Developing a startup culture in Japan

innovation-japanFairly or not, Japanese companies do not have the most innovative of reputations.  They have, rightly, been admired for the iterative improvements typified by things such as the Toyota Way, but seldom seem to deliver the revolutionary innovations that change a market.

A recent study from Stanford’s Walter H. Shorenstein Asia-Pacific Research Center explores the way Japanese companies are trying to develop a more start-up style culture internally.

“We can see that over the past 15 years or so, changes to the overall Japanese political economic context as it undergoes gradual but substantive reform over the past couple decades have created a far more vibrant start-up ecosystem in Japan than most people—both inside and outside Japan—realize,” the researchers say.

Entrepreneurship in Japan

The paper highlights the reforms undertaken in Japan in the last decade that are slowly baring fruit in the marketplace.  These include changes to corporate law, the university system and labor mobility.  The result, the paper argues, is that the country is now much more start-up friendly, and has helped overcome the preference for stability and loyalty amongst the workforce.

“A generational shift is accompanying social normative changes that are becoming more supportive of entrepreneurship and high-growth startups. Entrepreneurs and high-growth startups are celebrated in the popular media and in major events more than ever before,” the author says.

A key to this effort is an attempt to build the kind of networks and clusters that underpin innovation hotspots such as Silicon Valley.  There is also a strong growth in partnerships with the Valley, both in terms of investing n venture capital firms, but also partnering with start-ups from the region.

Early days

There is still a lot of work to be done however, as highlighted by the recent INSEAD/WIPO report into national innovation that placed Japan in 16th spot in the global league table.  The report highlights the crucial role attitude plays in our attempts to innovate.

Whilst it should be clear that innovation is crucial to the economic wellbeing of a country, few take the right approach to it.  For instance, despite much of modern science and innovation being both collaborative and across national borders, to many nations still treat each other as rivals rather than collaborators.

The EU notably pursue a policy of open science, open innovation and open to the world, and it is perhaps no surprise therefore that European countries dominate the INSEAD league table.

Japan does seem to be heading in the right direction however, and the Stanford report is optimistic about the prospects of the country developing a strong startup culture in the coming years, either from completely new ventures or from corporate spin-offs.

It will take time however, not least because of the lack of role models to look up to in the country, together with inexperience in developing the kind of global following required to build a business.

“Think of the negotiations that Apple undertook with telecom carriers around the world to roll out the iPhone worldwide, or how Google is continually negotiating with governments such as those in the European Union to allow its services to be adopted broadly,” the author says.

INSEAD produce their league table on a yearly basis, so it will be fascinating to see the progress Japan makes in the coming years.


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