Earlier this week, I attended the Infosys Enterprise AI World Tour in Tokyo, listening to CIOs and technology leaders wrestle with a question that has haunted Japanese enterprises for a decade: How do we actually transform with technology?
In 2018, I wrote about Japan’s “digital cliff“: METI’s warning that legacy systems would become unsustainable by 2025, costing the economy over 2% of GDP annually. I predicted that when trains started running late, Japanese firms would finally embrace transformation. Seven years later, the trains still run on time. But a different kind of disruption has arrived.
The DX Decade Fell Short
In 2022, we wrote that Japanese firms were losing their appetite for digital transformation. Just 39% were actively engaged in DX, and a stubborn 9% remained completely uninterested. Local Japanese firms in particular seemed frozen, trapped between legacy systems and a risk-averse culture.
Fast forward to 2025 – the year of the “digital cliff” that METI warned about seven years ago. How did Japan fare? Tomio Kikyoubara of Nikkei BP Research Institute delivered the verdict: 76.8% of Japanese companies promote digital transformation initiatives, but only about one-third have achieved notable results. Despite all the ministry guidance, industry coalitions, and corporate commitments, DX fell short in Japan.
The problem wasn’t awareness. It was the approach – and lack of governance. Most firms treated DX as modernization: digitizing existing processes, implementing RPA, hoping efficiency gains would compound. But without executive sponsorship and clear accountability, initiatives failed to deliver value. Same processes, same work. A little bit faster, a little bit cheaper.
From inadequate, that model is now obsolete.
Welcome To AX
Kikyoubara-san gave the shift a name: AI Transformation, or “AX”, or AI-premised DX. The multinationals at today’s event are already demonstrating what this looks like. Roche earned World Economic Forum “lighthouse” recognition by using digital & AI solutions to cut yield variability by ~60%, halved technology transfer time, and reduced Scope 1–2 emissions by ~31%. AstraZeneca is shifting from campaign-based marketing to AI-orchestrated micro-personalization across channels.
In Japan, the AI transformation narrative lands differently than in the West. There’s no widespread anxiety about AI replacing jobs here: the talent scarcity is too acute. For instance, Compass Group Japan is deploying robotics and AI not to cut headcount but because they can’t fill roles fast enough in a labor-intensive industry. Japan doesn’t just want AI. It needs AI.
What AX Demands
As I’ve argued recently: The real bottleneck isn’t AI capability, it’s organizational reinvention. AstraZeneca’s Kahori Tamura put it best when she says: “AI itself doesn’t drive success. It is always the people who bring success.”
Speaker after speaker returned to the same AI readiness themes. First, data readiness, and not just structured data, but also for identifying, organizing, and governing unstructured content like documents, images, and video. Then governance and trust rails for compliance with the EU AI Act and Japan’s APPI. Here Forrester’s AEGIS framework can help. And new operating models for human-AI collaboration that redesign roles, not just processes – what we call Agent Experience.
Roche’s Wilson Wang offered the clearest prescription for escaping POC purgatory: “Having the right sponsorship, the right governance – what to invest, where to invest, and who to invest in.” Their “everyday AI” initiative builds foundational literacy across the organization before moving into higher-investment, business-unit-specific use cases. Wang also stressed establishing master data governance first to avoid automating chaos with different definitions across the business.
Infosys CTO Rafee Tarafdar framed this as “exponential engineering” – using platforms like Infosys Topaz Fabric to build in days what previously took weeks, while integrating with existing enterprise investments. For Japanese firms stuck in pilots, this velocity matters.
The Second Awakening
The legendary reliability of Japanese business excellence was built by human coordination at scale. The next era will be built by human-AI collaboration at speed. This time, Japan cannot be late.
