Japan's quest for innovative freedom
Saturday, 21 June 2008
Jonathan Guthrie and Robin Harding
Nodding politely, a mechanical doll created by Toshiba founder Hisahige Tanaka totters across a tabletop and offers a visitor a cup of tea at the company's research and development centre near Tokyo. Ingenious and intriguing, the automaton was produced in the 19th century, portending the renaissance in Japanese applied technology that followed the second world war. This delivered such consumer boons as Toshiba laptops, Toyota cars and Nintendo games.
Now Japan is questioning whether its innovation system can serve it as well in the 21st century as in the 20th. There are doubts over whether Japan's Y18,000bn ($1681m) annual R&D budget is well spent. Reformers want an environment that is more entrepreneurial and less dominated by big companies. Corporate R&D bosses and academics are struggling to put aside long-standing grudges.
If Japan were a technology company it would be worried about its pipeline. The job of replenishing this has traditionally fallen to big corporations such as Toshiba. Ichiro Tai, a jolly, bespectacled man who runs Toshiba's R&D centre, says: "We have 1,000 researchers and they should have far more ideas. The number of patents [one each a year] is far too small."
Dissatisfaction is as much a management tool for Mr Tai as it is for a sales boss driving his team towards ever-higher targets. Toshiba could nevertheless do with some high-profile breakthroughs after losing its battle with Sony to set the standard for high definition players. Mr Tai duly shows off hopeful new technologies to awed visitors. One is a system that uses quantum physics effects to encrypt data. Another is a battery that can be recharged in five minutes which could be used to power electric vehicles.
Mr Tai muses that greater freedom could spur the creativity of company research staff. Yet Toshiba is characteristic of Japanese technology companies in protecting its elite scientists from commercial pressures more than many western ones. The electronics group, which had sales of about Y7,000bn in the year to March 2007, uses a tripartite structure. The R&D centre and its academic satellites do blue-sky research. A second tier of labs commercialise new technologies. A third layer engages in the nitty-gritty of improving existing products within business units.
Politicians and bureaucrats are now asking whether Japan is over-reliant on such corporate ideas factories. Like every country with a decent science base, Japan envies the global success of Microsoft in PC operating systems and Google in internet search. Surely, the argument runs. Japan would produce new global gorillas of its own if its innovation system were more like that of the US.
The Japanese government has accordingly announced a Y100bn venture fund to invest in fledgling technology businesses. The idea is to encourage more private and institutional investors to pump their money into start-ups too.
However, there are formidable barriers to injecting some of the pep of Silicon Valley into the commercialisation of new technology in Japan. The biggest is that Japan does not have an Anglo Saxon-style enterprise culture. Would-be entrepreneurs have few role models apart from Masayoshi Son, founder of communications group Softbank. Aspiring to become very wealthy is regarded as faintly unJapanese.
Equally, "business failure is seen as shameful in Japan, though that perception is beginning to erode", says Seiichi Yoshikawa of Nippon Keidanren, Japan's powerful business lobby. When new technology ventures fail, it tends to be as units of large corporations, rather than as standalone companies. This cushions the impact. The downside of the system is that it can suppress maverick talent.
At Japan's ministry of economy, trade and industry, Yuji Tokumasu, who works on science and technology policy, is fretting over a parallel problem, According to a chart he brandishes, even as Japan's spending on research and development (R&D) has soared in the past 20 years, value added in the manufacturing sector has stagnated.
Japan already spends more than 3.0 per cent of its gross domestic product (GDP) on R&D - more than any other country. One way of reading the chart is to surmise that diminishing returns have set in, that every extra yen spent on R&D goes to employ less talented researchers, who study less promising approaches to the same problems. Japanese universities' poor record on turning research funding into results published by top scientific journals suggests that government money can be more efficiently spent. It could be that rather than spending too little on R&D, Japan spends too much.
However, Mr Tokumasu and others in the technology establishment take heart from R&D expenditure data. If only Japan could convert all of this spending into scientific breakthroughs, new businesses and saleable products, they argue, it would prove a powerful source of economic growth.
The country has a world-class science base, as exemplified by Shinya Yamanaka of Kyoto University. In 2006 Professor Yamanaka created cells resembling embryonic stem cells from other tissue in mice, Last year, in parallel with US researchers, he repeated the feat for humans. The technique has huge potential to advance gene therapy, given moral strictures on using real embryonic cells. Prof Yamanaka has a chance of winning a Nobel Prize.
But businesses can be impeded from working with university researchers such as Prof Yamanaka by historically chilly relations. During the growth years of the 1960s and 1970s, corporations sought independence in R&D. Public service anti-corruption rules made it difficult for academics to hobnob with business people. It is telling that two of Toshiba's most important academic collaborations are with British universities -- Cambridge and Bristol.
In 2004 universities were incorporated and gained ownership of the intellectual property created in their laboratories. The change irritated some people. "Before, they got research for free," says Takafumi Yamamoto, plain-speaking boss of Todai TLO, Tokyo University's licensing organisation.
Mr Yamamoto believes the dominant role of large corporations in business life is weakening. Partly thanks to entrepreneurship education "young people do not all want to be soldiers for big companies", he says. Flotations of university spin-outs have increased enthusiasm for the commercialisation of research among academics. They are meanwhile likely to become more assertive in protecting their intellectual property rights (IPR) following the establishment of a new division of the High Court specialising in IPR. Mr Yamamoto says: "There could be an increasing number of cases brought by the universities against the companies."
So is traditional Japanese consensus under threat? Not according to Yutaka Asai, chief technology officer of Oki, the telecoms and printers group, who neatly reconciles the spat between business and universities. Companies may kind up with a smaller share of revenues from individual academic collaborations, he says. But, at the same time, a fairer division of the spoils should prompt more tie-ins, making everyone better off.
...............................
Under syndication
arrangement with the FE
Nodding politely, a mechanical doll created by Toshiba founder Hisahige Tanaka totters across a tabletop and offers a visitor a cup of tea at the company's research and development centre near Tokyo. Ingenious and intriguing, the automaton was produced in the 19th century, portending the renaissance in Japanese applied technology that followed the second world war. This delivered such consumer boons as Toshiba laptops, Toyota cars and Nintendo games.
Now Japan is questioning whether its innovation system can serve it as well in the 21st century as in the 20th. There are doubts over whether Japan's Y18,000bn ($1681m) annual R&D budget is well spent. Reformers want an environment that is more entrepreneurial and less dominated by big companies. Corporate R&D bosses and academics are struggling to put aside long-standing grudges.
If Japan were a technology company it would be worried about its pipeline. The job of replenishing this has traditionally fallen to big corporations such as Toshiba. Ichiro Tai, a jolly, bespectacled man who runs Toshiba's R&D centre, says: "We have 1,000 researchers and they should have far more ideas. The number of patents [one each a year] is far too small."
Dissatisfaction is as much a management tool for Mr Tai as it is for a sales boss driving his team towards ever-higher targets. Toshiba could nevertheless do with some high-profile breakthroughs after losing its battle with Sony to set the standard for high definition players. Mr Tai duly shows off hopeful new technologies to awed visitors. One is a system that uses quantum physics effects to encrypt data. Another is a battery that can be recharged in five minutes which could be used to power electric vehicles.
Mr Tai muses that greater freedom could spur the creativity of company research staff. Yet Toshiba is characteristic of Japanese technology companies in protecting its elite scientists from commercial pressures more than many western ones. The electronics group, which had sales of about Y7,000bn in the year to March 2007, uses a tripartite structure. The R&D centre and its academic satellites do blue-sky research. A second tier of labs commercialise new technologies. A third layer engages in the nitty-gritty of improving existing products within business units.
Politicians and bureaucrats are now asking whether Japan is over-reliant on such corporate ideas factories. Like every country with a decent science base, Japan envies the global success of Microsoft in PC operating systems and Google in internet search. Surely, the argument runs. Japan would produce new global gorillas of its own if its innovation system were more like that of the US.
The Japanese government has accordingly announced a Y100bn venture fund to invest in fledgling technology businesses. The idea is to encourage more private and institutional investors to pump their money into start-ups too.
However, there are formidable barriers to injecting some of the pep of Silicon Valley into the commercialisation of new technology in Japan. The biggest is that Japan does not have an Anglo Saxon-style enterprise culture. Would-be entrepreneurs have few role models apart from Masayoshi Son, founder of communications group Softbank. Aspiring to become very wealthy is regarded as faintly unJapanese.
Equally, "business failure is seen as shameful in Japan, though that perception is beginning to erode", says Seiichi Yoshikawa of Nippon Keidanren, Japan's powerful business lobby. When new technology ventures fail, it tends to be as units of large corporations, rather than as standalone companies. This cushions the impact. The downside of the system is that it can suppress maverick talent.
At Japan's ministry of economy, trade and industry, Yuji Tokumasu, who works on science and technology policy, is fretting over a parallel problem, According to a chart he brandishes, even as Japan's spending on research and development (R&D) has soared in the past 20 years, value added in the manufacturing sector has stagnated.
Japan already spends more than 3.0 per cent of its gross domestic product (GDP) on R&D - more than any other country. One way of reading the chart is to surmise that diminishing returns have set in, that every extra yen spent on R&D goes to employ less talented researchers, who study less promising approaches to the same problems. Japanese universities' poor record on turning research funding into results published by top scientific journals suggests that government money can be more efficiently spent. It could be that rather than spending too little on R&D, Japan spends too much.
However, Mr Tokumasu and others in the technology establishment take heart from R&D expenditure data. If only Japan could convert all of this spending into scientific breakthroughs, new businesses and saleable products, they argue, it would prove a powerful source of economic growth.
The country has a world-class science base, as exemplified by Shinya Yamanaka of Kyoto University. In 2006 Professor Yamanaka created cells resembling embryonic stem cells from other tissue in mice, Last year, in parallel with US researchers, he repeated the feat for humans. The technique has huge potential to advance gene therapy, given moral strictures on using real embryonic cells. Prof Yamanaka has a chance of winning a Nobel Prize.
But businesses can be impeded from working with university researchers such as Prof Yamanaka by historically chilly relations. During the growth years of the 1960s and 1970s, corporations sought independence in R&D. Public service anti-corruption rules made it difficult for academics to hobnob with business people. It is telling that two of Toshiba's most important academic collaborations are with British universities -- Cambridge and Bristol.
In 2004 universities were incorporated and gained ownership of the intellectual property created in their laboratories. The change irritated some people. "Before, they got research for free," says Takafumi Yamamoto, plain-speaking boss of Todai TLO, Tokyo University's licensing organisation.
Mr Yamamoto believes the dominant role of large corporations in business life is weakening. Partly thanks to entrepreneurship education "young people do not all want to be soldiers for big companies", he says. Flotations of university spin-outs have increased enthusiasm for the commercialisation of research among academics. They are meanwhile likely to become more assertive in protecting their intellectual property rights (IPR) following the establishment of a new division of the High Court specialising in IPR. Mr Yamamoto says: "There could be an increasing number of cases brought by the universities against the companies."
So is traditional Japanese consensus under threat? Not according to Yutaka Asai, chief technology officer of Oki, the telecoms and printers group, who neatly reconciles the spat between business and universities. Companies may kind up with a smaller share of revenues from individual academic collaborations, he says. But, at the same time, a fairer division of the spoils should prompt more tie-ins, making everyone better off.
...............................
Under syndication
arrangement with the FE