An Innovator Leaving Japan

One that sticks out to me is the use of IT and software in daily life. When I was a student here in Japan back in 2004, I had to enrol by filling out a form using pen to paper. My Australian university was already doing everything online without a hitch. If I want to organise a monthly cash transfer to pay for a gym membership, I have to fill out a paper form and stamp it to allow for the gym to take money out of my account. Again, back in Australia I can set up a monthly payment using Internet banking, or just get them to charge my credit card. In other words, in the field of applying IT to everyday life, I believe Japan is lagging other countries badly - and I feel that the main reason for this is that PCs did not spread as widely here as they did in Australia. I would guess that most people here primarily access the Internet using their mobile phone.

Japan, by and large, does not reward innovation.

This quote sums it up:

"So what do you need to create an environment where innovation and thus knowledge/ creativity thrives? What do you need for a thriving post-industrial economy?

You need a culture that can deal with change. You need companies that are small and agile. You need incentive structures that reward ideas over performance. You need a government that is not stuck in bureaucracy. You need a thriving VC investment climate with Angel Investors that are willing to take risk. You need entrepreneurs that take risk. You need an education system that rocks. And guess what, Japan has none of that [12, 13]."

I'll take exception to the one statement that Japan is not able to deal with change. If you look at the history of Japan, they are probably the only country in the history of the world to go from a medieval society closed off to foreign influence to a global power in less than 75 years. The reasons for this ability are complicated and may only work at the macro level, but it does demonstrate an enormous capability for change.

The article is right, however. If the other factors are not there, the outlook for Japan's entrepreneurial culture is not great in the coming decade.

There is defiantly a problem of stagnation in the workplace in Japan, especially in dynamic tech-based companies.

Generally the larger the company, the more lumbering they become.

I feel that this is mostly due to the fairly rigid seniority system that's instilled in Japanese culture (especially work culture). Like Patio11 often says, it's almost like it's anathema to think that someone under the age of 30 can have a good idea.

Most people in positions of rank in a company get there not because they're particularly gifted, but because they've been at the company the longest. This is not always the case -- but it is a rare sight to see a manager who's younger than their subordinates.

And generally, this has worked well for Japan. The young people come in, work their butts off to bring new ideas and energy into the company, present ideas to the older managers who then sends the good ones up top.

The managers don't work as hard as the younguns because they got finished with that 10-20 years ago. The younguns work hard because they know that in 10 years they will be able to relax more when they become a manager.

The problem is that with the current problems with social security, companies not paying retirement funds like they used to, and general suckiness of the economy, many young people no longer have confidence that their hard work will be rewarded with job security or a decent retirement.

Thus, many young people are starting to balk at the traditional Japanese working system, and while it is a slow movement, there are now a lot of more agile tech companies started by the younger generation. (One such great company is Messa Liberty in Osaka, which recently interviewed Patio11 in English and Japanese http://www.messaliberty.com/ )

I think that there is a chance that Japan will be able to spring back from this recession, and to be able to change their working style to more mesh with a technology-driven world.

If one thing I have learned in my many years here, it is that the Japanese are, if nothing else, incredibly adaptable.

Notes: For those who are wondering about the social security from companies, etc -- my father in law who worked at NTT (the phone company) for 40 years, and became a mid-level manager now receives more every month in retirement pay than I do working at my current job. However, that's a thing of times past, and my company (like many) have little to no retirement packages besides public social-security. And who knows where that'll be in 30 years when I need it.

Recently, I also attended a presentation from a "The Economist Intelligence Unit [2]" which painted a similar picture. In a nutshell, japan has now a strong position but will decline economically if the current government doesn't take serious steps to reduce and avoid, e.g. bureaucracy overhead.

Some interesting points from my notes:

- The case of Apple vs. Sony is for instance only a software issue not hardware. Sony doesn't encourage collaboration.

- Apple iPod production is a very interesting case anyway in respect that it is partly made in japan [1]

- Growth in regional differences (e.g. fukoaka prefecture has invested heavily in education and infrastructure. Has now strong ties with Busan area in Korea.) will be strong drivers for future markets.

- Too many "big basket" companies in japan

- Very competitive market (e.g. accepted ROI in japan is 4-5% while internationally it is more like 10-15%)

- Privatisation in japan started in 2005 (!). It takes very long to get products into the market

- Successful companies managed to roll their own efficient distribution chain (e.g. Uniqlo, Ikea, 7eleven)

- It takes at least twice as long to get the ROI than anywhere else. International companies are too short sighted

- Japanese consumers are very demanding and less forgiving. To get it right here is very difficult.

Startup wise there is also a growing environment, especially in seed funding for new ideas University wise. I attended another presentation from UTEC [3] where the growth rates they had were very impressive.

Current outlook for japan is not good, but that is mostly because they are too immobile and have too much bureaucracy. We are going back to 1840 standards where the global economy is dominated by China and India anyway.

Reference:

[1] http://www.nytimes.com/2007/06/28/business/worldbusiness/28s...

[2] http://www.eiu.com/

[3] http://www.ut-ec.co.jp

EDIT: Formatting

What about making japanese apps? There's got to be some decent potential there for the service economy.