“The clouds come and go, providing a rest for all the moon viewers – Basho

July 17, 2009

During the 80s, in the heyday of Japanese dominance in global markets, two things in Tokyo were highly visible to a foreigner:

  1. Karaoke (part of “mizu shobai”, an unstable business dealing with unpredictable customers, such as bars), was an essential element of doing business in Japan and
  2. Getting a taxi in Tokyo for a “gaijin” was next to impossible

While getting a taxi in Tokyo is much easier now, Karaoke still is an integral part of “mizu shobai”.  Granted, the corporate accounts are not as liberal as they used to be and the Japanese managers are more discreet in inviting the ‘gaijin’ today to be entertained by their favorite “mama san”.

Noticeably, the spirit of the current Japanese managers is quite different and the mood is less confident.  In the 1990’s, it was taken for granted both by the Japanese Management and global Japan watchers that Japan would be destined to play a leading role in global computer and communications industries, as this extract from Jack Lyne’s article states [1].  “”Yes, it is as [Fujitsu Ltd.] President Sekizawa has said,” explains Akio Hanada, Fujitsu PC Corp.’s President and CEO. “Fujitsu is striving to be the world’s leading Information Technology Company.  “FPC is a big part of that drive. We can only win in global competition by increasing sales in the United States, the biggest market in the world.”  And when does Fujitsu envision taking the No. 1 spot in information technology?  “We would like to be the world IT leader as soon as possible,” Hanada says.”

However, even during the heyday, while accepting the success in hardware related industries, questions were posed whether the same methods will give similar success in software markets.  Some argued that their hardware experience will translate to software factories and they will dominate the software development process.  This turned out not to be the case.  Others argued that the Japanese management has exploited their cultural characteristics to successfully implement business practices in hardware and manufacturing segments with high degree of success and will carry them to software.  I had a unique opportunity as an executive from U S WEST to study in a joint program offered by Japan American Institute of Management Science (JAIMS) in Hawaii and the Sophia University in Tokyo and return to develop joint R&D programs.  I was a guest intern at Fujitsu where I wrote my thesis on “Current issues in Japanese management – Is Japanese Software Thrust as Powerful as Their Hardware Thrust?”  My conclusion was that they were not adopting three of the cultural attributes they applied successfully in hardware projects to software projects:

  1. Incorporating innovative technologies to gain competitive edge:  While they were quick to bring hardware technology innovations from the west by working very closely with their R&D counterparts, they were very slow in adopting new software technologies such as Object Oriented Development, Iterative prototyping etc.
  2. Planning cycles that are very long that suited hardware manufacturing involving large capital layouts did not help them to rapidly develop software systems whose requirements change more rapidly.  Often, they used yesterday’s technologies to meet today’s requirements and developed products very slowly and missed to meet the rapid pace at which software systems were being developed and deployed globally.  This forced them to confine software systems development to domestic market.
  3. Education of new technologies in software that were being rapidly adopted in the west was slow in permeating in Japanese culture perhaps due to the language barrier.

With the advent of IP networks which the Japanese management underestimated [2] and the demise of ATM broadband switching growth, their traditional telecommunications market dwindled.  With servers and network equipment increasingly becoming a commodity, the hardware markets for Japanese vendors started shrinking getting them confined to domestic market.  One exception was the growing storage hardware market which Hitachi exploited by entering early and copying EMC’s success with Japanese hardware prowess.  However, their software entry into storage was not as successful with products like Tuning Manager which customers claimed neither tunes nor manages.

Twenty years later, the Japanese management is at crossroads today looking at emerging computing cloud revolution and wondering how to play.  The computing clouds demand the convergence of telecommunications and Information Technology services platforms and offer a unique opportunity for new leaders to emerge after the current recession when the pent-up demand along with the new health and green initiatives will breathe a new life into the hardware and software markets.  Players well positioned to take advantage of the transformation with innovative and disruptive solutions can change the landscape and establish leadership.  According to Steve Ballmer, CEO of Microsoft, “During the past decade, a dramatic transformation in the world of information technology has been taking shape. It’s a transformation that will change the way we experience the world and share our experiences with others. It’s a transformation in which the barriers between technologies will fall away so we can connect to people and information no matter where we are. It’s a transformation where new innovations will shorten the path from inspiration to accomplishment. Many of the components of this transformation are already in place. Some have received great deal of attention.  ‘Cloud computing’ that connects people to vast amounts of storage and computing power in massive datacenters is one example.”

“You can see they’ve gone from 50 instances of EC2 usage up to 3,500 instances of EC2 usage. It’s completely impractical in your own data center over the course of three days to scale from 50 servers to 3,500 servers. Don’t try this at home.”  With this assertion, Jeff Bezos from Amazon, points out that current data center infrastructure is not able to scale to meet the mass market needs of emerging social networking and the Internet based services delivery.

While Amazon, Google and Microsoft have made significant strides, true computing clouds will be enabled by innovation in hardware (new servers that enable hardware virtualization to compose logical servers transcending physical boundaries), software (operating systems that enable composition of virtual services on virtual servers transcending geographical boundaries) and service creation, assurance and delivery platforms that enable self configuring, self healing and self managing workflows that are massively scalable and globally interoperable.  This is reminiscent of the old telecommunication model where network intelligence using service aware hardware platforms provided Pretty Amazing New Services (PANS) as Nicholas Negroponte from MIT had predicted in the 1980s.

Will computing clouds offer a new opportunity for the Japanese management with a second lease on global markets to use their core competence in telecommunications, server, networking and storage hardware technologies?  While R&D organizations like Bell Labs have been decimated by free market forces in the West, the Japanese have managed to preserve their core competencies in Telecommunications and IT hardware and software as institutional knowledge as opposed to individual based knowledge.  However, institutional knowledge has to break through the silo organizational boundaries for it to be useful.  Bringing together expertise from telecommunications and IT hardware and software to architect and design new computing clouds that are massively scalable, globally interoperable and provide telecom grade “trust” poses a challenge.  It requires core competence that transcends hardware, software, telecom, IT and chip boundaries.  True virtualization must go beyond current efforts to put lipstick on x86 architectural shortcomings.  Current server centric bloated operating systems must become lean and network centric.  Managed distributed computing models must evolve to create next generation managed distributed workflows that optimize shared logical resources.  As one Silicon Valley Venture Capitalist put it, “Ninety percent of the VCs in the valley will not understand what telecommunications knowledge has to do with data centers.”   Most of this understanding in the west is retired, dead or scattered by short term profit motives of free market forces.

This may just be what the doctor ordered to change the mood in the Japanese Karaoke bars!  Clouds and the moon have a special place in Japanese Enka, although the older generation of managers today lament that the younger generation is more comfortable singing “I left my heart in San Francisco” than “kasumi ka kumo ka”.  Is the current Japanese management up to the new computing cloud challenge?  Who will be the next Sekizawa or Sekimoto who will lead the next generation computing clouds?  I am looking for input, comments and collaboration and invite anyone with appropriate insight to participate in an update to my thesis of almost twenty years ago.

[1]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

[2]In 2006, then new President of Hitachi who came from their Telecommunication division warned the employees that they underestimated the Silicon Valley startup Cisco and not to make a similar mistake again while setting the new goals for its divisions supporting IT and Telecommunications infrastructure


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