I think the author does a good job of picking out what has caused Japan to fall behind - not moving away from manufacturing, but didn't pick out the why so much. Yes the DJP is stupidly risk averse despite coming into office on the message of change, yes Japan has been slow to take advantage of the value of their culture, but there are deeper reasons.
One that sticks out to me is the use of IT and software in daily life. When I was a student here in Japan back in 2004, I had to enrol by filling out a form using pen to paper. My Australian university was already doing everything online without a hitch. If I want to organise a monthly cash transfer to pay for a gym membership, I have to fill out a paper form and stamp it to allow for the gym to take money out of my account. Again, back in Australia I can set up a monthly payment using Internet banking, or just get them to charge my credit card. In other words, in the field of applying IT to everyday life, I believe Japan is lagging other countries badly - and I feel that the main reason for this is that PCs did not spread as widely here as they did in Australia. I would guess that most people here primarily access the Internet using their mobile phone.
After two years in Japan, focusing almost exclusively on Japanese companies as a target market, and now also preparing to move back to the US (for different reasons), this report rings true.
Japan, by and large, does not reward innovation.
This quote sums it up:
"So what do you need to create an environment where innovation and thus knowledge/ creativity thrives? What do you need for a thriving post-industrial economy?
You need a culture that can deal with change. You need companies that are small and agile. You need incentive structures that reward ideas over performance. You need a government that is not stuck in bureaucracy. You need a thriving VC investment climate with Angel Investors that are willing to take risk. You need entrepreneurs that take risk. You need an education system that rocks. And guess what, Japan has none of that [12, 13]."
I'll take exception to the one statement that Japan is not able to deal with change. If you look at the history of Japan, they are probably the only country in the history of the world to go from a medieval society closed off to foreign influence to a global power in less than 75 years. The reasons for this ability are complicated and may only work at the macro level, but it does demonstrate an enormous capability for change.
The article is right, however. If the other factors are not there, the outlook for Japan's entrepreneurial culture is not great in the coming decade.
I live in japan now since a couple of years and can agree with the article to some extent but get the impression that this is not the full picture and there is a lot missing.
Recently, I also attended a presentation from a "The Economist Intelligence Unit [2]" which painted a similar picture. In a nutshell, japan has now a strong position but will decline economically if the current government doesn't take serious steps to reduce and avoid, e.g. bureaucracy overhead.
Some interesting points from my notes:
- The case of Apple vs. Sony is for instance only a software issue not hardware. Sony doesn't encourage collaboration.
- Apple iPod production is a very interesting case anyway in respect that it is partly made in japan [1]
- Growth in regional differences (e.g. fukoaka prefecture has invested heavily in education and infrastructure. Has now strong ties with Busan area in Korea.) will be strong drivers for future markets.
- Too many "big basket" companies in japan
- Very competitive market (e.g. accepted ROI in japan is 4-5% while internationally it is more like 10-15%)
- Privatisation in japan started in 2005 (!). It takes very long to get products into the market
- Successful companies managed to roll their own efficient distribution chain (e.g. Uniqlo, Ikea, 7eleven)
- It takes at least twice as long to get the ROI than anywhere else. International companies are too short sighted
- Japanese consumers are very demanding and less forgiving. To get it right here is very difficult.
Startup wise there is also a growing environment, especially in seed funding for new ideas University wise. I attended another presentation from UTEC [3] where the growth rates they had were very impressive.
Current outlook for japan is not good, but that is mostly because they are too immobile and have too much bureaucracy. We are going back to 1840 standards where the global economy is dominated by China and India anyway.
Looking at the article, I find myself agreeing with a lot of the points presented.
There is defiantly a problem of stagnation in the workplace in Japan, especially in dynamic tech-based companies.
Generally the larger the company, the more lumbering they become.
I feel that this is mostly due to the fairly rigid seniority system that's instilled in Japanese culture (especially work culture). Like Patio11 often says, it's almost like it's anathema to think that someone under the age of 30 can have a good idea.
Most people in positions of rank in a company get there not because they're particularly gifted, but because they've been at the company the longest. This is not always the case -- but it is a rare sight to see a manager who's younger than their subordinates.
And generally, this has worked well for Japan. The young people come in, work their butts off to bring new ideas and energy into the company, present ideas to the older managers who then sends the good ones up top.
The managers don't work as hard as the younguns because they got finished with that 10-20 years ago. The younguns work hard because they know that in 10 years they will be able to relax more when they become a manager.
The problem is that with the current problems with social security, companies not paying retirement funds like they used to, and general suckiness of the economy, many young people no longer have confidence that their hard work will be rewarded with job security or a decent retirement.
Thus, many young people are starting to balk at the traditional Japanese working system, and while it is a slow movement, there are now a lot of more agile tech companies started by the younger generation. (One such great company is Messa Liberty in Osaka, which recently interviewed Patio11 in English and Japanese http://www.messaliberty.com/ )
I think that there is a chance that Japan will be able to spring back from this recession, and to be able to change their working style to more mesh with a technology-driven world.
If one thing I have learned in my many years here, it is that the Japanese are, if nothing else, incredibly adaptable.
Notes:
For those who are wondering about the social security from companies, etc -- my father in law who worked at NTT (the phone company) for 40 years, and became a mid-level manager now receives more every month in retirement pay than I do working at my current job. However, that's a thing of times past, and my company (like many) have little to no retirement packages besides public social-security. And who knows where that'll be in 30 years when I need it.
There is a huge, huge market in Japan for mobile devices and apps to run on them. We've got a number of App Store millionaires in my town.
So many and so prominent, in fact, that it took me 5 minutes to convince the tax office that I was not doing iPhone development. "No ma'am, I write web applications." "So iPhone stuff, right?" "No ma'am, web applications. They run over the Internet." "Like iPhone stuff, right?" "Similar in some ways, ma'am, except almost all of my customers use PCs rather than their cell phones to access the software." "... and people pay money for that?" "Yes ma'am, it is not uncommon to pay money for software (+), even before the App Store existed." "Wow... foreign countries are so strange."
(+) Japan does not have as prominent of a B2C software market as the US does, aside from video games and the aforementioned mobile applications. The largest electronics store in this town stocks less than 20 PC titles -- i.e. about a fourth as many as a WalMart, not counting their bargain bin.
Some Japanese iPhone apps do pretty well. But they still don't have international marketing skills. Most of the successful products are on the gaming markets, where there's no language and cultural barrier.
Relying too much on gaming and anime isn't sustainable. Japanese have good technical skills, but they don't survive for the next 50 years without strong international, multi-lingual marketing and sales skills.
The economy of lucky Japanese App Store millionaires will end soon. If the world doesn't come to Japan, Japan goes to the world.
Maybe there was an edit before but I had no problem downloading the linked pdf. [1]
Pretty interesting read, I have no real knowledge of Japan and I have to say I would've fallen into the category of people that assumed everything was miles ahead in Japan.
I've noticed a few people from HN living in Japan, I'd love to hear what their thoughts are on this.
I'm in Tokyo, and I have lived here for 12 years. The paper is quite interesting, and I have no major disagreement, but of course it is not the full picture. As I see it, the main problem Japan has is that the education and work culture is good at iterative learning and refinement, but bad at picking up and acting upon ideas that are far from how things are currently done. This is a consensus society, and things have to be broadly agreed upon in the group/company to have a chance. If there is a risk of disagreement the idea will either be buried in endless meetings, or simply dropped without discussion. This makes decision making slow and unimaginative.
Software is a good example. Most software and home pages in Japan look like they have been designed by committee, where every person in the room has a pet feature that has to be on the front page. This leads to software that is cluttered and hard to use. There is also little innovation; most new software seems based on designs already in use.
However, there is one aspect where Japan shines. People care about visuals, and graphics and icons are often pleasing. This at least is an advantage in game software, where Japan is not lagging as badly as in business software.
The game visuals in Japanese games are very pretty and stylistic. However this is just the surface and the game mechanics itself is poor. I find the Japanese games are typically a grind, collect them all, or single path perfection.
The game software reflects back on the real world. Lots of style but no substance. Example, the typical Japanese offices have very shiny reception area but where the real work gets done is a cramped, uncomfortable place.
Indeed Japan feels like it's run by a committee. I worry that Japan is like General Motors. Some very interesting products, some very passionate capable people, but the culture doesn't allow innovative things to happen.
I would recommend Alex Kerr's 'Dogs and Demons' book about Japan. It is kind of old (2001) but it is still a great read about what have been some of the specific problems from Japan these past decades.
I've always wondered why everyone recommends that book.
In the English-teacher community in Japan it's like the sacred text for those who want to complain about Japan. ;)
The dropbox link eventually worked, it showed me an error message the first few times I clicked on it. I would love to hear more about it too. I wish the author had included more of their personal context in terms of why and how they decided to leave.
One that sticks out to me is the use of IT and software in daily life. When I was a student here in Japan back in 2004, I had to enrol by filling out a form using pen to paper. My Australian university was already doing everything online without a hitch. If I want to organise a monthly cash transfer to pay for a gym membership, I have to fill out a paper form and stamp it to allow for the gym to take money out of my account. Again, back in Australia I can set up a monthly payment using Internet banking, or just get them to charge my credit card. In other words, in the field of applying IT to everyday life, I believe Japan is lagging other countries badly - and I feel that the main reason for this is that PCs did not spread as widely here as they did in Australia. I would guess that most people here primarily access the Internet using their mobile phone.