How Japan can make innovation more than a buzzword

At the Global Innovation and Value Summit (GIVS) in Tokyo on Friday, participants ranging from Toyota’s head of automated driving to government ministers and digital marketers discussed how Japan can use its assets to foster a stronger culture of innovation.

An underlying premise was that Japan is often unfairly criticised for failing to innovate. At the same time, people acknowledged that some big changes are needed to facilitate the changes necessary for the country to remain competitive in the long term.

“Not running a lemonade stand”

Toyota (which last week announced a partnership with SoftBank to develop self-driving car services) is one company setting an encouraging example. Mandali Khalesi, gobal head of automated driving mobility and innovation, said the carmaker was on average investing in a new startup related to autonomy every month. He said it was pursuing two streams—"sustainable innovation” and “disruptive innovation”. To forge ahead, Khalesi said it had been necessary to create a standalone entity, TRI-AD, which focuses on autonomous technology.

“We needed to create a new company that would be free from the rules of the past,” said Khalesi. “We should not stay wedded to principles that may have worked in a different era for different products and services.” He said Toyota had also implemented a system where employees can submit ideas to an open internal forum and reach out to potential co-developers. More companies should allow ideas to “bubble up” rather than just taking a top-down approach, he said.

Masafumi Ishibashi, CMO of Nestlé Japan, said his company also offered awards as a way to foster innovation. Last year saw around 4,800 applications from a staff of 2,200, he said, noting that innovation has accelerated since introducing the award. But he pointed out that superiors must support the development bottom-up ideas if they’re to ultimately mean anything.

Getting that support can be difficult. Tamaki Sano, GM of new initiatives for Kirin, who is credited with creating a range of chu-hi products, said a problem is that corporations often expect those charged with "innovating" to implement innovation almost singlehandedly. She added that Japanese companies typically struggle to evaluate new initiatives “because we have not done enough new things”. But she said above all, as an innovation leader it’s important to persevere. “If I give up, all my colleagues will give up, so I won’t give up,” she said.

Kei Shimada, director of innovation at IBM, who works directly with startups, said established companies need a better understanding of how startups, and internal innovation leaders, operate. Typically, “Japanese management doesn’t understand how much time and resources need to be invested,” he said. “They say, ‘we want to see results in three months'. We’re not running a lemonade stand.’”

Japan vs Silicon Valley

Japan’s efforts to brand itself as a destination for startups have been half-hearted at best. But David M Uze, CEO of Trillium Secure, a company providing cybersecurity services for connected vehicles, argued that Japan is actually a good place to start a company. One reason is that it’s a lot less aggressive than the cutthroat environment of Silicon Valley. Uze added that a strength of Japanese companies is in turning competitors into partners.

Building a team in Silicon Valley is difficult, he said, because people are “too greedy” and “mercenary”, while in Japan workforces are relatively undemanding, hardworking and loyal. He said Silicon Valley workers could learn a lesson in “sacrifice” from Japan. But he said the low level of investment for startups and lack of appetite for risk among “salaryman” investors made it difficult to succeed there after the initial stages.

As a foreigner, “if you can communicate from the heart in Japanese, this is the place to start your business,” he said. “To take it forward, you need to be in Silicon Valley.”

Marco Koeder, head of digital at JWT Japan, agreed that the motivation for entrepreneurship is different in Japan. “In the US, people always ask a startup founder, ‘what’s your exit strategy?’,” he said. “In Japan, people don't understand what that means. They just think, 'I want to build a company'. Japan can teach the world something about sustainability.”

But IBM’s Shimada said naivety and lack of English ability continue to hold Japanese startups back. “Reading TechCrunch is not doing your homework,” he said. “They don’t go through that process of going to Silicon Valley. A lot of companies don’t understand how to build an idea into a viable solution, and there’s a lot of investors who don’t understand the global competitive landscape. That’s why they’re not flying, from my perspective.”

Lifelong learning

The future of education was another topic addressed. Yoko Ishikura, a professor at Hitotsubashi University, said the current system was outdated and failed to consider the prospect that 100-year lifespans will become commonplace. She argued that Japan needs to abandon the norm of study-work-retire and develop a culture of lifelong learning.

Yoshimasa Hayashi, the former minister of education, culture, sports, science and technology, agreed that life should become a “back and forth” between education and work. He said technological advances would mean softer skills such as communication, leadership and an ability to appreciate culture and nature would become more important than memorising facts and figures. Hayashi acknowledged that this vision was a far cry from the current state of affairs, but said a trial was in the works to provide “individualised” education to tailored to students’ abilities and talents. 

More time should be spent on debate and “active learning”, with the teacher more of a facilitator, he said. He added that entrepreneurship should become part of education “from elementary school level”. On the positive side, he noted that a higher percentage of graduates from top universities such as Todai are already showing more inclination to start their own enterprises rather than follow the traditional path of joining a big corporation.

Why marketers should care

Everyone, especially those whose work involves some element of creativity, clearly stands to benefit from an environment that is more open to new ideas and new ways of doing things. Brands and agencies increasingly recognise that they are threatened by, and can gain a lot from working with, startups. In recent years, agencies have become active in setting up practices (like TBWA Hakuhodo’s Quantum) that aim to bridge the two worlds. But Japan’s startup scene is still relatively undeveloped. If they are to benefit from collaboration, company leaders and marketers need to understand the mentality of entrepreneurs and help create a broader environment that is more open to innovation. The recognition that Japan’s education system also needs to change has big implications for the way all companies hire and train their staff—including agencies which have admitted they “push people out” once they reach a certain age.