Growth Disparity Between Japan and the U.S. (Part 7): Is Overall Optimization + Standardization a Perfect Match for IT!?

Because the U.S. is individualistic, with a "what's in it for me" mentality, one might associate it with individual optimization, but Japan is actually the country of individual optimization.

✅ Overall Optimization in the U.S. vs. Individual Optimization in Japan

I struggled with hotel management in Hawaii after the Lehman Shock.
The first thing that surprised me was that hotel management in Hawaii had the owner (the property owner) and the operator (the company running the hotel) completely separated and there were almost no cases where the owner directly handled operations like in Japan.

When I visited a hotel management company to learn their know-how, they asked me this question:

"How are you handling revenue optimization?"

The hotel industry is a business of selling guest rooms to customers.

Inventory in the form of guest rooms, if not sold today, is inventory that cannot be stored in a refrigerator.

Moreover, it is inventory characterized by being a lump of fixed costs.

In other words, the question was: how are you selling inventory that must be sold today, even if it means lowering the price, provided there is a marginal profit?

This is the same concept as the seat reservation system in the airline industry.

It is a business where it is important to sell at a lower price if the seats on a flight departing today are not filled, and to sell at a higher price if reservations are concentrated.

Instead of developing such a room reservation system for each hotel, using a common platform to share room reservation information with face-to-face travel agencies and web agents is a very rational way of thinking.

It is not that the Japanese ryokan method of opening a paper reservation ledger and writing in reservations with a pen when a call comes in is bad, but rather that there is also an "overall optimal method" where both ryokans and agencies share a common usage platform. that is what I mean.

Perhaps it is the trend of the times, but I feel that the idea of using a common platform, rather than trying to differentiate oneself by creating a unique, standalone hotel reservation system, is beginning to take root in Japan as well.

✅ Overall Optimization and Standardization are a Perfect Match for IT

I believe that overall optimization and standardization are a perfect match for IT.

The administrative procedures left to local governments, which caused delays in the 100,000 yen flat-rate benefit, especially the delay in standardizing electronic procedures and the IT individual optimization left to local governments, have vaguely become visible as the cause of benefits that were embarrassingly slow compared to other countries and PCR tests that could not be expanded.

Delays were also noticeable in education.

Despite the fact that countries like China were able to quickly transition to online classes, in Japan's educational field, where WiFi adoption rates are extremely low due to leaving it up to local regions, even online classes could not be conducted satisfactorily.

This current COVID-19 crisis was a situation where everyone witnessed such IT delays under public scrutiny.

I think it is important to understand that the reason for the IT delay is that we avoided overall optimization and standardization, which are compatible with IT, and instead relied on individual optimization and personal expertise while following precedents and sticking to old methods.

✅ Is Japan's labor productivity really this low!?

The graph above compares labor productivity per employed person across 36 OECD member countries in 2018.

Labor productivity is defined as GDP per employed person, not GDP per capita.GDP per employed person is what we call labor productivity.

While many people mistakenly believe that Japan is a more advanced country, in reality, it has fallen to such a low ranking.

There is even more shocking data.

This is the real labor productivity growth rate per employed person from 2015 to 2018.
Japan was, surprisingly, in 35th place with a dismal figure of negative 0.2%.

By the way, the U.S. saw a productivity increase of 0.8%, and South Korea saw an increase of 2.1%. In other words, while Japan is currently ahead of South Korea, the rankings will eventually flip between South Korea, which is improving its productivity, and Japan, which is regressing.

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