinions.
With this cultural context in mind, it's easy to see that hierarchy plays a significant role in Japanese society. Now, imagine running a workshop with a team of individuals at different hierarchical levels, or organizing a backlog grooming session where everyone's input is needed and people are expected to challenge one another.
While breaking through this barrier is possible, it takes time and effort. I have coached a few teams that eventually became truly Agile, able to leave their statuses and ranks at the door, engage in open conversations, challenge one another, and offer new ideas. However, initially, there was a lot of hesitation and apologies for deviating from others' thoughts.

Obstacle #3: The Almighty Customer

A popular Japanese saying states, "the customer is god." In Shinto religion, the world is filled with deities in the form of forests, rivers, mountains, and rocks. Praying to these gods can result in blessings, such as good harvests and protection from natural disasters. In a similar vein, the customer is seen as a deity, capable of blessing a business with success.
It's true that customers in Japan are treated exceptionally well, with fantastic service and attentive care. However, there's a drawback to this mindset: businesses hesitate to ask customers directly what they want, fearing it would disturb them.
This creates a paradox where Japanese businesses are highly customer-oriented yet not customer-centric. Companies attempt to anticipate customer desires, sometimes succeeding, but often missing the mark. Using prototypes, MVPs, and direct feedback is uncommon in Japan, as is involving customers in research or asking them to provide feedback through forms or surveys.
Moreover, customers are accustomed to being treated as deities, which can make involving them in research or usability testing challenging. However, it is not impossible.
To overcome this obstacle, it's essential for businesses to shift from a worshiper mindset to a researcher mindset, engaging customers directly and incorporating their feedback in order to truly meet their needs.

Obstacle #4: Rules, Processes, and Protocols

In Japan, rules govern every aspect of life, and they are held in high regard. When joining a new company, employees are inundated with rules and work protocols to follow diligently. Large companies often hire new graduates in bulk each April, and then provide extensive training that can last for months or even years.
This strict adherence to rules is beneficial for manufacturing high-quality products, such as best-selling SUVs or advanced cameras. Protocols and quality control measures give Japanese manufacturers an edge over the competition. However, when it comes to innovation and experimentation, these rules can stifle out-of-the-box thinking. Even small changes usually require lengthy discussions, multiple approvals, and copious paperwork.
For example, a team I was on in my first year in Japan, was working on an e-commerce site. We spent nearly three months just to reduce shipping fees by 100 yen (roughly $1). The labor cost associated with countless discussions and PowerPoint presentations far exceeded the potential loss of revenue from the reduced shipping fee.
As an Agile coach working with Japanese teams, it's crucial to examine the assumptions surrounding rules and regulations. Some rules may be kept, others discarded, and for some, management or stakeholder departments (like Finance and Legal) may need to be consulted for support. To encourage agility, it's important to create a bubble of freedom around pilot Agile teams and reconsider the organization's overall approach to rules and regulations.

Obstacle #5: The Status Quo

Japan is a fascinating blend of conservatism and modernity, with a deep respect for ancient culture and traditions. However, when this conservatism extends to the workplace, it can be frustrating. Outdated technology like fax machines and websites from the 90s are not uncommon. The prevailing mindset is "if it works, why change it?" Introducing changes is seen as a significant risk, as companies fear alienating loyal customers or inviting complaints from those who may not have adapted to modern technology.
Speaking from personal experience, when I was registering my company a couple of year ago, I had to submit paperwork on a CD-R. I had to buy an external drive just for that, and I was told that I was lucky since, until a couple of years ago, it used to be 3.5-inch disks. It's becoming nearly impossible to buy drives for those now. If you're young, a 3.5-inch disk is the one you see on the "Save" button. It stores fewer Mb of data than the number of Gb most USB sticks and SD cards can store nowadays.
The status quo is a powerful force in Japanese companies, with a focus on serving existing customers and maintaining the current state, rather than expanding into new markets and exploring new approaches. During Agile transformation, it's essential to invest time in customer persona and customer journey exercises. This enables teams to shift from "protecting" customers from change to empathizing with their needs and pain points. As mentioned earlier, Japanese businesses are highly customer-oriented, and with a bit of guidance, they can become customer-centric as well.

Obstacle #6: Risk Aversion

Gambling is illegal in Japan, though loopholes exist that allow pachinko (slot machine parlors), horse races, and boat races to operate. However, the stakes are usually small, and losing one's wealth requires consistently placing bets, rather than going all-in.
Japanese companies are notoriously risk-averse. In Western countries, a 50-50 chance of success might be considered a worthwhile deal, but in Japan, this is almost certainly a no-go. Even with a 70% chance of success, extensive internal discussions and alignments are necessary, and the likelihood of accepting the 30% failure risk is quite low.
In Agile, we encourage teams to be bold, try new things, and treat failure as an opportunity for learning. In Japan, companies often only engage in projects when they have enough evidence that others have already done it successfully, more than once. This cautious approach is also a reason why very few Japanese companies are adopting Agile; they are waiting for success case studies before deciding to invest in it.
Overcoming risk aversion is challenging. The key is to start with small experiments with low stakes, make it a habit, and then gradually expand the scope and raise the stakes. Ensuring psychological safety within teams is crucial—rewarding attempts at trying new things and learning, instead of sticking to the safe side and doing what everyone else does.

Obstacle #7: Death by PowerPoint

To be clear, this issue is not exclusive to Japan. However, as we discuss factors preventing Japanese companies from becoming Agile, PowerPoint is one of these factors. Throughout my years in Japanese companies, I've encountered countless individuals spending all their time creating slides and attending meetings to discuss these slides.
Slide decks are my nemesis, and I believe they are the enemy of Agile. I'm referring to slides for meetings – hours of work just to flash a few pages in front of a disinterested audience before starting over again. While it's sometimes necessary to prepare numbers and graphs to support a point, meetings should not devolve into PowerPoint karaoke. We gather to engage in face-to-face conversations, have meaningful discussions, and solve problems.
Many Japanese companies share a love for densely-packed presentations with 10pt font and an overwhelming amount of detail, leaving little room for discussion. Most meetings are designed to share updates, explain progress, or make announcements, with minimal opportunity for real communication, problem-solving, and decision-making.
When coaching teams, I often prohibit the use of slides in our team meetings. Instead, we rely on whiteboards, Miro, Jira, and other collaboration tools to store reference materials. The last thing I want to spend my time (or anyone else's time) on is ensuring that rectangles are aligned or bullet points have the right indent. Suddenly, we have ample time to focus on real work: researching customer behaviors and market trends, designing products, conducting experiments, and analyzing outcomes.

Obstacle #8: Dependency on Vendors

While many companies around the world use vendors, in Japan it is often taken to a new level. Companies frequently have primarily salespeople and project managers (often called "producers" or "directors"), while work requiring specialized knowledge (design, development, marketing, etc.) is outsourced to vendors.
This dependency creates a waterfall, as you need to gather all requirements before sending them to vendors. In Japan, there are two main types of outsourcing: 業務委託 ("gyomu itaku", full outsourcing), where you assign a task to a vendor and they complete it for you, and 派遣社員 ("haken shyain", temp staff), where you temporarily hire a specialist to join your team. The latter mostly works well, but the former often imposes significant limitations on the client company.
Standard agreements usually dictate that you can only communicate with the vendor's project manager, not directly with the team. And in most cases, it is only your project manager who is allowed to talk to the vendor, not the rest of your team. Imagine being a non-technical project manager trying to get a vendor's engineering team to do what your engineering team requests. Having been on both client and vendor sides, I can attest that it's not enjoyable – it's a waterfall enhanced by a game of broken telephone, a recipe for disaster.
Agile is possible with vendors, but to achieve good results, you need to treat vendors almost as part of your team, with full transparency and daily face-to-face communication. Achieving this may require new contracts and a complete change in approach.
In conclusion, there are many opportunities for Agile transformation in Japan, and although obstacles exist, they can be overcome. Despite the issues I've mentioned, Japanese companies have immense potential, and I hope to see more of them becoming ambitious and taking over the global market.