Is Japan still the leading Asian country for innovation?

May 12, 2010 - PRLog -- Bill Fischer
Yes
Is China really the new emerging Asian innovation leader? No, not yet!  For one simple reason: Japan – the former, and still reigning, Asian innovative champion!

In the midst of a veritable media blizzard regarding China’s newly-found innovative prowess (especially with respect to green technologies), and Japan’s -- Toyota’s -- recent embarrassing technical gaffes, it is important not to lose one’s perspective about what innovation really is, and why Japan, despite it’s stalled economy, is still the innovative powerhouse of Asia.  

Thomas Friedman has made it fashionable to speak about the world becoming “flat”, and this might actually be happening – to some small extent – when we speak about invention; in other words a lot of people doing research. But, innovation is the ability to produce, apply and distribute these inventions. It is the ability to create positive change by turning new ideas into application. Richard Florida pointed out that “The world is spikey”; and the spikes are centered on the location of powerful multinational corporations with global reach and global brands. These MNCs can take products, processes or business model improvements and turn them into new practices that change the way an entire industry works, on a global scale. New ideas (a commitment to research) are simply not enough. Innovation requires this, for sure, but also the ability to apply these new ideas, and this is where the Sonys, Matsushitas and Nintendos of the world provide a Japanese advantage that China simply does not yet have.

Unlike their more globally established Japanese rivals, most Chinese “innovators” continue to focus on their domestic market (Baidu, DangDang, Alibaba, etc) and their present source of new ideas appears to be mostly the re-articulation of the ideas of others for the Chinese market (eBay, Amazon, etc.) For the few Chinese firms such as  Haier or Huawei that have achieved global recognition, there are many more Japanese firms that exist already as global market leaders in a wide-range of industries. The rapid growth of fast retailing and the Japanese pharmaceutical industry’s increasing investment in California bio-tech firms are signals that Japan continues to search for ideas and brands wherever they might originate; successfully marrying the ideas of others with the manufacturing, logistical and brand power of Japan’s global industrial presence. China’s multinational-aspirants, on the other hand, run the risk of being overwhelmed by their “large market” and losing sight of what global business means in the process.

Energy, enthusiasm and good intentions (or five-year plans) are simply not enough when we speak of innovation on a global stage; nor is “good-enough” service and manufacturing. What is essential, instead, are management skills that have been honed on the tough competition of world-class offerings; the ability to manage complex organizations around the world; and a commitment to quality and customer experience that is not compromised. For the moment, despite the remarkable momentum of China’s growth, it is the seasoned and practiced management of Japan’s well-known global corporations that is more likely to realize the successful application of new ideas in the global marketplace. It is for this reason that one finds retired Japanese engineers consulting in China to that country’s fledgling motor companies. The old Ghost Busters song asks: Who You Gonna Trust? When it comes to innovation, the answer is: Japan! Despite all its problems, Japan works, and it is cool and worldly as well. It is the achievement of the present, not the promise of the future, that continues to keep Japan as Asia’s number one innovative powerhouse.

Bill Fischer is Professor of Technology Management at IMD. He directs IMD’s Mastering Innovation Globally program which will take place in Tokyo (June 7-9) and Hong Kong (October 25-27).

Jean-Pierre Lehmann
No
Let us be clear. The Western stereotype that lasted well into the 1980s that Japan is a nation of copiers and incapable of innovation was completely wrong and ultimately also expensive. By underestimating Japan’s competitive challenge in innovation, Western firms in many sectors succumbed. The Swiss watch industry is one of myriad examples. Japan’s great strength has been in the rapid commercialization of incremental innovation and in areas such as production technology.
   
   But Japan has reached its limits primarily because of certain social structural features and chauvinism. The point can be vividly illustrated by the remarks made by one of Japan’s few Nobel Prize Winners, Susumu Tonegawa, when he paid a brief visit to Tokyo after having won the 1987 Nobel Prize for Physiology and Medicine. After getting his bachelors degree from Kyoto University in 1963, he left Japan to undertake his PhD in the US and for the ensuing decades pursued research in America and in Switzerland. He was at the time living in the US attached to MIT. And what he said as he got off the plane from Boston in Tokyo was that had he stayed in Japan, he would never have won the Nobel Prize.
   
   Japan has two main problems. One is that all institutions in Japan suffer from a rigid suffocating hierarchy, including universities and research institutes. Researchers’ purpose is to prove their professors’ hypotheses right, whether or not they think otherwise. To say that individual thought, let alone radical individual thought, is discouraged is putting it mildly. There is a Japanese saying: deru kugi wa utareru (the nail that sticks out will be hammered in)!
   
   It may be noted by way of parenthesis that in the rare cases when these hierarchies do not exist, the Japanese can be masters of innovation. It is generally recognized, for example, that the Japanese are global leaders in culinary innovation. The Michelin Guide has attributed three stars to more restaurants in Tokyo than in Paris. This is in great part because chefs are independent agents who do not report hierarchically.
   
   The problem of hierarchy in some respects accounts for the second. From Cordoba in the 10th century to California in the 20th, the evidence is quite strong that global hubs of innovation are ones that are at the epicentre of cross-cultural pollination. Japan has failed to attract researchers and inventors from other parts of the globe because in research as in virtually everything else Japan is a closed society with a chauvinistic orientation. The fact that Japanese are so poor in English – the lingua franca of global dialogue and innovation – is both cause and consequence.
   
   The future (and in many ways current) Asian leader of innovation is India. The words of the title of Amartya Sen’s famous book, The Argumentative Indian, mean that the conditions for probing, challenging and hence creating are prevailing. India is not a nation, but a hodge-podge of cultures that in cross-fertilizing generate the incredible fountain of thought that India has been in many fields, including in science and mathematics. The internationalization of Indian research is reflected in many ways, including through the very intellectually rich and dynamic Indian diaspora. Japan is closed not only to foreigners, but also to Japanese who have resided abroad. Tonegawa did not return to Japan. Had he done so, in all probability he would have not been offered a job!

Jean-Pierre Lehmann is Professor of International Political Economy at IMD and the founding director of the Evian Group. He teaches on the Mastering Technology Enterprise (MTE), Orchestrating Winning Performance (OWP) and Leading the Global Enterprise (LGE) programs as well as on the International Seminar for Top Executives (ISTE).
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