Productive Constraint: How Japan is Leveraging AI to Overcome Limitations
As global policymakers and business leaders gather in Davos this week for the 2025 Annual Meeting of the World Economic Forum discussing “Collaboration for the Intelligent Age,” AI is set to dominate the conversation. Because this transformative technology has the potential both to unite and divide, FleishmanHillard is looking to examples of where AI has been applied successfully to overcome boundaries, taking Japan as a case in point.
To start, the country’s geographical isolation has often been connected to a “Galapagos effect,” which leads to unique and unusual innovations. Now, in the Intelligent Age, demographic, economic, cultural and regulatory constraints still paradoxically have the potential to drive rather than hinder sustainable innovation. With AI as a catalyst across sectors, Japan presents an opportunity and model for leaders to innovate beyond limitations and accelerate social change.
Mobility is one area that has seen significant change, not only in the growing interest in electric vehicles but also the rapid adoption of micro-mobility solutions. Companies like LUUP, the largest player in the industry in Japan with over 10,000 stations, use AI to manage fleets and create a new urban infrastructure empowering customers to travel more freely, addressing issues of car ownership costs, limited parking spaces and last-mile transportation gaps in public transit. While the government has updated its regulations in response to the scooters’ popularity, LUUP manages identity and age verification again through AI-driven technology.
Sustainable agriculture is also approaching a tipping point in Japan, supported by the government’s Midori strategy. Technology is being embraced as a catalyst for change to overcome constraints such as the lack of arable land, aging farmer population and knowledge gap for younger generations. AgriTech startup Agrist, for example, which was valued at 1.6 billion yen two years after founding, leases AI-powered harvesting robots that address labor shortages while determining optimal crop harvesting times. Meanwhile the National Agriculture and Food Research Organization has developed an AI-based pest recognition system to support inexperienced farmers.
A third sector that is undergoing significant change is sustainable housing and energy solutions, which are gaining more interest considering Japan’s rising utility costs and dependency on imported energy. New building codes and solar energy mandates are driving AI-integrated home energy management systems, zero-energy building innovations and smart construction techniques. Domestic giant Sekisui House is now the world’s largest seller of Zero Energy Homes (ZEH), with 95% ZEH compliance in fiscal 2023. The company’s Platform House concept goes beyond home management to use AI as a way of linking home to health, learning and other elements of lifestyle.
While some view Japan’s restrictions with caution, these examples show that AI deployment can spark sophisticated innovation within patterns of ‘productive constraints.’ The Japanese market demonstrates how highly regulated or culturally restrictive environments can become testbeds for AI solutions that address universal challenges. From aging populations in Europe to urban density in Southeast Asia, the lessons from Japan’s approach have broad applicability. The key lies in identifying constraints early, embracing them as innovation catalysts and deploying AI strategically to overcome systemic challenges while respecting societal and regulatory boundaries.
