How Google-Style Perks Help Japan’s Carmakers Attract Engineers

(Bloomberg Businessweek) -- Woven Planet is an exemplar of Silicon Valley corporate culture. Its office has hammocks, massage rooms, and plants to promote relaxation; glass-walled rooms for an open feel; and Segway-like personal transporters. Employees can mostly work when and where they want. Even its futuristic-sounding name exudes a Bay Area vibe. Except that Woven Planet is based in Tokyo, not Palo Alto, and far from being a startup, it's a unit of a titan of Japanese industry: Toyota Motor Corp.

The venture is Toyota's advanced software and technology arm, where the world's biggest automaker is developing the self-driving, internet-connected cars of the future. Toyota and its Japanese rivals are opening shiny offices for their tech divisions and offering flexible work arrangements to attract the software experts they need to shift from processes heavy on manufacturing to ones that run on code.

Modern cars, like smartphones, beam features and services over the air. Within a decade, most passenger vehicles will need about 300 million lines of code, according to a report from McKinsey & Co.—more than seven times the amount used by the operating system of a standard PC.

Volkswagen AG and Ford Motor Co. have thrown billions of dollars into scaling up their software operations, building coding schools to train employees and poaching Silicon Valley executives. Automakers in Japan—a top producer of cars, with more than $100 billion of exports annually—may have to work harder than their international competitors. They face a shortage of homegrown talent and are less accustomed to hiring foreigners.

Japan was a global digital leader in the 1980s, an era of hardware innovation during which it led development of computer chips and brought to market such devices as Sony Group Corp.'s Walkman. It lost momentum during the software boom of subsequent decades, held back by a lack of IT workers, according to management consulting firm A.T. Kearney Inc., which blames a language barrier, corporate culture, and wages that fell short of global standards.

“Now, as software starts to integrate with hardware in vehicles, this is in a way Japan's chance for a second act,” says Sinead Kaiya, the Canadian chief operating officer of Toyota's Woven Planet, who joined in July 2021 after two decades in the software industry. She says that for the engineers the company is bringing on board, “the allure of working with Toyota is getting the chance to have their software run in millions of vehicles.”

Woven Planet opened early last year in a bright high-rise in a commercial quarter that's home to the Tokyo Stock Exchange and izakaya, or “stay-drink-place,” bars. It's run by James Kuffner, co-founder of the robotics division of Alphabet Inc.'s Google. Its office belies the sometimes penny-pinching reputation of its parent company. Toyota famously shut down elevators and adjusted the air conditioning at its own headquarters in Tokyo to save money in 2016, when a strong yen was cutting into profits.

Subaru Corp. is making a similar play in Shibuya, Tokyo's chaotic center of tech, shopping, and nightlife, where in late 2020 it opened an artificial intelligence lab for its autonomous driving technologies in an airy high-rise office. And in 2016, Honda Motor Co. opened an innovation lab in a high-rise in Akasaka, an upscale commercial district in Tokyo.

In addition to the fancy workplaces and other perks, Japanese automakers may need to allow for more risk-taking to retain the tech sector's best and brightest, says Howard Yu, a professor of management and innovation at the Switzerland-based Institute for Management Development. “For engineers, the concern is that something is created and it goes into countless rounds of review,” he says. “They want to be able to be a builder and see their work get deployed with reasonable quickness. That's a concern for them that could prompt them to leave an older company in Japan.”

The carmakers will also need to focus more on attracting foreigners, says Tong Liu, a Tokyo-based manager at recruitment firm Robert Walters. Japan-based automotive companies used to almost exclusively hire Japanese candidates. Over the past five years they've started to bring in international workers—even non-Japanese speakers—but the remuneration often falls short of global standards, she says, and the companies seldom are willing to sponsor visas for foreign workers.

Toyota's and Subaru's tech divisions say they're seeing some early signs of hiring success, though they don't disclose specific figures. For the fiscal year that ends this March, Woven Planet says it's on track to at least double its number of recruits from a year earlier. Since the opening of Subaru's Shibuya office, the team working on AI for the company's advanced driving systems, run by the lab's deputy chief Toru Saito, has received more than 10 times the number of applications it had in the past, he says.

Saito says automakers need to show prospective employees they offer more than just a nice office. “Car companies just can't shake the image of being antiquated and only having manufacturing plants,” he says. “We need to change that.”