This report covers 4 areas: 1) Japan’s competitiveness in the new era of “digital manufacturing”, 2) the execution of the ambidexterity strategy, 3) how Japanese companies can manage culture change, and 4) how strategy and culture change require a new, elevated role of HR practices.

The digital transformation (DX) and the post-new coronavirus world require new strategic positioning, if companies want to benefit from the new business opportunities. This report shows how leading Japanese companies are already competing powerfully in digital manufacturing. One tool for the new strategic positioning is the ambidexterity framework. While many Japanese managers are already familiar with ambidexterity, the mechanisms on how to execute this strategy are still not well-known. This report introduces three models that help with the execution of ambidexterity. The first is the alignment model, which shows that successful strategy execution requires a tight fit between the critical tasks (KSF), people, HR systems, and corporate culture. The second is the DISCC model of how to manage culture change. One component of this culture change model is a fundamental change in HR and performance incentives. An example of a new process is the third model, the 9-Box Grid. This offers an example of a tool that links an employee’s assessments with incentives and individualized training, tailored to each employee’s goals. The tools of culture change and HR can be combined to create a new alignment for a company’s innovation strategy, and this will result in new capabilities to compete in the digital transformation.

The digital transformation (DX) is combining with the COVID-19 pandemic to bring a large disruption to all global businesses. While this increases uncertainty, it also brings new opportunities to accelerate change and reinvention. This report shows that many of Japan’s leading companies are well-positioned to compete. It introduces examples from digital manufacturing to highlight these competitive strengths. It is also suggested that now is the time to revisit the role of HR in large companies, not just as a support unit but as a critical lever in motivating and retaining employees and implement strategy change. To execute the dual strategy of ambidexterity and to run separate alignments within one company requires new leadership approaches. The tools presented in this report give managers examples and frameworks for how to think about managing corporate culture change and positioning their companies at the new global competitive frontier.