“Innovation – A style in Japan”

Yayoi Kamimura INTEL, Global Account Executive, previously: NTT Docomo, Director and Head of Business Development & Investment

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Summary written by Gerhard Fasol

Yayoi Kamimura – self introduction

– 20 years experience in open innovation, services alliance and JV with foreign companies

– originally investment banker

– promote innovation to customers with cutting edge Silicon Valley technology

– Joint ventures and investments: PLDT, Sri Lanka Telecom, StarHub, Codelco, TT&T

– Service alliances and collaborations: runtastic for docomo, Toyota, M-TV, SEGA

– Anti-Fraud App: “hi its me” fraud crime exceeds US$ 400 million/year in Japan. Recently launched anti-mobile fraud app to protect the elderly population from these types of crime. The system monitors suspicious in-coming calls to the elderly, then sends alerts to their family

Snap shots: Macro view on Japan’s innovation landscape

R&D and patent applications
2016 R&D expenditure vs GDP
  1. USA: GDP (PPP) = US$ 18,559 Bill, R&D 2.77% of GDP
  2. China: GDP (PPP) = US$ 20,015 Bill, R&D 1.98% of GDP
  3. Japan: GDP (PPP) = US$ 4,913 Bill, R&D 3.39% of GDP
  4. Germany: GDP (PPP) = US$ 3,741 Bill, R&D 2.92% of GDP

Patent applications by Chinese companies have been sky-rocketing since 2000, while patent applications by US, Korean and European companies are steadily increasing, patent applications by Japanese corporations have peaked around 2000, and have been decreasing ever since 2000.

Japan is trailing in R&D efficiency, defined as total value add in the last 4 years / total $ spent for R&D between 8-6 years ago:

While R&D efficiency in USA and Germany is similar between 80-90 times during the last 10 years, R&D efficiency in Japan has dropped from 80 times in the 1990s to near 60 times currently.

Venture Capital and start-ups

With only 3.7% of the population, Japan has one of the lowest ratios of entrepreneurs in the world.

In countries like Zambia, Nigeria or Ethiopia the entrepreneur population is on the order of 40% of the population.

In China, USA, Canada, the entrepreneur population is on the order of 12-14%.

In Japan the entrepreneur population is only 3.7% – similar to France, Belgium, Germany.

Venture Capital Funding is shockingly low in Japan

VC Funding 2016:

  • USA: VC Funding US$ 60 billion
  • China: VC Funding US$ 20 billion
  • Japan: VC Funding US$ 2 billion

Start-up ecosystem

Japan does not appear in rankings of the “hottest start-up ecosystems” (source:Spark Labs Global Venture):

  1. Silicon Valley
  2. Stockholm
  3. Tel Aviv
  4. New York
  5. Seoul
  6. Boston
  7. Los Angeles
  8. Beijing
  9. London
  10. Berlin

Start-up ecosystems require:

  1. startup culture
  2. engineering talent
  3. technology infrastructure
  4. economic foundation
  5. funding and exits
  6. active monitoring
  7. legal and policy infrastructure
  8. government policy and programs

As a result of “Digital-Capital” mobile internet unicorns in Q1 2015, which include Facebook at the top, only three Japanese “unicorns” appear in the ranking: DeNA, GREE, and Cookpad.

USA has a large number of young companies, established since the 1970s with high market caps, e.g. Apple, Google, Microsoft, Facebook, Amazon etc.

Japan has only one single such company: SoftBank.

 

What can we change today?

In the public domain we need changes:

  • Education system, STEM: coding population, diversity, gender gap bridges
  • Public sector R&D: DARPA like organization, TAX breaks
  • Policy change: deregulation, promotion or open innovation, funds flow, capital markets
  • Universities and research agencies: more funds, clear goal set and PDCA

In the private domain we need changes:

  • Organization: double decker structure, CVC
  • Management: vision and target setting, acquisition & development rather than R&D / not NIH, start-up inclusion
  • Process: PDCA, SPEED, ROI monitoring
  • People: talent, skilled labor, IP and Legal, Standardization
  • Funds

We need entrepreneurs, especially those who can compete globally

We need many more coding population in face of the software defined economy, we need to rewrite our DNA

We need to expand the funds flow to startups, from public sector and from private capital markets

 

Conclusions

  1. Japan is now facing big challenges and global competition to even keep the status quo in innovation
  2. Both public and private level, we should rewrite our DNA and accelerate the rejuvenation our economy
  3. Innovation happens where money is. We should be ready to invest in more riskier assets of start-ups, both on private and public level. And the money does flow where returns are sound
  4. Build our ecosystems and gain the momentum to maximize innovation, producing next generations of Sony, Honda, Toyota… they were all ventures at their start
  5. Large enterprises transform themselves and/or we welcome the rise of new generation entrepreneur players

 

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Yayoi Kamimura: Innovation – A style in Japan

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