Kanji

http://www.chozen-ji.org/mushin.html

Abstract

The culture (specifically, the emphasis on collectivism or individualism) plays a crucial role in business decisions and the results affect both the individual and the group.  Looking at the cultural roots, the recent rise and fall of some technology companies, and the decisions made by their management, perhaps we can learn some lessons to address the current issues facing both Japanese and US companies in improving the efficiencies of current IT infrastructure management.   Current trend toward next generation computing clouds offers an opportunity to reexamine the evolution of POTS, PANS and SANs and learn from the lessons of the past.

While there is a lot of debate about pure individualism and collectivism, free markets and planned economies, history and evolution of POTS, PANS and SANs argue for a middle path.

Kyudõ and the Living Bow

The master moves with graceful elegance.  You can feel the intensity of purpose behind his each move.  You see the master’s face radiating cherubic serenity of a stress-free baby looking into the comfort of mother’s eyes.  Blindfolded, the master focuses his attention on the kiai (the spiritual energy – the vibration) to emulate the four seasons, the spring, summer, autumn and winter.  The mind, the posture and the breathing are all orchestrated in harmony to create that moment of perfection when the master, the bow, the arrow, and the target become one.  All I see is the arrow hitting the bull’s eye perhaps 60 meters away.

According to Jackson Morisawa [1], “The ‘aim’ of kyudõ at Chojen-Ji is never an external focus on the external target.  It is, rather, an internal ‘aim’ focused on the center of the perfect cross.  When one reaches the ‘point zero,’ the body, mind, and energy are in perfect harmony and serenity prevails.  This internal harmony works in relation to the external effect, and the arrow that pierces the mark is penetrating and alive.”  Yamada Shõji [2] discusses the influence of Zen on Japanese archery.  “Dead blade and living sword are Buddhist concepts taught in tantric (Shingon) lineages. We take this principle and merely rename it the dead bow and living bow.  It is the same principle as expressed by the saying “Rejoice in death and live (kõshi sokusei); [Try to] insure life and die (hissei sokushi).” [In other words,] when one’s mind is troubled by fear, one’s bow is dead. When one is willing to sacrifice oneself and regards lightly the loss of one’s own life, then one’s bow comes alive.”

A Zen master in Japan, once, told me that the interesting moment of enlightenment is not when you hit the target.  It is when you miss the target, that the self is revealed, and the understanding of your own shortcoming makes you a better person ready for the next aim.

Watching the unusual feat of the living bow and learning about Zen were part of my studies as a student at Japan American Institute of Management Science (JAIMS) in the paradise island of Oahu, Hawaii.  I became an “accidental student” when my boss, Bud Wonsiewicz, at U S WEST, a telephone company, came to me and suggested that I spend a few months in Hawaii and a few months in Tokyo studying Japanese language, culture, and business.  The purpose was to return to US WEST and establish closer partnership in technology and business, development & transfer between the Japanese Telecommunications company Fujitsu and US West.  Fujitsu has a school in Honolulu that brings students from many countries including Japan to learn business management in a cross-cultural setting.  Top management of Fujitsu and US West decided to choose someone from US WEST management to attend this program and spend a few months in Fujitsu Japan working with various groups learning the Japanese Way.  According to Jinjiro Dodo, the then President of Fujitsu America, Japanese understood the role of personal relationships in creating value in business partnerships and Fujitsu created the school with a long-term view to develop business leaders with inter-cultural understanding and close inter-personal relationships.  He also emphasized that both language and culture play a very important role in business conduct and JAIMS encouraged Japanese students to experience the culture through internships in the US and non-Japanese students to experience Japanese culture through internships in Japan.

US West, one of the baby Bells created by the divestiture of the then regulated monopoly, AT&T, was a quintessential example of the rugged western culture of individualism, set out to create dust so as not to fall behind and eat the dust others created (as the US WEST commercial in this blog says).   Bud Wonsiewicz was a renaissance master with a lineage from MIT and Bell Labs who came to US WEST to bring innovation and transform the plain old telephone company to an information services powerhouse.  He had worked with other masters who made UNIX at Bell Labs in Murray Hill, New Jersey.  He was starting experiments at US WEST Advanced Technologies using video walls and information appliances in the late 80s.  He had started collaboration with various universities working on different projects including the transmission of holograms over telephone wires at the MIT Media Labs.  He was impressed with the long-term focus of Japanese companies and took the opportunity to collaborate with them.  Later US WEST was to start a project with Time Warner, Toshiba and Itochu to bring information services to home on cable.  More recently, an Itochu executive told me that the Time Warner deal turned out to be a very profitable venture for Itochu.  The decade that followed was a very exciting time at US WEST for innovators, until a few executives were carried away with the Internet bubble and merged with Qwest.  It did not matter to them what havoc the dust they created wreaked on the universe!  The birth and death of US West should be a good case study for the IT industry to learn how the bubble mergers with inflated valuations led by individual egos can go awry and affect thousands of employees, their dreams and the entropy of the universe.  On the other hand, the case study of Steve Jobs would show the positive impact of a single individual.  Even when everybody else had given up on Apple, he resurrected the software innovation and hardware design, leveraging the institutional knowledge.

The next few years, beginning with my first encounter with Dodo San, turned out to be an adventure in discovering new insights into life, technology, quality management, Japanese business, personal relationships and myself.  Learning about Zen, and watching kyudõ with awe in Honolulu, were just the first steps of a journey that opened my eyes to the power of innovation in America, human resource potential in India, the long-term focus and process savvy of management in Japan.

Zen, derived from Buddhism, which originated in India, connects the oneness of individual’s body and mind to the oneness of the universe with the principle of connectedness of all sentient beings.  The resulting concept of “Sangha” has played a role in the evolution of collectivism.  As Lama Surya Das summarizes [3], Sangha implies true community.  “It is taking refuge in true community itself; communion with others – collaboration, connectedness, engagement, responsibility, working together in an organic way, and not in an addicted manner.”   The concern for the group often played a prominent role in Japanese decision-making process, which often resulted in the individual willingly or unwillingly compromising self-interest in the interest of the group.

Later, when I met Dodo San in Tokyo, he told me over a bottle of sake in a small sushi bar, that globalization is creating a new connected universe where collectivism will transcend national boundaries and he saw building global interpersonal relationships as critical to Fujitsu’s future.  The Internet had not yet become the force that it is today.  Broadband was just beginning to take form and Fujitsu aspired to lead the broadband revolution with emerging Asynchronous Transmission Mode (ATM) Switching and SONET transmission technologies.  Fujitsu wanted to play a major role in computers (acquiring ICL in Great Britain) and the PC revolution.  Cisco was still a Silicon Valley startup struggling to understand what it takes to build telecommunication grade systems for the Internet, which originated from a “send and pray” protocol.

The connectivity Dodo San was talking about was very different from the global connectivity today at the speed of light, to which we are accustomed.  Twenty years later, Cisco has established itself as the leader in bringing Telecom grade trust to IP networks.  ATM switching and all the associated companies have disappeared and Fujitsu is struggling domestically and has toned down its global ambitions.  New companies such as Microsoft, Google and Amazon have emerged, with that unique American innovation, as companies that are the new global communication, collaboration and commerce enablers.   They are offering new ways to access computing services through clouds challenging the conventional Information Technology infrastructure solutions.  Their introduction of computing clouds using the emerging virtualization technology is reshaping the IT infrastructure and its management.  This new revolution will claim new casualties in the conventional IT infrastructure market.  A host of storage and server companies will cease to exist as the next generation servers and storage devices become commoditized.  Some storage companies are already for sale while others are migrating to server and network infrastructure domains to find new ways to survive.

Space -Time Services Continuum & Information Services Changing the Landscape from Banking to Healthcare

The canonical nature of space and time manifests itself in many domains namely, spirituality, theory of relativity, quantum nature of the universe and in just day-to-day living.  In day-to-day life, people have learnt to trade space and time to better organize their lives (manage entropy) and improve productivity.  People are willing to pay to save time as they do when they use faster transportation to move about.  People are also willing to pay for services that allow them to avoid travel by bringing objects and information to where they are and when they want.

The services that people are willing to pay usually have the following attributes [4]:

  1. Choice based on individual requirements
  2. Interactivity
  3. Mobility
  4. On-demand
  5. Cost based on fulfillment-latency tolerance (faster fulfillment at higher price)
  6. Pay per-use  and
  7. The ability to bundle and unbundle the received services

Current generation of information services coupled with high-speed transportation networks have the ability to fulfill these attributes and improve productivity of the individual or group.  Many of the new service offerings in e-commerce, electronic banking, mobile banking, and mobile wallet [5] fall in this category.  Similar attempts are being pursued to improve productivity of health care services.  Information access at speed of light has raised the bar for consumer information services.  The ability to correlate information from many quarters at the speed of light offers the possibility for a new class of services that were not possible before.  In addition, the explosion of social networking, multimedia interactive services and collaboration of groups transcending time and space have placed new demands on service creation, delivery and assurance infrastructure.

In contrast to business services that have higher profit margins, the consumer services have far lower profit margins and infrastructure that the businesses can afford becomes unaffordable for consumer service providers.  While the affordable price points start falling, the volume of services delivered (scaling) increases drastically along with unpredictable fluctuations in demand.  This was true with Plain Old Telephone Service (POTS) and it was true with Pretty Amazing Network Services (PANS) that the Internet made possible.  We are again seeing the same phenomenon with emerging mobile internet services and social networking services.

Services Management and the Information Technology Black Hole

On one hand, any service that is not managed cannot scale.  On the other hand, services always out run the pace of their management infrastructure.  There are several reasons for services to grow wildly before they are properly managed to globally scale and interoperate with other services:

  1. There is a cost involved both in time and in resources to include the management aspects in the design of services.
  2. It is not certain whether the services will be successful or not
  3. The profit margins and management affordability are not clear in the beginning
  4. Time to market pressures force short cuts that become burdensome when the service becomes wildly successful
  5. Evolutionary product and technology changes add layers of services and management infrastructures that become burdensome over time

When the services are distributed, their management becomes an important factor for service assurance to meet the latency tolerance of the service consumers.  Globalization at the speed of light makes automation of distributed services management critical to reduce the human latency and improve the consistency of user experience.

If history is any guide, one lesson that I clearly take away from studying the evolution of POTS, PANS and SANs is that the history repeats itself.  In Bell Labs, we always debated about services and services management and it always turned out that the management platforms were never on time for services to meet the market needs.  Management services were always added as an afterthought, when scaling requirements forced the issue.  Local Switching Generic Requirements came first.  Operation Support Systems Generic Requirements came next.  Finally, the Total Network Operation Processes were designed.

When Cisco first introduced the routers, I remember the lack of basic element management, let alone network management.  When SANs were introduced, I asked if Hitachi storage devices supported dynamic FCAPS (Fault, Configuration, Accounting, Performance and Security) management and people looked at me as if I was an alien.  In all these cases, a huge services industry was created to fill the management gap and it disappeared when the network element providers eventually addressed management.  Recently, when I mentioned dynamic FCAPS management to a couple of Silicon Valley Venture Capitalists (VCs) with respect to virtualization and cloud computing, they gave me a quizzical look and said that they don’t think 90% of the VCs know what FCAPS mean and were skeptical about what it had to do with clouds.  What the current generation of young VCs, the high priests who broker other people’s money for investment in innovation, misses is the fact that telephony is not about voice.  It is about networking abstractions.  It is about end-to-end service creation, delivery and assurance with telecom grade trust, universal access, massive scaling and global interoperability at an affordable price.  Interestingly, SUN got the slogan “network is the computer” right but unfortunately missed the opportunity to create a computing cloud platform before it was acquired by Oracle, thus wasting a generation of innovation and institutional knowledge.  With a broader vision, Bell Labs was able to invent the Transistor and the Laser that transformed the simple voice connectivity to what it is today.  Bell Labs is another example of wasted institutional knowledge dismantled by the short-sighted appetite of free market forces coupled with the poor decisions of a few AT&T executives, regulators, and Judge Green.

Current IT data centers have evolved to meet the business services needs in an evolutionary fashion from server-centric application design to client server networking to Storage Area Networking without an end-to-end optimized architectural transformation along the way.  The server, network and storage vendors optimized management in their own local domains often duplicating functions from other domains to compete.  The application developers also started to introduce server, storage and network management within their applications.  For example, Oracle is not just a database application.  It also is a storage manager, and a network manager besides being an application manager.  It tries to optimize all its resources for performance tuning.  No wonder it takes an army of experts to keep it going.

The result is an over-provisioned data center with multiple functions duplicated many times by the server, storage and networking vendors.  Large enterprises with big profit margins throw human bodies, tons of hardware and a host of software and shelf-ware to address their needs.  Managers in some of the data centers do not even know what assets they have and of course that is yet another opportunity for vendors to sell an Asset Management System that discovers what is available and services to provide asset management using the asset manager.  Another system is de-duplication software that finds out multiple copies of the same files and removes duplication.  This is another example of how expensive it is to clean up after the fact.

Heterogeneous technologies from multiple vendors that are supposed to reduce IT costs actually increase the complexity and management costs.  Today, many CFOs consider IT as a black hole that sucks-in, expensive human consultants, and continually demands capital and operational expenses to add hardware, software and shelf-ware.  Even for mission critical business services, enterprise CFOs are starting to question the productivity and effectiveness of current IT infrastructure.  It becomes even more difficult to justify the costs and complexity to support massive scalability and wild fluctuations in workloads that consumer services demand.  The price point is set low for the mass market but the demand is high for massive scalability.  I understand that a simple service like Facebook alone uses about 40,000 servers.

Unless the cost structure of IT management infrastructure is addressed, the mass-market needs cannot be met profitably.  The cloud service providers are justifiably looking to alternatives just as AT&T looked for alternatives to replace operator services in Telephony.  However, will history repeat itself?  In the rush to provide cloud services and lock-in their solutions, are the cloud service providers making the same mistakes that POTS, PANS and SAN infrastructure vendors made initially and added layers of service management as an after-thought?

Computing Clouds and the Last Best Hope at Crossroads

The evolution of POTS, PANS and SANs influenced the IT infrastructure to change from being server centric in 80s to being network centric in the 90’s and to being storage centric during the past decade.  I remember in the 80s, server vendors roaming the IT data centers to influence the sale.  While the differences between the servers from different vendors were minor, the sale was always made through wining, and dining of a few decision makers.  Sometimes, the new decision makers even reversed the decisions of their predecessors.  In the 90s, the network vendors and during the last decade, storage vendors dictated what the enterprise CTOs and CIOs bought.  Today, storage and its management have become the highly visible costs in the current data center.

With the introduction of server virtualization, and multi-core, multi-CPU green server initiatives, the tables have turned away from storage vendors and we are already seeing the consolidation in the industry where most of the storage companies are on the block for sale, going the way of ATM switch companies.

Amazon, Microsoft and Google in that order seem to have grasped the need for massive scalability and price point sensitivity.  They have successfully exploited server virtualization (some more than the others have) to create cloud environments at the right price points.  They have just started to address availability, performance and security issues.

Today, Cloud Computing (public or private or hybrid) offers the last best hope for saving the enterprises from the IT black hole.  However, unless cloud providers address telecom grade trust and provide end-to-end application visibility and control including business customer mission critical applications, clouds will be relegated to non-mission critical archiving, e-mail (mission critical enterprise e-mail will still be on Exchange) and social networking applications where customers are price sensitive and tolerate occasional downtime. In POTS, end-to-end visibility and control was provided through the automation of operation and business support systems.  The Internet through IETF (Internet Engineering Task Force) request for comment process incorporated end-to-end network operation and management automation.  Unfortunately, in the IT data center, end-to-end application (CPU to Spindle) operation and management is provided by an evolutionary patchwork of systems sold by multiple, server, network, storage, and management software vendors focusing on promoting their own products, which address only piece parts of the solution.   While all vendors pay a lip service to the standards by promptly including them in their roadmaps, they have not helped in reducing the complexity in inter-operability management.  In POTS, PANS and SAN implementations, we repeatedly learnt that the end-to-end Total Cost of Ownership (TCO) is not optimized by optimizing the Cost of Ownership of piece parts independently. This is what Total Quality Management was trying to teach us.

Japanese management should know this better because of their preserved institutional memory of the lessons learnt from the evolution of POTS, PANS and SANs.   Server, network, storage, telecommunications and software expertise is preserved in the Japanese institutions.  On the other hand, in the US, the dismantling of large R&D labs such as the Bell Labs, reduced government R&D, the demise of companies like US WEST and SUN, and the emphasis on startups to create innovation (with the disadvantage of starting from scratch with limited individual knowledge that the new teams bring) have all contributed the duplication, complexity and increased cost of current IT data centers.  Youth, inexperience, quest for quick profits from investors, loss of long-lasting institutional knowledge dismantled by unbridled free-market forces and a culture of making dust without concern on its impact on the universe, limit the current American Management, who depend solely on the culture of individualism, to benefit from the lessons of the collective past.  As the master said, those who ignore the lessons of history are condemned to repeat it [7].  US WEST later was acquired by a long-distance service provider Qwest whose CEO ended up in Jail.  All the institutional knowledge and the investment in innovation went to waste.  It is unfortunate that the rest of the world has to live with the consequences based on the decisions of a few that control money and decision-making. It is unfortunate that the innovation and hard work of many that bring out the best of American individualism is squandered by the decisions of a few paying attention to mostly self-serving short-term interests.

As Professor Ballon [8], pointed out in my class on current issues in Japanese management twenty years ago, waste, duplication and occasional mismanagement are of no visible consequence in a culture that promotes individualism when the resources are abundant.  When the resources start becoming less and less abundant, the group as a whole cannot afford increased entropy.  Similarly, in a collective culture, as resources start becoming more and more abundant, the group can afford a little waste, redundancy and individualism to foster innovation.  Groups usually decide where they stand in this spectrum of possibilities from unbridled individualism to stifling collectivity and adjust to optimize their chances of success both as an individual and as a group.  Success seems to lie in the middle.

The Fujitsu management, I knew, twenty years ago had a long-term vision to build global relationships and develop co-prosperity.  Dodo San twenty years ago, on a winter night, over another bottle of warm sake from Akita, told me that business is like sailing.  “Current wind speed is not your main concern.  You carefully watch for the rate of change of wind speed and direction.  You anticipate the future based on your observations at the present moment with intense focus to make your decisions and act.”  I do not know sailing, but what he said made a lasting impression just as the Zen master hitting the bull’s eye did.  Is the current Fujitsu management watching the rate of change and making its goals such as selling 500,000 servers anticipating the future?  Has the Japanese management learnt from their misses of the past?  This is the subject of my current study and I would like any one with appropriate insights to participate.

References Used

[1] Jackson S Morisawa, “The Secret of the Target”, Rutledge & Kegan Paul Inc., 1988, p35

[2] Yamada Shõji, “The Myth of Zen in the Art of Archery”, Japanese Journal of Religious Studies 2001 28/1–2

[3] Lama Surya Das, “Mind is Mightier than the Sword: Enlightening the mind, and Opening the Heart, Doubleday Religion, 2009, p 168

[4] Rao Mikkilineni, Greg Pugmire, “The Connection Between Profit and Services in the Next Generation Network”, Annual Review of Communications, volume 54, 2001, p 521

[5] http://www.mfino.com/

[6]  https://scalr.net/login.php

[7]  http://en.wikiquote.org/wiki/George_Santayana

[8]  Robert J. Ballon, “Human Resource Management in Japan”, Issue 23 (Vol. 12, No. 1), June 2002, pp. 5-20.  Robert Ballon is a professor Emeritus in Sophia University, Tokyo.  He has written many articles and books on Japanese management, role of individualism and collectivism in business management.  His lectures inspired me to write my thesis under his guidance in 1990 titled “Current Issues in Japanese Management – “Is Japanese Software Thrust As Powerful As Their Hardware Thrust?”

[9] Kenneth Kushner, “One Arrow, One Life: Zen, Archery, Enlightenment”. Tuttle Publishing, 2000

[10] E. Herrigel, “Zen in the Art of Archery” New York, Pantheon, 1971”, Routledge & Paul Keagan Inc., New York, 1988.

http://www.mishalov.com/japan25-26sept03/pictures/img_1044.html

Abstract:

Japan is undergoing many cultural, business and political changes simultaneously.  For a nation that once was touted as would be No.1 in national GDP, it must be very painful to see China surpassing it and getting the World’s attention.  This blog observes that the emerging theories of organizational DNA that purport to relate a company’s leadership, strategy, culture and structure to its business success might throw some light on the current Japanese business plight.  For example, disruptive innovation is currently playing a big role in reshaping the market place by Apple and Intel in mobile and cloud computing.  Once very successful, in borrowing and copying innovation, can Japan compete with China and India in the future?  Should the Japanese companies alter their DNA to change the game in the future? Can they leverage their still preserved technical organizations, R&D Labs and investment capital? After all, even if Japan is No.3, their GDP per capita still is about 10 times that of China or India.  Here are some thoughts based on my observations over past two decades.

(日本は今、文化面、経済面、そして政治面でも多くの変化に直面している。日本 は、かつてはGDP世界第一位になろうかと賞賛されもしたが、今やGDPでも中国が 日本を凌駕し、世界を席巻しつつある状況を、痛みを伴いながらも指を咥えて見 ていなければならなくなっている。

本ブログでは、ビジネスの成功と関わりが深い企業のDNA(企業におけるリーダ シップ、戦略、文化さらには構造)について考察し、日本が現在置かれたビジネ ス面での苦境を紐解く新たな理論について示していきたい。 一例を挙げると、モバイルやクラウドコンピューティングにおいて、Apple や Intelが新たな市場形態を作り出したように、今日では破壊的イノベーションが 大きな意味合いを持つようになってきている。 かつてイノベーションを模倣することで大成功を収めたように、今回も日本は、中国やインドとも競い合えるのではないだろうか? また、日本企業が自らのDNAを変革することで、近い将来、Appleのように競争形態を変化させていけるのではないだろうか?さらには、日本企業は技術指向の組織構造をこれまで維持してきたが、Intelのようにもっと積極的に研究所や投資資本を活用していけるのではないだろうか?結局のところ、日本は例え世界第三位に甘んじていても、国民一人当たりのGDPでは依然として中国やインドの10倍近くも維持しているのである。本ブログでは、日本を過去20年以上見てきた経験に基づいて、幾つかの私の考えをまとめていく)

Kabuki Theater

The famous historic theater, Tokyo Kabuki-Za which opened in 1889, closed its curtains in the end of April 2010.  It will be torn down and become a theater and office complex with direct connections to the subway station.  According to Encyclopedia Britannica, Kabuki is a “Popular Japanese entertainment that combines music, dance, and mime in highly stylized performances. The word is written using three Japanese characters — ka (“song”), bu (“dance”), and ki (“skill”). Kabuki dates from the end of the 16th century, when it developed from the nobility’s ‘no’ theatre and became the theatre of townspeople. In its early years it had a licentious reputation, its actors often being prostitutes; women and young boys were consequently forbidden to perform, and kabuki is today performed by an adult all-male cast. Its texts, unlike no texts, are easily understood by its audience. The lyrical but fast-moving and acrobatic plays, noted for their spectacular staging, elaborate costumes, and striking makeup in place of masks, are vehicles in which the actors demonstrate a wide range of skills. Kabuki employs two musical ensembles, one onstage and the other offstage. It shares much of its repertoire with Bunraku, a traditional puppet theatre.”

A. C. Scott [1] writes that the Japanese and Chinese classical dramas have many points in common, yet differ widely from each other.  “The Kabuki, like the Chinese theater, lays great stress upon the virtuosity of the actor.  He supplies the motive for the whole drama.”  The actor must play to a knowledgeable audience within the constraints of tradition but also must display individual style that takes the symbolism to go beyond imitative repetition.  While the Chinese drama emphasizes on the actors singing, Kabuki actors do not sing at all.  “The Kabuki stage is a complex affair with elaborate settings and effects which have been developed to a high pitch of artistry through the centuries.”

For a nation that is very proud of their centuries old tradition and agrarian cultural roots, the symbolism of the Kabuki-Za transition to a modern office complex is just a portrayal of the many changes that are rapidly descending on their culture, business and political landscape.

According to the World Policy Journal [2], “Japan, once considered an economic superpower and potential contender for global pre-eminence, finds itself slipping down the rankings of leading states. Although still the second largest economy in the world (at the time this article was published), it is absent from most realpolitik discussions about the global redistribution of power that is shaping the new world order, which highlight the emergence of Russia, China, and India. China’s rise in East Asia is now eclipsing the land of the rising sun, but Japan’s slippage is not all due to China’s growth. Japan’s maladies stem from three causes largely of its own making: its loss of a distinctive national identity, its international leadership deficit, and its continuing economic and political travails.”

National GDP

According to an estimate by Japan’s Cabinet Office, Japan’s second-quarter in this fiscal year, unadjusted GDP totaled $1.2883 trillion on a nominal dollar basis, against China’s second-quarter unadjusted GDP of $1.3369 trillion.  In the first six months of 2010, Japan’s GDP before seasonal adjustments totaled $2.5871 trillion, surpassing China’s $2.5325 trillion.  “People have been expecting the Chinese economy to grow at a rapid pace and become physically larger than Japan for many years, so it is not a surprise,” said Robert Feldman, chief economist at Morgan Stanley MUFG Securities in Tokyo. [3]

“The issue is whether this will be a trigger for policy changes in Japan,” he said, and he added that in the short-term, domestic political considerations were paramount as prime minister Naoto Kan struggles with a hung parliament and a potential leadership challenge from his own party.  Given the history, being surpassed by China may be not palatable but Japan still leads China in per Capita GDP by more than a factor of 10!

Table 1 shows both nominal and per capita the GDP [4] in 2009.

Japan’s GDP surpassed that of West Germany in 1968 and became the second biggest in the world, topped only by the United States. This achievement was credited to a national effort that supported the Japanese industries who established leadership in exporting automobiles, telecommunications and consumer electronics. Today, the illustrious Toyota is saddled with quality issues [5].  Fujitsu’s ambition in the 90’s to be number one in Information Technology [6] has proven to be totally elusive.  NEC’s leadership in supercomputing has all but vanished and the company is struggling today to find its niche while selling its various assets globally.  Once considered legendary, Sony’s innovation in consumer electronics has been usurped by Apple.  Nintendo’s attempt to change the game with Wii does not seem to be sustainable.  The Samurai business men (even today, there are no significant Samurai business-women) have proven to be not invincible.  What can Japanese businesses do to prevent further decay even if they cannot completely re-engineer to regain the past successes?  How can they leverage their still preserved technical organizations, R&D Labs and investment capital?  After all, Japan is still no. 3 in GDP and No 2 in Per Capita GDP among the top three GDP leaders!

The answer may lie in revisiting the tradition of renewal practiced by the Japanese at the Ise Jingu [7], ”the most sacred shrine in Japan, with great spiritual and historical significance.  One of the most amazing things about Ise Jingu is that the wooden sanctuaries are rebuilt and rededicated to the enshrined goddesses every 20 years in a process called “shikinen sengu”. This tradition began with the first rebuilding in 690, and is still being practiced. The sixty-first rebuilding was completed in 1993, with the sixty-second scheduled for 2013. Ise Jingu is actually divided into two large shrine compounds, containing over one hundred and twenty smaller shrines in addition to the two major shrines: Naiku (Inner Shrine) and Geku (Outer Shrine). The Inner shrine enshrines the sun goddess Amaterasu Omikami, who is believed to be the ancestor of the Japanese imperial family. For this reason, the Emperor visits this shrine when he assumes office, and on other important occasions. It is said to have been erected roughly 2000 years ago, and its location was chosen by the 11th Emperor of Japan, Suinin. The Outer Shrine enshrines Toyouke no Omikami, the goddess of harvest, and was erected in 478 A.D. It is customary to visit the Outer Shrine first, but if you don’t have much time on your hands a visit to the Inner Shrine is recommended.  The entrance to the Inner Shrine begins at the Uji Bridge, which passes over the sacred Isuzu River. There are two large torii gates at either end of the bridge, and it is said that by crossing the bridge one’s mind and heart are purified.  The Uji Bridge is also rebuilt in this ceremony.  What strikes visitors to Ise Jingu the most after passing through the gates is the sense of nature and life around them. The grounds are comprised of 5500 hectares of natural forest as well as young hinoki (cypress) trees, which were planted in 1926 for future harvesting. The trees tower over one passing through the grounds. Along the way to the main building in the Inner Shrine, one can wash their hands and mouth with the water from the Isuzu River at the Mitarashi. This is also done for purifications purposes.”

A Japanese friend of mine says “change or renewal from time to time itself is in the DNA of Japan. We think preservation of old things is important, at the same time, we like new and fresh things as the Ise Jingu demonstrates.  Probably, we have it in our DNA not to stick to the materials much and want to see beyond it.”

Disruptive Innovation and Japanese Business Conundrum

There are now a few theories emerging which identify an organizational DNA [8, 9, and 10] and its impact on business success.  These theories deal with how to identify the DNA and change it to meet the evolving business needs.  While each theory attempts to claim that their model identifies the patterns that have evolutionary advantage, one stands out.

According to the website of DNA Global Network Inc.,  [8] a management consulting firm in the Silicon Valley, a company’s DNA consists of four building blocks – Leadership, Strategy, Structure and Culture.  Leadership has the responsibility to define the strategy and align the structure and culture of the organization to shape the core DNA building blocks.  Evolution it seems, has defined a set of successful patterns for each building block.  Every organization either by choice or happenstance evolves by following a path where they define the core DNA that determines their success or failure.  Leadership’s ability to shape the strategy, culture and structure determines their destiny.  The right alignment of strategy, culture and structure results in creating the value to all stake holders and a sustainable organization.

Various components of the building blocks they discuss in their website are shown in Table 2.  The claim is that certain patterns formed by a combination of these components are more successful than other combinations.

Figure 1 shows my attempt to understand the relationship patterns of the key components in the three building blocks that they claim (on their website) have proven to be successful in today’s business environment:

An organization’s DNA perceived by its customers, R&D experts, Product business units and operational groups can be measured using appropriate surveys to create clear patterns.

If this is the case, using these patterns, we can examine various companies on how close they are to the winning patterns.  Notice that the strategies have to be matched with right culture and structure to gain evolutionary advantage.  For example, a control culture to create disruptive innovation may not be ideal.  On the other hand, a control culture may be just what the doctor ordered for achieving operational excellence.  Similarly, we know that a hierarchical structure works well to achieve operational excellence whereas a matrix style works well in establishing product leadership with cross-functional coordination.

It would be very interesting to analyze individual Japanese company’s DNA and identify its current state.  If we represent each component with a color green if the organization measures high, yellow if it measures medium and red when it measures low, we can depict the DNA of an organization as a pie-chart.

The pie chart on the left shows a low scale on disruptive innovation, medium on cultivation culture and Program and functional matrix characteristics required to harness disruptive innovation.  The pie chart on the right shows a market leader with a well-balanced strategy.  Similar analysis can be performed on various component relationships.

Another way of describing the DNA-print of successful strategies is shown in Figure 3:

Different organizational DNA is required to execute a different strategy and successful companies either develop these organizations within or collaborate with others who have complementary DNA to successfully compete in the market place.  Examples of successful companies with disruptive innovation as part of their core DNA are Apple and Intel.  What would be the patterns for Japanese Companies?  How are they different from other world-class companies?  Given the differences in these patterns, can one company organize itself to create different groups with ideal patterns to deliver on all four strategies?

Twenty years ago, I concluded (in a thesis submitted as JMP-17 student at JAIMS, Japan American Institute of Management Science, Hawaii and Sophia University, Tokyo) that the Japanese companies were good at incorporating innovative technologies that are borrowed from US in hardware but were not so adept in borrowing innovation in software [11 and 12].  With the advent of Chinese and Indian competition in borrowing innovation (both in hardware and software domains which was virtually absent twenty years ago) the pressure is now on to adopt disruptive innovation in both hardware and software to differentiate.  Will Japanese companies step up to this challenge or embrace mediocrity while watching China and India surpass them in borrowing and improving innovation.  The economics of communication, collaboration and commerce at the speed of light levels the playing field in product leadership, operational excellence and customer intimacy, and China and India will no longer be Japan’s customers.  They will be more Japan’s competitors to become number One; After all, there is room at the top for only one number One.  As every one starts to battle in establishing product leadership, operational excellence and customer intimacy using same technologies that get commoditized, only choice open for nations to be number one is to bring disruptive innovation to differentiate.  Time and again, evolution has proven that architectural simplification through disruptive innovation brings orders of magnitude productivity. Life forms survive and thrive by changing their DNA and adopting to external changes.  Will the differentiation in the future come from organizing yourself to excel in disruptive innovation?  What are the limits?

This is the subject of my current research and I would like any one with appropriate insights to participate.  I am interested in listening to what the Japanese business leaders today will say about these observations.  Twenty years ago, I concluded my thesis with these remarks. “The differences in approach from hardware and software are large enough at this time, that it will be difficult to gain the competitive advantage in software as in hardware. The management is well aware of this situation and will be looking in the future to rectify it. For example the new president of Fujitsu Mr. Tadashi Sekizawa (who will start his term in June 1990) has recognized the importance of software and his motto for the future is ‘Sofuto de rieki wo koujou’ (Kogyo Shinbun, 1990).”  However, history has proven that changing at least one company’s culture in Japan was not so easy and the focus of the company still remains on hardware.   The profits from software are still elusive.  May be it is time for Japanese companies to adopt the tradition of the twenty year renewal “shikinen sengu.”  Toki wa ima.

References:

[1] A. C. Scott, “The Kabuki Theater of Japan”, The Dover Edition, Published 1999

[2] http://goliath.ecnext.com/coms2/gi_0199-11032193/Why-Japan-can-t-lead.html

[3] http://www.irishtimes.com/newspaper/breaking/2010/0816/breaking7.html

[4] 2009 World Economic Outlook Database-October 2010, International Monetary Fund.  Accessed on October 6, 2010. (reproduced from Wikipedia)

[5] Bunraku, Toyota Quality Woes, Japanese Hardware/Software Prowess and Management Lessons

[6] Lyne, Jack. “Fujitsu PC Corp. CEO Akio Hanada: Coming to America . . .And Just about Everywhere Else” 1996,  http://www.developmentalliance.com/docu/pdf/43354.pdf

[7] http://www.yamasa.org/japan/english/destinations/mie/ise.html

[8] http://www.dnaglobalnetwork.com/

[9] http://www.orgdna.com/

[10] http://www.boozallen.com/consulting-services/organization-strategy/mission-dna/about-mission-dna/organization-types-mission-dna

[11] https://mikkilineni.wordpress.com

[12] Current Issues in Japanese Management – A Second Look – “Is Japanese Software Thrust As Powerful As Their Hardware Thrust? Or Does It Really Matter Anymore?”

Abstract:

Japanese have adopted the process of mastery from cultural spheres such as Zen, Imperial traditions and the ritualistic roots of agrarian artisanship and the Japanese management has institutionalized the adoption of innovation and skill through their own unique technology transfer process.  Their process has worked well during the boom eras of the 80s and 90s.  However, the advent of globalization “at the speed of light”, fostered by the Internet, has changed the dynamics of technology innovation, transfer, and operation.  Businesses and mass-market consumers both have become accustomed to real-time access to information, and analysis to react to fast changing global events.  They are demanding low latency process implementations and tolerate responses only limited by the finite velocity of light.  The complexity is compounded by the unpredictable demand for any particular service in the mass market.  This is creating a demand for new processes to eliminate current human latency involved in information service creation, assurance and delivery.  While this creates a radical departure from current best practices of Japanese management, this blog suggests that it is also an opportunity to address the impact of dwindling human resources caused by low birth rates and aging population in Japan.

Over time, skill development, its mastery and transfer processes have changed radically from focusing on the individual as practiced by the sushi chefs and sumo wrestlers to collectivism and global collaboration at the speed of light.  By re-architecting new processes for technology innovation, transfer and operation teams on a global scale, Japanese management can leverage their investment capital and human network management expertise based on their emphasis on collectivism and Kyozon Kyoei (growing together).  This requires changing current models to adapt globalization at the speed of light and create multi-cultural and multi-national teams collaborating with each other in real-time.  This requires breaking the sequential water-fall model of innovation, technology transfer, and operation processes and adapt an iterative collaboration between innovators, technology transfer agents, and operators.  Is the current Japanese Management ready for such a transformation?  This is the theme of my study as a sequel to my thesis published in 1990 on current issues in Japanese management. I am looking for input, comments, and collaboration. I invite anyone with appropriate insight to participate.

The Art of Sushi and the Mastery of the Individual

Every Saturday, during my stay in Japan during late 1990’s, I was eagerly looking forward to my lunch in a small neighborhood sushi-ya.  It had become a routine.  Over time, the sushi master knew what I liked and what I did not.  He knew what I should drink with which food.  While I enjoyed the tasty morsels of fresh raw fish with uniquely Japanese vinegar rice, it was pure theater watching him and his two apprentices work.  During my lunch, he taught me about the uniqueness of Japanese rice.  He talked about how each region in Japan has its own brand of rice and sake and the subtle differences they claim.  It was a small shop with six seats very neatly organized at the counter.  The mistress of the shop was busy tending to the customers, pouring drinks, always making sure to avoid eye contact and profusely apologizing for almost everything.  The apprentices were almost invisible tending to their chores.  The customers knew the master’s skill and were his regulars.  One of the apprentices was his son.  The master’s dream was to transfer his skills so that one day his son would be in his place and will command the same respect.

In Japanese culture, making sushi is regarded as an art, because the sushi master’s “way” (Ryuugi) is as important as resulting sushi’s appearance, its presentation and its taste.  Also equally important is how one eats it and what one drinks with it.  The sushi master, as Frans de Wall suggests, [1] “epitomizes human sophistication, artistry and know-how.  We eat the fugu (the blowfish sushi) trusting the chef’s skills, which he learned from other chefs, and they in turn from those before them”.

In the tradition of Japanese Zen Masters, the sushi chef transfers the “way” to his student in a uniquely “Japanese process”.  There are no women sushi chefs in Japan at least to my knowledge.  A friend told me (Frans de Wall also mentions this in his book) that woman’s hands are too warm for the task.   However, Frans also points out in his book, that the women make sushi at home and the men have no qualms about eating it.

The student for his part dedicates about ten years of his life with unquestioned devotion to mastering the subtle skills.  As Frans describes it, “(the student’s) education seems a matter of passive observation.  The young man cleans the dishes, mops the kitchen floor, bows to the clients, fetches the ingredients, and in the meantime follows from the corner of his eyes, without ever asking a question, everything the sushi masters are doing.  For no less than three years, he watches them without being allowed to make the actual sushi for the patrons of the restaurant – an extreme case of exposure without practice.  He is waiting for the day on which he will be invited to make his first sushi”

Two characteristics of the ‘would-be’ sushi master stand out.  First is the inner passion “to master the art of sushi” and become the best there is.  It is not driven by the hope of a monetary reward.  Instead, it is driven by the recognition of the challenge involved, and a strong will to devote a significant amount of his time while postponing near-term gratification.  The second is the unquestioned faith in the master based on a deep respect for the master’s skill.  In a collective culture, these traits are considered virtues whereas in a society where individualism and immediate gratification play a significant role, they may be viewed as a waste of time and unwarranted.  Whether they are virtues or not clearly depends on the context and the value of time and the resources available to the group.

The master on the other hand is looking for a disciple who will carry forward the art and the skill, who will spread the satisfaction of enjoyable sushi to customers beyond his reach.  It is in the teacher’s interest to scale but without compromising quality in favor of quantity. His reputation depends on the quality of his disciples.  He submits the would-be disciples to rigorous tests to baseline their skill and tailors the training to meet their individual need.

Clearly, optimal technology transfer takes place from a willing giver to an enthusiastic receiver and another great sushi master will emerge.

The Ritual of Sumo and the Mastery of the Individual in a Group

Process is an important part of the way of life in Japan.  Similar to the Zen emphasis on the “means” and not the “end”, the Japanese culture has adopted process emphasis to develop a collective approach.  The process compensates for the frailty of the individual, showing up as greed, anger and selfishness that may affect the welfare of the whole group.  The process deals with the potential human failings by using objective measurements, analysis and corrective action that advance the goals of the group both in everyday life and in business.

Ritual is often, used to standardize a process.  Rituals define the protocols of behavior.  A ritual creates a bond of camaraderie that results from the deep knowledge of the substance behind the subtle form (or style) of ritual practice.  For the outsider, the practice of ritual may look pointless and a waste of time but the insider feels the satisfaction of discerning the substance behind the subtle form of ritual practice.  When an American friend complained that the Tea Ceremony, that we attended, was too long, my Japanese friend’s reply was “the Tea Ceremony is not about tea.  If we want a quick tea, we visit a local tea shop or a vending machine, and if we want an overpriced tea, we visit Starbucks!”

Sumo captures the essence of Japanese effort to combine process and ritual to create a unique sport.  Dolores Martinez [2] describes the origins of sumo rituals; “Sumo match seems to have two origins: one is in rural villages, the other in court performances.”  According to her, village sumo was enjoyed as a part of the seasonal ritual at the village shrine as a part of celebrating the completion of a harvest.  It was one of the competitive sports along with tug-of-war and archery.  A Korean prince and his thirty wrestlers who were exiled to Japan have introduced the court performance part of the ritual.  “In sumo there are forty-eight ways in which the match can be won.  The performance of sumo is identified with the image of a god playing in the ring, but the deity can only be manifested in the body of the rikishi (wrestler), at the moment of winning, if the win is correctly performed.  An experienced spectator enjoys the style (kata) of performance at the very moment of winning.  It is the kata which is the ultimate concern of sumo.”  That is why the yokozuna performs the most essential kata during the first ritual of the day of “entering the ring”.  It is believed to bring cosmic energy into the ring.

According to Mark Willacy [3], who followed a sumo stable in Tokyo for a few months, “sumo isn’t just a sport; it’s a ritual and tradition”.  Like the would-be sushi master, the would-be sumo rikishi devotes his time staying in a sumo stable learning the “way” hoping to become a yokozuna (the grand champion). Mark Willacy observes, “Senior sumo wrestlers, have the privilege of being the teachers.  Junior wrestlers coddle them, wait on them and feed them. Life for these youngsters is tough. Often up before dawn, their job is to sweep the ring, get pummeled at practice, prepare tubs of food after practice, serve the breakfast, wash-up, do the laundry, and get the groceries.”  They endure the rigor in the hope of becoming a grand master one day.

The Process of Mastery and Technology Transfer Cycle-time

Mastery and the transfer of skills from the master to the disciple require dedication, and patience.  Both the sushi chef and the sumo wrestler exemplify individual mastery in a collective society and associated human latency in technology transfer.  However, the time and resource constraints along with the differing skill levels of the disciples in a group setting require a new approach to the technology transfer in order to scale.  The process of acquiring mastery itself has been thoroughly analyzed and the roles of the teacher and the disciple have been identified to facilitate optimal technology transfer in a group setting where constraints of time and resources are compounded by the wide variation of skill level of the group learning the skills from a master.

According to a monk, with whom I had discussions on the subject of learning, (when I was visiting a famous temple in Koya San), learning has four distinct phases:

  1. Discovery:  the master assesses the would-be disciple to create a baseline from which to start the training.  He sets both short term and long-term goals taking into account external and individual factors.  He facilitates the discovery of knowledge by the disciple.  According to the Monk, knowledge seeking is a self-discovery process and the teacher can only facilitate the discovery process.
  2. Reflection: The student spends time deeply reflecting on the discovery.  This is the most difficult part of the process where struggle to connect the dots, resolving conflicts between appearances and reality and the past and the present continues till that moment of clarity appears.  The resulting “Aha” moment prepares the student with a mental model of what is learned so that he can apply it to the real world and test his understanding.
  3. Application:  The student starts to apply the knowledge to test his understanding and getting feedback from outside to improve his/her mental model.  With practice, he becomes better and starts the next phase.
  4. Teaching:  As the disciple starts to bloom and become the new master, he will start teaching which allows him to facilitate the discovery process to his students.  At this stage, the teacher himself becomes a student continually pushing the boundaries of his own knowledge.  The teaching, the monk says, is the “way” to discover one’s own ignorance and reflect upon it and the cycle begins where the teacher himself becomes the student.

Figure 1 shows the process of learning or acquiring mastery. zen of learning

I thought this was a very interesting way to define the process of learning and I have used this model when I was teaching at Golden Gate University with very good results.  Figure 2 is an application of this process with some product and process metrics, which, I designed, to measure success of the theory in a classroom setting where a large number of students with different levels of preparation and baselines come to learn a specific set of skills in a given period of time.  Unlike a Zen master and his disciple, a classroom teacher has deadlines and students have time and resource constraints.

masteryThe process of mastery in a classroom is a walk on a thin line between student’s anxiety and boredom.  Each student comes to the class with a set of skills (pre-requisites).  If the students do not have the required prerequisite skills, the teacher has to give special assignments to them to make up for the lack of prerequisites or ask them to come back when they are ready.  If the students are overqualified, the teacher must find ways to challenge their skills to keep them interested.  If the student skills are not challenged enough, the student gets bored.  On the other hand, if the student skills are not adequate to meet the challenges posed in teaching, it leads to student’s anxiety, which may lead to eventual quitting.

A skilled master will attempt to balance the student’s acquisition of skills and the challenges presented to reach the objectives taking into account the teaching goals, external factors, and human factors.  The assignments, exercises, and skill tests are all designed to monitor and optimize the process and the outcome.

The students for their parts, will progress by acquiring new skills and testing them with the appropriate level of challenge while avoiding excessive boredom or anxiety.

In my class, I started with a baseline quiz that gave questions consisting of both the prerequisites and what they would learn in the class.  The result gave a good assessment of the skill level of each student.  Based on this result, I gave customized assignments that used higher skilled students to share their knowledge in discussions in the class.  For those with inadequate prerequisites, I gave special make up assignments.  I facilitated the discovery and reflection phases by giving reading assignments, discussions, tests and lectures.  Every student is required to apply the knowledge by writing a paper and present the learning at the end of the course.  This presentation allowed them to teach their learning to the class and the class by asking questions facilitated the discovery process for the presenter.

The process metrics are designed to provide them feedback on their discovery, reflection, application and teaching process. The product metrics measured their understanding of the subject based on their application of the knowledge to finish the paper assigned.

This discussion illustrates the complexity of technology transfer process, which is further affected by the limitations of time and resources.  A Zen master’s time scale spans across multiple reincarnations.  Self-imposed isolation of the group from real world reduces external constraints.  However, the technology transfer process for most Zen masters usually is limited to only one lifetime.

The Dark Side of Process & Ritual – Entropy Management

Entropy is a measure of randomness or uncertainty in a system and left to its own device, the entropy of a closed system always increases.   Process and ritual attempt to manage entropy; process by implementing measurement, analysis, and intervention; the ritual by following the “rules of practice” derived from experience and encapsulated in tradition.

However, both have their limitations.  Implementing a process takes time and resources.  Process is only as good as the measurements it relies upon.  The measurements are only as good as the systems that provide them.  Making people believe in a ritual takes effort.  The ritual is only as good as the experience it encapsulates as “rules of the ritual”.  They are both affected by the human element with all its frailty and shortcomings.  The literature extensively has documented the subversion of processes by individuals and groups [4].  Despite sumo’s popularity, most people in Japan still do not know how the wrestlers make their money, and how that money is distributed.  This has led to some accusations against the Japan sumo association.   Similarly, business processes in corporations and the government may be well defined but in reality, people circumvent them using personal relationships thus undermining the original purpose of the process.  This has often resulted in crony capitalism that favors one group from the other or one individual from the other.

Transparency and timely access to information are essential to improve process effectiveness in both personal and business life.  This is creating a need for real-time information systems.

Globalization at the Speed of Light and the Drive for Real-time Information Processing

With the advent of the industrial revolution, access to information and resources was made available across the globe through transportation networks and the resulting mobility.  The power grids, and other utility networks enhanced efficiency of resource consumption through sharing.  Communication networks improved global communications, allowed human networking across the globe, and facilitated information access.  The new global human networks made it possible to transfer technology from where it was invented to where it can be used.  The latency caused by the human factors dictated the speed of technology transfer.

The velocity of information took a leap forward with the advent of the Internet and high bandwidth networks.  Businesses became global demanding instant response transcending space and time.  Moore’s law speeded up information processing and business workflow implementation.  Social networks exploded across the globe demanding immediate attention reducing the attention span of individuals to twitter chat of 140 characters or less.  Data mining websites have created a new level of urgency to respond to the explosion of both relevant data and unproductive noise.

The acceleration of technology transfer is evident when you examine how long it took various networking solutions to mature.  The telecommunications network matured during a period of a hundred years.  It took about 30 years for the Internet to mature.   It took about 15 years for Storage Area Networks and mobile networks to mature. It now takes only months to develop a business application and deploy it.  It takes only days and weeks to develop a web based consumer application and deploy it.

However, globalization at the speed of light also has introduced an uncertainty in the demand fluctuations.  The new constraints of time and resources demanded by instant response with unpredictable and wild fluctuations have started changing the dynamics of technology innovation, transfer and operation.

Japan and its Technology Transfer Conundrum

Both the industrial revolution and the information revolution have altered the technology innovation, transfer and operation by making them capital hungry, human resource intensive and time sensitive.   Isolated masters no longer can play key roles  in innovation and technology transfer because their success requires collaboration between multiple disciplines with both technology and its management playing equally important roles.  Mastery is institutionalized, requiring investment of capital, human resources, and compliance with legal, regulatory and cultural constraints of the nations in which they operate.

If a conundrum denotes an intricate and difficult problem, technology transfer in Japan is surely a major conundrum for two reasons:

  1. The graying of Japan coupled with low birth rates, and strict immigration policies, is shrinking the pool of available masters and would-be disciples.  In a technology transfer model that depends on human element, dwindling human resource becomes a major issue.
  2. Globalization along with the accelerated pace with which innovation is occurring and changes are propagating is putting strain on the old-school, ritualistic, process intensive  and time consuming technology transfer approaches of the past.

In the past, Japan consciously chose to optimize its limited space in the island nation by trading off time.  Just-in-time supply management is a good example.  They traded the limited shelf space to just-in-time arrival of the inventory using the transport networks.  The success ofcourse depends on the latency and bandwidth of the transport network and the end-to-end process management.  Collectivism allowed sharing and optimizing limited resources with collective goals developed through consensus.  They traded off time in allowing the consensus process to take its course.  That is the reason why it takes a long time to make a decision in Japanese society, which frustrates the outsiders who guard their time preciously.

Japan also chose to send technology scouts to Europe and USA, imported innovation, and adopted it to fit uniquely the Japanese culture.  It also leveraged its process innovation and collectivism to focus on manufacturing high quality products for export.  The technology transfer process took about two years to bring it in and customize it to fit uniquely Japanese needs.  It took another couple of years to package the Japanese products to meet export requirements.

As information technologies move from hardware to software through virtualization technology, and as globalization at the speed of light demands faster response to meet wildly fluctuating consumer needs, Japan is no longer able to compete in the world of fast-paced technology transfer.  To leverage innovations that occur globally (this becomes even more critical as the domestic resource pool of innovation decreases and is not replenished by liberalization of immigration as in the US), the technology transfer has to occur at a more rapid pace.  In addition, other countries such as China, Vietnam and India, which Japan is counting on exporting technology and engage in outsourcing, are not going to wait when they can go directly to the source cutting out the Japanese middle layer overhead and reducing technology transfer time.

This is already occurring, as India and China directly are becoming competitors to Japanese technology.  In a global economy operating at the speed of light, outsourcing as a way to extend a country’s borders as Japan is doing with outsourcing to China, India and Vietnam will not be sustainable in the long term.  The outsourced countries will eventually become equal partners in developing innovation and demand equal shares of the profits.  In the long run, there is no reason why a Vietnamese engineer is paid a lower wage for equal work than a Japanese engineer in Japan is.  The days of colonialism, in any form, are over, in a world that is globalizing at the speed of light.

Unless, Japan addresses the speed of innovation and technology transfer by rapidly adapting to the imminent changes, it may not be long before it loses its current place in the world economy as number two.  The information technologies are increasingly becoming software intensive because of virtualization.  Computing clouds with pools of virtual computing power provide rapid cycle time reduction in business and consumer service creation, assurance and delivery.   It will fundamentally alter the way new services are created, assured and delivered in the future.

Global Kyozon Kyoei and Technology Innovation, Transfer and Operation at the Speed of Light

An alternative is to use Japan’s  investment capital and its human network management skills and Kyozon Kyoei expertise to create collaborative groups that are equal partners in technology creation, transfer and operation and share the benefits.  This requires creating teams of global technologists, managers, marketing and operations experts consisting of US, Japan, and the other Asian countries as equal partners.  In fact, the Asian countries that are not yet well developed have shown aggressive adoption of new technologies to give them a differentiation whereas well developed countries are saddled by their existing investments in older technologies and processes that are hard to change.

Such a global collaborative team will bring the best of their core competencies and resources (institutional and individual knowledge, capital, technology labs, human resources etc.) and create a continuous cycle of innovation, transfer and operation taking advantage of globalization at the speed of light.

Is the current Japanese management ready to think global again just as they did in the 80’s and 90’s when Fujitsu, NEC and Hitachi established leadership in telecommunications infrastructure and supercomputing.  In the past, they imported technology, added value to it and exported it.  They also started innovation with their first Broadband switch.  In the future, globalization at the speed of light will demand real-time information systems and mandate emphasis on collaboration with equal participation to bring the best of breed global teams and share the benefits.  The response involves rethinking current concepts of transfer price, involving global infrastructure providers, global service creators, global service providers and global service users and creating globally networked teams collaborating at the speed of light.  It means current large corporations rethinking their current strategies to reduce IT complexity by eliminating layers of management systems, and human latency involved.  It means redesigning systems to eliminate current  product strategies that force labor intensive services on their customers to generate recurring revenues.  It means global collaboration with equal pay for equal work independent of physical location, national boundary or cultural difference.  It means blending the best of individualism and the best of collectivism and instituting new global processes with transparency to guard against the frailty of the individual harming the group or preventing the monopoly of one group at the expense of other groups.

 References Used:

[1] Frans de Wall, “The Ape and the Sushi Master: Cultural Reflections of a Primatologist”, Basic Books, 2001, p 23

[2] Yamaguchi Masao, “Sumo in the popular culture of contemporary Japan”, The Worlds of Japanese Popular Culture, edited by Dolores P Martinez, Cambridge University Press, 1998, p 19

[3] http://www.abc.net.au/news/stories/2009/03/29/2529052.htm

[4] An excellent discussion of lack of transparency and resulting issues with sumo is presented by  Mark D. West, “ Law in Everyday in Japan: sex, sumo, suicides and statutes”, University of Chicago Press, 2005, p57
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