Corporate Innovation in Japan: Connecting History to New Perspectives

I was in Tokyo last week, having been a regular visitor since first visiting and then living there 18 years ago.

If you read the economic summaries of the last 25 years, you may be expecting to see a city filled with decaying infrastructure, no consumers and extreme social tensions. Of course, the reality on the ground is totally different. Leading up to the 2020 Olympics, the already impressive infrastructure is being improved and Japanese hospitality continues to be amazing.

Still, there are many challenges that remain for the country. As a sign of the demographic trend, schools in the countryside are closing because there are not enough children. The government is trying different policy measures but it’s not clear that any of them are actually improving the situation. Many companies have become risk averse and are simply sitting on cash.

The opportunities

So what are the opportunities? The good news for many companies is that they already have a long history of corporate innovation. The bad news is that most of them haven’t figured out how to connect this history to the present and future.

The story of Nintendo is a useful case study of what success looks like. Nintendo has the storied history of innovation but struggled to translate that history into success across today’s networks. The partnership with Niantic, a US startup, was the key to success with Pokémon GO and now it’s possible that this will have a change in Nintendo’s long-term strategy.

Making the connections

Here are the key lessons from my visits and the success of companies like Nintendo which can help to accelerate corporate innovation in Japan:

  1. Innovation is “out there”, not just “in here”. This means partnership with companies outside of Japan, especially startups. Nintendo by itself had plenty of historical innovation but it needed to find a US startup as a partner to re-capture success.
  2. Promises are not enough, find a track record of partner success. Talking about innovation is easy, it’s the doing that’s hard. During my trip last week, we met with several Japanese corporates who had received impressive promises of innovation from partners only to be disappointed by the actual results. When doing due diligence on partners, the emphasis should be on a proven track record of actually delivering results.
  3. Famous names sound great, but who’s doing the work? It’s tempting to target famous names as partners who claim that they can get things done “with one phone call”. But anyone who’s had to push through a complicated cross-border partnership knows that the hard work starts after the first phone call. So make sure that the partner has the time and motivation to work from start to finish without disappearing after that first phone call.

What are the next steps?

For Japanese companies who have no external partners in place, the next step should be to find a partner using the criteria above. For companies who already have partners, make sure to confirm that you have the right ones because the only thing worse than having no partners is having the wrong partners. For companies who have the right partners in place, keep the momentum going!

The way we live and work is fundamentally changing. While there are many uncertainties about the future, being passive and risk averse can only guarantee eventual failure. Japan has a rich history of innovation and connecting this past to new perspectives is the right path for future progress.

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