Japanese companies are not alone to have been unable to adapt to the era of digitization. As it appears, the unexpected transformation and weakening of human capital, which constitutes the very foundation of Japanese companies, has occurred.
Up until recently, Japan has maintained its advantage over other countries in the “capabilities to deal with change-causing and unusual situations” at a mass level as has been demonstrated by skilled workers. However, that is not enough to be competitive in the era of digitization, in which multi-level competition occurs frequently within a short time frame. A social system that fosters workers’ ability to self-evolve their capabilities to deal with change-causing and unusual situations (self-evolvability) will become essential because the half-life of skills learned within a certain context is becoming increasingly shorter.
In order to cope with the challenge posed by the shorter useful life of learned skills, workers must be able to explore a new direction of evolution so that they can take a leap before their existing skills expire. However, it is hard to develop such self-evolvability by simply building up experience within their company because compatibility, reusability, and interoperability across corporate, organizational, industrial, and national (including language) boundaries—i.e., abilities enabling prompt collaboration—are the essential qualities of self-evolvability.
In economics, skills useful only to a specific employer are referred to as "firm-specific human capital" and those useful to all employers as "general human capital." In the era of multi-level competition, both individuals and companies are bound to fall into a cycle of obsolescence if they rely solely on firm-specific human capital that is useful only in a specific level of competition.
Excessive adherence to the policy of insourcing everything tends to reduce the capacity to adapt to changes in business environments, resulting in the unexpected transformation and weakening of human capital. Such erosion of human capital is hard to detect within the organization. It is thus necessary to create a mechanism for human resource development as a social system spanning across organizational boundaries.
Some people may think that self-evolvability is a synonym to the capabilities characteristic of multi-skilled workers, those who have long supported the competitiveness of Japanese manufacturers. Indeed, multi-skilled workers are capable of dealing with change-causing and unusual situations. However, it takes a higher level of self-evolvability that has simultaneous conservative and innovative qualities to navigate changing environments in the era of multi-level competition. This is not to say that we all need to become supermen. I will return to this topic later in this series.
* Translated by RIETI.