By James Santagata
Principal Consultant, SiliconEdge

The Sun Also Rises (陽はまた昇る ||  Yō wa mata noboru), starring Ken Watanabe (foreigners will know him from his appearances in The Last Samurai and Inception) is a riveting drama that captures the development in Japan of the nascent and soon to be ubiquitous VHS video format.

Starting as a stealth or more accurately, an unapproved Skunk Works projects within JVC (Nihon Victor Corporation) it culminated in 
the development and release of the new VHS standard to the industry.

On top of that, JVC's new format was royalty-free and competed directly against Akio Morita and his uber-powerful Sony Corporation (when you think of Akio Morita, think  about Steve Jobs before  Steve Jobs was even on the scene) and their Betamax.

Lots to takeways from this movie in terms of government pressure and cronyism in the form of MITI (Ministry of International Trade and Industry / 通商産業省 / Tsūshō-sangyō-shō) officials who had backed Betamax and, therefore, wanted JVC to deep-six their VHS format. 

Other key takeways:
- Intrapreneurship
- No Box Thinking
- Technical Innovation 
- Market-Focused Feedback Loops to ferret out new Use Cases
- Tenacity / Being Relentless
- True Leadership
- New Business Models (royalty-free industry standard)

In summation, this docu-drama really demonstrates Japanese business ethics, working styles, attention to detail and cultural expectations.

By James Santagata
Principal Consultant, SiliconEdge


Today I wanted to pose a very serious question regarding the coming failure of Abenomics (and it will fail, mark my words as economically there is no other alternative or outcome), Japan's continuing dearth of real, dynamic leadership and what it means for Japan's future.

Here we go: Has Japan's once rich, brave and bold Samurai spirit come to a crashing halt and been replaced by that of the Eunuch's?

I've deeply pondered this.

A Eunuch spirit and culture would suggest that, and evoke the feelings that, Japan's Samurai, Battlefield Culture has been replaced by something much softer and lacking in leadership.

I've written about this from various which you can find here:

• Japan May Be Able To Compete Globally But Not Yet
  
• Can Japan Compete Globally? You Betcha And Here's Why
  
• Can Japan Compete Globally? You Betcha & Here's How
  
• Japan's Problem: Severe Lack Of Leadership Not A Lack Of Innovation Or Creativity (The Globe & Mail)
  
• The Truth About Japan: Can Japan's New Startup Spirit Revitalize The Japanese Economy?
  
• Exploding The Myth of Japan's Lack Of Talent By Understanding The Tip Of The Sword
  

Now some may be still questioning my prediction that Abenomics will fail. I guess the only debate I can see is how one define's failure and how bad the coming failure will be. 

Abenomics is and has been economically untenable from the start, from when it was first announced.

And for those not overly familiar with Abenomics, here's a review of the so-called "3 arrows":

"The first arrow is an aggressive monetary policy. Abe appointed Haruhiko Kuroda, former president of the Asian Development Bank, as governor of the Bank of Japan in March. Kuroda has set a target of achieving 2% inflation and doubling the money supply within two years.

The second arrow is a proactive fiscal policy, consisting of a ¥10 trillion (US$100 billion) public works package.

The third arrow is a growth strategy. Structural reforms in Abe’s sights include everything from increasing women’s share of leadership positions to 30% by 2020 to joining the Trans-Pacific Partnership (TPP), a 12-country free-trade agreement that should drive trade liberalization and deregulation inside Japan.

There are several things wrong with these areas and we've discussed them before. First, even if you thought all three all needed they are in the wrong order.

The first arrow should have been the biggest, heavy hitter arrow - structural reform, but given the amount of ossified, rent-seeking incumbents in Japan coupled with near complete regulatory capture in many areas, well, that just isn't going to happen.

So instead, the two simple arrow, although massive destructive arrows to the economy, will and have proceeded -- loosing monetary policy to drop the value of the yen and going on a Keynesian-spend what you don't have public works-waste the money spree to welcome inflation!

Folks, inflation is the last thing Japan needs and given the fact that Japan is oil dependent and import dependent for food and other materials, the last thing that should have been done was to drive down the yen.

In fact, it would have naturally fallen anyhow because of the current account balance for the new record oil imports.

I wrote about this in detail, what the smart play would have been:

Now back to the Eunch problem. What Japan needs is to develop more homegrown leaders - real leaders, women and men, of all ages and persuasions that are not afraid to lead -- they are out there, but often they are forced out of the game early or left on the sidelines because they frighten the status-quo management or the ossified corporate culture.

But by paving the way for more and more startups, these leaders can move to run and drive those businesses, which in turn put heavy pressure on the ossified incumbents -- sales, business models and so on.

It's a win-win for talent, for consumers, for the country.

But Abenomics is only a symptom of a Eunuch spirit and culture (as well as a self-serving incumbency) and leadership, nascent and seasoned will continue to be rare and often smothered out or crowded out of where it is most needed.

By James Santagata
Principal Consultant, SiliconEdge


That Japan like any country, be it developing or developed, has her share of problems is not in the least bit surprising or at least it shouldn't be.

However, what has surprised me over the years is how many foreign "Japan watchers" and "Japan pundits" always seem to miss the crux of what's really going on on the ground in Japan and more importantly what's going on in the mind of the Japanese.

When articles are written or comments made about the supposed dearth of Japanese startups, the author or speaker almost always boils this down to several factors such as Japan's Shima-guni mentality (Island Nation / 島国), the so-called Galapagos Effect (which as I've continually pointed out is really just a misnomer for an industry or marketplace rife with ossified, rent-seeking incumbents and regulatory capture), Japan's supposed lack of talent, Japan's supposed lack of diversity and Japan supposed lack of creativity.

In the past, I've written about and either fully debunked these myths and memes or I've put them into a context in which they are far better understood.

With that said,  there is another popular myth and meme that comes up regarding the lack of Japanese startups and that is the idea that the Japanese have an almost in-born fear of failure.

I'm not here to argue that Japanese don't have a fear of failure because they do. We all do. Just as most other peoples around the world do, including those in the US and even including those working in Silicon Valley.

People fear failure. 

But to hear the pundits tell it, "Japanese need to get over failure and embrace it". These pundits act like the fear of failure in Japan is simple a psychological construct* like it is in parts of the West like in the US.

(*For the record, even in the US failure is more than just a psychological construct, there are still real financial, social and psychological penalties, set backs and damage that can and do come with it. But this is so much less than what is faced in Japan)

Now I am here to tell you, that in Japan this "fear of failure" is not simply psychological but real. Depending on the failure level there are material penalties that can accrue or hit one hard and if you are to strike out on your own or with a small group of friends, launch a company and it fails it is not like Silicon Valley where you can walk down the street and pickup a paycheck at a top firm while your lick your wounds, get on your feet and start again or even just resume your pre-startup career.

In Japan, the damage and risks include and span the following:

• Career risks
  
• Social risks (personal and romantic relationships and prospects; access/membership to business clubs, etc.)
  
• Psychological risks (depression, self-hate, loathing)
  
• Financial risks (immediate and long term)
  

There are huge differences in how societies views failures and how you move on in terms of romantic prospects and relationships, platonic relationships and friendships, how your family views you, the support groups you have and, most importantly, the career risks which translate, in the end,  to money - to financial issues.

Although much has changed in Japan over the last 8 years, especially in the last 4 years or so, it is still no where near the levels of what we see in the West regarding some issues such as Mid-career hires.

Now let's step back in time, to say 1995. In the US, for instance, much of the economy was still coming out a bad recession from a couple years earlier where housing prices were pummeled - in fact, I remember many saying they wouldn't buy a home again.

As one specific example, I'll pick Silicon Valley as just one example, even in that economy, a person could have a massive failure and if they learned something and could present themselves well, they could easily land a similar or even better job by leveraging it. Even if they were fired.

Conversely, even if they didn't learn anything, they still could land a similar job. Even if they were fired.

People hired with a very open mind based on what the candidate could produce.

In Japan, the idea of mid-career hires, although changing now, was really non-existent unless you had super skills, super connections or worked at a foreign firm (gaishikei), like Microsoft, Oracle, etc. who needed talent and hired among themselves.

I can tell you, as just one example, when I met with Fuji-Xerox HR group back in mid-2008 to discuss their domestic hiring needs, although they were very polite and professional, it was made extremely clear they wanted new grads only and that they weren't set up to recruit mid-career hires.

Did that mean that mid-career hires didn't happen at Fuji-Xerox?

Of course not. 

But it did mean and it does mean that mid-career hires (a)  were rare and (b) a special case.

Which again leads to this risk factor of damage to one's career and so on.

Coupled with this was a employee/candidate ethos that often considered working for a direct competitor "dishonorable" while on the company side, such a candidate applying for a position from a direct competitor would be seen as "suspect" or "suspicious". 

Again, I want to emphasize this has been changing for the better over the last 8 years and specifically the last 4 years or so but this hiring mentality exists and so does the economic and career damage fear among workers.

I can also share with you some examples where I took top talent from various gaishikei firms (in this case, in the network & information security industry) and introduced the persons to other top companies, both domestic and gaishikei.

Often what I heard was, "They are a job hopper".

My thought: "Are you insane" or "What an idiot, can you not see how talented this person is to fill the position you've had open for the last 4 months...."

My reply, "Uh, no. They aren't a job hopper. And regarding their changes, the last company they worked for went bankrupt and the other two companies before that, that the candidate worked for got acquired by huge multinationals. They left because they preferred a smaller work environment."

The reply?

"Well, that shows bad choices on their part."

A bad choice? To know the firm would go bankrupt? To work at a startup or a company working in emerging markets or developing nascent technologies?

This actual conversation took place in 2008. And I've had numerous conversations like this, from the mid 1990's, skipping through the dot com boom of 1999 to 2001 (in the US, the dot com bomb died out with the 2000 Nasdaq crash but Japan trailed about a year) to around early 2009. Then it thawed a bit. 

I should note that in the dot com bomb, Japanese firms were so scared by the hype and activity happening online that they did hire mid-hires and they did bring in foreigners, even non-Japanese speaking. Fear of the firm failure, spurned positive changes. In other words, competition is good.

I should also add that this was within the fast moving, dynamic tech industry. I've also done work in very static sectors like industrial chemicals, and as late as 2008, it was not uncommon to have a HR manager or even the hiring authority (even the country manager) characterize a person who had stayed at each job less than 5 to 10 years was seen as a job hopper and also undesirable.

Wrapping this up, it's not so much that Japanese have a greater fear of failure than, say, Americans, it is simply that the economic cost of a failure in Japan is much higher - financially, socially, psychologically.

Once you understand, all the pieces begin to fall into place.

By James Santagata
Principal Consultant, SiliconEdge


Former Wall Street Journal technology reporter Yukari Iwatani Kane has published a new book entitled, "Haunted Empire: Apple After Steve Jobs" and I'm here to posit, that without even having cracked open one page of this book she is spot on, at least with regard to her provocative title.

"But wait, what? How could she be right?" 

"How could that title be right?"

"How can you, James, be such a pompous ass to think you know anything about Apple let alone judge Kane's book by its cover?"

"Doesn't Apple create magical products? It's true that Steve Jobs has passed on but the same great staff, the same great workers remain!"

And all of that is true.

However, to understand why the title of the book is right and why I'm right we need to honestly and objectively understand who Steve Jobs was and what made him so successful and Apple so successful under his leadership.

And leadership is an operative word here.

At the same time, we need to understand that competition doesn't operate in a vacuum so we must ask, "What made Apple's and Steve Jobs' competitors so timid? Why didn't they respond and counterstrike?  Better yet, why didn't they create the iPhone type phone, the smartphone first?!"

And the answer is simply it goes back to the structure and dynamics of office politics and power within a company. The real shock should not be that Apple, with zero experience within the mobile phone industry, built and released the blockbuster iPhone but that none of the incumbent handset makers did!

Where was Nokia and their smart phone? In fact, where were the rest of the handset makers?

And that is the real shock. Not that Apple made a smartphone but that the 800-pound Gorillas gave them an opening and then didn't pounce and kill or even defend their territory.

However, if you've taken one of our related coaching or training sessions (How To Beat Silicon Valley's (and other) Fast-moving Startups At Their Own Game) or just intuitively understand Office Politics and Power (aka Organizational Politics & Power - OPP) this not only comes as no surprise but rather it both predicted and expected. And once you understand Office Politics and Power, you can quickly see and understand why and how Apple under Steve Jobs beat Sony to the next iteration of the Sony Walkman which became known as  the Apple iPod. 

It helps one also understand why and how Larry Ellison discussed the Net PC (in the mid-1990's) but Apple built it (the iMac), and why Apple could add some basic design features and colors to it to make a hit while intra-company rent-seeking behavior at the competition prevented them from responding or competing let alone getting that to market first.

OPP also explains why and how Jobs could do the same with Pixar while a former Disney employee, John Lasseter, who suggested as much years before Jobs ever thought about animation or rendering farms was let go (or summarily fired depending on the source one references) from Disney, only to have it all come full circle again with Disney acquiring Pixar. 

Go figure! 

And, of course, it explains some of the biggest daddy ball drops in history such as Xerox PARC and their full blown PC and related projects (which later became reflected in industry leaders like Apple, Adobe, SGI and 3Com) and Kodak with their digital camera years before the competition had one...that all went to waste...

I've talked about that in detail here, about the Myths About Steve Jobs and how is personality and ethos, while celebrated within Silicon Valley (and beyond) is actually completely anathema to traditional Valley ethos.

Reference: Steve Jobs: The Man Who Broke Every Myth & Meme In Silicon Valley & Become A Legend

The problem then, is that a company (any company, including a post-Steve Jobs Apple) needs a strong leader who is unafraid to break eggs to make omelettes and unafraid to slaughter sacred cows for burgers or even just for fun. They also need a leader who is not just unafraid but actually enjoys and even thrills in steamrolling the competition and taking the troops straight up the middle as Alexander the Great did to Darius during one the Macedonian-Persian wars.

As a further piece of evidence, one only needs to consider that the Akio Morita, the founder of Sony, was Steve Jobs while Steve Jobs was still in diapers. Moreover, Akio Morita was extremely aggressive, even actively counterattacking industry special interests who tried to have the courts block the Sony Betamax recorder. Morita was successful in defending this and in ultimately escalating this to the US Supreme Court  with Sony (and consumers) coming out as the victor.

• U.S. Supreme Court: SONY CORP. v. UNIVERSAL CITY STUDIOS, INC., 464 U.S. 417 (1984)
  
• U.S. Supreme Court decides Universal v. Sony, as VCR usage takes off
  

Tim Cook being the nice great guy and "steady, paint by number operator" he is (certainly he's the first guy that I would hire or consult with to determine what color doilies to lay out for my dinner party), shares none of those characteristics with either Steve Jobs or Akio Morita.

So now lets move on to more questions regarding Job's selection of Cook as his successor.

• Did Jobs not know what made Jobs so successful?
  
• Did Jobs think that Cook had what Jobs did to keep Apple thriving? 
  
• Did Jobs think that Apple now needed a "steady, paint by number operator"?
  
• Did ego get the best of Jobs and he wanted to forever ensure and enshrine his legacy by making sure that his successor could only perform to a level that would make people wish that and wonder what Steve Jobs would have accomplished or would be accomplishing if he were still alive?
  

By James Santagata
Principal Consultant,  SiliconEdge

We hear so much about the supposed power of innovation and creativity. That these qualities or skill sets are somehow both unique and scarce. And at the same time, a lack of innovation and creativity is often quickly blamed for the downfall or underperformance of a company or organization.

But is this really true? And more importantly, how much impact do innovation and creativity or their lack thereof really have on an organization?

Here's the real deal:
Innovation & creativity are highly overrated and badly misunderstood.

If these were so vitally important, then Xerox PARC would have been and still would be the most successful company in the world while Microsoft would perhaps be the least successful.

But it didn't turn out that way because...

Well, because innovation and creativity are both meaningless and worthless without the ability to productize them.

And productization is both meaningless and worthless without the ability to monetize it.

And monetization can't happen without a strong leadership.

Strong leadership is required to allow, enable and drive an organization to productize and then monetize its innovation and creativity.

Don't let anyone tell you otherwise.

By James Santagata
Principal Consultant, SiliconEdge

Over the last twenty years, and accelerating in the last 7 years, not only Japan but the entire world has begun to question Japan's ability to innovate and create as companies such as Apple and Samsung rule Japan's former stomping grounds and gleefully gorge themselves on Japanese companies' bento boxes on a daily basis.

Meanwhile, once mighty and innovative Japanese firms like Sony and Panasonic bleed red and constantly try to slough off workers while peddling a staid if uninspiring set of "me-too" and "also-ran" product lines.

How far has Sony fallen? Well, it's gotten to be so bad that if Sony founder, Akio Morita, were to magically re-appear today and venture over to the front entrance of Sony Japan, he wouldn't  recognize the place.  Worse, if he then decided to apply for a position, not only wouldn't they hire him, they'd most likely call security and have him escorted off the premises.

But all is not lost. 

In our No Box Thinking™ (Volume 3), entitled "How Struggling Japanese Companies Can Beat Silicon Valley's Fast-moving Startups At Their Own Game" we go through exactly what has happened, what has changed and how, in a short time and by using some talent management adjustments, Japanese firms can again perform at our above that of their competitors.