The world is going through a turbulent time of rapid change and huge technological advancements, and the events of 2016 are evidence of just how unpredictable it can get.
British voters stunned the world by deciding to leave the European Union. Republican U.S. presidential nominee Donald Trump has scared the global community with the prospect of the intolerant and belligerent administration he would likely oversee if elected. And who would have thought the Trans-Pacific Partnership trade agreement, once championed as the gold standard of free trade pacts, would have little prospect of being ratified in the U.S., as it does now?
The theme of the G1 Global Conference last week — Leadership: Thinking the Unthinkable — was timely, as the global community is experiencing, and is currently perplexed by, a paradigm shift in which traditional ways of running governments and companies no longer seem valid.
The annual conference started in November 2011, aiming to create in Japan a forum similar to the Davos Conference put on by the World Economic Forum, where business and political leaders exchange views, and in which The Japan Times is a media partner.
While innovation and social changes are taking place rapidly, the participants of the summit argued that Japan’s government, businesses and citizens have to take risks and get out of their comfort zones to adapt to the unthinkable, or that which can’t be foreseen.
“A new normal has arrived here and we really need to change ourselves,” said Taro Kono, a Liberal Democratic Party member of the House of Representatives. “We should have prepared for the thinkable. … We did not even prepare for the thinkable.”
As a staunch opponent of nuclear energy, Kono was referring to the triple meltdowns at the Fukushima No. 1 nuclear power plant in the aftermath of the Great East Japan earthquake and tsunami in 2011.
He also said Japan is no longer a secure place, as its national debt has snowballed to more than 230 percent of the country’s gross domestic product, and the society will be unable to take care of the growing aging population in the way it did decades ago, with rich pensions and health care funds.
To accommodate the seismic changes and spur growth, Prime Minister Shinzo Abe has pushed his “three arrows” economic goals. The policy received great acclaim at first, but the third arrow, structural reform to shore up the teetering economy, is still in the quiver.
The 2 percent inflation target Abe promised in tandem with the Bank of Japan has also not been achieved, prompting the BOJ to introduce negative interest rates. But the surprise policy by BOJ Gov. Haruhiko Kuroda unveiled earlier this year has yet to produce the desirable results of boosting capital and consumer spending.
The speakers at the conference all agreed that businesses should get out of their comfort zone and break away from this systemic stalemate. But Tomohiko Taniguchi, a special adviser to Abe, said Japanese businesses remain the most risk-averse as the prolonged economic malaise has discouraged people from taking risks, thus creating a vicious cycle.
“It’s a self-fulfilling downward spiral. Demand is not growing, therefore you cannot spend money. … You cannot give birth,” said Taniguchi. “And the negative downward spiral continues.”
In many ways Japan seems like the frog being boiled, oblivious to the slowly rising temperature. It has yet to fully embrace the need for change, while people in other parts of the world have expressed dissatisfaction with the status quo.
The U.K. voted to exit the EU, and someone like Trump, who is roundly criticized for his outrageously misogynist and racist comments and actions, has become overwhelmingly popular among the disenfranchised with his anti-global trade rhetoric.
Richard Edelman, president and CEO of communications and marketing firm Edelman, said these global phenomena are happening because there is an information divide between the masses and the elite. He also said the bulk of the population believes they will never become elite because they do not believe in progress, and they blame the elites for not acting in their interests. Edelman said better communication between the masses and elites must take place to rectify the situation.
“I think the biggest challenge is for businesses and governments to understand they can no longer rely on the pyramid of authority. … You must talk directly to the mass population, and you must do it quickly, and you must do it in short form and long form,” said Edelman. “We’ve got to change how we talk and we’ve got to change who we talk to and we’ve got to change the speed at which we talk.”
One thing that could shore up the reeling Japanese economy might be innovation and entrepreneurship. But that is also a high hurdle in Japan, where the seniority system still rules, whereas innovation around the world is most often championed by youth.
The founders of the car-hailing service company Uber and apartment rental startup Airbnb launched their unicorn businesses with valuations totaling more than $1 billion while they were in their early 20s and 30s. It was the same with Facebook chief executive officer Mark Zuckerberg, who co-founded the world’s biggest social-networking platform while at Harvard University.
“From the historical perspective, the area of innovation in the world is a youth-led initiative,” said William H. Saito, special adviser to the Cabinet Office. “This is true that if you are not empowered to do this, you will obviously see the ramification of this.”
Participants agreed that they should listen and give chances to young people, while emphasizing the importance of “youth-inization” and “reverse mentoring,” where younger employees mentor the older executives in the areas of technology, social media and current trends.
“I told the middle managers when we do something new, experience does not guarantee better judgment,” said Hiromichi Mizuno, executive managing director and chief investment officer at Japanese Government Pension Investment Fund. “(I tell them) do not control or manage the (opinions of) young people.”
While some participants said projects such as creating an empowerment committee for young people has worked, others said there have been setbacks, as older executives are pushed out and have a hard time landing a job that can replace their income. They said it is important to integrate the wisdom of the old with the ideas of the young.
“Ultimately, you have to keep your eyes on your goals and your goal is not youth-inization for itself,” said Abigail Friedman, CEO of Wisteria Group. “You expect certain results.”