It’s my pleasure to introduce Akinori Shibata, CIO of JP Digital, to our global audience. Shibata-san leads the digital transformation of the Japan Post Group, a massive endeavor given the scale and complexity of its operations. Innovating and transforming the Japan Post Group while staying true to its public mission is a commitment of a lifetime.

Shibata-san was a colleague of mine at Oracle Japan in the late 90s. He moved to the Japan Post Group in 2012 after more than 15 years at Oracle. His reason for doing so is a source of inspiration for me.

The interview has been edited for clarity.

Public Service and the Bottom Line

Yasu: Could you give us some background on Japan Post Group?

Shibata-san: Japan’s postal service has been in existence since 1871, but when talking about the Japan Post Group today, we’re talking about three companies-Japan Post, which is the postal service, Japan Post Bank and Japan Post Insurance-as well as Japan Post Holdings, a listed company which owns 100 percent of the postal service. Japan Post was privatized and reorganized into its current structure in 2007. The bank and insurance companies are publicly traded entities. The Japan Post Group has approximately 400,000 employees.

The key to understanding the Japan Post Group is that we had been a public service, so we have a strong sense of mission even to this day, but we also need to be accountable to shareholders.

While leveraging digital technology and transforming ourselves into a Post Office of the future, we must also continue to serve as a lifeline for all people throughout Japan, from the elderly to the physically challenged.

Japan Post Group employees play an important role in their communities. This is especially true in rural areas. We have a legal obligation to provide public services, but our employees’ sense of duty is also deeply rooted in our corporate culture and embedded in our DNA.

So the perennial challenge for us is to balance the need to run a business with what cannot and probably should not change.

Transforming the Japan Post Group-and Japan

Yasu: Going from Oracle Japan to the Japan Post Group is a huge leap. What was the transition like?

Shibata-san: The Japan Post Group was a customer of ours at Oracle so I knew the organization and its challenges very well. But I wanted to do more than sell software. Oracle is an amazing company with great products and services. At the end of the day, though, the goal was to drive sales and generate revenue. I wanted to do more. I wanted to play a part in changing Japan for the better. And since the Japan Post Group is in many ways a part of Japan’s social infrastructure, I believed transforming the Japan Post Group would be akin to changing a part of Japan. I thought it was a job worth dedicating my career to. This was my honest feeling.

Early to the Cloud

Yasu: That’s amazing and truly admirable. Thank you. In a previous interview, you mentioned your DX strategy consists of three pillars: merging online and offline, enabling mobile and leveraging data. What role does the cloud play in your overall strategy? The Japan Post Group was early to the cloud…

Shibata-san: If you’re referring to our Salesforce deployment in 2007, yes, you can say we were early to the cloud for a very large organization. We use Salesforce for the front end of our postal services. The cloud enables us to take a trial and error approach, to innovate our customer engagement, workflow and knowledge sharing across more than 24,000 post offices in a flexible way.

But, like many large organizations, the Japan Post Group operates a plethora of systems. We’re totally hybrid. We have our own data center. We use mainframes for our bank and insurance company-though these companies are looking to leverage the cloud more as well as new FinTech solutions.

Overall, I think we’re still too rigid, and there are regulatory issues as well. We need to become more flexible and open. We need to do a better job of integrating new solutions with our legacy systems. We have already begun implementing Zero Trust. I think this is where cloud companies can do a better job of helping us.

Developing Next-generation Talent

Yasu: What challenges do you face in transforming the Japan Post Group?

Shibata-san: Our biggest challenges are changing the mindset of our employees as well as recruiting and training next-generation talent. I’m not saying we abandon the past. There’s a great deal that’s good about it. But we can’t adhere to the established way just because it’s the way we’ve always done things.

Increasingly, we’re executing based on a shared understanding of benefits and possibilities. We’re aligning on the “why” and the “how” and executing to create new value.

That said, the current infrastructure is huge and complex. And there are a myriad of rules and regulations. Just maintaining our network and PCs across our post offices can be incredibly costly and time consuming. By law, we can’t just reduce the number of post offices like a mega-bank might do with their retail branches. So we need to be realistic and we need to focus on areas where we can deliver the greatest impact in terms of customer value.

I should also add that, like many large Japanese companies, we depend too much on vendors. This defeats the purpose of deploying the cloud which, again, allows for a more iterative, DIY approach. We need to take ownership of outcomes. This is one of the reasons why JP Digital exists.

Designing “With” Customers

Yasu: Leveraging data is a key pillar of your DX strategy. Where are you on this initiative? Also, your customer base is extremely broad. How do you engage with your customers to better understand and address their needs?

Shibata-san: Yes, we do have access to massive amounts of data through interactions with customers across our three companies. The goal is to leverage this data to better understand our customers and offer more personalized services. Our data strategy is totally customer-driven. We’re in the midst of building a new data lake across our three companies based on this strategy.

As for engaging our customers in our design and development process, we have an internal team that’s focused entirely on a design “with” approach. The Japan Post Group has always had a culture of customer engagement. Again, we’re an integral part of rural communities. But to date our relationships with customers have been informal. We’re now implementing an iterative method that will allow us to involve our customers in the design process. This is a key initiative for us.

This doesn't mean we’re designing all services to be online. The Post Office exists for everyone and we want to make it convenient and attractive for everyone. We need to continue to provide services that are useful to society as a whole, not online or mobile services that are useful for only a certain segment of the population. Providing universal services is the whole point of our design thinking initiative.

Learning By Doing

Yasu: A question that I often ask CIOs is how they stay abreast of new technologies? What is your approach to learning about new technologies and trends?

Shibata-san: That’s a great question. Take Zero Trust, for example. If we’re going to implement the latest cloud solutions and break down barriers between internal and external processes, we need a Zero Trust model.

So we’re talking to vendors constantly about building a highly secure architecture that is still flexible enough to accommodate differences across our regions, some of which are so remote that they don’t have the bandwidth that we need.

The days of going to seminars and being lectured to are of course over. I believe taking part in user communities and learning from other users is the way to go.

Also, I’m a strong believer in partnering with vendors and building solutions together, not simply outsourcing to them. It’s a form of OJT that allows us to learn about new solutions and ways of doing things while also taking ownership of outcomes. This way we can benefit from the latest solutions while developing our internal talent as well. The Zero Trust model that we’re implementing is a case study for this approach.

Learning “With” Partners

Yasu: This ties into my next question about acquiring and developing new talent. How are you developing the talent that you need to pursue DX?

Shibata-san: We’re taking a two-pronged approach. One approach is to partner with the training organization within the Japan Post Group. The focus is less on building technical knowledge, say, educating employees in Python, and more on understanding our customers and how to design and develop with them in a design thinking sort of way.

The other approach, which we’re taking within the JP Digital team, involves hiring specialist freelancers whom our junior members can partner with, solve problems with and learn with in a trial and error fashion. We feel this OJT approach is more productive than working with expensive consultants. Again, it’s about owning outcomes.

A Lifeline for Local Communities

Yasu: What is your vision for the Japan Post Group five to ten years into the future? And what advice would you give global cloud companies that want to work with you?

Shibata-san: First of all, I truly appreciate the passion that cloud innovators have, the belief that they have in their products and the innovation they bring to companies. I felt the same way when I was at Oracle. I used to be in their shoes.

Where they can improve is in understanding the needs of large, complex organizations like the Japan Post Group. We’re focused on innovating and trying new approaches, but we still have to address fundamental issues around security and integration with legacy systems. There are many organizations like us, and not just in Japan.

So in addition to promoting their products, cloud vendors need to make an effort to understand their customers and the very real challenges that they face day in and day out. We can’t innovate without getting the basics right.

Our vision is to keep innovating while continuing to serve as a lifeline for local communities throughout Japan.

The cloud can play a key role in enabling the Japan Post Group to realize this vision.