I am thrilled to have arrived in Japan. My third trip in just over two years. This is a country with some of the greatest technological capabilities in the world. It was critical in the emergence of the semiconductor. It led the way in consumer goods, with Sony, Panasonic, and others. It is the center of the global robotics industry.
Despite this, the country has experienced decades of low economic growth, narrowly avoiding recession in the last quarter. The national debt as a percentage of GDP is 159 per cent. More than 40% of the population is expected to be over the age of 65. This “demographic cliff” has implications for the national debt, but also for the hard workforce. The number of managers in giant corporations will shrink particularly in the coming years, as will the availability of new workers. (This Financial Times article about Japan’s “child superstar. “)
Innovation will have to play a key role in meeting these challenges. However, Japan’s classic technique of generation-driven innovation has so far failed to close the economic gap. Nor has it failed to solve disorders such as the demographic abyss. Huge public and personal investments have been made to develop robotic technologies that alleviate the looming challenge in caring for the elderly. A lot of progress has been made, but Japan has learned that it takes more than a generation to turn the promise of robots into a solution that nursing homes can adopt to alleviate the shortage of hard work.
The missing link is the usefulness of generation in resolving disorders. What Japanese innovators are learning to do is better understand what disruptions consumers need to solve, how they need to solve them, and what they want to do to remove barriers to adoption. In a country with many generation, science and engineering companies, this is not an undeniable path. The classic business style is the main source of gravity and exerts a strong inertial force on organizations.
Fortunately, some Japanese corporations are learning to be “ambidextrous organizations. “These are corporations that separate exploratory innovation from the day-to-day “core business. “The most prominent example is AGC. Formerly Ashai Glass Corporation, the company no longer focused on automotive and architectural glass, but added new lines of business in the chemical and pharmaceutical industries. This has allowed them to record results, with more than 25% of profits coming from corporations created in the last ten years. (See my Corporate Explorer Fieldbook for a case study on the AGC approach)
AGC is just one of the leaders in this new movement. I have worked with chemical, electronics, financial services, and technology companies seeking to replicate these stunning results. There is huge potential waiting to be unleashed by combining innovation disciplines to excellence in technological invention. The ambidextrous model is helping these firms to create separate spaces where they can apply innovation practices like customer discovery and lean experimentation to generate growth.
I hope, for Japan’s sake, that the next generation of managers will realize that corporations with fewer managers work faster and more efficiently. Combining this with a renewed interest in how to build established organizations for innovation and expansion can be a difficult combination.
There are so many things to love about Japan. Professional rugby attracts larger crowds than in many parts of Europe. I am faithful to food. Courtesy and respect are a refreshing relief from America. But what I appreciate most is the openness to learning. This is the greatest asset of any innovator. If the next generation of Japanese managers can hold on to this, then innovation in Japan will begin to emerge.