Considering how dominant Japanese technology was a few decades ago, it’s incredible the same skills haven’t vaulted Japan into the forefront of digital growth; but they haven’t. Sony, which was the iconic leader of Japanese high tech electronics is now losing market share to Samsung, of South Korea. But, the Japanese high tech culture of the 1960s was not built on fast paced venture capital and angel investors. The digital age, thus far, is all about a combination of technology and finance based on big risks. Japan has adopted the infrastructure of digital society, but not the risk-taking culture.
Resistance To Change
Japan is second or third in the world in cell phone penetration and internet use. Somehow, it seems odd that in adopting and building out this infrastructure that Japanese society would not also adapt new forms and methods that embrace this new technology on its own terms. But, thus far, this is clearly a huge struggle in Japan. Innovation in Japan follows very rigid patterns. Big Japanese corporations tend to hire graduates from the same schools where the company’s top managers went to school. The technology crowd is insular. They study the same materials at the same schools and miss out on new ideas. The culture is very conservative.
With the economic slump of the last twenty years in Japan, which included a devastating deflationary spiral, the country is now facing difficult options. The more creative and adaptive among Japanese businessmen are now saying Japan has to change or miss out on the new digital economy that is taking hold in so many other places. Japan’s spectacular failure to jump into the internet age is partly due to a bad experience early on. In the first years of the new century, one Japanese innovator, Takafumi Horie, grabbed hold of digital innovation by founding a website design operation that he grew into a popular internet portal. Horie adopted many of Silicon Valley’s brash outward symbols of success. He drove around Tokyo in Ferraris and cut a non-conformist image. Horie was imprisoned for securities fraud in 2006.
The high-profile nature of Horie’s rise and fall stifled Japanese digital innovation for a decade. Other young entrepreneurs saw his downfall as a cautionary tale about how the established Japanese technical community would crush anyone attempting to challenge their cultural rules about innovation. Japan has a highly conformist corporate culture that is proudly egalitarian. Flashy consumption and public hubris does not play well among this crowd, and that conservative crowd still control the Japanese economy.
The Future At Stake
In 2013 Japanese Prime Minister, Shinzo Abe, teamed up with Internet billionaire, Hiroshi Mikitani promising to shake up Japan’s hidebound corporate culture by offering a new economic plan that makes it easier for innovators to find investors and customers. Young entrepreneurs are now hoping that Abe will follow through with more support for new innovation and changes to the technology establishment.
Some of the current youth generation are turning away from the traditional technology channels their fathers and older brothers followed. There are over 400 business incubators throughout Japan and some of them are at the most prestigious Universities for Technology like the University of Tokyo and Waseda University, which is also in Tokyo. Perhaps the greatest sign of technology culture change is that a significant number of elite university graduates are now turning away from jobs at big corporations in order to found start up companies. Maybe this marks the shift that will lead Japan back along the path to Asian technology leadership. The younger technology generation will have to break down walls if they are to lead Japan away from its risk averse traditional business culture and towards becoming a premier digital technology hub in Asia.
Most Japanese new businesses run on a shoestring and without cultural support to nourish them, they tend not to last long. There is steady pervasive cultural resistance to new ideas. There may be a hearty group of early adapters to a new idea, but apparently they are trend setters and do little more than identify what’s new, then move on to the next new thing. Too often an envious, critical audience follows the trend identifiers and this follow on group vocally attack the product or service as well as attaching on social media. They are persistent in their opposition to innovation and the innovator.
Japan’s strength is technology development but not business development. Regulation is strict in Japan and the large bureaucratic corporate research culture that built Japan’s reputation for electronic innovation was very cautions about bringing products to market. Failure was not an option in that corporate culture and that is in stark contrast to the way digital start up culture operates. To succeed Japan is being forced to change their society and that is a tall order. Without unflagging support from a collection of high visibility older participants, that change is not likely to happen. However, there are a few of these gray generation technology leaders beginning to speak out.
The question is how much longer can Japan drag its feet in the competition for digital technology development before it is left behind by other Asian countries like South Korea, China and Taiwan. The one formula that seems to open the door to digital innovation in Japan is when a start up has a variety of strong foreign connections. There are several ways this happens. A young innovator can get education elsewhere and bring back ideas that gain a foothold in Japan because they also get foreign financial and business support. It’s possible the spearhead of Japanese cultural change about technology innovation will come forward as a hybrid Japanese and foreign effort. The Japanese digital cycle is slow in getting started and it’s not yet clear if Japan will become a digital technology center in Asia.