Riding the wave of digital transformation: Insights and lessons from Japan’s journey

Imagine a country once lagging in digital adoption, now setting its sights on transforming an entire society of over 120 million through digital innovation and technology. This is Japan’s story.

In 2000, only 30 percent of the population had internet access, far behind other advanced economies. Japan not only lagged in internet usage but also in integrating ICT into businesses and public services, placing it at a disadvantage in the digital age.

By 2008, Japan made significant strides, with internet penetration surging to 75 percent. The rapid development of broadband infrastructure and increased internet usage across the private sector marked considerable progress.

Inspired by Japan’s transformation, the Quality Infrastructure Investment (QII) Partnership, supported by the Japanese government, developed the report Riding the Wave of Digital Transformation: Insights from Japan’s Journey. The report offers valuable lessons for countries seeking to harness digital technologies to improve citizen well-being, particularly in emerging markets and developing economies.

Japan’s digital journey offers lessons to other countries in undertaking a similar journey

Four key components emerge as essential pillars in Japan’s digital transformation, providing cues for other countries on similar journeys:

1. Data

Data are the lifeblood of digital societies, guiding decision making through predictive modeling and value creation. Many developing countries, however, grapple with the challenges in collecting, managing, and sharing up-to-date, granular, and digitally accessible data across operations and services. This limits the ability of both the national and city governments to respond to society’s current conditions. Japan’s experience navigating data challenges, from enacting key legislation to promote the acquisition, utilization, and sharing of data to protecting and safeguarding data provides a good reference for actions a government can take.

2.  Digital infrastructure

Digital infrastructure encompasses a wide range of elements that support digital systems including stable power supply, high speed internet, efficient telecommunication networks, scalable IT systems, and secure data storage and management solutions. Availability and accessibility of digital infrastructure is often inadequate in developing countries, preventing digital services from reaching everyone. Japan’s experience in this domain ranges from formulating national strategies for digital infrastructure development to providing affordable high-speed internet access, and to integrating and standardizing different systems. The key takeaway here is the importance of sustaining robust infrastructure investment over a period of time and providing room for digital system scalability and flexibility.

3. Institutional enablers

An enabling environment that fosters collaboration and innovation requires adequate policies and regulations, shared vision and strategy, and strong leadership and governance. Japan established a legal framework and incentivizing mechanisms to encourage collaboration between government agencies and the private sector. New government bodies were set up to support digital transformation with guidelines, instruction, and best practices for the local government and private sector. Cities and local governments established platforms, including data portals, to foster collaboration in addressing municipal challenges.

4. People and digital skills

The success of digital transformation initiatives also rests on the digital capabilities across the public, private, and civil sectors. With this in mind, Japan embraced innovative approaches to enhance people’s digital skills. Some cities like Kitakyushu are training staff to use minimal coding tools—software that allows them to design applications with simple codes— as well as providing other training on digital transformation to equip staff at various levels within local governments with relevant skills. Japan also worked to build capacity of municipality officials in close collaboration with local residents—one example included a collaboration with elderly citizens to detect their vulnerability risks and offer insights for preventative care. The lesson here is that governments can power a digital transformation by equipping people with new skills.

Smart City development

Japan also underwent a digital transformation in cities and towns—local governments harnessed digital technologies to enhance and innovate service delivery, building on the country’s recognized strength in urban infrastructure development. The country transformed urban and peri-urban cities into smart cities through a whole-of-society approach, in that every stakeholder plays a part and collaborates to make things better for all.

Digital transformation relies on coordinated efforts: the Japanese central government established supportive policies and frameworks, while local governments translated these into actionable initiatives for public benefit. Proactive governance and open regulations have enabled private sector involvement and citizen engagement, with public-private partnerships proving essential to unlocking digital technology’s full potential.

Japan’s experience offers insights for other countries navigating their own digital transformations, especially those seeking more connected, efficient, and innovative societies.

For more information on the QII Partnership and its initiatives visit the QII Partnership website or follow us on LinkedIn.