There appear to be contrasting realities in management culture, the nature of technological innovation, and Japan's successes. Japanese management takes too long to decide. On the other hand, technology progresses at a rapid pace. Moreover, often, Japanese companies enter the global technology race being a follower. Despite this reality, Japanese companies have emerged as innovation leaders in many areas. Where is the secret sauce in combining these contrasting realities is often an intriguing question.
Many of the technological innovations in which Japanese companies have now a global edge are not invented by the Japanese. Often, they were latecomers. How Japan leads to being a follower has become a management question. Moreover, in the rapidly changing technology landscape, how Japanese slow decision-making management culture succeed?
Although technological innovation is known as the one-time act of creative genius, in reality, any idea emerges in primitive form. In the beginning, there are myriad uncertainties. Before embarking on commercial exploitations, the amenability of progression and its likely implication in the competition space should be investigated. Furthermore, once the decision is taken to pursue it, a long journey should be pursued by a team effort, often in the midst of uncertainty. Often the success depends on making effective decisions and staying on course for years and decades.
For example, in comparison to RCA and Texas Instruments, Sony was a latecomer in the transistor radio. Prior to Sony, Kodak made a digital camera and got a US patent. However, more importantly, Sony’s speed of execution was far faster than their American counterparts. Subsequently, Sony acquired the lead in innovation in both cases. Ironically, forerunner Kodak and RCA became bankrupt due to the creative wave of destruction caused by Sony’s follower approach to lead.
The resonance between Japanese management culture and the competence need to succeed in technological innovation
To many western managers, the Japanese are very slow to decide. It seems that they suffer from indecision. They allocate substantial time to focus on the problem of developing a collective, shared understanding. As opposed to top management in making decisions and selling it to lower levels for its execution, they make decisions through consensus. Through this process, they make very effective decisions. Moreover, once the decision is taken, they spend no time selling the decision. The team goes to execution immediately. And they remain on course for years and decades. Moreover, employees’ life-long loyalty also gave the Japanese companies an edge in building competence by accumulating tacit capability.
It’s gathered that Westerners who have done business with the Japanese have learned that the negotiating stage’s apparent inertia, with its endless delays and endless discussion of the same points, is followed by a speed of action that leaves them hanging on the ropes. Their response behaves like S-curve. In the beginning, they progress very slowly. Primarily, to gather additional information for getting needed clarity. And also to build consensus or shared understanding among the team members. However, once the decision is made, the response ramp hap very quickly. Such a management response appears to be in sync with the nature of the technology innovation life cycle.
Such Japanese management culture appears to be very much in harmony with the challenge of succeeding in major technology innovations. For example, the decision to change the technology core should be taken through adequate investigation. Moreover, once the decision is taken, speed matters. Moreover, the continuity of the same people in pursuing the journey, even over decades, is crucial. This is essential in creating success through fueling creative waves of destruction through incremental progression. Here are some examples.
Toshiba in HDD and SSD—a typical example of Japan leads being a follower
In 1956, IBM released a hard disk drive—fifty 24-inch platters had a total capacity of 5MB. After more than 11 years in 1967, Toshiba entered the HDD industry. With sustained incremental advancement, Toshiba started gaining traction. While Steve Jobs was desperately looking for a dime-sized HDD to hold enough songs during the prototype phase of the iPod, he found Toshiba as the only qualified supplier. Although most HDD makers have gone out of business, Toshiba had a 24 percent market share. Moreover, in 1984, Toshiba invented a substitution technology for HDD. That is solid-state flash memory. In the $60 billion solid-state storage market, Toshiba is a leader. Moreover, computer memory storage pioneer IBM is no longer in the scene. Being a late entrant, Toshiba’s uprising as the leader in shaping the computer storage industry is a strong example that Japan leads being a follower.
Nichia in LED lighting sheds further light on Japan leads being a follower
Nichia used to be a small Japanese chemical company. In the late 1970s, it decided to enter into the LED lighting business. However, in those days, the blue LED was the problem. Along with GE, many other companies were trying to address it. Of course, Nichia was a follower. It’s GE, which invented semiconductor LED lighting in the 1960s, was the leader. At that time, small Nichia was busy producing chemicals. To establish the lead, Nichia recruited Shuji Nakamura and sponsored R&D. The journey continued for 15 years leading to the demonstration of perfect blue LED in 1993.
Through this invention, Nichia created the entry. Subsequently, Nichia emerged as the world’s best and the largest LED chip producer for the $100 billion lighting industry. Moreover, Nichia’s has cornered once leader GE. In fact, the founder of GE invented the light bulb, which has been going through a journey of evolution. Moreover, Nichia sponsored R&D led to Mr. Nakamura’s winning the Nobel prize in 2014.
Sony in Radio, TV, and Camera
In a bid to get a solid-state switch, scientists at the Bell labs invented the Transistor in 1947. Within just one year, Bell Labs also demonstrated transistor-based radio. Shortly after that, American RCA and Texas Instruments also demonstrated their designs of transistor radios. In 1955, Japanese Sony came up with its maiden pocket radio made out of five transistors. Of course, Sony was a late entrant. However, Sony kept progressing at a faster speed than competitors in refining transistors. In the 1960s, Sony emerged as the dominant transistor radio maker, and also made RCA marginalized. Subsequently, Sony repeated similar success in TVs. Sony showed similar performance in taking the idea of a digital camera in the market. This high-speed process of refinement also led to deep scientific discoveries, which enabled Sony’s one of the R&D team members to win the Nobel prize in 1974.
Canon in Camera—another remarkable example of Japan leads being a follower
One of the founders of Canon was a camera repairman. Due to curiosity, he opened Leica’s Camera. Subsequently, he made each of the components and assembled them to make a copy of the original Camera. This success led to the formation of Canon. However, Canon did not keep imitating Leica. Instead, Canon got into a relentless journey of refinement, at a faster speed than Leica. Hence, within a decade or so, Canon emerged as a leader in camera innovation. More importantly, while Kodak was disrupted due to the digital camera‘s uprising in the 1980s, Canon emerged as a DSLR camera leader. This is a remarkable example, indeed, that Japan leads being a follower.
Ashai Kasei in Lithium-ion battery
In the 1980s, Sony felt the necessity of having a high energy density battery for its portable video camera. To meet this demand, Sony and Ashai Kasei joined hands to pursue the lithium-ion battery, invented by the British and American scientists. In 1985, Akira Yoshino, while working at Ashai Kasei, assembled a lithium-ion battery. They envisioned the potential and decided to pursue it. The long refinement journey made Japanese global leaders in this vital component. Along the way, their R&D made significant scientific discoveries leading to Akira Yoshino’s winning of the Nobel Prize in 2020.
Sharp in Microwave Oven
This is an interesting example. In 1945, a scientist, while working at American Raytheon, accidentally invented the technology of microwave heating of food. Upon getting a patent in 1946, Raytheon released the Microwave oven innovation in the market in 1947. However, it was a bulky, power-hungry expensive machine. Japanese Sharp corporation envisioned innovation potential in it and decided to pursue it. Sharp’s R&D led to the invention of a far smaller microwave oven. Sharp came up with a far better oven within ten years at a one-tenth price of what Raytheon innovated. Starting the journey as a follower, Sharp emerged as the Microwave oven innovation leader. Subsequently, it took over 25% market of Microwave ovens in the USA.
There is a very close match between the nature of competence needed in managing the journey of technology innovation and Japan’s management culture. This might be one of the reasons for which Japan leads being a follower, leading to even Japan’s successes in winning Nobel Prizes. Japan’s this intangible competence appears to be highly non-imitable. Winning in the technological innovation race is not about having the lead in getting into the race. As among many possibilities, only a small fraction has the potential to succeed, the first challenge is to make an effective decision. The selection of the right time of entry is also very important. The next challenge is to keep pursuing the journey of incremental progression at a very high speed. Passion for perfection shared vision, and loyalty matter to remain on the course. As far as such competence is concerned, Japan is unparalleled.