James will speaking on the very important career-related topic of "I'm 40 Now! Is It Really Game Over For Me In Japan's Job Market?" at the Foreign Correspondents' Club of Japan on November 20th.

Among job seekers, arguably no group is more negatively affected by this brutal reality than 40+ year old job seekers.

Many 40+ year old job seekers are shocked to find this is the reality not only in the broader US economy but even in vaunted Silicon Valley which is the supposed Mecca of open-mindedness and where a meritocracy has ruled for decades.

And yet, for how bad it is in the US and even Silicon Valley, 40+ year old job seekers soon come to find that it's often much, much worse in Japan. Terrible. Impossibly frustrating. Depressing. These are words that come to mind when seeking employment in Japan as a 40+ year old candidate.

But how can this be the case in Japan, when Japan still has an economy which is the 3rd largest economy in the world and which is moving to further internationalize its businesses as rapidly as possible in the face of both falling domestic demand and a severe shortage of experienced workers.

The bottom line is this: Older, deeply experienced job seekers quickly run into 5 seemingly insurmountable brick walls..

This presentation, How to Jumpstart Your Career In Japan, was delivered to a large group of visiting high school students from The Harvey School (Katonah, New York).

In the presentation we covered:

• Developing your value and ROI as a candidate
  
• How one can future proof themselves in the face of the rapidly advancing societal and economic tsunami
  
• Impact and Opportunities coming from rapid adoption and utilization of technologies such as artificial intelligence (AI), expert systems, machine vision, robots, 3D printing, autonomous vehicles, etc.
  

By James Santagata
Principal Consultant, SiliconEdge


This is a quick update to an earlier post I made: 
(So Where's The Next WhatsApp & How Did The Tech Cheerleader Press Miss It?)

As the Silicon Valley Cheerleader Tech Press continues to desparately look for the next WhatsApp, it's apparently been found....in China....and it's called Alibaba.

But China is apparently too far away from Sand Hill Road.  

And most Valley VCs don't do China....sure they dabble, but they don't do China...

http://www.businessinsider.com/american-investors-missed-out-on-alibaba-2014-5

Fun night at Mitsubishi Estate's EGG/T21C New Year's Kickoff Party (Shin-nen-kai). Had great presentations from the Japan Country managers of Pinterest, Box, Splunk and Millennial Media.

By James Santagata
Principal Consultant, SiliconEdge

Ask the average person to think of Japan and then to share with you the first thing that pops into their mind. I can guarantee you that they'll almost certainly read back from one or more of these several powerful and well-established myths and memes: 

1. High-Tech Japan:
A High-tech and Cyberpunk culture and society comprised of very polite albeit non-thinking and undifferentiated robots and drones all clothed similarly in their business or school uniforms and all marching off to the office or to school. Visitors find themselves amazed by the high-tech, 20-function paperless Toto toilets, the jaw-dropping variety of merchandise dispensed by ubiquitous vending machines, the automated, elevator-driven parking structures, auto-opening doors, sensor-controlled escalators and so on.

2. Old Japan:
The nostalgic view of Japan found in Tom Cruise's "The Last Samurai" and other movies before which focuses on the picturesque Japan. The culture and the style.  The polite, disciplined demeanor of the people. The attention to detail and quality. The lacquer ware artisan, the sword craftsman. Mount Fuji (富士山), Kyoto, Nara and Kamakura. Geisha. Sumo. Onsens. Samurai. Ninja.  Swords. Shamisen. Kimono.

3. Modern Japan / Culture Japan:
The exporting of top talent in baseball as well as having its players picked up by European soccer clubs. The deep stable of world-class swimmers, gymnasts, wrestlers and figure skaters. Beyond this, the delicious, healthy cuisine of Japan: sushi, sashima and various other staple dishes of Japan. Karaoke, manga, anime, video games. Modern Japan is about talent and culture.

4. WWII Japan:
Banzai human waves attacks, Kamikaze pilots, rapacious invasions of civilian cities along with soldiers and civilians who would rather toss themselves off the cliffs at Saipan than surrender.

5. Basket-case Japan:
20 years of economic malaise, a deflating economy, aging population, declining birthrate, a broken self-image and the inability to create or innovate as China continues to eclipse Japan in terms of GDP all while the world waits for Japan to sink into economic obscurity and irrelevance.

I've discussed and hopefully skewered a few of these myths and memes in detail, in particular:
1. Japan May Be Able To Compete Globally But Not Yet
2. Can Japan Compete? You Betcha And Here's Why
3. Japan's Problem: Severe Lack Of Leadership Not A Lack Of Innovation Or Creativity

We've also discussed these topics in detail (articles and podcasts) over at FirstPoint Japan. The FirstPoint Japan Expert Interview Series may be of interest to you.

The New York Times' Martin Fackler (see below) wrote a nice piece on some of the startup activity happening in Japan, however, I think it still misses some of the key points of where Japan has been, where it is, and what it needs.

In a nutshell, over the last 30 years the Japanese economy has been held captive by the power wielded by ossified electronic giants such as Panasonic and others, as well as the very real monetary, career and social risk that entrepreneurs face in Japan which is only compounded by the huge amount of regulatory capture found in Japan.

Surely Japan has had world class entrepreneurs before, such as Akio Morita who founded Sony, Soichiro Honda who founded Honda,Konosuke Matsushita who founded Panasonic (formerly known as Matsushita) and Kiichiro Toyoda who took his families Toyoda Loom Works and transformed them into an automotive powerhouse called Toyota.

The point remains, though, that if Morita were still alive today, he wouldn't recognize Sony as it stands today, and worse, the suits currently running Sony would never, ever hire a maverick entrepreneur and genius like Morita.

Akio Morita was Japan's Steve Jobs, except that he was Steve Jobs, before Steve Jobs even got out of his diapers.

How aggressive and prolific was Akio Morita? 

Well, in terms of fights. he didn't not shy away, not only co-penning the somewhat acerbic book "The Japan That Can Say No: Why Japan Will Be First Among Equals" (and see Amazon) but also refusing to bow to arm-twisting by the US content industry that wanted to ban his Betamax recorder.

Morita fought this case all the way to the US Supreme Court (Sony Corp. of America v. Universal City Studios, Inc) and won!, making this not only a victory for Morita and Sony but for all other electronic manufacturers after them and especially making this a victory for us lowly consumers.

If you look closely at Japan, you'll find that it is usually during absolute or relative social or economic chaos that such dynamic entrepreneurs have risen. Mind you, this is not because "necessity is the mother of all invention" but because the chaos at had had broken or cracked the social conformity or regulatory capture just enough for a few green shoots to sneak through. 

These green shoots, these entrepreneurs and creators and makers, the were always there. They always had the ability to perform. But they were choked out. By a combination of social conformity and most importantly rent-seeking incumbents.

In recent years, perhaps over the last three or four years, Japanese entrepreneurs and startups as well as entrepreneurs and startups in general are getting media attention (thanks in part to the visibility of Steve Jobs / Apple / iPhone and Mark Zuckerberg / Facebook among others). And with that, it has slowly become "okay" to be an entrepreneur again while at the same time the immediate financial and social risks are greatly reduced and even longer term social and career risks are lower.

In other words, currently, huge momentum is building in Japan, it's under surface and it's not just Japanese entrepreneurs but foreigners as well, many of whom have relocated in Japan from tech hot spots in the US including Silicon Valley, New York and everywhere in between.

These startups are critical to put further pressure on the ossified Japanese corporations to either compete and streamline their business OR die a quick, brutal death and then be composted, releasing and recycling their talent and know-how back into the pool of Japanese labor, intellectual property and financial pool.

It's exactly that intra-industry competitiveness and dynamism that is a hallmark of Silicon Valley's constant success in the world technology markets (and post-tech as well) and conversely it was exactly that lack of intra-industry competitiveness and dynamism that was the death knell for Detroit's once vaunted auto industry.

Japanese Start-Ups Channel Samurai Spirit

By Martin Fackler
Published: December 25, 2013

TOKYO — The 20-somethings in jeans sipping espresso and tapping on laptops at this Tokyo business incubator would look more at home in Silicon Valley than in Japan, where for years the surest signs of success were the gray suits of its corporate salarymen. But for those hoping the nation’s latest economic plan will drag Japan from its long malaise, the young men and women here at Samurai Startup Island represent a crucial component: a revival of entrepreneurship.

...

The signs of that comeback are still new, and tentative enough that the statistics on start-ups and initial public offerings have not caught up. But analysts and investors report that hundreds of new Internet and technology-related companies have sprung up in the last two to three years, creating an ecosystem of incubators like Samurai Startup Island and so-called accelerator new venture investment funds, which invest in early-state start-ups in hopes of cashing in.

...

For years, sagging entrepreneurial spirit has been cited as a major reason for Japan’s inability to save itself from a devastating deflationary spiral. The nation that produced Sony, Toyota and Honda has created few successors.

...

When he started investing in new companies six years ago, Mr. Sakakibara was lucky if two would-be entrepreneurs approached him in a week to seek financing. Now he gets two such queries a day, he said.

He and others closely watching start-ups attribute the increase in interest to cultural shifts that have slowly chipped away at Japan’s famously insular culture.

Having grown up immersed in an online world that stretches beyond national borders, young Japanese appear more willing to draw inspiration from foreign role models like Steve Jobs, the founder of Apple. And having seen Sony cede market share to South Korea’s Samsung, many no longer share their salarymen fathers’ belief in the permanence of established corporations or lifetime jobs.

“In a world where everything is risky, it’s better to be your own boss, in charge of your own destiny,” said Yoshinori Fukushima, 25, whose year-old Internet company has grown to 14 employees.

...

Some warn that Japan has a way to go to become a hotbed of break-the-boundaries venture behavior. Noriyuki Takahashi, who specializes in entrepreneurship at Tokyo’s Musashi University, pointed to comparative global surveys that place Japan at the bottom among leading Western and Asian economies in social acceptance of entrepreneurs.

...

By James Santagata
Principal Consultant, SiliconEdge


Over the years there's been much discussion in both the business press and the general press regarding the state of Japan's economy with many, including technology, economic and Japan-focused pundits, having concluded that Japan has become nothing short of a complete and utter "economic basket case".

Far worse, it's said that in the very near future Japan risks becoming completely irrelevant if it doesn't immediately act according to a particular set of "politically-correct prescriptions" which we'll discuss in more detail later.  We are told that the situation Japan faces is dire even though Japan still retains the world's third largest GDP and was only just recently eclipsed by China -- The same China which has ten times the population as well as a supposedly long, advanced and storied civilization according to the pundits.

And yet, through all this doom and gloom, here we find little, lowly, Japan smack dab in the number three slot. 

I. What Exactly Do The Pundits & Japan Watchers Say Is Wrong With Japan?
Specifically, technology and economic pundits as well as Japan watchers have come to the conclusion that Japan is ailed by the following:

1. Lack of innovation.
2. Lack of creativity.
3. Lack of Business-level English speakers (determined as a percentage of the adult working population).
4. Lack of inflation (we are told that Japan is in a devastating deflationary spiral).
5. Lack of diversity.
6. Lack of immigrants.
7. Lack of a globalized workforce (besides sufficient English skills it's said that the Japan workforce lacks a variety of soft & hard skills).
8. Lack of startups.
9. Lack of entrepreneurs.
10. Lack of babies / A falling fertility rate.

Whether one agrees with these pundits and the press or not, the very frequency and pervasiveness of such articles, comments, and themes clearly show how far Japan has fallen from its once rapid and presumed continuous economic ascendancy in the the mid-1960's. This kicked off with the 1964 Tokyo Summer Olympics and along with the debut of the Shinkansen / Bullet train service heralded Japan's post-war "Coming Out Party" and continued through the 1980's with a great many believing that eventual world economic dominance by Japan was a given. It may be hard to imagine now, but this was a time when Japan's economic dominance bloodied even American stalwarts such as Intel and General Motors and eventually had them hanging onto the ropes screaming "no mas! no mas!". 

At the pinnacle of its economic power and influence, Japanese products evoked in consumers a promise of high-quality, innovativeness, and a fine attention to detail, all to be had by middle class consumers for a very reasonable price. At the same time, Japan's economic power and influence provoked sleepless nights if not abject horror in many American business managers who dreaded the prospect of facing this highly aggressive and unyielding competitive foe on the unforgiving battle field of business. 

And let's be very clear about this fact: American business management feared Japan businesses and industry and for a very good reason. The Japanese economy and its assortment of high-performing companies were literally on fire and stomping out American, European competitors left and right.

From automobiles to semiconductors to video games to industrial test & measurement equipment to video consoles. Japanese products were often very innovative and almost always fantastic. And by no means were they all "copycat" or "fast follower" products (see: First Mover or Fast Follower? Harvard Business Review, June 14, 2012).

Nope. 

Consider Sony Trinitron tubes, Sony Walkmans (the inspiration for Apple's iPod), Toshiba's pioneering flash memory, Maganvox's Odyssey home video console (which was released a full 3-years before Atari's best-selling Pong) and, of course, the Sony Betamax video recorder as well as JVC's VHS players and VHS standard (which would set you back $4,600 while each blank tape ran for $72 based on inflation-adjusted dollars) which was adopted and also produced by Japanese electronics powerhouse Matsushita (now Panasonic).

The Japanese, coming from a small island nation roughly the size of Montana but with even less usable land and all but devoid of natural resources save for her people, were literally knocking the stuffing out of American industrial giants and America as a whole. Even more shocking was that this little resource devoid island nation was clobbering Superpower America which was overflowing with natural resources as well as having a population 2 times larger than Japan's! 

The economic bloodshed was bad. 

Real bad.

How bad was it? Let's just say that it got so bad that US businesses scrambled to lobby and plead for the US Congress to get involved, not only in terms of Japanese "voluntary" trade restraints but also in the development of SEMATECH (see also: Lessons From Sematech, MIT Technology Review, July 25, 2011). This political pressure later escalated with the goal of forcing Japanese firms to open manufacturing facilities stateside. (see: Transplant Car Makers Redefine The Industry, New York Times, June 23, 1992).

And yet, with the bursting of the Japanese economic bubble in the early 1990's, Japan is now often seen if not actively portrayed as a failing economy which is devoid of strength and slowly deflating over the last two decade -- the so-called "Lost Decade". At the same time, Japan is portrayed asemploying an army of graying, boring, robots and worker bee drones who themselves are devoid of even an ounce of creativity. If that weren't bad enough, we're now told that Japan's rapidly aging population along with the declining birthrate are about to take Japan underwater, once and for all. 

The US and Western press no longer asks "Can the US and other developed nations compete with Japan?".

No.

It's now, "Can Japan even compete globally?". And this rhetorical question is often posed with an air or sense of deep schadenfreude while at other times it's posed with nervous hand-wringing from Japonphiles as well as the Japanese themselves

We've repeatedly been told this narrative so many times that the answer to the question "Can Japan compete globally?" is already a foregone conclusion: Of course Japan can't compete globally we reflexively answer.

The adherence to this false but official narrative is so strong that everyone appear to be too busy witnessing "a failing Japan" to even contemplate a Japan that can compete. These forgone conclusions have now fully morphed into a set of very powerful myths, memes and misunderstandings.

This in turn raises two other questions:

• What if these myths and memes aren't correct? 
  
• What if they are misguided at best and dangerous at worst?
  

Having read numerous articles such as this coming from both the technology and economic press, it seems that very, very few articles have approached this topic with a ground-level, brass-tacks understanding of what really goes on in Japan, socially, culturally and economically. Moreover, even fewer seem to have approached this with a positive worldview (versus the normative proposition) to ascertain what's really going on and what, if anything needs to be fixed or improved let alone how to do it. And by "how", I mean a real "how" not some socially-engineered pipe dream.

We've previously analyzed and destroyed a few of these memes, including that "Japan's troubles have do to with a lack of creativity and innovation on the part of Japanese" as well as the nagging question as to whether or not Japan can even compete globally. We've also touched upon and heavily damaged the "diversity is necessary for success" myth as well as the mythical "immigration is the solution to Japan's problems" narrative.

II. Debunked Myths & Memes About Japan

1. Can Japan Compete Globally? You Betcha And Here's Why
   
2. Japan May Be Able To Compete Globally But Not Yet
   
3. Japan's Problem: Severe Lack Of Leadership Not A Lack Of Innovation Or Creativity (full Interview with The Globe & Mail)
   
4. Japan Aims To Return To Walkman Glory Days (SiliconEdge Interviewed) (The Globe & Mail) 
   
5. The Truth About Japan: Can Japan's New Startup Spirit Revitalize The Japanese Economy?
   

Not withstanding the reality of where Japan is today and what ails her, these previously discussed myths and memes have become so well accepted as "fact", that many Japan, economic and technology industry "analysts" and "pundits" simply rehash or cut 'n paste these old, tired and dangerously incorrect myths, memes and misunderstandings without ever stopping to think and consider how obviously and completely wrong and broken they really are. 

III. What Japan Does And Doesn't Face
1. Japan does not lack of innovation.
2. Japan does not lack of creativity.

Japan and the Japanese people are extremely innovative and creative as we've discussed previously. It's not that Japan and the Japanese lack these attributes but rather that what Japan does lack (i.e., strong leaders with ability to productize and monetize creativity and innovativity) is being mistaken for a supposed lack of innovativity and creativity.

If you are now competing with Japan or if it's likely that you may compete with Japan one day, swallowing such a broken narrative is perhaps as dangerous as mistaking some range bum's politeness for weakness as illustrated in this Clint Eastwood classic:

What Specifically Is Japan Lacking:
a. The ability to productize its innovations & creativity.
b. The ability to monetize its innovations & creativity which it has productized.
c. Real leaders that will drive a. + b forward and into a long-term, sustainably profitable reality.

3. Japan does not lack of business-level speakers:

While you can possibly never have too many fluent speakers of any language, especially when it concerns a global business, scientific and cultural language like English (this is because English language ability provides the greatest marginal utility of all second languages in almost every case) it's still a fallacy to assume that you need to have everyone of your citizens possessing English fluency.

Why?

It's no different than running a military operation and employing the concept of the "tip of the sword" or "tip of the spear". You may use pilots to drop ordnance from the air but not everyone in the military and not everyone even in your branch of the service or unit needs to be a trained pilot.

Of course not. That would be ludicrous.

They don't even all need to know about airplanes. Some, like flight mechanics, may need to know more about aircraft than others, but do you really think that the cooks, supply line drivers, doctors or chaplains do? Of course not. How silly would that be and what a waste of resources it would be as well.

As an added benefit, by maintaining a relatively limited pool of strong globally-minded and fluent English-speakers while having the main population relatively "weak" in these skills, you've just created a fantastic, practically impenetrable barrier to entry to foreign competition. Yet, simultaneously by deploying your own "tip of the sword", you can approach, enter and take foreign markets as desired. 

Not bad.

4. Japan is not in a devastating deflationary spiral

We are told that Japan needs more inflation - that inflation is your friend. But since when has inflation become a "good thing"?  Certainly not for producers and especially not for consumers and savers.

Further, how can it be stated that Japan is in a deflationary cycle when it's clear that Japan is simply recovering from an inflationary bubble? Things are continuing to deflate because equilibrium hasn't been reached yet, therefore setting the baseline of this analysis from the top of the bubble is as idiotic as having your pediatrician worry about your child's temperature because the baseline of their temperature reading was taken at 103F when the child was exhibiting a high-grade fever. Now imagine that the child's fever has broken and their temperature is spiraling down to 98.6F, the "normal basal temperature".  Is this something to worry about or is that simply the return of the child's temperature to the basal temperature and something to celebrate?

5. Japan doesn't have a diversity problem

Diversity as well as the benefits, value and costs of diversity (few rarely acknowledge let alone consider the costs of diversity) critically depend on you one defines it. If by "diversity" one simply means a quota of different races, ethnicities or the possession of a different set of reproductive organs, then no, diversity by itself has absolutely zero value.

If by diversity one means possessing, sharing and exhibiting different viewpoints and abilities all within a particular or specific band whereby the various individuals can still work cohesively as a team and support each others, then most certainly diversity has measurable value if not immense value.

In practice, true diversity would be having two Japanese come from completely different backgrounds, even if they are both men or both women, as compared to having one Japanese male hailing from Kyoto University and the other from Tokyo University both of whom studied the same subject matter.

At the other extreme, coupling an Israeli scientist who is an expert in materials science with an illiterate Sudanese goat herder probably won't add any value either. This would especially be the case, if the two parties involved don't speak the same language or have any means to communicate in a mutually intelligible language or system. This gap and mismatch would perhaps be even more apparent if their objective was to discuss the advanced development of carbon nano-tubes.

I'm well-aware and understand that this is heartbreaking if not earth shattering for the pro-diversity-at-any-cost social-engineers out there, but the fact remains, Japan is one of the most homogeneous countries in the world and uet it's a smashing success as is Korea. And Korea is arguably more homogeneous than Japan! 

Meanwhile, other highly diverse societies have eaten themselves for lunch such as the former Yugoslavia while an analysis of other diverse societies often suggests that a very small percent of the population is doing the heavy lifting (this is often captured and reflected in large income disparities assuming that government regulations and interventions haven't distorted the market by fouling pricing signals, blocking competition or picking winners and losers). 

And as repulsive as Jim Crow-era laws and apartheid is and was, during this reprehensibly time and with an extremely non-diverse workforce, the US arguably reached the pinnacle of its vaunted space program which culminated in several lunar landings. Since then the US hasn't revisited the moon nor made any substantial man-driven landings to Mars (that is put a human on Mars). 

This then begs the question. "Where exactly is the "diversity dividend" we've been promised?

6. Japanese doesn't lack immigrants because it doesn't need wholesale immigration

What makes Japan work is its strongly-coupled and cohesive society. This doesn't rule out immigrants as immigrants can, would, could and do help Japan but it must recognize that immigrants will only help Japan or any nation when there is a policy based on the merit and value the immigrant brings or is expected to bring to the host name (as expressed by "life time value") versus the societal carrying costs over the immigrant's lifespan. 

Japan would be well advised to avoid what has happened to not only the US but also Europe where never ending flows of immigrants,
in particular low skilled and/or non-assimilating immigrants are bringing negative externalities as a whole. Obviously, there are very productive and bright immigrants which should be welcomed, but we must ask if family chain immigration should be allowed and to what extent should anyone be welcomed without regard to their financial and societal contribution as well as financial and social impact to the host nation?

For those that consider this cruel and cynical, let me ask you this:

• Do you allow just anyone into your company as a new hire?
  
• Do you allow just anyone into your family?
  

If not, your answers are "no", then it it would seriously behoove you to consider why you harbor such a double-standard regarding national immigration since it is just a larger version of the family structure.

This issue will be even more critical as we continue racing toward Peak Jobs (see: "Not Peak Oil But Peak Jobs") and certain societies are beginning to strain with overpopulation and large, unemployed or even underemployed layers of society. 

The solution is to understand that a small, highly-educated, cohesive and tightly-knit society is the society that is well positioned for the 21st century. Japan and Korea are obvious choices that come to mind.  

If you doubt this, simply consider the reaction of two very different societies and cultures to natural disasters that have befallen them. Namely, consider Japan's Tohoku earthquake and New Orlean's Hurricane Katrina where even the local police were caught on camera looting!

7. A Globalized workforce is not a panacea but can be very important (this includes business-level English skills) 

Although Japan does have some very capable workers, this is a critical issue that they face in some situations. However, while the English language component is important, even more so is critical thinking, overseas sales ability and psychological aggressiveness-- this is true even if these skills are taught in Japanese and the Japanese students are monolingual (Japanese only speakers).

8. Startups & entrepreneurs is critical for Japan's economy

This is a problem which is mainly due to various cultural and social conventions along with a strict, domestic regulatory environment (more about this later). 

9. Lack of babies / falling fertility rate is a pro or con

This can be good or bad. By focusing on factory automation (FA), autonomous systems and robotics, Japan can overcome any such problem. If Japan's decides they need more flesh and blood I would suggest that rather than "import immigrants" they should do what countries like China, India, Indonesia and Mexico do so prolifically -- make their own babies the fun and natural way. There are a number of things that the Japanese government can do, policy-wise  to encourage this which we'll discuss later.

IV. The Real Problems & Solutions
There are a number of solutions to the problems that Japan faces, but most of the solutions necessary to remedy these issues will go against what Japan's domestic incumbents and power structure want and what have installed in Japan for their own benefit.  We see this in the so-called Abenomics where Prime Minister Abe's economic policies, the so-called Three Arrows are potentially disastrous for Japan. Prime Minister Abe was presented with a fantastic opportunity to remake Japan and have her again challenge the world, instead he chickened out, putting a rope around Japan's neck while making her stand on a wobbly chair amidst a chaotic, soapy floor...we all know how this will turnout.

Prime Minister Abe listened to Japanese businesses who wanted the easy way out (devaluing yen) rather than having to compete globally as this would have required many of these companies to fully restructuring their businesses. In response, Abe pushed forward with a plan to drive down the yen by easing monetary policy (i.e., printing money or creating digital credits as they do today) and hoping to stoke inflation (as though that were a good thing). After those two "arrows" were in place, he had hoped to push through some critical economic reforms.

This was very, very poorly played. 

By weakening the yen, at the very same time that Japan was experiencing record fuel imports (due to the shut down of the country's nuclear reactors), all that was accomplished was a short-term shifting of non-sustainable profits to the exporters while shifting 
the cost of the increased imports (vis-a-vis the weaker yen) onto consumers. Lastly, I can guarantee you that the very structural changes which Japan needs the most won't be proposed and even if they are proposed, they will either be stomped out or be so thoroughly neutered as to be ineffective.

V What Would Have Been The Smart Play & What Really Ails Japan?
The smart play would have been to keep the yen strong -- let it stay there -- then, simply work to encourage Japanese firms to engage in heavy non-yen foreign-based M&A. This would driven down the yen (which is what exporters want) but Japanese firms would have been holding foreign-based non-yen denominated assets and since the Japanese need to improve their global operations, much of that strong yen could have been used to purchase the critical training and know-how needed, again trading a strong yen for non-yen denominated training and knowledge.

By combining this overseas asset purchase spree with the increased energy imports, the yen would have still been devalued (albeit more slowly), however, Japan would be holding foreign assets and exporters would quickly understand from the fierce discipline meted out by the market, that they needed to improve their operational effectiveness and efficiency and not simply rely on a "cheap yen". 

The next step would be to understand that Japan's current business environment is full of deadwood and heavy overgrowth. This deadwood and undergrowth needs to be cleared out and the way to do that is make the Japanese economy at a minimum neutral to if not lovingly-biased towards startups. Once in place, an army of these startups would begin to nip at  the incumbents' heels prodding even the most obtuse or ossified of firms to retool and restructure. Eventually those firms that couldn't compete or refused to compete (and yes, there are some very stubbornly obtuse and ossified firms in Japan) would be killed, eaten and composted with their ashes and assets, talent and IP being quickly recycled and allowed to blow with the winds across the Japan business community.

It would also ensure that Japanese successes (and failures) are kept in Japan. Currently, due to the lack of a vibrant startup ecosystem, when big ossified Japanese firms stumble and fall or implode, it is the foreign firms that benefit and end up eating the Japanese firms bento box. For example, Apple benefited (iPod, iTunes) from Sony's stumbles as did Samsung from both Panasonic's and Sony's travails (actually it could be said that these firms, Panasonic and Sony, fell flat on their collective faces).

Don't fool yourself into believing that this concept I'm proposing is somehow unique -- it isn't. It's a plain vanilla, common sense concept and this is actually what the US in general and Silicon Valley in particular does so well.

Compete, kill, eat, compost, spread the ashes and recycle....

In US tech regions in general, and in Silicon Valley in particular, there is fierce intra-industry competition where firms are wiped out and crushed on a daily basis until a victor stands tall and dominates the industry. Only to have it happen again as this new victor is mercilessly pummeled and cut down. The names may change, but the winners are almost always American.

Doubt that? 

Well, how about computers and the computer industry?
ENIAC, UNIVAC, Wang, DEC, IBM, Eagle Computers, Kaypro, Osborne, Compaq, Tandem, Dell, HP and so on. 

See any patterns?

Do the same for chips, for databases and so on.

In fact, just about the only area in the US where you won't find this fierce intra-industry competitiveness is where the US government has intervened and distorted the market (e.g, labor, regulations, pricing, etc.). This primarily occurs when rent-seeking incumbents engage in the regulatory capture of markets.

This is why the US auto industry was wrecked -- regulatory capture and regulations hobbled and harmed it, until foreign competition like the Japanese and Germans crushed the US domestics. Were it not for the US governments over regulation of the automotive industry, we would have seen many automotive startups begin to form and then compete with and eventually force the obtuse and ossified US automotive giants to change, piston by piston, engine block by engine block. crankshaft by crankshaft..

Those firms that refused to change or couldn't change would be slaughtered and then composted.

And this is exactly what Japan faces as its number one problem.

The endemic regulatory capture in Japan needs to be eliminated. Beyond that, entrepreneurs face serious hurdles with capital accumulation and company formation along with facing very serious (although it's getting better) social, financial and career risks. 

From this there are even further knock-on effects whereby mid-hires or hires from direct competitors only happen rarely in Japan and often when these types of hiring occur it's driven by the Gaishikei, the so-called foreign-capital firms (think: Microsoft, Oracle, Altera,  Coach, Starbucks, McDonalds, etc.). This refusal to hire mid-career talent effectively prevents individual risk taking as well as precludes intra-industry and cross-industry cross-pollination.

All of this greatly dampens an entrepreneur's appetite for risk. Interestingly enough, though, Korean and Chinese firms have begun to hire mid-hires as well as very talented "early-retired" or "moth-balled" Japanese executive and engineers.

A vibrant, healthy and properly functioning labor market will exhibit strong labor mobility - for the most part Japan doesn't have labor mobility although it has made huge changes in the last 19 years and even more so in the last 4 years -- but it still has a long way to go.

By making these structural changes, primarily with adjustments to various regulations and some tax reforms to favor capital accumulation and company formation, Japan could rocket upwards by unleashing her creative, innovative people and giving them the opportunity not only to productize but more importantly to monetize their efforts. 

This would most likely mean that many of the big Japanese brands that we know today would wither away (assuming they refuse to or can't modernize and compete) but this is no different than what we've seen happen in the US' relatively more vibrant economy.

As it stands now, Japan's obtuse and ossified incumbents are more than happy to go down with the ship and they apparently have no qualms about taking the entire workforce and nation with them.

Asia Biz Blog's Howard Lim interviews SiliconEdge's James Santagata on three main ingredients for business success in Japan and Asia.


1. Communication
2. Talent acquisition
3. i18n and L10N in the software development process