Open innovation in Japan: A noticeable change?

For the past 7 years, I have been visiting Japan each year to work with colleagues in Kyoto on various projects relating to the management of technology, 3D printing and open innovation. Back in 2009, we held an event at Doshisha University with members of the local business community that discussed, among other topics, open innovation. Yesterday, at the same location, a forum was organised by Professor Toshiro Kita to bring together Japanese firms that are implementing open innovation. Listening to the talks and discussion it was very clear that much seems to have changed since the start of the decade in terms of attitudes and actions relating to open innovation. This post provides some quick initial reflections on 'then and now', with a more detailed summary of the actual event to appear on the Doshisha Business School website shortly (along with the speakers' presentations). 

Then

At a general level, there was interest from companies in open innovation with much reference was made to the structure of corporate systems in Japan - in many ways closed to the outside, but open within keiretsu structures. Comment would made to the role of corporate spin-offs as one open innovation-type strategy that was well-suited to the Japanese corporate context. This was also the era when the 'Galapagos Effect' was much in the business news, reflecting one perceived consequence of the open-yet-closed environment.  The discussions would also often cover the challenges facing start-ups, and the weakness of the entrepreneurial support ecosystem when compared to Silicon Valley, Cambridge, and elsewhere. When visiting national and regional government agencies, presentations and report would frequently make explicit reference to open innovation and the need for this to be supported, though discussion of implementation activities tended to be rather opaque. The role of universities and the need to encourage higher levels of interaction between industry and academia was also a popular talking point. Overall the attitude seemed to be one of 'This is interesting, but we are not yet quite sure how this will work in Japan'.

Now

The recent publication of the Open Innovation White Paper by NEDO and the Japan Open Innovation Council is an important milestone. The differences in both attitude and activity on from companies is also very noticeable - at least from the sample of attendees yesterday. Among the +85 attendees at the event, the number of business cards that contain an explicitly open innovation-related job title was very high. The presentations given by speakers from Omron Ventures, Daikin, Horiba, Screen Holdings and Osaka Gas revealed a high level of activity (e.g. Daikin spending US$300m on a new open innovation facility) and Horiba acquiring MIRA in the UK) and sophisticated reflection on emerging issues.  This last point was perhaps particularly revealing as the willingness to discuss both success as well as failure can be an important reflection of an organisation's true attitude to open innovation. However, in term of results achieved through open innovation, the most common response to questions relating to this was: 'It is too early to say'. 

What are the emerging issues?

The final workshop session highlighted areas where more understanding is needed to improve the implementation of open innovation in a Japanese context. Discussion points included:

• How can open innovation be managed - and activities with all partners coordinated - along different value chains?
• What is needed to develop open innovation regional support ecosystems?
• How do you develop specific regional specialisations for open innovation? Is it necessary?
• How do you manage open innovation systems within one organisation that aim both to strengthen the core business as well as explore new business areas?
• What are the capabilities needed to make a strong open innovation team?
• Once you have developed a strong open innovation team, how can you ensure that they stay within your organisation?

The 'after-party'/飲み会 discussions also provided clear evidence of the increasing level of maturity of open innovation attitudes in Japan, with talk of the launch of an open innovation community of practice, and the explicit need for organisations to be willing to share experiences and learn from one another.  I am really looking forward to being part of these on-going discussions, and seeing how lessons can be shared within and beyond Japan.

Innovation Roundtable - discovering the 'adjacent possible' with emerging technologies

Earlier today I attended one of Axel Rosenø's Innovation Roundtable workshops, this one being on the topic of Technology Enabled Business Model Innovation. Others will do a much better job of summarising the wide range of themes presented and discussed during this event, but here are some brief personal selected highlights:

• Shell:  We heard interesting examples of how start-ups are implementing business models in the world of transport, including Filld (fuel delivery service) and MetroMile (pay-per-mile insurance). During one of the many fruitful informal discussions, examples of interesting 'non-traditional' innovations from Shell emerged:  these included 'Fill Up and Go' and the trial of an app that used the sensors in drivers' smartphones to sense how they were driving, and reward economical behaviour with reward points.
• Bosch: For IoT innovations in a firm such as Bosch, one challenge is bringing together and aligning the different worlds of what were described as the 'Machine guys' with the 'Internet guys'.  Bosch use a very structured process to explore IoT opportunities (solution sketches, mapping value drivers >value proposition >value delivery, stakeholder network diagrams etc.)
• JLR:  Innovation in automotive has been largely incremental for many years. Disruption requires a catalyst, and one example of that is the explosion of mobile communication technologies, and the way in which these are now so deeply integrated into cars. Vehicles now contain a huge range of sophisticated ICT systems that are an innovation 'gift' for car makers to exploit. For example, JLR can now offer a range of features that are enabled by the connection between the car and the driver's smartphone.  
• 3D printing: the discussions that followed the presentation of trends in 3D printing raised many common themes with those revealed during evidence gathering to support the development of UK national strategy for 3D printing. Key among these were concerns about the availability of data on the performance of different material / machine / process combinations. The discussions also highlighted the need for firms to be able to experiment with 3D printing technologies to help discover the 'adjacent possible' that could be the real opportunities for value capture from these technologies.

And on the actual logistics of the event, I like the use of Catchbox for Q&A from the floor and the IRMeet app for the use of in-presentation polls, stimulating discussions, and capturing feedback. 

New Research on "Open Innovation: A New Classification and its Impact on Firm Performance in Innovative SMEs"

This paper attempts to deepen understanding of the relationship between open innovation (OI) and firm performance in small and medium-sized enterprises (SMEs). Based on survey data from 306 Korean innovative SMEs, the results of this study show that: (1) broad and intensive engagement in OI and cooperation with external partners are positively associated with firm performance; (2) technology and market-oriented OI modes (Joint R&D, user involvement and open sourcing), involving relatively low level of changes, can positively contribute to performance enhancement; and (3) innovative SMEs benefit from working with non-competing partners, such as customers, consultancy/intermediaries and public research institutes. This work has broadened the evidence available on SMEs’ OI adoption and has proposed a new way to study OI adoption and implementation.
Click here to download full paper.

AstraZeneca coming to Cambridge: A sign of the times?

Earlier this week, planning permission was granted for AstraZeneca's new Global R&D Centre and Corporate Headquarters at the Cambridge Biomedical Campus.  The initial announcement of this plan in 2013 attracted great interest and excitement as it represented a major coup for the region. This seemed to show that Cambridge can not only build £bn companies on the back of its strengths in science and technology, but it can also attract significant direct corporate investment.
Several major corporations have had R&D facilities in Cambridge for many years (Philips, Rolls-Royce, Microsoft, Nokia, to name a few) but the scale of the AstraZeneca facility - £330m investment, 2,000 employees - dwarfs many of the earlier investments by large organisations.

The site of the planned AstraZeneca facility at the
Cambridge Biomedical Campus

AstraZeneca states that it believes Cambridge will provide them with "[..] invaluable access to world-leading scientific expertise and provides excellent opportunities for collaboration with renowned academic research institutions, pre-eminent hospitals and cutting-edge biotech companies". This reflects a widespread trend towards more open models of innovation that draw upon the strengths of specific regional clusters. It also reflects a response to specific challenges facing the pharmaceutical industry, where massively increasing R&D spend has not been leading to 'blockbuster' successes in the market. Establishing R&D activities within a thriving regional innovation clusters is one way for firms to form and manage partnerships that allow them to share the risks (but also the rewards) of research commercialisation.

But there are some potential downsides to this move. There is something of a Catch-22 problem: people want to work and live in Cambridge because of the perceived high quality of life. But the sudden arrival of 2,000 new workers (plus dependents probably doubling that number) in a city with a population of 124,000 may start to put strains on the infrastructure (especially transport and housing), thus lowering the very quality of life that made the move attractive in the first place.

As the Cambridge Technopole continues to build upon its success with more successful start-ups and more inwards investment (most recently from Apple and Amazon), the importance of the joined-up long-term strategy for the city's development within the wider region becomes ever more important.