BreakThrough Study Idea

Transition of open innovation
- Kazuyuki Motohashi <1st serial series (2 times in all)> -Kazuyuki Motohashi<Series 1 / complete>

Study Idea

2018.03.05

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As speed of innovation is required in the rise of emerging countries

"Open innovation" is a concept proposed by Henry Chesbrough, an American business scholar in the 1990s. After that, even in Japan, the need became popular, and the way of opening innovation gradually changed. Currently, open innovation has come to the stage of "3.0" and it has become more noticeable than ever. Let's start with the history of open innovation first.

Open innovation in Japan, "1.0" was a story "How do you make money" by putting out the technology buried in a large company. Licensing and doing business makes many sales impossible. It was such a simple thing to let other companies buy such technology at a high price. Even in the traditional business model, it is an era when sufficient sales could be secured, and large enterprises had enough time to develop the technology on their own fully.

Under these circumstances, emerging countries such as China and South Korea became prominent, and the competitive environment surrounding Japanese companies changed drastically. Innovation became more critical, and product development speed became faster. It is necessary to introduce products ahead of other companies and occupy the market. Under such circumstances, if you rely solely on your technology, you will lose to the competition. So, I tried to raise innovation by gathering the techniques outside the company and multiplying them. This is "open innovation 2.0". At this time, the need for industry-academia collaboration in small and medium-sized enterprises was shouted out loudly, and the form of open innovation changed drastically. However, the relationship of companies in "Open Innovation 2.0" is mainly "one to one." To supplement our research and development, our style focusing on universities and other companies and others has its characteristics.

About 80% of large enterprises are engaged in open innovation

In contrast, "Open innovation 3.0" is characterized by "One to many." This way of thinking is called the "Business ecosystem," and it is an important concept to talk about in open innovation. Why did this change in open innovation? The background is in the business model. Automobile manufacturers should have sold "Cars" once as cars. That was enough to earn money. However, in modern times, the "Solution" rather than the "Thing" is required. Moreover, as the technology advances, the content of the "solution" has become diversified. It is not difficult to imagine coming so far that it is accompanied by the considerable impossibility to develop through self-principles. Although IoT has become a topic, automobile manufacturers also need to cooperate with Internet companies and communication companies. It was an era when we had to search for an equal relationship that took advantage of each other's strength without being limited by the size of the company.

In fact, with the changing business model, open innovation is becoming popular in large companies. There are successful examples of setting up specialized departments such as the "Open innovation promotion office", and the Keidanren's survey revealed that about 80% of large enterprises are doing something about open innovation. Nonetheless, there are not many cases that have made remarkable achievements such as the "creation of new business" through open innovation.Currently, many large companies are merely strengthening existing businesses. For this reason, there is a "Relationship dependent model" in Japan. When Japanese companies conduct open innovation, there is a tendency to focus on ongoing business with existing business partners and universities with which they are associated. There is such a background that open innovation to build a business ecosystem and create new business does not go well.

CEO of a salaried man who does not want to take risks

There are a couple of reasons why open innovation is stagnating besides "Self-righteousness." One of them is "CEO of salaried workers." CEO of a salaried worker, which is common in large companies, has a fixed term of office. In many of them, there is a section that considers "It is only necessary to be able to overcome the term of office without problems," and there is a clause that does not actively want to take risks. Although cross-shareholdings are getting much less than in the past, they are continuing, and it is a problem that managers do not feel tense.

In the case of the United States which is an advanced innovation developed country, managers will be forced to retire due to "NO" from the capital market in such a posture. Also, if the stock price goes down, there is also the possibility of becoming a target of M&A. We are receiving pressure from the market directly "We must constantly innovate."

On the other hand, in the case of small and medium enterprises in Japan, owner companies are standard, so unlike the president of salaried workers, we can make drastic decisions. It is no longer a small and medium enterprise, but SOFTBANK Group Co., Ltd. has the most characteristic of the owner company. A business strategy that is tackling open innovation with a sense of speed concerning strategic alliances and M&A etc. can be said to be a case not seen very often in Japan.

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Kazuyuki Motohashi
Professor, Graduate School of Engineering, the University of Tokyo(Resilience Engineering Research Center/Technical Management Strategy Major)

Completed Master's degree in the University of Tokyo in 1986 and entered the Ministry of International Trade and Industry (Ministry of Economy, Trade and Industry). After becoming an economist at the OECD Directorate for Science-Technology and Industry, became Associate Professor at Hitotsubashi University Innovation Center from 2002. Associate Professor, Center for Advanced Science and Technology, University of Tokyo since 2004, Since 2006 he took office as professor of engineering department of the University of Tokyo and has reached the present. Faculty Fellow for Research Institute of Economy Trade and Industry, Visiting researcher for National Institute of Science and Technology Policy. Stayed at Stanford University Asia Pacific Research Center as a visiting fellow from September 2014 until March 2015. Michelin Fellow for France EHESS (Institute for Advanced Studies of Social Sciences) from April 2016. Editor of "Research Policy", International Journal on Innovation Management and Policy. Cornell University MBA, Keio University Dr. (Commerce). Professional for econometrics, industrial organization theory and technology management theory.

◇Main book
"Alliance management"(Hakuto-Shobo)April 2014
"The day is also high ~Regeneration of industrial competitiveness"(Nikkei) February 2014
"Global management strategy"(University of Tokyo Press) March 2013
"Bio-innovation in Japan"(Hakuto-Shobo) November 2009
"Empirical analysis of IT innovation"(TOYO KEIZAI) March 2005

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