By James Santagata Principal Consultant, SiliconEdge Coming across entitled, "Foreign startups in Silicon Valley still a rarity" I immediately asked myself two questions: a. Why is that? (first thought: money & visas) b. Does it even matter to be in the Valley now? I first moved to the Valley at the end of January, 1995 and although it seems like yesterday I'm still amazed to see how far both the internet and technology in general have come in terms of their capability and diffusion into our society. For instance, while many newspapers at ground zero of the dot com boom, such as the San Jose Mercury News, used to worry and fret about the so-called "digital divide", we see how misguided those worries were as even the Bloods and Crips have made great use of Facebook, Twitter and other online media and communication services. The fact is, these once nascent and intriguing technologies have now become deeply embedded in our daily existence to the very point that although we rely on them for the most mundane tasks, they have effectively become invisible to us. In fact, they only time we do notice the technology that we've come to rely on is when it fails to work or breaks such as during a blackout. Over the last 18 to 20 years (and especially in the last 7 years) the skills and knowledge need to quickly and cost effectively build and mass produce these technologies and tools have now become all but common place. Moreover the amount of computing power (and bandwidth) we have stuffed into just our smart phones is mind boggling as is the ability to buy right off the shelf parts and services of most of the things we need to create just about any product or business and to do so immediately. We are now longer concerned with the theory or possibility behind building a router or the design and development of a packet switched (rather than circuit based) networks. It's done and proven. Similarly, IPTV is no longer a dream but a reality. I could go on and on but I won't bore you. Beyond core technology, the Valley has grown and matured in the knowledge, processes, skills and resources needed to not only build a product but to launch a company and to make it successful (although, often times, the Valley still greatly struggles with market-based productization and ultimately the monetization of the product. These two sticking points, by the way, provide huge opportunities for the next generation of entrepreneurs to focus on. It's again hard to believe, but much of this was only possible in the late 1990's and again in the mid 2000's. First, we had the explosion of open source software, from Linux to MySql to Perl to PHP to Python and beyond with various applications available to all. This was coupled with the continuing march forward of technology-price improvements where the price point of servers, routers, SANs and bandwidth plummeted as the power, stability, ease of use and ubiquity rocketed upward. The knowledge of how to set these up and admin them diffused as well -- from the US and Western developed countries into developing countries and even as far as to the pimply-faced high-school kid across the street who could setup or administer your Linux server. This helped pushed the total cost of ownership (TCO) of these technologies down even further, and making them even more ubiquitous and more intertwined in our lives, whether we knew it or not. This continued after the Dot Com Boom (or Dot Com Crash depending on your point of view), however, around 2005 and 2006 something else happened. We began to see huge improvements in both the knowledge, formation and management of startups and venture capital investments. Once opaque and arcane industries, terms and activities such as the VC industry, the meaning of the terms on a term sheet (such as a liquidity preference or cramdown) as well as the funding raising process itself become transparent, almost overnight!. What was once at best, Tribal Knowledge regarding the startup process and how best to anticipate and overcome common obstacles and business threats soon became openly discussed, then codified and finally shared widely to the point that by reading perhaps 15 bloggers in a variety of thematic areas as well as perhaps 30 additional books, a fairly intelligent person running a startup or looking to launch a startup could go from Newbie to low-level Sage in a matter of 3 to 6 months. With all of these aforementioned changes as well as the codification and diffusion of knowledge it begins to beg the question, "Is being in Silicon Valley even important anymore?" I would say it was 10 years ago. The knowledge, what there was of it, was very silo-ed as well as tribal and often very anecdotal in nature. But now with all of the knowledge, mentors, books, forms, templates and so on I question that. Further, most of the "tech pain" and "tech risk" has been taken out of the equation. No longer do you need to rent some space at some sketchy colo at a former bomb shelter in San Jose or Mountain View where you need to provision your own rack and where you rack is separated from the next customer's rack by some chicken wire (anyone remember Best Internet on Winchester Blvd that sported the chicken wire colo cages?) Heck, you no longer even have to physically be there. Better yet, provisioning happens at the click of a button and almost immediately. And with cloud-based services like Amazon's AWS, scalability isn't a problem either. Only the cash to pay for it. In effect, so many of these startups are post-tech. Sure, these startups use tech, just as KFC, Walmart or UPS does, but those firms aren't tech firms either. Even vaunted Silicon Valley startups like Airbnb and Uber aren't tech firms. Netflix may be now that it's streaming media, but before that, it was a mail order rental house for DVDs. And what about Groupon? Is that a tech play? Now of this makes any of these startups "less" or "more" of a startup as it is simply a reality of where the startup world is today. So why should you be in the Valley? Well, some people will do it just for a challenge -- you won't find a more concentrated community of super-switched on, open-minded, openly-sharing people anywhere. Sure there are great communities like it everywhere, but not at the scale that the Valley offers. In some cases, it's critical to see, learn and reset yourself to what "Valley time" really means. A crushing rush forward. Sure, you can do that anywhere, in any city in the world, but you'll be looked at as "weird". And it's fantastic to benchmark yourself against other world-class competitors. In the Valley, you come to see that as normal, because all your friends and co-workers will be doing the same thing. For me, I'm glad I lived in the Valley and I still do business there. It was a very huge turning point and critical chapter in my life. However, for many reasons, not everyone can get there, at least now. Yet they worry and fret about it. My advice, is don't worry or fret, do the best you can, with what you have, where you are. If the Valley is in your future you'll be there. And beyond that, there is a downside to the Valley -- too many people acting like entrepreneurs attending events and conferences rather than building product or businesses. It's also a huge echo-chamber. Those are major downsides. Even if you aren't there, you can still read and see what's going on, without being pulled into the echo-chamber and backslapping "ataboys" that are often made with good intentions but inadvertently damage companies or entrepreneurs in the long run. Foreign startups in Silicon Valley still a rarity
Summary: Asian programmers may be a common sight in Silicon Valley, but foreign entrepreneurs are practically a rarity, says Valley-based accelerator. By Victoria Ho for Starting Up Asia December 5, 2013 -- 08:58 GMT (00:58 PST) Asian programmers may be a common sight in Silicon Valley, but foreign entrepreneurs are practically a rarity, according to Ben Levy, a partner at BootstrapLabs. "If you start digging into how many of the foreign entrepreneurs that go through them manage to stay in Silicon Valley, the number might be close to zero or in the single digit percentage," he said. Foreign startups in Silicon Valley still a rarity, according to BootstrapLabs.Levy, who is based in the Bay Area, said foreign entrepreneurs who try to set up shop in the Valley—even those who manage to go through prestigious programs with Y Combinator or 500 Startups—almost never manage to stay on. Of course, Levy was speaking from the perspective of BootstrapLabs, whose raison d'etre is to bring foreign startups to the Valley in the first place. But his point is supported by several high-profile tech CEOs who have been pushing for immigration reform in the U.S., in order to attract more tech-savvy workers to the country. In March, over 100 tech executives including Facebook CEO Mark Zuckerberg, HP CEO Meg Whitman, Intel CEO Paul Otellini and Yahoo CEO Marissa Mayer, signed a letter urging President Obama to relax immigration laws especially for highly-skilled workers into the U.S. Levy said the missing piece for many startups wanting to stay is the need to have sufficient funding while they build relationships, without having to start out from ground zero "begging for money" already. While many may have landed in Silicon Valley with some seed funding, follow-on funding can be a challenge for those new to the scene, he said. Founded in 2008, BootstrapLabs has been active in relocating startups to the Valley, including Zerply and Witsbits from Sweden, and Budapest's Prezi, for example. Recently however, it's started to plant roots in Asia, with partnerships with accelerators in South Korea and Malaysia. Earlier this week, it announced a tie-up with Seoul-based Coolidge Corner Investment (CCVC), to set up a program in Seoul for Korean startups. CCVC manages a US$22 million fund. The visa is not subjected to the same restrictions as the broader H1B visa for most foreign workers into the States, and has allowed Varun to avoid some of the waiting time and regulatory hoops after Semantics3 finished its term with Y Combinator last year.
1 Comment
By James Santagata Principal Consultant, SiliconEdge Given the current media frenzy of "everything Bitcoin" (BC) you probably would've had to have been living under a rock to not have heard about it. Along with this attention there's been no shortage of proponents as well as detractors. Many detractors have pointed to some of the weaknesses or flaws they see or have purportedly been found in Bitcoin. While there are certainly many things to be sorted out regarding Bitcoin it always seems that whenever something new comes about there are immediate detractors telling you that this or that is the new shiny thing's "achilles heel" and with Bitcoin it is no different. Specifically, I'm referring to Bitcoin: What You're Not Being Told which suggests that the blockchain is BC's achille's heel. As usual, this type of doom and gloom usually never comes to pass as the world is dripping with intelligence and ingenuity. We've seen this with the Y2K situation and numerous others. This isn't to say that detractors aren't valuable, because they are. And very often it is only because of their efforts and concerns that issue or problems come to light and are addressed. So for that we are very thankful. But back to the BC's blockchain and the doom and gloom surrounding it. Once upon a time, there were any number of people telling us that the internet was doomed because of the perceived lack of bandwidth (remember those silly "conserve bandwidth" sig lines?) -- that the internet would collapse upon itself. Yet technology and the market place rode to the rescue and we now can download huge video files at the click of a mouse button or watch streaming media on our smart phones very minimal, if any, latency and all for peanuts. More analogous to the BC blockchain concerns is the limited addressable space provided by IPv4 with IPv4 being 32 bits in length and providing approximately 4.3 billion IP addresses. I first heard concerns about this back around 1995 in tech circles and perhaps in the late 1990's it began to hit the mainstream or at least business press. And yet this hasn't stopped the internet from growing even though we have more and more devices connected by the minute -- just off the top of my head, we have about 10 devices connected. Perhaps more. So what gives? Well, as a short term solution, the NAT protocol was developed and introduced as well as dynamically assigned (recycled) IP addresses. And eventually, we've come to see IPv6 being implemented as more robust solution (of course, IPv6 offers many other benefits, the massively enlarged address space being just one and perhaps the most obvious). IPv6 implementation has been slow as it's had to contend with both cost and compatibility issues (i.e., you may need something like NAT64, as IPv4 / v6 are not compatible). But it works (as far as I know -- techies, correct me if I'm wrong). Most importantly, though, IPv6 is 128 bits in length which yields about 340 trillion trillion trillion addresses. Not bad - that'll support a lot of devices and objects to be sure. So what can be done about the current and projected length and subsequent weight of blockchains? One possibility is Blockchain pruning but as there are some extremely smart people out there, certainly other solutions will arise to fill this and other needs and issues as they arise. And given other uncertainties about BC, surely this issue of "blockchain weight and length" will be seen to have been a trivial bump in the road for BC. By James Santagata
Principal Consultant, Silicon Edge Recently Andy Serwer, managing editor of Fortune, sat down with Marc Andreesen to discuss The Future of Work, Cars and the Wisdom in Saying 'No' (full, unabridged version on Forbes Magazine here: Inside the mind of Marc Andreessen). In this interview, I was particularly struck with Marc's views on the impact of the ever-accelerating and widening technological adoption on the job market, and the elimination of entire categories of jobs as well as his comments on education and the need for re-training. Andy Serwer: We all understand that the Internet revolution is inevitable at this point, but it’s also kind of controversial. There are scads of new jobs at Facebook and Twitter and other places, but what about the ones that are destroyed by the inroads of technology into every industry? Are you actually creating more than you’re destroying? Marc Andreessen: Jobs are critically important, but looking at economic change through the impact on jobs has always been a difficult way to think about economic progress. Let’s take a historical example. Once upon a time, 100 percent of the United States effectively was in agriculture, right? Now it’s down to 3 percent. Productivity in agriculture has exploded. Output has never been higher. The same thing happened in manufacturing 150 years ago or so. It would have been very easy to say, “Stop economic progress because what are all the farmers going to do if they can’t farm?” And of course, we didn’t stop the progress of mechanization and manufacturing, and our answer instead was the creation of new industries. From my vantage point, this is completely off track for one main reason -- in the earlier stages of mechanization and automation we had far, far, far fewer people on this planet so that these productivity increases could support and sustain larger and larger populations. In addition, the rate of change was far lower and more localized. It was the difference of seeing single family home burn, to the firebombing off an entire city with no where to run to the simultaneous firebombing of an entire country if not world. The logical implication of the initial waves of mechanization and automation was that an individual had to gain more or better skills perhaps in either designing, manufacturing, managing or servicing the production and automation manufacturing tools (such as injection molding machines, machine vision, semiconductor fabrication tools like a CVD tool or a stepper, etc.), the automation or productivity tools to design or support the development of these tools (such as CAD/CAM software, testing software, etc.) or in some other area supporting it such as marketing, sales and so forth. There was still great pain associated with this in parts of the US and other markets, but by and large it worked. The new wrinkle, though, is that this automation is not only happening everywhere at once but across wide swaths of both industries and functional areas. If you look at what is on the near horizon, autonomous vehicles, drones, 3D printers, even greater factory automation, visual inspection, automation for agriculture and so on, we saw that especially in labor intensive or high wage (on a relative basis) jobs, much of this work was first offshored or moved internally/domestically to the low cost provider or region. For the next phase, many of these jobs that have already been offshored (such as call centers or assembly jobs),may be completely eliminated through more efficient troubleshooting algorithms and well as expert systems to handle the service call rather than people. This is happening now in both China where Foxconn has increased its purchase of factory automation (FA) systems and robotics and in the US where higher value manufacturing is moving back on shore -- but it's highly automated, not employing large amounts of people but a few select technicians and managers who, of course, are highly trained (on a relative basis). All and all, this wouldn't be a problem as people could and I feel should move up stream educationally and into more and more cerebral work. Many people then blindly shoot out that these displaced workers as well as everyone will need an "an education" or more of an "education". But this is completely off base. An education by itself is irrelevant unless it is the proper education. And that often means obtains some tools or skills that allow you to keep learning or give you some longer-term competitive advantage and/or are monetizable. Your skills need to bring value to the market place in a way that you can monetize them directly or through an employer. But wait, there are two more wrinkles: First, most of the education that is being offered now is sorely lacking in transferring the key skills that people may need to not only be able to do the job, but to keep the job and then keep moving on to the next job again and again while trying to their maintain value in the marketplace until they "retire". Marc seems extremely optimistic on this point: Marc Andreessen: And then for all this to work, a lot of people will have to get retrained, they’ll have to develop new skills. Education is going to become even more important. People are going to have to be much more adaptable in this economy. This has been a trend for a long time; the days of lifetime employment are long since over. And the whole system of how everything works – from education to health care and housing – has to adapt to an era in which people are going to have a lot more jobs over the course of their career. The problem is if it were that easy for people to skill up, they already would have. But they haven't. Why didn't all of the autoworkers and steel factory workers do this and simply skill up in the 1970's and 1980's when their ranks were decimated? There are many reasons but the fact is they didn't. And that was easy back then. The jump from skill level A to C was a cakewalk compared to the requirement many times to jump from skill level A to M... In the coming years, perhaps by 2020 at the lastest, we will have almost complete elimination of truck drivers, cab drivers, many medical personnel, book keepers and yes, software developers and so on where will they all go? Who will retrain them? And most importantly what will they retrain to do? This is especially going to be an issue for manual laborers (ironically, excluding plumbers and perhaps auto mechanics for the foreseeable future), factory workers and transportation drivers. Again how will the retrain? Do they have the ability to do so? After all, if they had the ability or resources to skill up beyond their current job, and on a relative basis it's a simple and cheap task to accomplish compared to what it's going to be, why haven't they done it? And again, if they haven't been able now to make the small jump from skill level A to C, how does Marc expect these same folk to make the massive leap from skill level A to M in the near future? This leads me to believe that we are at not Peak Oil (we're pumping more than ever with Mexico, as just one more example, about to float us away in crude) but Peak Jobs. As more and more automation eats away the lower and lower levels of jobs as well as the easily automated jobs albeit higher value jobs, starting with the middle class (book keeping, accounting, call centers, etc.), they'll be more and more displaced people. The good news is this. It won't be an unmitigated disaster for everyone. No. Only the unprepared. So instead, prepare for a hyper competitive forms of global musical chairs where you competitors are humans from all around the world as well as robots, drones, bots, algorithms and expert systems. The ability to take a seat, fortunately, won't be predicated on your reaction time when the music stops playing. Nope. It'll be predicated on both the value you can add as well as your ability to package, present and communicate that value to the employer or customer. For those that are already skilled or who can skill up in the proper areas with the proper curriculum (going back to the traditional academic environment offering the same tired, numb curriculum not only isn't going to help but it will hurt you as you layout hard earned cash and waste time, energy and suffer forgone wages while you are out of the labor market) by redirecting their current outlay of time and energy, the future may be brighter than ever. That means more and more people will need to ask themselves:
It becomes a decision of where people put their time. Now, this bar is going to be raised even higher in the US and other developed countries versus the developing world, although the developed world will most likely be able to respond, though it is doubtful about England and France. Others developed countries like Germany and the Scandinavian countries are much better positioned for this. But where does this leave the developing countries? Hurting. We can expect this compounding rapidly. I think what Marc misses is that we are now at "peak jobs" -- I'm no Luddite, just a realist. You add in all of the new automation now and in development from autonomous vehicles, drones, factory automation, 3D printing, expert systems + AI, and you'll see huge numbers of jobs being irrelevant, including soldiers, and this will become even more apparent and widespread as more and more of the cartels are broken and the enabling regulatory capture is done away with -- or as a reaction to this, regulatory capture by special interest groups and incumbents may increase or accelerate. In the face of global competition, that will be tough though. At the same time, the easy access to labor, technology, markets, etc.no longer assures that "average" or "below average" people are employable just by virtue of their geographic location. Forty or fifty years ago, if you were a small bar near an auto plant in Detroit, you could have subpar service or drinks but make money because you were local, Detroit was flush with cash, and people obviously drank local. Same with book shops, shoes shops, dvd shops and record shops. Not any more. You can get what you need from Amazon, Zappos, Javari, Gilt Groupe, NetFlix and iTunes among many others. We also see this playing out in Silicon Valley, where there are many great paying jobs, but it is not the proximity to the valley or the jobs that matter but the skills you have. So a local resident from say, Bayview-Hunters Point, doesn't have an automatic advantage over an applicant who is applying from Massachusetts, India or China (although the Indian or Chinese applicant has some barrier due to acquiring the proper work visa). In fact, if the BHP applicant has no relevant tech skills while the Massachusetts applicant is a switched on computer science graduate, guess who's getting the $150,000 software development job? Being local is irrelevant. On a national basis, the countries that succeed in the future in the face of this accelerated automation and mechanization will be those that empower their citizens while maintaining (on a relative basis) a small, highly-educated and tightly knit, socially-cemented population. Examples would include obviously Japan, perhaps Switzerland and Denmark. Other nations like the US will be a split case (have's and have not's due to the huge continuing immigration waves + the heterogeneous cultures operating within the US (see: Two Cultures In America Separated By I Do - New York Times). And still other countries with huge and growing populations (Indonesia, China, India, Mexico) will be hard hit by virtue of having too many people, especially too many people in low wage, low value jobs, especially in assembly or agrarian roles. These populations will then shrink from this economic pressure or it will lead to massive unrest and/or forced redistribution of assets to support those that are having too many dependents and/or non-marketable skills based on the market needs at the time. The next 10 to 20 years are going to be amazing, though not necessarily for those outside the system and without skills. Action Items: To position yourself (or your children) now and in the future for these tectonic labor market shifts I would suggest: 1. Understand the skills you acquire should help you do a job and future proof yourself. These skills must be monetizable. 2. Understand that acquiring these monetizable skills aren't enough. You need to understand how to discover a job. 3. Understand that after discovering a job (or creating one) you must be able to package and present yourself and then close the job. 4. Understand that once you have the job you need to maintain it/keep and work to produce deliverables and takeaways for when you leave or are asked to leave your current job. 5. Understand that you still then need to know how to move to the next job (which one? when and how?) and somehow stay on track to leverage each previous skill and job and continue to build a career as you monetize your skills. The skills you should acquire: Start with hard skills in the sciences, computers, math, critical thinking & analysis and foreign language acquistion (even if they are basic or rudimentary). From there: 1. Communication Skills 2. Negotiating Skills 3. Influencing Skills 4. Persuasion Skills 5. Assertiveness Skills 6. Leadership Skills Resources: By James Santagata
Principal Consultant, SiliconEdge One of the frequent topics I like to discuss besides the myth and meme that "Necessity Is the Mother of All Invention" is the fact many of Silicon Valley's most vaunted startups are all post-tech businesses. Yes, you read that right. Post-tech. They surely use technology in their day-to-day operations just as UPS does, the Hilton hotel chain or even Walmart. However, many of these startups may actually use even less tech than these brick and mortar firms. Examples of such startups and ventures that are post tech include Airbnb, Uber and Zappos which is analogous to an online Nordstrom in terms of the excellent customer service experience they provide. Further, the technology required to run these companies is often available right of the shelf for a pittance (relatively speaking). There are plenty of other non-Valley, post-tech companies such as Groupon, Gilt Groupe and Dollar Shave Club to name just a few. What does all this mean? As we've discussed many times before, this means that what many of these startups are facing (or will face) as their primary challenge is primarily human in nature not technical. Specifically, the markets that post-tech startups will want to or tend to target are those which are massively inefficient (thus, having huge profit potential while populated with tepid or ossified competitors) due to the use of regulatory capture by rent-seeking incumbents. Over the last 18 to 20 years (and especially during the last 7 years) the skills and knowledge needed to quickly and cost effectively build, mass produce and even consume these technologies and tools have now become almost completely common place. Consider that the amount of computing power (and bandwidth) we have in our smart phones to a person 10 years ago as is the ability to buy right off the shelf most of the things we need to create just about any product or business. We're no longer concerned with the theory behind building a router or the design and development of packet switched (versus a circuit based networks). Even IPTV is no longer a hazy dream but a daily reality. I could go on and on, but I won't so as not to bore you. Beyond core technology, the Valley has now grown and matured in regards to the knowledge, processes, skills and resources needed to not only build a product but to launch a company and to make it successful (although, often times, the Valley still struggles greatly with market-based productization and ultimately the monetization off the product. These two sticking points, therefore, provide huge opportunities for the next generation of entrepreneurs to focus on). For me, I'm glad I lived in the Valley and still do business there. It was a very huge turning point and chapter in my life, however, for many reasons, not everyone can get there, at least now. Yet they worry and fret. Don't. My advice, is don't worry or fret, do the best you can, with what you have, where you are. If the Valley is in your future you'll be there. And beyond that, there is a downside to the Valley -- too many posers, Drive-by entrepreneurs, Lottery Ticket Louts and so forth attending events and conferences rather than staying home or at the office building product or businesses. Better yet, spending the time getting in front of customers. The point is the Valley is a huge echo-chamber where luck and one-trick ponies are seen as "systems", "processes" and "truths" and where almost no one I have met can separate talent from systems, brand and product. That's the downside. A major downside. The upside is that even if you aren't in the Valley, you can still read and see what's going on, in real time, without being pulled into the Valley echo-chamber and backslapping "ataboys" that are often made with good intentions but damage companies and entrepreneurs in the long run. The glorious fact, and I do say glorious, is that now with all of the knowledge, mentors, books, forms, templates and so on I question this "race to setup in the Valley" Further, we should consider and clearly understand that most of the "tech pain" and "tech risk" has been taken entirely out of the startup equation. To summarize, in effect, so many of these startups are post-tech. They surely use tech in their daily business or operations just like KFC, Burger King and UPS does but they aren't tech firms. This doesn't make them better or worse than any startup. But it does mean they should acknowledge this new reality as should every startups, potential entrepreneur as well as incumbent. By James Santagata
Principal Consultant, SiliconEdge As previously discussed, we focus on both the human and the strategic elements of personal and business success. We'll dig down deep and explore and unpack the official narratives as well as the myths and memes as to why particular companies, products, people and technologies have succeeded or "failed" and we'll often end up with far different conclusions than are commonly published or discussed within the business and tech communities. We'll also draw heavily upon some of the following subject matter to help make our points: 1. Evolutionary Psychology 2. Cognitive Science 3. Influence and Persuasion 4. Military History, Tactics and Strategy 5. Economics (primarily regulatory capture by rent-seeking incumbents) 6. Linguistics & Languages 7. Foreign Cultures 8. Seduction and Dating And a whole lot more... stay tuned! 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:
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
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:
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. The Global & Mail (Stuart Braun):
Japan ranked first worldwide in ‘Capacity for innovation’ on the World Economic Forum’s 2012 Global Competitiveness Report, and second in terms of Company Spending on R&D. Is this reflected in real ongoing innovation in Japan? According to the "Global Innovation Barometer" survey by General Electric Co. released in March, Japan's self-assessments were the lowest among the surveyed countries. Does this surprise you in light of the WEF competitiveness report? What is causing the dissonance in these views of Japanese competitiveness and innovation? SiliconEdge (James Santagata): For decades Japan has been churning out innovation after innovation, some of which are both very visible and "sexy", such as today's automobiles or when Japan dominated the video entertainment and portable audio player market. Many other innovations, such as those by Toray composites, are critical albeit invisible as they are industrially rather than consumer focused. Nevertheless, this innovation continues today. Paradoxically, while rest of the world recognizes Japanese prowess in regards to innovation, the Japanese themselves are much less impressed by their innovations. Partly this can be explained by Japanese tendencies towards humility and introspection. Beyond this, however, much more can be attributed to the perceived (from the Japanese perspective) if not actual lack of visible let alone "sexy" innovations, primarily in the consumer space. The Global & Mail (Stuart Braun): But some closer to home seem to less confident about Japanese competitiveness and innovation. Shinji Fukukawa, writing in the Japan Times in December, said that "Having observed trends in Japanese industries for a half century, I have never felt deeper concern about their future than at present. Many of Japan’s leading enterprises that once dominated the global market are now suffering huge losses and lagging in performance behind competitors in South Korea, China and Taiwan." Do you agree? Or is he overstating the problem? SiliconEdge (James Santagata): To hear many economists talk and even the Japanese themselves, one would begin to believe that Japan is the "'sick man of asia", rather than the world's third largest economy, having just recently been eclipsed by China, which possesses a land mass larger than the US and a population which is almost ten times larger than Japan's. Nevertheless, I do have some worries about Japan not for her lack of innovation but rather for her lack of leadership. In my opinion, too much attention is paid to "innovation" as though that is the "end all be all". It isn't. If it were, then how can we explain China rising so rapidly? What innovation is emanating from there? Innovation by itself, though mesmerizing, is worthless without productization. And productization is worthless without monetization. Innovation must be monetized to be worth anything. And that is the problem with today's Japan. Spectacular and often early innovations come out of Japan's labs and corporations such as Sony's Location Free TV, yet due to corporate constraints on monetization these innovations for fear of rocking the boat or cannibalizing some products, they allow scrappy firms, like Sling Media to come from behind and gobble up the market. It could be said, the Apple's iPod was simply the next iteration of Sony's Walkman. And I don't mean to pick on Sony as they are not alone -- the majority of the Japanese CE (Consumer Electronics) industry has been having their bento boxes eaten by the likes of Apple and Samsung among others. The US is also replete with examples like this as well with Xerox PARC as just one poster child with their lack of motivation or desire to monetize their PC and related technologies (graphics chip, ethernet, vector based graphics, etc.). To solve this, Japan needs real leaders that aren't afraid to make a hamburger from a sacred cow or break a few eggs to make an omelette. It seems evident that the current ossified incumbents won't be doing this. Normally, within a healthy ecosystem, a flurry of startups would rise up and take advantage of these missteps or opportunities, but Japan is missing much of that part of the ecosystem. Worse, the Japanese government and central bank, rather than leveraging the strong Japanese yen to encourage Japanese firms to acquire foreign firms and international talent, have succumbed to printing money, to drive the yen down in value, which is simply benefiting the incumbents in the short term, by shifting monies from Japanese savers and consumers to the producers. In the long term, even 18 months out, it will be clear it was the wrong move. Sadly, a real opportunity was lost, for had the government and industry pursued the M&A route, the purchase of foreign assets coupled with record energy imports would have drove the yen down in value while allowing Japanese firms to build non-Yen denominated assets. The only difference is that it might have taken an additional 6 months to a year for the yen to weaken to where it is today. The Global & Mail (Stuart Braun): Anything else you would like to add on these themes? SiliconEdge (James Santagata): The quickest way to jump start not only innovation but more importantly the productization and monetization of innovation would be to encourage the development of a vibrant startup community and ecosystem, which would put enormous pressure on the incumbents but also help ensure that when incumbents like Sony or Panasonic stumble, their missteps will be captured and monetized by Japanese firms rather than firms gobbled up by the likes of Apple and Samsung. In an effort to climb back to its Walkman glory days, Japan is investing heavily in R&D, especially in its technology strongholds. But the culture may not have the same appetite for risk as its competitors and may be outpaced by more aggressive countries, experts say.
When Japan exclusively developed and manufactured Walkmans, Honda hatchbacks and Nintendos, it was set to overtake the United States as the world’s largest economy. Today, Japan continues to be a world-leading high-tech innovator. Yet in commercial terms, the competition has caught up, and is often running ahead. As the Apples and Samsungs of the world outcompete Sony and Panasonic, Japanese companies are trying to revive the country’s economic miracle. “Japan is in desperate need of a new philosophy of management, a new paradigm for competitiveness, a new sense of self,” Sony founder Akio Morito warned as far back as 1992. Twenty years later, as once-omnipotent Japanese tech corporations continue to lose ground to rampant global competition, it seems some are now heeding these words. “Japan’s high tech sector is finally waking up to the need for a new management philosophy ... there is evidence of a growing sense of renewal,” wrote global management consultancy Accenture in a 2013 report. One key shift is an attempt to invest profits, and technological capital, from shrinking traditional businesses into dynamic new markets. Accenture points to the way specialized high tech firms such as Canon and Fujifilm are using established optical, printing and imaging capability to successfully break into new medical imaging and other sectors. Even so, this emerging new drive to competitiveness in Japan has some catching up to do. Between 2010-11 and 2012-13, Japan fell four places in the World Economic Forum’s (WEF) Global Competitiveness Report, from 6 to 10. Though the report ranked Japan No. 1 for business sophistication and No. 5 for capacity for innovation – Japanese companies are the world’s second highest spenders on R&D – the island nation’s raw competitiveness is in a bit of a free fall. While Denmark and the Netherlands now lead Japan in terms of global competitiveness, for the Japanese, the problem is closer to home. China, which in 2010 leapfrogged Japan to become the world’s second largest economy, now makes more cars and PCs than Japan, while South Korea outsells Japan in most TV and smartphone markets. Leading business and economic figures like Mr. Fukukawa are demanding solutions and deep reforms. “Many of Japan’s leading enterprises that once dominated the global market are now suffering huge losses and lagging in performance behind competitors in South Korea, China and Taiwan,” Mr. Fukukawa wrote in the Japan Times in December. Japan’s spending on R&D remains high but South Korea now invests more in R&D as a per cent of GDP, Mr. Fukukawa noted. And though Japan still makes the most patent applications in the world, these are in steady decline. Applications from China, by contrast, have increased exponentially in recent years. China will inevitably lead Japan in terms of this innovation indicator, Mr. Fukukawa wrote. Others argue that Japan’s declining competitiveness is less a lack of innovation than of leadership. “Innovation by itself, though mesmerizing, is worthless without productization. And productization is worthless without monetization,” says James Santagata, managing director of SiliconEdge, a Tokyo-based leadership development consultancy working with startups in Japan and the United States. Mr. Santagata describes a number of pioneering innovations emerging from Japanese corporate R&D, such as Sony’s Location Free TV. “Yet due to corporate constraints on monetization of these innovations for fear of rocking the boat, or cannibalizing some products, they allow scrappy firms like Sling Media [U.S. producer of the Slingbox Internet TV interface] to come from behind that gobble up the market,” he says. Steve Jobs: The "Real Lessons" on Innovation, Business Acumen and The Definition of "Genius"1/1/2013 We're in the process of migrating content from our old CMS system.
Apple Computer and Apple Records Liquid Audio Beatnik Lala Who To Choose: Apple, Sony or Microsoft? Napster breaks the music industry's business model The necessity of a new business model and legal consumption of downloaded music Integrated yet not friction-less: Still a royal pain in the ass The iPhone - Nokia, et al. sitting on their hands Command and Control Psycholgical Aggression Order of Battle |
AboutSiliconEdge™ helps catalyze and drive the Productivity, Performance, Profitability, and Peace of Mind (4P's) of organizations, talent, and teams through our innovative, results-driven Talent Acceleration, Optimization, and Transformation programs. Archives (by date)
May 2022
Categories
All
|