INSIGHTS

2024.06.19

R&D DISCUSSION Vol. 54

Mind change――
Aiming to become a company that will develop into the future [Part 1]

Hidehito Kawahara, President and CEO of ALFA PMC

R&D DISCUSSION TOP

Q: What changes have occurred in the business world over the past few years, including the COVID-19 pandemic? What business trends do you think are worth paying attention to right now?

A : 皆さんも痛切に感じていると思いますが、2019年末から2023年までのコロナショックによって、既存ビジネスのあり方が根本から問い直されたと言えます。大きく変わった点は３つあります。まず、最大の変化は、グローバルサプライチェーンの再編が進んだことでしょう。中国の不動産バブルの崩壊やウクライナ危機によって、それはさらに鮮明となりました。サプライチェーン分断とリショアリングによる囲い込みの動きが顕在化しています。

Secondly, online business has become widespread. There are people listening to this lecture today using Zoom, and the number of daily meeting participants on Zoom peaked at 10 million in December 2019, but by April 2020, it had reached an average of 300 million, a 30-fold increase in three months. In addition, the use of web conferencing systems such as Microsoft Teams and Webex has become commonplace. From this example, you can see that the presence or absence of a company's unique intelligence (intellectual property) further promotes differentiation from other companies.

Thirdly, it has become necessary to reconstruct human-to-human (face-to-face) business. While it is convenient to think that "even this much can be done online," I think there are also hurdles that can only be overcome by meeting and talking in person. In other words, we have been forced to reconstruct human-to-human business, but we need to choose what is OK to do online and what is preferable to do face-to-face. The basis of face-to-face business is how to create serendipity (the power of chance). In order to turn unexpected coincidences into opportunities, it has become more necessary to hone our sensitivity to business issues on a daily basis and to pursue the essence.
However, even though it has been a big change, it doesn't mean that the basic structure has changed. I think it is important to be flexible in changing business methods and strategies.

Now, all business sectors and industries are being exposed to the waves of the Fourth Industrial Revolution (Industry 4.0). Some people may be troubled by words such as Society 5.0 and Web 3.0 that express the concepts of future society and the Internet. A representative initiative is DX (Digital Transformation). In other words, "the penetration of digital will change people's lives in every aspect for the better," which sounds like a phrase that will make everyone happy. But is that really the case?
There is a term with a similar meaning: "digital disruption." It refers to the penetration of digital technology that fundamentally destroys existing social and industrial structures. It would be more accurate to say that digital technology will change everything, including business areas, business models, and industrial structures.

Even in Japan, disparities caused by digital technology have begun to appear over the past three years. In the construction industry, major general contractors, design firms, and PM/CM companies are simultaneously beginning to work on digital transformation from 2022 to 2023, but I believe that the next few years will be a crossroads for the industry, and that next year, 2025, will be the beginning of a turning point.

Q: What kind of digital transformation do you think we will see in the future?

A : 2025年にデジタイゼーションが促進され、アナログで行っていた事務処理が大規模にデジタル化されることが予想されます。そして、2030年にはAI技術も含めて、さまざまな業務フローや業務プロセスが繋がるデジタライゼーションの時代が訪れます。

DXの鍵を握るのがプラットフォーマーです。ここでは、圧倒的な大手であるGAFAMの4社以外についてお話しします。まず、プラットフォームの原理ですが、Aを求める人とBを求める人をプラットフォーム上でマッチングして、両者が利益を享受できるという仕組みです。UberやAirbnbは2019年、創業から10年で時価総額を一気に伸ばしました。同年の大手ゼネコンの時価総額がおよそ2兆円だったのに対して、Uberは7兆円、Airbnbは3.3兆円だったことを考えると、Zoomの成長と似ています。

In recent years, many other matchmaking services, large and small, have appeared. A typical example is a love matching app. In one case, a man and woman living in Hokkaido and Kyushu met in Tokyo and immediately agreed to get married. Long-distance couples no longer have to pay for travel expenses to meet up and for multiple dates.
In this way, new business models are being born one after another through innovation born from various ideas, with marketing conducted by analyzing big data collected on platforms. In the United States, platforms are the engine that drives new businesses, and a large gap is emerging between platform operators and other businesses. New technologies that can turn the Internet space into an economic sphere, such as the metaverse and Web 3.0, have also appeared, but there are also aspects that make it difficult for one company to win alone. For this reason, I think that new business development on platforms based on Web 2.0 will continue for some time to come.

Q: Do you have any hints for the next-generation business model that Japan's construction industry should aim for?

A: Let's think about the factors that are expected to drive Japan's domestic economy in the future. Japan's areas of expertise are those that are called "Japan's charm," and this includes technology, skills, wisdom, and human resources, as represented by your business. Or, the so-called "Cool Japan" such as the environment, food, culture, robotics, safety, cleanliness, precision, and hospitality. In addition, although words and concepts such as "recovery power," "low-carbon revolution," and "resilience power" are Western in origin, Japan should be aware that its original "energy conservation power" is also a strong point.

In addition, Japan has the world's highest average life expectancy and healthy life expectancy, and its universal health insurance system allows people to receive medical services at low cost. For example, an MRI scan in Japan costs about 5,000 to 9,000 yen per session, but in the United States, it would cost 3 million yen if you are not insured. Japan's medical system is also a strength that should be cherished.
However, Japan is surprisingly not good at connecting these areas of expertise to next-generation business models. Creating next-generation business models requires a strategy to control the platform on which the business is deployed, such as mechanisms, combinations, and system construction. It is also essential to build a platform related to money, such as monetizing services through subscriptions and financial accounting mechanisms. If you do not participate in the platform in some way, you will not be the master of next-generation business, but will become a servant.

Let's take a look at the current state of the construction industry. Construction investment in fiscal 2024 is expected to exceed 70 trillion yen, comparable to the bubble period of 1988-89. On the other hand, the number of employees in 2020 has decreased to about 70% of the peak during the bubble period, and the total number of contractors has decreased to about 80%, so we are currently in a long-term busy season [Slide 1]. In addition, the aging of the construction industry is significant, with more than 30% of construction workers being 55 years old or older. Although construction is an experience-based industry, only 10% of the workforce is 29 years old or younger, so a strategy to attract young people to the construction industry is needed.
Demographic trends show that both the total population and the working-age population will decline after 2025, so the only way to grow the socio-economy is to increase GDP per capita [Slide 2]. In the construction industry, it is important for engineers to work as long as possible, to increase productivity through efficiency, and for experienced workers to pass on their skills to young people. As social structure needs to change in the future, the construction industry must also use both real and digital technologies to promote change, break away from existing businesses, and create new business model mechanisms.

[Slide 1] Understand the actual amount of construction investment, number of licensed contractors, and number of employees.
[Slide 2] Changes in social structure are essential for the future.
  1. This refers to a process in which a manufacturing company or other entity transfers its production base overseas back to its home country.
  2. Digitizing analog tasks in a specific business.
  3. Digitizing business flows and processes to make them more efficient.
  4. It is an acronym for the four major platform providers: Google, Apple, Facebook (now META), and Amazon.

[Slides 1 and 2: Provided by Hidehito Kawahara]

Continued in Part 2

PROFILE

President and CEO of ALFA PMC

Hidehito Kawahara

Hidehito Kawahara

First-class architect, certified construction manager, certified facility manager / born in Karatsu City, Saga Prefecture in 1960. After graduating from university, he worked for the Agricultural Land Development Corporation before joining Yamashita Design Co., Ltd. in 1991. He then joined Yamashita PMC Co., Ltd. as a founding member and served as Representative Director, President, and Chairman of the Board. He established ALFA PMC Co., Ltd. in March 2023. His books include "Facility Advisor" (Diamond Inc., 2015) and "The Strongest Law of Platform Business" (Kobunsha, 2019).

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R&D

Update : 2018.09.21

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