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Could Japan’s Approach To Data Sharing Change The World?

Japan are adopting a new open approach, but will it have a global impact?

3Apr

Data use is now one of the most important topics for companies across the world. It is no longer an exercise done by a few who are above the rest, instead, it is a vital part of almost every modern company’s operation.

However, one of the major difficulties with this has been that companies who want to move into new areas naturally struggle because it is impossible for them to have the correct data, as they haven’t been collecting it. For instance, a taxi company is unlikely to have ever bothered to track phone locations before Uber came along and dominated specifically because they were doing it. It may be in 10 years that Uber is then totally disrupted again by a company that has collected and actioned a completely, as yet unknown, data set.

Given that the ultimate aim of many companies is to become data-driven, data can often ironically prevent them from pursuing some paths as they don’t possess the data they want on specific subjects, so are therefore wary of moving into it. For instance, if an accounting software company wanted to begin creating employee calendar software, they are likely to lack sufficient data to do so as effectively as a company who have been specializing in the area, even if their product has flaws in it that could be exploited.

The Japanese government has noticed this disconnect and believe that having companies sharing their data is the way forward.

It is a controversial move, but one that they believe will have a big impact on their economy and allow for entirely new industries to be built. Essentially, at present when a company makes a sensor, a phone, etc, the company itself doesn’t keep the data that the device creates. Instead, the data created is owned by the company for whom the technology was built. Under this new idea, there will be negotiations between the two parties who will then come to an agreement on who has access to specific data created using the technology.

In theory this sounds like a great idea, as a car company may be collecting data on where their cars are driving and the company who makes parts for it could, therefore, see that they should be placing higher amounts of stock in these areas to firstly take advantage of this market and secondly to improve the experience of the customers who bought the car.

The specifics of the program are yet to be announced, but one of the key elements is going to be that those who abuse this data will lose their access to it in the future. It seems like a good punishment given the potential damage that this would do not only to one deal but also potential future deals. There also needs to be regulations put in place that prevent theft of intellectual property and abuse of the data available to them, which will be dictated further along in the implementation process.

It is a genuinely exciting prospect and will certainly give Japanese companies a real edge over their competitors in many areas, but could it work elsewhere in the world?

One of the biggest hurdles that they would need to overcome would be the competition over everything else mindset. Data is seen as a key differentiator in industries in most other developed countries and opening this up, even to manufacturing partners, would be a terrifying prospect. Equally, there is a profound mistrust amongst many companies so even though it could be that every company would play by the rules set down by the government, there would always be suspicions that their partners were not, effectively destroying the good will necessary for the project to work. This comes from having large manufacturers of specialized components, like microchips and processors, supplying multiple companies, so the data provided by an Apple MacBook would potentially help Asus’ performance.

There is also the attachment to their data based on the amount of money and time spent on it. Companies like Google and Facebook make their money solely through their use of data and hence collect more of it than almost anybody else. The chances of them being willing to allow their data to be made available to anybody is slim as it is essentially their lifeblood.

However, these issues conversely make it difficult for companies based outside Japan because those in Japan will have a significant advantage over their international competitors. If this were to happen the move would become less a case of sharing data to help the economy, but sharing data to keep up with international competitors. If Ford were to be able to use brake pads that last longer because of data their car held on speeds and stopping distances, then it would help in international markets against Japanese car makers like Toyota, Nissan or Honda, who’s suppliers would have the opportunity to use similar data.

Although the law is yet to be enforced in Japan the move could have a huge impact not only on Japan itself but on the wider business community across the globe. It will be difficult for companies in other countries to implement for a number of reasons, but the truth is that the advantage it is likely to give their Japanese rivals may eventually force their hands. 

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