The business performance of companies in Japan is becoming polarized due to the spread of the coronavirus. While digitalization and stay-at-home demand have boosted the performance of some companies, the blows dealt to the transportation, restaurant and tourism industries are increasing in severity.
Even if infections are brought under control in the future, changes to the economy and society are unlikely to be reversed. A shift in the structure of industries also looks likely to advance.
The role of companies is to address issues in society through their business, and distribute profits to investors and employees. If society changes, these issues also change. Companies need to keep questioning their raison d'etre and responding to changes without ceasing.
For the time being, investment in the environmental and digital fields will be the driving force behind growth. There was a time when Japanese companies led the world in these fields -- for example in the markets for environmentally friendly vehicles and semiconductors. In recent years, however, Japan's presence has declined, allowing Western countries and China to take the lead in products and services utilizing information technology. Japan has also been slow in decarbonization efforts.
Japan cannot survive merely by leaning on its past successes. It is indispensable for the country to adopt a stance of leveraging the current adverse circumstances to rebuild business models.
Railway companies, whose earnings have deteriorated, have been putting effort into services distributing information on the state of congestion in trains and at stations to avoid crowding and close contact between people. To do this, they have utilized data such as that on the weight loads of trains, and the number of people who have passed through ticket gates.
If businesses can respond to customers' needs and make good use of latent managerial resources, then they should be able to pick up hints for turning themselves around.
Yet at the same time, if companies merely focus on profits and err in their response to holes in capitalism with regard to disparities, human rights and the environment, then they will immediately lose people's trust.
Fast Retailing Co. Ltd., which operates Uniqlo clothing stores, received support from consumers in its efforts to reuse material. But the major fast fashion brand was criticized for sourcing material from the Xinjiang Uyghur Autonomous Region in China, where human rights abuses have been pointed out.
At Amazon.com Inc., meanwhile, following a dispute between labor and management over working conditions, founder Jeff Bezos wrote a letter of apology to shareholders and promised to improve the quality of employment.
If companies don't outline a path for growing with society, then they will lose sight of the significance of their existence. For the Japanese economy to recover its vitality, more than ever before, managers need to adopt manifold perspectives.