«Japan wants to be Number One
Solutions Provider of the XXIst Century»
Japan must NOT compete for Number
One in economic power or size. «We must search
for a position as a solutions leader in critical areas
of the future» - that's the strategic advise from
a business historian professor, a Japanese "pupil"
of Alfred Chandler.
Interview with Seiichiro
Yonekura, researcher at Institute of Innovation Research
of Hitotsubashi University, Tokyo, and Director of Sony
Institute of Strategy
editor of Gurusonline.tv, October 2003
University Site | Profile
of Professor Yonekura
Professor Yonekura E-mail: firstname.lastname@example.org
Another interview about Japan - "The
secrets of Japan's economic anorexia"
Business Review, a leading management journal in Japanese
Seiichiro Yonekura came to Lisbon for the 460th anniversary
of the historical relationship between Portugal and
Japan since de XVI Century. Professor Yonekura talked
about the "Culture and Innovation in Japan"
since the opening movement of 1868, the Meiji Restoration.
Yonekura, 50, is professor of Business History and works
at the Institute of Innovation Research of Hitotsubashi
University at Kunichati, Tokyo metropolitan area. He
is one of the "pupils" of historian business
professor Alfred Chandler and got his Ph.D. from Harvard
Graduate School of Arts & Sciences in June 1990,
in US. He is also director of the Institute of Strategy
of Sony and editor of the International Journal of Entrepreneurship
and Innovation Management. He belonged to the Board
of Managers of the International Joseph A. Schumpeter
Society, an organization devoted to innovation. He was
for five years in the 90's of last century faculty member
of the Global Leadership Program at the University of
Michigan, in US. He is a "serial" writer of
management and business matters in Japanese. His last
book titled Japanese Dreamers came out last year in
Tokyo. The last book published in English, at Oxford
University Press, is about Entrepreneurship and Organization,
co-edited with Michael Lynskey.
Short spot about Portugal and Japan: The first contact
between Japan and Portugal began in the XVIth Century.
After 1543, when three Portuguese drifted ashore to
the island of Tanegashima in Japan, a lot of things
were introduced and brought into Japan mainly by the
Portuguese. To take some examples, firearm was introduced
into Japan in the very first arrival of the Portuguese
in 1543, Christianity was first introduced by São
Francisco Xavier, Basque Jesuit who was supported in
his foreign missions by the Portuguese Royal Household,
and furthermore printing machine and many musical instruments
of occidental origin were brought by 'Tensho Mission
to Europe' constituted by 4 Japanese adolescents, when
they returned to Japan in 1590 after their visits to
Portugal, Spain and Italy. In addition, it is well known
that there are a lot of words of Portuguese origin in
Japanese language that they still use in daily lives.
There are too many words to mention every one of them,
but botan (botão, button), kappa (capa, cover),
koppu (copo, glass), orugan (orgão, organ), tabako
(tabaco), bisuketto (biscoito, biscuit), pan (pão,
bread), Yoroppa (Europa, Europe) are some of them. In
spite of the first great step made toward active cultural
exchanges between both countries, however, Japan started
in the first place to exclude Christianity. They put
a law to forbid Christianity into force in 1614, which
lead to the worse relations between Japan and Portugal.
In 1639 the Tokugawa Shogunate closed the door to foreigners
except the Dutch, which means the end of relations and
exchanges between Japan and Portugal. Japan and Portugal
established their diplomatic relations officially in
1860, when the Treaty of Peace, Amity and Trade was
signed between two countries, which was followed by
the ratification of the Treaty in 1862. The first Legation
of Japan, which had a jurisdiction over Portugal and
France, was established for the first time in Lisbon
on March 24th in 1880. Mr. Samejima was appointed the
first Minister Extraordinary and Plenipotentiary of
Japan to Portugal on the same day. The General Headquarters
of the Allied Powers (GHQ) occupied Japan in 1945 and
the diplomatic relations between Japan and Portugal
were made broken off until April 1952, when the San
Francisco Treaty came into effect. After Japan restored
its sovereignty in 1952, the diplomatic relations between
two countries were re-established on October 22nd 1953.
Portugal inaugurated its Legation in Japan on the same
day and Japan established the Legation in Portugal on
March 15th in 1954. The Portuguese Legation was raised
to the status of the Embassy on October 5th in 1958
and the Japanese Embassy was done on April 1st in 1959.
As a business historian do you agree that your country
is like a phoenix?
It could be. In 1868 Japan joined the modern world.
It was still a tiny poor country in the Far East. 460
years ago Portugal was interested in Japan, but my country
feared the influence of Christianity. So we closed for
more than two hundred years. Since 1868 we invested
in three areas - military, industrialization and education.
The first attempt to be a great power was military for
more than 50 years. But it was in vain. It was a devastated
strategy. Finished in 1945. But, in the other end, Japan
invested in the other two items. And in these areas
it was rewarded. We re-emerged in the 60's after losing
everything in the Second World War. But it was not a
But popular press talked in the 80's about the Japanese
It was a result of almost one hundred years of investment
in the industrial revolution and in education. Japanese
working culture emphasizing implicit wisdom like teamwork,
process technology and accumulated know-how in the post-war
manufacturing process eventually created the so-called
Japanese management style. As a result, Japan became
a leading actor in the world. Nobody predicted that
such a small far-eastern nation without any natural
resources would grow up to be the second largest economic
power. And suddenly we lost competitiveness.
«Global money of institutional
investors become searching for the most effective operations
all over the world. And for this new trend, the American
model was suitable, more suitable than the Japanese
values based in long-term growth and long-term stability.
Our model - for example, lifetime employment, cross-shareholder
holding, group orientation, and keiretsu - worked in
the 60's till the 80's. But in the 90's didn't work
What went wrong with Japan in the 90's? Akio Morita's
speech in 1992 was like a "crash" when he
said that Japan Inc success came to an end
I think two important events happened in late 80's
and beginning of the 90's. First, globalisation - particularly
finance. Second, digitalisation.
But with all the global strategies defined by shogo-shohas
and all the aggressive marketing in the 80's, how it
Global money of institutional investors become searching
for the most effective operations all over the world.
And for this new trend, the American model was suitable,
more suitable than the Japanese values based in long-term
growth and long-term stability. Our model - for example,
lifetime employment, cross-shareholder holding, group
orientation, and keiretsu - worked in the 60's till
the 80's. But in the 90's didn't work any more. All
was so rapid. We could not change so fast.
Anyway there's a few sectors from Japanese international
specialisation that went well - the Japan Inc that worked
Yes, certain businesses like automobile and computer
were doing well. But others like finance, insurance,
distribution were heavy regulated in Japan and very
protected and do not respond to the change. Also the
cross-shareholding model has to be changed - it worked
well in the past, but with globalisation it do not work
But that's not easy to change
Sure. Look at Cannon, for example. Institutional investors,
like CalPERS, own 40% already. These international investors
want to increase corporate value, and to respond to
their requirements, the Japanese wants to sell off their
cross-shareholding. But if they sell, the stock market
could be panic - so they have to maintain, even if they
do not want. From outside it looks easy - but in Japan,
inside, it's not so easy. That takes time.
«Japan was a master in integrating
things, in assembling. Digitalisation requires a new
game - requires modularity and architecture. This change
needed a shift in Japan - from integration capabilities
to coordination and supply chain management capabilities.»
You mentioned also as a second "disruption"-
the digitalisation. In what sense?
It changed the rules of the game. Japan was a master
in integrating things, in assembling. Digitalisation
requires a new game - requires modularity and architecture.
This change needed a shift in Japan - from integration
capabilities to coordination and supply chain management
capabilities. See what happened in the computer sector
- suddenly Dell is most competitive. Why? Because they
buy the cheapest components everywhere - for instance
in the Asian tigers - and put them in the supply chain.
Microsoft and Intel did the other part - they created
the architecture. And so Japan lost competitiveness.
And that's the story of the last decade.
And now, how can the Japanese phoenix revive?
I think a new game started. The game of the digital
consumer manufacturing, all the digital appliances that
the people of the XXIst Century will use everywhere
with Internet embedded - TV, radio, mobile phones, refrigerator
And those are areas where Japanese companies are very
competitive. And also, we can talk about energy and
«I think a new game started
in the XXIst Century. The game of the digital consumer
manufacturing, all the digital appliances that the people
of the XXIst Century will use everywhere with Internet
embedded - TV, radio, mobile phones, refrigerator
And those are areas where Japanese companies are very
competitive. And also, we can talk about energy and
So you think Japan is far ahead in those areas that
will be critical in the future?
Yes. Imagine hundreds of millions of Chinese people
driving the present cars - it's impossible. So Toyota
and Honda began already selling new type of cars and
also energy saving electrical appliances and advanced
And you have a window of opportunity regarding US?
Sure. In the US the present energy cost is 1/3 of Japan.
So US haven't motivation as we have for new energy fuel
cells, solar systems, combination of Internet and energy
saving technology. We have a chance. The problem is
our university system.
It's very domestic oriented. It is not global as the
American one. We have to open our university system.
So we have a 50-50% opportunity regarding the advantage
in the future.
And what about the cultural field?
Yes, there's a field where I can say we have good news.
In music, animation, games, gadgets for children and
adults we are far ahead. Our advantage gradually spread
all over Asia and the US, and less in Europe. Japanese
animation is everywhere in TV in the morning. That's
an important sub-cultural export from Japan. And these
fields are of the type that can create digital equipments.
I think we shouldn't underestimate this sub-culture
power. Also in design. For example, one of our most
famous designers, Takashi Murakani, was asked to be
chief designer of Louis Vuitton bags collection.
Do you mean with that advantages Japan can be number
one in the future? Just a week ago, Goldman Sachs published
a report about the emergent countries in this century
- in 2050, China and India will be in the 3 top world
economies regarding GNP. China will be number one, ahead
of US. After this top three will come European Union,
and only then Japan. So in 50 years, Japan will fall
out from number two to number fifth
Well, there's strong competition. From China and India
in Asia, for example. China has more than 1 million
scientists - just launched a man in space by its own.
India has more than 1 million software engineers. Imagine
also that in 2001 the Chinese won the first prize in
a Chopin contest. The Chinese have 45 million people
studying piano! That's volume! So, for Japan it's not
so easy to be number one. But in certain areas we can.
There are certain constraints for China and India, and
also Russia. Who gives solutions to the world will win.
«For example, if war on food
and water could be very serious in the future, with
water shortages by 2002 in China and India, agricultural
technologies will be critical. Monsanto, the American
multinational, try to control the food supply, but that's
a very dangerous game. In Japan we have been struggling
for years to increase our agricultural productivity.
We accumulate critical knowledge in certain areas, like
biotechnology, soil improvement, etc. We can be a consultant
or solution provider in that field also.»
What you mean by that?
If Japan can pioneer in certain critical technologies,
it can be the number one solution provider or consultant
in the world. I think Japan must not compete for economic
size or power. We must search for a leading position
as a solutions provider - a solutions' leader. For example,
if war on food and water could be very serious in the
future, with water shortages by 2002 in China and India,
agricultural technologies will be critical. Monsanto,
the American multinational, try to control the food
supply, but that's a very dangerous game. In Japan we
have been struggling for years to increase our agricultural
productivity. We accumulate critical knowledge in certain
areas, like biotechnology, soil improvement, etc. We
can be a consultant or solution provider in that field
The problem: we do not see that "re-emergence"
The past success was huge. More success, more difficulty
to change, as you know. So many people think: "why
to change ?" This is our strongest enemy so far.
That's true we have two Japans. We have the competitive
sectors and the regulated. These regulated sectors are
very strong and have strong ties with the political
system. In order to reform this situation, we have to
reform the political system. But, probably we will need
two or three more elections.