Japanese enterprises are their own worst enemy when it comes to innovation.

In this live panel discussion, I talk about my experience driving innovation at TEPCO, and Ion and Jensen share their experiences running innovation labs. This panel was part of the btrax Design for Innovation event in Tokyo last week.

We talk about the specific challenges that Japanese companies are facing and the strategies we’ve used — with varying degrees of success —  to help overcome them.

Of course, like everyone else, I always remember the most important thing to say ten minutes too late, so I’ve added those thoughts to the outro at the end of the podcast.

It’s a great conversation with four people who really care about innovation in Japan, and I think you’ll enjoy it.

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Transcript

Welcome to Disrupting Japan, straight talk from Japan’s most successful entrepreneurs.

I’m Tim Romero and thanks for joining me.

I’ve got another live show for you today. I’ve gotten some great feedback on the past couple I’ve put out, so while I finish up the big solo show I’m working on about how to raise money in Japan, I thought I would bring you another live show today.

But this one is a bit different.

Last week, at the BTrax Design for Innovation conference, I was part of a panel where we talked about the challenges a lot of large companies face in driving innovation internally. I talk about some of the specifics from my work at TEPCO and my fellow panelists share their experience running innovation labs for Japanese enterprises.

And, I’m sure you will not be surprised to learn that Japanese companies are pretty bad at innovating this way.  At least so far. Most have good intentions, of course, but almost all of them are making the same core mistakes in their innovation programs.

We go over a few of the big ones in our conversation, and in my comments at the end of the show, I’ll give you my closing thoughts on the problem with what I call the “innovation market.”

But for now, lets get right to the discussion.

Interview

Brandon:          So let’s see the topic innovation labs. So sounds really Silicon Valley, isn’t it? So I like to start by getting a poll from the audience about Silicon Valley. So how many of you guys have visited Silicon Valley in the past, but few, one third maybe? I live in San Francisco and I see many Japanese companies visit Silicon Valley looking forward to some ideas or methods for innovation. And I feel like every single week there’s one company visiting from Japan trying to find some ideas. However, I feel like result-wise and output wise, I haven’t seen a clear results least. So I like to open up discussion here to ask your opinions about while we did some of the challenges that Japanese companies are facing when it comes to creating innovation, even though they do come to the second Valley very often. What’s, what’s wrong with it? What’s, what, what do they need to do?

Anybody JV, go ahead.

Jensen:            Well hi, I’m Jensen Barns. I’m from California, lived in Japan for six years. Basically opened up, well co founded the innovation lab here in Japan. Been active in many institutions and I kind of brand myself as doing new things, always doing new. So I think the, the issue I see in this in California is Japanese key Japanese companies coming, but then not really setting with Tim has, both Ian and I have, we’ve talked about is like setting objectives, setting the right objectives and coming for the right reasons. As a, as someone who opened up a lab here too, it’s, it’s sort of a trophy to have a innovation system or innovation process within the company. And I think there’s a lot of mid sized companies that could really, you know, use great, great innovation lab to prop up the brand of the institution and, and the employees without hiring, you know, expert maybe Toyota some, you know, today we heard about Yamaha Toyota, you know, I mean Honda rather. And you know, without hiring, you know, expert researchers or engineers transforming their own people more into innovation experts.

Brandon:          So how about the from the viewpoint of expert TEPCO Ventures yourself then?

Tim:                 I guess should I should introduce myself a bit? I, I’m my name is Tim Romero. I’m CTO of TEPCO ventures where we work with both Japanese startups and foreign energy startups to develop new business models and energy here in Japan. Before I joined TEPCO, I’ve started four startups here in Japan over the last 25 years. Sold to bankrupted too. So 50/50. That’s not bad as far as startups go. Yeah. I also work with some other large Japanese companies on their startup outreach and innovation programs. But I’m probably best known for a podcast I run called Disrupting Japan, where we sit down and we talk with Japanese startup founders about not so much their specific company, but what it’s like to sell to big enterprises as a tiny startup.

How they managed to convince their wife to let them leave Mitsui and start this crazy, you know, side project. Just what it’s like to be an innovator in a country like Japan that prizes conformity.

To answer the question, I think the single biggest mistake that large Japanese enterprises make when creating an innovation program, it’s a lack of a specific goal. So innovation is not a goal. It is a means to an end. So when a company says they want innovation, they’re, they’re still a little bit confused. So do you want to create new business models within your existing industry? Do you want to create new products that can be sold to consumers? Do you want to streamline existing businesses taking technology and best practices from other companies? So all of those are reasonable and achievable goals. But the single biggest mistake I see most companies make is saying, well, go outside and find some of this innovation and bring it back and that that doesn’t work. Cause innovation is a, it’s a process. It’s not the goal.

Brandon:          So speaking of with the goals how to major innovations maybe on can start introduce yourself and you can add some of the ideas or?

Ion:                  Happy to. Hello. Good afternoon. My name is Ion. I’m general manager for Frog. Frog is a global design and strategy consultancy. We’ve just celebrated our 50th anniversary and are in our third year a partnership together with Dentsu to help Japanese companies grow basically and stay relevant in the future by designing experiences that people love. Thank you. I, I agree with what everybody else has said. Innovation is, is complex and is not anything magical. It requires a lot of planning. Before answering the question, how to measure innovation. If you don’t have objectives, you don’t have an innovation strategy. If you don’t have an a plan to actually see how whatever comes out of your innovation activities will be embedded into the organization, you are going to fail or you’re going to shut it down, which is not obviously the purpose of making investments.

Innovation should never be measured by return on investment in day one, year one. It should always be a long term thing. If you look at the horizon that McKinsey basically works around horizon one, two and three. Horizon one is the known horizon two is the partially known and horizon three is the unknown. What’s innovation can influence all the three horizons. The one you should be focusing on is the third one, the one that is furthest away. So it’s five years plus. Anything else that you expect from innovation coming to the business sooner is going to be a failure.

Brandon:          So where do you think of like the, the last session I had a Nick with Honda says their measurement is number wows or devolving over that I’m not going to, to have that the wows that they get from the audience. Is that a good measurement for innovative at least

Jensen:             Well, like I think Tim and Ion, you know, the system that you have within the company and how you measure it. I think it’s just very important. If the company uses OKRs, which I, you know, measuring what matters. I don’t know if you know this, this book Measuring Which Matters Most, it’s one of the, you know, prime books of how to structure objectives within your company. And I’m sure they do, many companies do, but somehow I think innovation teams are just exempt. A lot of teams just simply don’t do them because of this worry of, of watching them. And I differ a little bit from the KPI. I think all innovation teams should have KPIs and I think there should be carefully watched. I don’t think it should just be this kind of, you know, open-ended thing that we don’t watch.

I mean, it’s like this, it’s like a seed. I mean, it’s like you wouldn’t just plant the seeds and run away and not, you know, and just like, Oh, just grow somehow. I think this is like really important that you, you, you care your Nutri nurture this thing. But you like all controlling things, you can’t just obsess and control it and stifle it by shutting it down for example. I think, I think that’s what you’re getting to. Maybe it’s just like, you know

Brandon:          So  at TEPCO Ventures. Do you guys have any KPIs or goals set?

Tim:                 We do, and again, it depends on the team. So we have a CVC team and we’ve got several different project teams. And I think the, I mean, KPIs are essential and it’s important to set them in line with whatever your goals are. So if the goal is new business creation, the KPIs should be centered around you know, creating the first, first few yen of external revenue, not the total amount, but creating a new business model that does generate revenue. If, the program is focused more on using new technology to improve efficiencies, those KPIs should be centered around internal adoption of the new technologies.

Brandon:          Did you, did you learn those things through working as an entrepreneur? How did you get those ideas?

Tim:                 Oh yeah, it has mostly been, it’s mostly been working as an entrepreneur but also within TEPCO. So startups and innovation labs are fundamentally different creatures than enterprises. Enterprises exist to optimize and execute an existing and known business model where startups and innovation labs are searching for new business models. It’s unknown. So a lot of it is taking things from my, my startup days and trying to make it work in a large organization to kind of align those KPIs with the rest of the organization’s KPIs. Not always easy, but you’ve got to do it.

Brandon:          Okay. From Ion’s point of view, what’s, what’s the value of external agencies working with your clients to help them innovate more? Why don’t they do everything in house first?

Ion:                  It just really depends on how, how well set up the client is. There are clients who don’t need our help and that’s perfectly fine. They can, they can do everything on the, on their own. And the clients who have a less, you know, a lower educational level or are not, are inexperienced they could obviously ask an entrepreneur to come and help them. They can ask a consultancy to come and help them and that it depends on what stage they are at. So we can help them in all the process in the entire roadmap or we can just basically be picked to help them in one where they have encountered issues and problems.

Brandon:          I do feel Japan specifically external agencies such as Dentsu is quite beneficial because many companies do look for whatever called external pressure, meaning advice or suggestions or even ideas from external quote unquote experts. So there are some people in those companies do not have to worry taking responsibilities on the results because they can say, well, I didn’t like it, but Dentsu did it. I think that’s something that doesn’t only come for Japan. You can get her Mc Kinsey in any company of this world and you will not get fired. Maybe because it’s too expensive, but not for bringing in the wrong consultant.

Tim:                 No, I think that’s absolutely right. And I mean, I think that’s why all of the world’s consulting companies now are doing innovation consulting, PWC and McKinsey and Accenture because it’s a easy product to sell. That said, these companies aren’t necessarily that good at innovation themselves. And, and I do think that there, there’s two advantages to having someone from outside, whether it’s an individual or whether it’s an outside agency.

One is what you mentioned is someone coming from outside and talking about innovation can speak more credibly about it than someone who’s come up within the organization. But the other thing is that at, at any large organization, basically everybody’s job, no matter what their job title is, everyone’s job is to get their bosses approval. And it is incredibly hard to be innovative and to do something where if your boss agrees it’s innovative, then maybe you can do it. But his boss has to agree to and making more than one jump makes it almost impossible. So bringing in people from outside, whether it’s individuals or agencies, will bring in that perspective will kind of people to Jump hierarchies. And that is incredibly important in actually getting companies to roll out innovative new ideas.

Brandon:          I guess JB can speak from your own experience about having innovation lab as a separate organization separate from the headquarters main business unit while we, the some of the benefits of doing that.

Jensen:             Well it’s the communication gap. I mean it’s a way of, it’s still connected. Like I think all good innovation labs, even though they remain a separate, they should be connected to the values of what you’re trying to do and the values of the institution. So this is where I also feel like there’s a slight gap with sometimes wanting to do this thing called innovation and the not for basically forgetting about what the original company even stood for or what the people stand for, which is something else maybe we should talk about. But it’s, I think this is, we’re talking about people, I mean, people are building this new stuff somehow and then you have other people managing them. Like, like if the managers don’t follow the values of the company, you’re, you’re in big trouble.

Brandon:          The biggest reason that I believe personally of having an innovation lab outside of the headquarters is that particular organization could be outside of their whatever cold corporate rules and the rules and guidelines may be a to Japanese corporations are so strict talking about security, talking about the online tools. They could use the evaluation process approval process, slow and steady, which is, which is good, which is good for their main business models. But when it comes to creating something very quickly, very fast battling with startups, those are a huge, huge handicap for those activities. Innovation activities.

If they cannot use any cloud software, your hands are tied. It’s almost impossible to win the game without having your hands to punch the opponent if you’re playing the playing boxing for example.

Tim:                 I think there’s, there’s two parts to corporate innovation; the creation, the actual innovation part. I think you’re absolutely right. Trying to do it inside the company is incredibly challenging. Creating a special unit where the rules can be relaxed and people are free to experiment more is really useful.

But the other half of that is taking that innovation and then getting adoption back in the company proper. And so I always, I mean I joke, but it’s true, my title is CTO, but 80% of my job is sales and it’s inward facing sales. It’s good to get him buy ins from, from, from different divisions going to people say, no, no, no. Here’s why this is important to you. Here’s why this, this crazy idea can help your unit and why you should adopt it. And the risk of having a separate unit, if it’s too isolated, is that a lot of times you, you don’t have that function where you’re, you’re going back into the organization and selling it and getting buy-in.

Brandon:          Maybe Ion can talk about this. So while we, some of the real examples from Western companies, I’m succeeding innovational lab activities where with some of the factors for that, because I get a lot of people ask me like how do they do it in the U S or Europe or other countries?.

Ion:                  So I think if you look at 90% of the innovation labs are failing or being closed, there’s not much good to look at. And that’s good to know. That’s really good to know actually. But the, the majority of the ones that are successful have a healthy distance to the head office but are not too far away to be forgotten and actually to still influence what Tim just said is really important. And they have a high profit executive who normally leads the innovation lab. If it’s somebody that is just basically running around for the last couple of years of his, of his tenure in the company or he’s been, he’s been punished and that’s why he’s been sent to an innovation app

Those things don’t help. A high profit executive will know exactly how to navigate the waters of the organization. He will, he will be you know, he will have an open year with the CEO. They will have an innovation strategy that he knows exactly how to follow. Maybe he’s defined it himself. He will have an operating model of actually how the lab should be functioning. And what is what is really important about the fact that he goes back to the head offices, that he will get the required funding for the different stages. We had an, an example that I can talk about without naming the client is an automotive company in Japan that we worked for and we worked together with a rebel within the organization that was known to be difficult. But we were quite happy that he was on our side because we had to design a car, but we had to do it the other way round instead of doing it from the outside and the engine inwards, this was a car that was based on experience and technology and had to be done from the inside to the outside.

Now if you look at how conservative organizations are and how they normally would tackle that problem, if you’re not a rebel, if you don’t have your own way of thinking, you will struggle and eventually you will fail. Because he was one of these high profit executives that knew how to navigate the waters secret to it the other way round. Anyway, he was successful. What was, what’s the definition of fail here? Fail would basically mean. Another anecdote that I can say is a pharmaceutical company that ups in innovation lab works with us together. And the moment we have the first product that could actually be decided it’s a, you know, do it or don’t do it. Finance looks at the profit margin so we’ll achieve their them pharmaceuticals. All right, let’s forget it. That is failure. It’s failure for the organization. They’ve spent a lot of money. They’ve basically burned talent to do something that at day one could have almost been decided we’re not going to do because it’s not as profitable as we would expect it to be. And that’s the reason why the corporate distance is critical for you to do what is good. But on the other hand is to your detriment if you are forgotten because then you come back, you say, here, take this. What is it? It’s amazing. How much money can we make? Not enough goodbye. And that frustrates people.

Brandon:          Let’s talk about human factors here. I always wonder if you can teach somebody how to be an innovator. Is it really possible? Is it like a natural born talent or is there a ways, or maybe there’s some people with hidden talents within them but they don’t realize themselves. Maybe how do we do that?

Tim:                 My thinking of this has changed over the years. I used to think creativity or innovation was more of a personality thing. But I, I’ve changed my mind totally. I think innovation is a skill. It can be learned by anybody, but it’s a skill kind of like let’s say basketball as a skill. Anybody can learn it, but some people are going to be better at it than others. There’s going to be a range of abilities, but it’s not a mysterious thing there. There’s processes. It’s something that anyone can learn to do. And should.

Jensen:             I think we’re living in the age of the non individual, like the teams, like building a team and working together. If you just look at decentralized, the way people hire it’s becoming more and more this way. It’s more essential that you can build a team with the same, with a good mix of values. And just a good mix of ethics. I, and I think that’s where I would say the human factors like most important. And I’ve seen, I mean I’ve been a part of the hiring is that part of the innovation? It starts with that. And it, it can end with that too.

Brandon:          I just realized just now that, so we keep talking about innovation lab activities. When you think about Google for example, they have something called 20% rule. You can do something totally different from what you are doing as a main, main role. Do you guys believe in this? The 20%?

Ion:                  I would probably believe in it. It depends what the objective is. I would say Google can probably afford to have a 20% rule in order to retain talent. Talent gets through cool things to tinker, to do whatever their passion is about. And it doesn’t then so much matter if it actually is turned into a Google product, but Google might just spin it off.

Tim:                 So it depends on the strategy you have. And there are Japanese companies doing the 20% rule. I had a, the founder of Preferred Networks on their show and they have a 20% rule and they’ve released several products that have come out of it. So it is, it’s doable. It’s a big commitment for the company. It’s very hard to keep managers in line in the sense that ensure that managers allow employees to do that 20%. That’s the biggest challenge within the companies. But the structure itself is, is workable both for US companies like Google and Japanese companies like Preferred Networks, if they really make the commitment.

Jensen:             I think it’s where it’s controversial though, is that it’s, I always hear 20% but it’s not connected to something bigger. It’s like this thing that, Oh yeah, the employees have to work 20% to get some kind of, you know, interesting prize and because they want to optimize some internal process within the company, but it’s not connected to a huge, bigger strategy around innovation in the values of the company. And that’s where I think it’s there. Right?

Ion:                  In that case, you should question why there’s the 20% rules.

Brandon:          They do claim that they got Gmail out of that 20% rule.

Ion:                  Yes. Yep. Yeah. Got launched.

Tim:                 think that a lot of, especially younger employees, younger programmers are very surprised by the 20% rule because most of that 20% does not result in a new product. It does not result in big changes. and it, the ones that succeed are employees that kind of develop an ability to pull together a team on their own without formal authority. So it is a way of training employees allowing avenues for innovation to open up. But like I said, I mean I, I think it’s a great idea, but it is a huge commitment for a company to make.

Brandon:          In Japan’s case, I’ve seen multiple companies doing 20% rule on top of 100% of what they’d been doing.

Tim:                 The 120% rule, right?

Brandon:          You can do whatever you want to do at 20% on top of the a hundred percent.

Tim:                 That’s where it’s really important to make sure from the top down that the managers are, you have to put pressure on the managers to allow it because you know, they’re being judged on their sales quota for this this quarter or you know, shipping the product by this time. So their incentives are not aligned to allow the 20%.

So ita really, it, that is a big shift in corporate culture. Otherwise you end up with like you say, the 120% rule

Brandon:          Specifically JV keeps saying that hiring is very important. Make sure to hire innovators. I think many Japanese companies, large corporations hire people, who follow rules, very stable process and they are salarymen. Could they become innovators? Is it how,could a company can, how, how could they transform somebody from salaryman to innovator?

Jenson:             So I, I believe in the long-term game on here. Like this is a, I do, I have hope that the long-term game can win because I think I see so much potential in the, in the power of the Japanese team, like setting up each other for success, that term even that’s currently being used. And I’m the head of software at Off The Grid and it’s a thriving doubling company year on year, year over year.

And we use this primarily because we’re inspired by how Japanese teams work. And I just think there’s so much potential in how the, the connections that already in the value systems here. But yes, I, I think you know following each other is not something you want either. And you really need, you really need these tools within the company then to the such as maybe 20% or other strategies to…

Brandon:          What would be some of those tools? I’d like to know some of the tools you could use to be more innovative.

Jenson:             Well, I think one is what we already have discussed is bringing in third party people. I mean, I think that’s a tremendous you know, benefit for the labs or, or even the people within the company. I think taking a hard look at the, the whatever’s called HR in Japan, which is still called HR, but the experience of the employees, like what is their, how are they representing the values of the institution through actions and behaviors every day. If it’s just showing up, just doing your job, that’s not actually building something progressive for the future, it’s just maintaining the business itself.

Brandon:          So I do believe that Tim really admires the Japanese work ethic or teamwork, what were some of the great things about Japan comparing to maybe other countries?

Tim:                 I’d say, think Japan more than anywhere else has, has this a commitment to excellence to doing something absolutely right. And that that can kind of backfire in the early stage where Japanese particularly engineer’s will try to get something just perfect before they ship it. But as a company grows, as they hit that kind of mid level, that scale up or certainly mass market this commitment to their customers. And to this perfection. I don’t, I don’t think there’s anything quite like it anywhere else in the world. You know, Germany comes close but not, not really.

Brandon:          What about the level of customer support and services in general?

Tim:                 I think that’s, yeah, that I think those two things are very tied into each other.

It is Japanese customers expect things to be, you know, have that near perfection. But, but I’ve noticed something different happening with say crowdfunded and some startups Japanese consumers are being a lot more tolerant of projects that were crowdfunded. So they will, they have lower expectations for something they bought from Makuake or Kibidango then something they ordered from, you know, a product produced by Panasonic say. And …

Brandon:          That is why it’s really tough for large brands to create something new.

Tim:                 I think it is. And because, well, I think Sony has a very interesting case study in innovation here. So Sony engineers started not using the Sony brand. Then I think if you want to be innovative and want to take chances, you cannot use the major brand. You’ve got to create some sub-brand, otherwise you’ll never be able to make any kind of an announcement or web site or anything.

But Sony, for example, had different engineering teams doing really creative things and going out and crowdfunding it themselves. And they weren’t using the Sony brands, so they were creating their own brands. And I think the danger there is that if they haven’t yet, some of these engineering teams are going to wake up and say, wait, why? Why do we need Sony? We can go out and get capital on our own and we’ve got the customers. But I think the basic plan is, is right. You give people the freedom to access knowledge and knowhow within the organization, but you don’t let them run with the brand. You let them create something on their own and see how it goes.

Brandon:          Ion have you had any experience doing some, like a stealth mode projects or not using clients’ brands about releasing some products up there?

Ion                   We did with lens, by the way, in the past, Conrad’s probably not really. So most of the things that we have done with clients are actually in stealth mode within the organization. So we have had projects that were, you know, executives were given a budget and they were told go away and come back when you have something. And that was actually to avoid the typical disruption you have in, in large organizations where people are politics are going to play a role. You know, fear of cannibalizing their current products is going to play a major role in terms of avoiding the success of this venture basically. So that then we have a lot of experience. Yes. But in terms of running our products that are not attached to the brand, no, we haven’t.

Brandon:          All right, let’s start talking about something actionable here. So we still have seven minutes or so. So some, some of the first things that we should start doing to be more innovative as a, as a company.

Ion:                  Can I kind of suggest one thing that nobody should do, don’t think about the space. It doesn’t really matter. Every startup, the garage space at we work well wherever it is. Don’t stop, felt fall into the pitfall of saying we need a big space. It needs this, it needs that. All of a sudden 20 million yen or you know, into something in, what about like, you know, being in the neighborhood of awesome startups. Totally fine as long as you don’t pay 200 million yet. What I just mean is many companies, I agree you shouldn’t be in a neighborhood that is, you know, engaging, creative, successful that you know, will rub off on you.

But don’t worry so much about the space you have, which is what many companies do. It’s like having a computer with outdated software to the other way round.

Brandon:          How about snacks and free food?

Ion:                  We can talk about that but for so seriously, talent is really important. We at Frog would believe that you don’t need a good idea, you need the right people. So you need the right team to actually bring any idea forward. And that’s where capital will be invested in. It’s not so much the idea. And then obviously a strategy needs to follow. Like I said, an operating model and a framework.

Jensen:             Yeah, I totally agree with that. I think there’s much more time needs to be spent on how to design the best team, how to design. Like it’s your, you’re building a baseball team, you’re building a soccer team, you’re, you’re building an innovation team and that the same things play, but I never see any kind of like, I haven’t seen that. I just don’t see that.

Brandon:          Fundamentally speaking. Many Japanese companies have HR system that most people in the company have very lose control, meaning like they assign people, HR department does size or corporate executives, business division decides those. So it’s really hard to design the best team by yourself.

Tim:                 What I think it’s, it’s trying to design the best team is already starting to make a mistake. So I think that, so I don’t know all of the companies that you work for, but I, I guarantee you that wherever you’re working, there’s already enough innovators inside your company.

Even if you look At places like San Francisco, which everyone holds up as the center of innovation for the whole world, less than 1%, less than half a percent of the people in San Francisco are actually doing anything innovative. Most of them are driving cabs and teaching school and, and keeping the lights on. And it’s the same with any big company. You don’t need to change the corporate culture.

What San Francisco is really, really good at though is connecting those 0.5% to each other and letting innovators talk to each other. And so if you look at successful Japanese companies that, that do innovate internally, there’s, there’s two categories. There’s companies like DNP and SoftBank and DMM that, that have CEOs that relentlessly advocate the importance of innovation. They have programs dedicated to connecting these teams.

And there’s companies that kind of have to do it by stealth. In TEPCO, we’ve created this project called GreenTech Labs where it’s startups in energy. And what we’ve noticed is that a lot of people from TEPCO are kind of coming on the weekends in their own time. And some of them, their boss knows they’re doing it and a couple of them have told me, you know, don’t let my boss don’t tell anyone I came here. But you need the, the ability to connect the innovators within the organization.

Brandon:          How, how is it import? How much is it important to have a diverse team team?

Ion:                  I think that’s incredibly important. I think the more diversity you have in a team, the more different insights you will get. When I look at the designers, we would employ it. Frog, I’m probably one of the examples, not the best designer, but I’m a banker and I turned designer. We have anthropologists, psychologists. So the more flavors you can get into the mix, the better outputs.

Jenson:             I just say gender. I mean like I haven’t lived in Japan here. I feel there’s such an imbalance.

Brandon:          Seriously. Teams. Yeah. We had our Halloween party last week. I did a makeup on them in the face. I finally realized how they feel about doing, make us and stuff. I mean it’s, it’s really important to have diverse team with empathy. There. Yeah,

Tim:                 I think it’s a balance, and I agree completely, a diverse team is incredibly important, but the, the balance to that, the more diverse the team is, the stronger you have to communicate the vision and the stronger, the more effort it takes to keep everyone focused on the same goal. And so the flip side of that is if you take a lot of people from a traditional organization and you say, okay, now you’re going to innovate, there’s no diversity, but they’re, they’re very focused on the same goal, but they won’t achieve it. And if you take an incredibly diverse team, you might get a lot of creativity. But without that vision, without someone like really directing it, you also won’t get a, an end result. So you need a balance of those two.

Brandon:          What were the other things that we can, we could do that’s Japanese companies?

Tim:                 I’d say talk to startups. I mean, it’s incredible that corporate people do not talk to startups and it’s not hard. There was a group from a totally different division. But within TEPCO, there were, someone had proposed that they sponsor this startup program and it was going to cost, like $100,000 to sponsor it. And there were all these advantages and at the end it was like,

“Well, what do you want out of this?” They said “We want to be able to talk with the startups and you know, hear about them.” Then just, just go to the demo day, you know, go to the last day and talk to the startups for free. You know, it’s like you’re, you’re a TEPCO for God’s sake. Any, any startup that is remotely interested in energy, wants to talk to you.

Jenson:             And that’s the California. If we talk, get back to the sort of title, maybe that’s the spirit of what exists there. If there’s a culture you want to transplant, that’s it. It’s the sharing. It’s the making connections with each other. As Tim was saying, I sort of, the company I started of organization, it doesn’t really matter, not based on money or monetary benefit or each other or how high you’re going to climb. It’s just you’re want to share and you’re excited about your area. Yeah.

Tim:                 If you go up to any startup founder, particularly early stage and say, “So what is it you do?” They will tell you, you will have a half hour conversation whether you want to or not. It’s, you know, it’s very easy to talk to, to start.

Brandon:          So that’s exactly why we designed Btrax design for innovation event to you guys, startup people, corporate people, some eccentric people are coming up next to make it more diverse so that maybe audience can feel the innovation. That’s the whole topic of that. Thank you so much. I appreciate it. Thank you very much. Thanks very much.

 

Outtro

… and we’re back.

>I’d like to add a little bit to my thoughts from the program, and I might do a whole episode on corporate innovation in the future, but I’m constantly baffled by large Japanese companies who open up an office in San Francisco, post staff there for a few years, and expect that they will, I don’t know, become innovative by osmosis and bring innovation back to the companies.

As I said at the top of the show, innovation is a tool. It is a means to an end, not an end in itself, but something interesting has happened over the past decade. Innovation has become trendy and fashionable and big companies want some of it. Whatever it is.

And thus the enterprise innovation market was born.

And so innovation, which really should form the bedrock of any company’s long-term strategy is being packaged up and sold just like all the other business management fads like, six sigma, and MBOs, and process re-engineering.

The problem is that meaningful innovation is inherently risky. Not only can you not predict if innovation will succeed, but you can’t even predict how it will look if it does succeed. Successful innovation could upend the power structure of the whole companies in unpredictable ways, and that’s not something you are going to get management to sign-off on in corporate Japan, or corporate American, for that matter.

So innovation gets repackaged, and de-risked to make it more palatable to those who, frankly don’t really want to innovate, but have budget that has been allocated to spend on innovation. So instead of connecting and empowering the innovators they already have, they turn to consultants who in turn, turn the conversation to co-working spaces, and unlimited snacks, and design thinking classes, and innovation training.

And all those things are great. I mean what’s not to love about design thinking or free snacks?

But innovation is not the goal. Innovation is a tool, and it’s a dangerous one.

It can’t really be made safe. It can’t be de-risked. But also, in the long run, it can’t be stopped and can’t be held back. in fact, almost all economic progress in the past 260 years had been driven by innovation.

And the companies too timid to open themselves up and embrace innovation are going to lose out to the ones that do.

If you want to talk about corporate innovation or innovation in general, I would love to hear from you. So come by Disrupting japan.com and let’s talk.

But most of all, thanks for listening, and thank you for letting people interested in Japanese startups an innovation know about the show.