2. Today's topics
• Innovation = Totally new idea? New invention?
• What makes people innovative?
• Importance of mentality and business
environment
• Japan as No.1?
• Speed of economics
3. OECD Definition of innovation 1
Product
Innovation
This involves a good or service that is
new or significantly improved. This
includes significant improvements in
technical specifications, components and
materials, incorporated software, user
friendliness or other functional
characteristics. In the education sector, a
product innovation can be a new or
significantly improved curriculum, a new
educational software, etc.
Process
Process innovation involves a new or
significantly improved production or
delivery method. This includes
significant changes in techniques,
equipment and/or software. In education,
this can for example be a new or
significantly improved pedagogy.
4. OECD Definition of innovation 2
Marketing
Innovation
Marketing innovation involves a new
marketing method involving significant
changes in product design or packaging,
product placement, product promotion
or pricing. In education, this can for
example be a new way of pricing the
education service or a new admission
strategy.
Organizational
Innovation
Organizational innovation involves
introducing a new organizational
method in the firm’s business practices,
workplace organization or external
relations. In education, this can for
example be a new way organization of
work between teachers, or organizational
changes in the administrative area.
5. Are Japanese companies NOT
innovative?
• Walkman
• VHS, Beta VCRs
• High performance motor cycles
• Excellent Motor vehicles
• High speed railways
• Electronic Musical instlments
• Hi Speed ships, JetSki
Photos from Yamaha, JR, IHI, Kawasaki Web sites
7. New combination
• Engine + bicycle = Motor Cycle
• Boat + Jet Engine = Jet foil, Jet SKI
• Box+ electricity + CPU = Computer
• Optics + printer +CPU = Digital copier
• Tape recorder – record + headset = Walkman
• Telephone – wire code = Cell phone
• Surfboad + Sail = Windsurfing sail board
• Display + CPU + User experience + Service = iPad
It was not difficult
to get those ideas,
but difficult to
make them
8. Many people says……
• Japanese technology is no longer competitive.
• Digitization makes no differentiation among
products
• Japanese can not make innovative products
like iPhone.
• Each individual Japanese are not so smart
9. My experience in Silicone Valley
• Totally different from other US areas?
• Outside looking -> Just one of a country area
• San Jose Down Town -> full of homeless in 1992
• More cultural diversity
– Indian, Chinese, Russian, Vietnamese, and lots more…
– When we started engineering team, the country origin was
more than 10 countries.
• Silicone valley fever when I moved in 1996.
• Paradise for engineers
• They worked hard and long hours
• House rent was getting higher and higher then people
started to focus on more to money and lugsually life
style.
10. Printer Development
• Laser Beam Printers are combination of Software and
hardware technology
• Engine: Minolta, JAPAN
• Engine Firmware: Minolta, JAPAN
• OS: Vx Works, WindRiver Corp., San Jose, USA
• Printer Controller Firmaware: Peerless Systems Corp., Los
Angeles, USA
• Printer Controller hardware: IBM and Peerless Systems
• Printer Driver: Xenographics, Irvine, USA
• QA test suite: Genoa Technology, Los Angeles, USA
• QA test: Minolta Systems Lab. SunnyVale, USA
• Production: XEROX Corp., Los Angeles, USA
11. Typical life of engineers in SV
Student
Skill level
Intern
Training
New Job
As a Junior
Engineer
QA test
engineer
New Job
As senior
Engineer
Back to
school
MBA
Managing
position or
startup
business
Specialist
Scientist
Happy
engineers
As they change job, they keep building
Human networks in the industry
Year
This position is
no longer safe.
Drop out
12. Carrier pass of workers in JP
Before 2007
Student
Life level
Small
company
Year
Drop out
Large
domestic
company
Multi-
national
company
Middle management
Middle management
Middle
management
Top
manag
ement
Top
manag
ement
Top
manag
ement
Engineers are also the same
13. Silicone valley
• Business environment
– It is common to start a company at their garage.
– Even large company deal with small companies
– Thick business support system by investors and professionals
– People can move companies easily
– They have a skill pool in the area
– Broadly constructed human networks
– Cultural diversity makes easy to go abroad
• Mentality
– Challenging and open mind
– Good thing is good
– Speed is important
– Born to be worldwide
– Big is not important. Excellence is important
14. Japanese Engineers and US Engineers
Comparison
Local
Cosmopolitan
Royalty for the
company is high
Low
Royalty for research group
Is high
Low
Source: International technology development strategy
Saito, Itami
15. Typical Japanese Large Company
model
You
e
f
Your COMPANY
University
g
Research Society
Market Information
Overseas Sales
Companies
Industry
Group
16. IT industry
Medical industry
Human Network
You
a
c
d
b
e
f
Your COMPANY
COMPANY B
COMPANY C
COMPANY AUniversity
Independent
Contractor
g
Professional
17. Idea to integration
Mr. Engineer:
I’ve got a great idea!
Marketing
Technology pool
Human network
Money
Sponsor
Production
Sales channel
19. • Sometimes when you innovate, you make
mistakes. It is best to admit them quickly, and
get on with improving your other innovations.
Steve Jobs
20. Why Japanese companies are not
successful these days?
• Slow decision
• Lack of investment
• Too much stock holder consciousness
• Balance sheet oriented top management
• Too many “salary man” president -> low skill,
slow decision
• Wasting engineers resources
• Less training since bubble economy is exploded.
21. Japanese business environment
• “Keiretsu” a group network is getting weaker,
but it still exist.
• To avoid risks, large companies do not work
with start ups and small companies directory.
• B to C business is getting better, but B to B
business is still difficult. It takes time to
increase the credibility.
• COSY Inc. took four years to increase the
credibility.
22. Economics of speed
Sep.1 Sep.30 Oct.31 Nov.30 Dec.31
Start
Oct.5
1000 Cash
750
Unit: Thousand yen
Cash
0
Purchase -500
Then cash 250
First sales
Of 800
Payment
Of 800
Cash
-250
Cash
550
Purchase -500
Cash
50
Start
Oct.5
1000
Cash
750
Purchase -500
Then cash 250
First sales
Of 800
Payment
Of 800
Cash 1300
Then purchase -500
Then cash 800
2nd. Sales
Of 800
Cash 1850
Then purchase -500
Then cash 1350
US Net 30 days
JPN Net 85 days
Condition:
Product 800k
Purchase 500k
Fixed cost 250k
23. Long payment term affects company
mentality
• If payment cycle is long, management tend to try to
reduce the fixed cost.
• Salary for workers are also fixed cost in Japan.
• Japanese companies are know as life time employment
policy.
• When the sales amount goes down, it suddenly affect
the cash flow.
• As a result, management start thinking of reducing
total salary and related cost, but how?
– Use off shore subcontractors
– Use temporary workers to make fixed cost to variable cost.
– Try to reduce R&D and other cost.
It makes products poor and reduce the mind of
innovation!
24. Japanese companies from 2008
• Multinational corporations will shift to get
more skillful workers from overseas.
• Domestic companies has to have only one skill
or technology.
• Working well with non-Japanese is
indispensable skill for Japanese workers
25. World wide business is getting easier
for small companies
• Before (1988)
– Communication cost was high: 200/min
– Internet connection: not available most of cities.
– Telex was still used for document transfer
– Facsimile was getting popular
– Only limited people can do business with abroad.
• Now (2010)
– Telephone cost is almost free
– Video conference cost is low
– E-mail, chat, skyp, Slide share, You tube, Web page,
– Low advertisement cost by using Adwords, Twitter,
Facebook
– English: Speak or die
26. Be ambitious!
• No need to work with Japanese companies if
they are arrogant or slow. But they maybe
change in the near future.
• Word wide market is waiting for start-ups.
• Operation cost is getting lower
• Speaking languages and understanding foreign
culture is essential for future success.
• Protect your reputation and expand human
network.
