Shaping the Future of Japan's Regions with AI
Japan’s regional communities face a range of challenges, including population decline, labor shortages, and weakening community ties. At the same time, advances in digital technologies, including generative AI, are opening up new possibilities for addressing these challenges.
For this stakeholder dialogue, we invited Masahiko Shoji of Musashi University and Haruyuki Seki of Code for Japan. Mr. Shoji is an expert in information sociology and the research and promotion of local government DX, while Mr. Seki works to address regional challenges through civic tech and other initiatives. Taking a broad perspective, we discussed the current state of regional communities and the potential applications of AI, offering candid, objective views.
- Date: Friday, July 3, 2026
- Attendees:
[Outside expert]
Masahiko Shoji（Professor, Department of Socio-Media Studies, Faculty of Sociology, Musashi University; Chair, Study Group on Promoting Digital Transformation in Local Governments, Ministry of Internal Affairs and Communications; and other positions）
Haruyuki Seki（Founder, Code for Japan; and other positions）
[TISI Inc.]
Kenji Horiuchi（Senior Managing Executive Officer, Division Director, Regional IT Solutions SBU 1）
Miki Yutani（Executive Fellow, Technology SBU and Social Innovation Div.）
Masakazu Kawamura（Managing Executive Officer, Division Manager of Corporate Planning SBU, Corporate Sustainability Promotion Officer）
[Facilitator]
Shigeyoshi Araki（Sustainability Consultant, Cre-en Inc.）
Participants
Masahiko Shoji（Professor, Department of Socio-Media Studies, Faculty of Sociology, Musashi University; Vice Director, Institute of Data Science, Musashi Academy of the Nezu Foundation; Executive Research Fellow, Center for Global Communications (GLOCOM), International University of Japan; Visiting Professor, Center for Spatial Information Science (CSIS), The University of Tokyo）
Research Fellow, Center for Global Communications (GLOCOM), International University of Japan(2002–present; currently Executive Research Fellow); Professor, Faculty of Sociology,
Musashi University(since 2019); Vice Director, Institute of Data Science, Musashi Academy of the Nezu Foundation(since 2023); Visiting Professor, Center for Spatial Information Science (CSIS), The University of Tokyo(since 2024)
Haruyuki Seki（Founder, Code for Japan; Founder and Chief Executive Officer (CEO), HackCamp Inc.; and other positions）
A policy entrepreneur and civic hacker, he launched sinsai.info following the Great East Japan Earthquake in 2011 and founded Code for Japan in 2013. He has spearheaded government digital transformation initiatives across Japan, serving as a Senior Expert, Digital Agency, Government of Japan, Chief Innovation Officer, City of Kobe, and Chief Digital Services Fellow, Tokyo Metropolitan Government. Through these efforts, he has led citizen-centered approaches to solving social challenges.
Kenji Horiuchi（Senior Managing Executive Officer, Division Director, Regional IT Solutions SBU 1; Segment Owner, Regional IT Solutions Segment, TISI Inc.）
Served in Social Innovation Div. and Distribution Services Business Div. before being appointed Division Director of Distribution Services Business Div. in 2021. Became Managing Executive Officer and Division Director of Metropolitan Industrial Business Div. in 2023, Senior Managing Executive Officer in 2025, and assumed the current position in April 2026.
Miki Yutani（Executive Fellow, Technology SBU and Social Innovation Div., TISI Inc.）
After working in new business planning and serving as a project manager for manufacturing systems development projects, he was appointed Director of the Strategic Technology Center in 2009. Since then, he has led the planning and promotion of numerous innovative initiatives, including AI service businesses, the Osaka Healthcare Pavilion for Expo 2025 Osaka, Kansai, the Aizu-Wakamatsu Smart City initiative, and organizations responsible for digital social service business planning. He joined Technology SBU in 2025.
Masakazu Kawamura（Managing Executive Officer, Division Manager of Corporate Planning SBU, Corporate Sustainability Promotion Officer, TISI Inc.）
2017 General Manager of Corporate Management Dept. (after serving in Financial Industry SBU and elsewhere)
2020 Executive Officer, Deputy Division Manager of Corporate Planning SBU
2021 Division Manager of Corporate Planning SBU
2024 Managing Executive Officer
April 2025 Current position (responsible for corporate sustainability, corporate planning, finance and accounting, IR/SR, corporate governance, intellectual property and legal affairs, and human resources strategy)
[Facilitator]
Shigeyoshi Araki（Sustainability Consultant, Cre-en Inc.）
The potential of AI to address regional challenges
Kawamura: In response to rapid changes in the business environment, the Group has been reviewing its strategic risks and materiality, with AI emerging as a major theme. At the same time, I believe that how we develop our regional businesses sustainably will become one of the key strategic issues shaping the Group’s management going forward.
This reflects the deep ties our businesses have with clients and professionals in regional communities across Japan. I believe that revitalizing these communities and fostering their growth through digitalization and AI is important not only for the Group’s growth but for Japanese society as a whole.
Today, I hope our dialogue with those of you who know regional communities firsthand will provide insights into what we must consider in pursuing their sustainable development. I also hope to better understand what we need to hear from the communities themselves, rather than viewing these issues solely from the Group’s perspective.
Shoji: Perhaps the greatest challenge facing the future of regional communities is population decline. The “2040 problem” is frequently discussed in government, as the working population that supports society continues to shrink while the number of people requiring support grows. We need to recognize that this demographic shift is even more serious than we may think.
The continued rise in single-person households is another major social challenge. Nuclear families were once the norm, but single-person households now constitute the majority and are expected to increase further. In terms of “self-help, mutual assistance, and public assistance” within regional communities, public assistance is coming under growing pressure as tax revenues decline and expenditures increase. Mutual assistance is also under pressure, as family- and child-centered networks that have traditionally fostered community ties are weakening, raising concerns about a decline in the vitality of regional communities themselves. At the same time, simply concentrating people and functions in major cities is not the answer. Just as small companies can be attractive and vibrant, I believe that regional communities, too, can continue to thrive and develop sustainably depending on how they are managed, regardless of their size.
In this era of population decline, how can we build regional communities that, despite their small size, remain attractive and vibrant and continue to develop sustainably? I believe this will be a key issue for regional policy in the years ahead.
Seki: At my organization, we promote civic tech*1, working alongside local governments from a citizen’s perspective to tackle regional challenges ourselves. AI has dramatically expanded the range of options available to us. In the past, many initiatives never progressed beyond the idea stage, often stalling over questions such as “Who will do it?” or “How will we fund it?” However, AI is increasingly enabling us to create high-quality products even with limited numbers of engineers and designers. In terms of the ability to create, I feel that AI has brought about a remarkable democratization. On the other hand, through our work supporting AI adoption by local governments, we are seeing a growing divide between those that actively embrace AI and those where adoption remains limited even when the necessary environment is in place. Many local governments also face shortages of staff and funding, so support tailored to these realities will be essential for the sustainable development of regional communities.
Horiuchi: Challenges are emerging not only in local governments but also among regional businesses. We often hear clients say, “Talented students leave for Tokyo and never come back.” Regional communities do offer attractive jobs and R&D opportunities, but I feel they are not doing enough to communicate these opportunities and their appeal. The Group supports many clients that provide essential regional infrastructure, including local governments, medical institutions, regional banks, and electric power companies. Many of these organizations, however, face staff shortages and growing operational workloads.
A rising number of local governments are adopting AI to improve operational efficiency and address staff shortages. However, its use in services for residents and administrative functions remains limited. In addition, to address the growing burden of operating IT systems, including AI, we plan to expand shared services across multiple local governments and strengthen operational support services.
We are also developing medical information-sharing platforms, primarily for large hospitals around Japan, to integrate and accumulate data across institutions. We are leveraging this data to improve the quality of medical care and hospital management. Hospitals face a range of challenges, including the need to deliver frontline medical services with limited staff, driving growing expectations for AI. Our aim is to strengthen support for the adoption of AI, but many initiatives still fail to progress beyond the PoC (proof-of-concept) stage.
Araki: Why do so many initiatives fail to progress beyond the PoC stage?
Horiuchi: Several factors are behind this, including insufficient data preparation, talent shortages, difficulty in demonstrating return on investment, and security concerns. Ultimately, simply introducing AI is not enough to deliver results. It needs to go hand in hand with business process reform and effective use of data.
Yutani: As an SIer*2, we have begun incorporating AI into our development processes. However, our clients’ system environments vary considerably, and we are still building the expertise needed to introduce AI in the optimal way for each environment. We have also been working to utilize public- and private-sector data and open data. Building on our “Area Data Utilization Service,” we aim to combine a wide range of regional data to create further services.
Supporting local governments that administer regional communities is another important priority. While they increasingly need to strengthen security, their information systems departments are often understaffed, making it difficult to tackle AI and security challenges on their own. We therefore believe broader frameworks for regional collaboration and support are essential.
*1 Civic tech: The use of technology by citizens, NPOs, companies, and other stakeholders to address regional and social issues.
*2 SIer: Abbreviation for “system integrator” (a company that provides end-to-end IT system services for companies, government agencies, and other organizations, encompassing planning, design, development, implementation, and operation)
The path to AI adoption in regional communities
Seki: AI has made it possible for citizens themselves to turn ideas into reality, broadening the range of options for addressing challenges. However, when it comes to developing a viable business model, we still cannot rely entirely on AI. I believe the real challenges are how to build consensus around using AI to address regional issues and enhance quality of life, and how to move forward in areas where we will not know what works until we actually try it.
In an era when local government employees can use AI to develop applications themselves, it is important to move beyond the traditional relationship between “those who commission” and “those who build” and shift to a framework in which they create solutions together.
Shoji: Before discussing how to use AI, it is important to consider what we want regional communities to look like and share a common vision of what we hope to achieve by addressing their challenges. If we work backward from the desired outcome, we often find that AI can provide many of the means needed to achieve it. What matters is not focusing on AI itself but focusing on the challenges and sharing a common vision of the desired outcome.
To this end, I believe strong, locally rooted companies will have an increasingly important role to play in supporting regional communities. Local governments can no longer sustain these communities on their own. That is why I believe locally rooted companies, even if they do not operate nationwide, need to take an active role in supporting their communities by providing employment and maintaining a strong attachment to the regions they call home.
Seki: Moreover, regional challenges are difficult for any single company to solve alone. They involve a diverse range of stakeholders in the community, including local governments, transportation operators, medical institutions, financial institutions, local businesses, and civic organizations.
Rather than acting separately, these stakeholders need to share a common vision for the future of the region and build relationships that enable them to work together.
Araki: So, what we need is a framework for co-creation that brings the entire regional community together.
Seki: Exactly. But rather than conventional, formal councils, what matters is building relationships in which people can speak openly and candidly. We need a forum where stakeholders can share a common vision of what they want the region to look like in 10 years.
Horiuchi: We too have brought stakeholders together for discussions but have sometimes struggled to make progress because each participant approaches the issues from their organization’s standpoint and policies. Listening to this discussion, I realize how important it is to speak candidly with people in the community, not in our organizational roles, but as individuals with a personal connection to the region.
The importance of “success stories” and broader rollout
Seki: To broaden AI adoption, there is no need to persuade those who are reluctant to use it. Rather than pushing AI on everyone, I believe the key is to create more “success stories” that others will want to emulate and then replicate them more widely.
In local governments, some employees are using AI to develop applications to solve problems, but these initiatives can be difficult to sustain due to staff transfers and operational challenges. We therefore need operational frameworks, as well as auditing and security support, to ensure these applications remain in use.
As with DX, the key to effective AI use is to understand frontline challenges in depth and deliver valuable solutions, even on a small scale. Local governments have also pioneered initiatives that have since been rolled out nationwide, including the digitalization of public service counters. In some respects, smaller municipalities may find it easier to take on new initiatives, and I believe that companies with local networks have significant potential to collaborate with these municipalities to conduct pilot projects and roll out new initiatives.
Horiuchi: I completely agree that we need more success stories that others will want to emulate. As these examples accumulate, they foster a positive mindset that “we can do this too,” rather than focusing on the technical challenges. As these successful experiences accumulate and spread among local governments, they will help promote wider use of AI, I believe. Ultimately, I feel that concrete examples will easily resonate with people.
Yutani: The Group is currently establishing a system to share examples of AI applications internally. First, we put them into practice ourselves, then roll out the results to the local community. We then use the feedback we receive to inform improve future applications. We aim to create this kind of cycle.
People and a sense of ownership: The keys to success
Araki: Listening to the discussion so far, I feel that a key to addressing regional challenges is a “sense of ownership”—a desire to make the community a better place.
Seki: Exactly. The conventional approach of first setting up a council, developing a plan, and securing a budget prevents us from taking advantage of the flexible, agile approach that AI enables. As a result, it can be difficult to achieve meaningful results.
What we really need is not such frameworks, but people who immerse themselves in the community, share its concerns, think through the issues together, and take action alongside local people.
Horiuchi: That is true. We have tried co-creation projects involving multiple companies, recognizing that no single entity can do this alone, but differing interests have often prevented them from producing tangible results. In contrast, projects that begin with personal relationships seem to be more successful. Perhaps organizational logic alone can only take us so far.
Shoji: Think back to the COVID-19 pandemic. Online classes and paperless processes took off because there was simply no alternative.
In other words, what matters is not the means but the objective. The same applies to AI. If we are truly committed to solving a problem, we can adapt our approach in any number of ways.
No matter how far AI evolves, one thing will remain unchanged—human passion. A genuine desire to make the community better, coupled with a sense of ownership, will be the greatest driving force.
Balancing solutions to regional challenges with business viability
Kawamura: Addressing regional challenges is an important priority for the Group, and we are pursuing various initiatives, including services for local governments. At the same time, as a company, we inevitably have to consider whether these initiatives can be commercially viable.
Deep engagement with regional communities is of course important, but that alone cannot sustain a business. Do we prioritize scale, or focus on accomplishing what we set out to achieve in each region? I believe that unless we first determine our direction, we will eventually reach an impasse. I also feel that we need to change our own way of thinking and our positioning.
Shoji: Exactly. To ensure that solutions to local challenges are sustainable, it is important for companies to take on the role of supporting their communities and to make this a viable business model. Many government bodies and regional intermediary organizations face severe human resource constraints. Companies can therefore commit to addressing regional challenges while receiving fair compensation, creating benefits for both sides. Appropriate pricing is one way to make this possible.
Another approach is to address each region’s specific challenges while using AI and automation to streamline implementation and standardize common elements. By balancing customization with efficiency, the business can remain viable even when revenue from individual regions is limited.
Furthermore, by creating local jobs and building a track record of tangible results, I believe these initiatives will gain due recognition from society and the market.
Seki: For regional initiatives to be sustainable, they must be commercially viable as well as socially beneficial. However, there is no need to pursue large-scale business opportunities from the outset. CSR has both budgetary and structural limitations, so I think it is fine to start an initiative through CSR and ultimately develop it into a viable business.
However, trying to address regional challenges and establish a viable business model at the same time from the outset is extremely difficult—like solving a complex system of equations. Therefore, frontline staff should first focus on solving regional challenges, while the company handles commercialization, broader rollout, and the necessary support. Having this structure in place is important. We should also create an environment where employees can work confidently within local communities and have their achievements recognized as part of their career progression.
These activities should not be judged solely on short-term profits. The trust and networks built within regional communities should be viewed as intangible assets that support future growth. If we can communicate their value to investors, it will become easier to sustain our regional initiatives.
Kawamura: Today’s discussion has made me realize that while each region faces different challenges, there are common elements in the underlying laws, regulations, and business processes. We therefore need to address both region-specific challenges and common elements, tailoring our approach to local circumstances. This is highly significant for the Group. We are accountable to a wide range of stakeholders, and I feel that advancing these initiatives will demonstrate the sustainability of both our business and our efforts to address social challenges.
What is needed to promote AI adoption in regional communities
Araki: We also often hear concerns about security when promoting AI adoption. Some people may feel uneasy simply because they do not fully understand it.
Yutani: The greater hurdle for security may actually be psychological rather than technical—whether residents are comfortable with AI. No matter how advanced the technology, it will not be used if people feel uneasy. That is why AI solutions need to be developed together with users from the outset.
Shoji: Given the increasing sophistication of attackers, designers of security measures need to assume that incidents will occur. Ultimately, this comes down to how organizations respond after a security incident occurs.
Security cannot be ensured simply by providing training. What matters is an organizational culture that fosters day-to-day security awareness, ensures an appropriate response when problems arise, and makes it easy for people to speak up when they notice an incident.
Seki: Another challenge is that overly strict security controls can actually drive people to use AI outside the company’s oversight. Guidelines and appropriate restrictions are necessary, but not enough on their own. We need to balance user-friendly systems with education on appropriate AI use and security.
Araki: In regional communities as well, people with high AI literacy tend to ask, “Why aren’t we using AI?” How can we increase the number of people using AI across the community?
Shoji: In working with local governments, particularly with older residents, I find that many hesitate to use AI and digital tools because they feel they have to master them on their own. Concerns such as “What if I make a mistake?” or “What if I cause an information leak?” create significant psychological barriers.
For this reason, rather than leaving individuals to manage on their own, we need to create an environment where they can use these tools together with others, stay connected with their community, local government, and local businesses, and seek help when required. With this kind of support network, people may feel less anxious and more willing to simply “give AI a try.”
It is also important to accurately understand risks, such as “hallucinations” (generation of plausible but false information). Rather than being overly cautious and usage restriction, we should identify areas where mistakes would have limited impact and use and test AI within those boundaries for appropriate usage.
Seki: I believe psychological safety*3 is important in broadening AI adoption. People new to AI may hesitate at first because they are uncomfortable making mistakes in front of others. Small-group settings where people at a similar level can learn together can therefore be effective.
Managers in particular may feel that “the current way works fine” or “I can make the decisions myself,” making it difficult to see the need for AI. It is therefore important not only to provide tools but also to help people see the value of using them.
Yutani: I believe that local chambers of commerce and communities of young entrepreneurs could serve as entry points for promoting broader AI adoption. Perhaps there is potential to expand the use of AI through these kinds of forums.
I also feel it is necessary for us as a group to expand the AI use cases we have been developing internally so that local government employees and community residents can also make use of them.
Horiuchi: From experience, I find that small study sessions where participants can get to know one another are more likely to foster personal connections than large-scale seminars.
In smaller local governments, one person may be handling these initiatives alone, or someone without particular expertise may be tasked with leading them. We therefore need to consider shared services that provide the right support where it is needed.
*3 Psychological safety: A state in which everyone in a workplace or team feels safe expressing opinions, asking questions, and admitting mistakes without fear of rejection or punishment.
Promoting development of regional communities
Seki: AI makes development easier, but its value will remain limited unless we overcome bottlenecks, such as consensus building and adoption on the ground. This discussion has reaffirmed for me the importance of moving beyond the trial stage, working alongside people on the ground to envision the desired future, and continuing to work toward realizing it. We can now create prototypes on the spot while engaging in dialogue with people on the ground, greatly improving the efficiency of both hands-on support and sales activities. I believe AI will become increasingly important not only for boosting engineer productivity but also for enabling sales teams to leverage engineering capabilities and shorten proposal lead times.
Shoji: I feel that AI is entering a phase much like the Cambrian explosion of the Paleozoic Era, with a vast range of possibilities emerging. Just as the web, smartphones, and social media did when they first emerged, I believe AI will eventually permeate every aspect of society, transforming how we work and communicate, how organizations operate, and even revenue models of business themselves. In terms of real-world implementation as well, we may be reaching a turning point at which the structures of regional communities and businesses will undergo major change. In this context, the Group’s track record and experience as an SIer with deep expertise across a wide range of industries, together with the strengths rooted in the Hokuriku and Toyama regions, offer significant potential. I also see significant possibilities not only in providing global platforms but also in driving their implementation in regional communities and society.
Horiuchi: My biggest takeaway from today is that the real driving force behind change lies not in organizations or systems, but in the commitment and passion of individuals. My discussions with all of you today have reinforced that conviction. I am once again convinced that the most important factor in moving initiatives forward is creating organizations and frameworks that enable individual commitment to engage others and inspire empathy and action.
Yutani: Today was a good opportunity to return to basics and consider not just AI itself, but how we can use technology to create value.
I also recognized the importance of having locally rooted people drive the Group’s initiatives, including those originally from the region, people who have relocated there, and locally hired employees. Wanting to give back to the region where you were born and raised is only natural. Going forward, we hope to continue working with people who share that commitment to pursue initiatives that benefit regional communities.
Kawamura: Today’s discussion has reaffirmed for me the importance of having a sense of ownership.
To make society function more smoothly through AI, technology alone is not enough. We also need people who are genuinely committed to addressing regional challenges.
The Group will continue fostering the sustainable development of regional communities while balancing solutions to social challenges with business viability. We invite you to look forward to what lies ahead for TISI.