Japanese companies accelerating their investments in artificial intelligence (AI) are struggling to fully reap the benefits. Management consultant Ken Hioki points to the existence of “deadwood employees,” a product of Japan’s unique employment practices, as the fundamental cause. He argues that top-tier companies like Toyota Motor (7203.T) and Mitsubishi UFJ Financial Group (8306.T) are structurally more susceptible to this problem, and the arrival of the AI era is only making the situation more severe.<\/p>\n
According to a 2025 survey conducted by Boston Consulting Group (BCG) across 11 countries and regions, covering more than 10,600 people, the proportion of individuals in Japan who “use AI in their daily work” was just 51%. This is significantly below the global average of 72%, and the gap with the leader, India (92%), is stark. In a bid to catch up on their delayed AI adoption, many Japanese companies are pushing forward with AI integration at a furious pace, but what awaits them is not solely a “rosy future.”<\/p>\n
Hioki categorizes corporate AI initiatives into two levels. The first is “Level A,” where tasks previously performed by humans are simply replaced by AI. This can be handled if a company has internal AI talent, and can also be supplemented with support from external consultants. The second, “Level B,” involves fundamentally rethinking existing business content and processes before introducing AI, demanding a more advanced transformation. Naturally, demand for consulting is rising, with the market size expanding at an annual rate of around 17%.<\/p>\n
Amid this trend, SoftBank Group (9984.T) Chairman and CEO Masayoshi Son has proposed a new management metric: “ROA.” This does not stand for the traditional Return On Asset, but rather “Return On AI.” It is a unique indicator measuring how much AI investment has translated into productivity improvements, cost reductions, and revenue expansion, reflecting a stance of rigorously demanding results from AI initiatives.<\/p>\n
However, Hioki points out a dilemma specific to Japanese companies here. As AI streamlines operations, surplus personnel should theoretically be generated. Yet, at large corporations where seniority-based human resource systems premised on lifetime employment remain deeply entrenched, such talent cannot be easily laid off. As a result, a structure is solidified where companies internally hoard middle-aged and older employees who lack clear job functions or high productivity\u2014the so-called “deadwood employees.”<\/p>\n
The more AI adoption progresses, the more labor-intensive tasks are replaced, relatively highlighting the existence of these “deadwood employees” within the organization. This can become a factor hindering overall corporate productivity improvement and carries the risk of diminishing the returns on AI investments. It appears that Japan’s inferior position in the global AI race stems not merely from a delay in technology adoption, but is deeply connected to such structural defects arising from low labor mobility.<\/p>\n","protected":false},"excerpt":{"rendered":"Japanese companies accelerating their investments in artificial intelligence (AI) are struggling to fully reap the benefits. Management consultant…\n","protected":false},"author":2,"featured_media":70980,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[45711,8,17,45710,250,274,14570,25865],"class_list":["post-70979","post","type-post","status-publish","format-standard","has-post-thumbnail","category-japan","tag-boston-consulting-group","tag-japan","tag-japanese","tag-ken-hioki","tag-masayoshi-son","tag-mitsubishi-ufj-financial-group","tag-softbank-group","tag-toyota-motor"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/posts\/70979","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/comments?post=70979"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/posts\/70979\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/media\/70980"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/media?parent=70979"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/categories?post=70979"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/tags?post=70979"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}