BreakThrough Study Idea

SMEs open innovation strategy
- Kazuyuki Motohashi <2nd Serial series (2 times in all)> -Kazuyuki Motohashi<Series 2 / complete>

Study Idea


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Open innovation that does not succeed only by top down

How is open innovation activity done in large enterprises? Let's introduce concrete examples divided into "Top-down type" and "Bottom-up type." Typical examples of top-down type are "Toray Co., Ltd." and "Komatsu Ltd.." Toray Industries, Inc. made a specialized section of open innovation in our laboratory, with the determination of the top. Using that special section as a hub, we issued a directive of open innovation top-down. In the midst of a dramatic change in the market for construction machinery, Komatsu dramatically changed the manner of manufacturing. Today, Komatsu changed its name to "smart construction" and turned into a solution company, but at that time, it is imagined that there was a considerable sense of crisis at the top. "Smart construction" is an ICT solution at the construction site. We are trying to develop services centered on ICT, not only providing construction machines, which is a conventional business style, but also developing compact communications equipment that analyzes the topography of the construction site using a drone. An example of Komatsu is a case of few open innovations in Japan that succeeded in creating a new business.

One representative example of "Bottom-up type" is Osaka Gas Co., Ltd. Osaka Gas Co., Ltd. was on the verge of collapse of the business model by the appearance of all electrification. Under these circumstances, Osaka Gas Co., Ltd. requested employees to use external technology when conducting new projects under top down. At that time, within the company, there were a series of voices saying "Why are you going to bother going out of it, why cant you do it in house", and if you leave it alone, there was a fear that such an employee would not appear to do the proper thing. Therefore, we changed the consciousness of our R&D staff by setting the study of external technologies as the default when formulating R&D plans. There is a top decision to introduce such a system, but at the heart of the open innovation rooted in Osaka Gas Co., Ltd. is the change of internal culture. Many companies are introducing open innovation mechanisms. However, unless the consciousness to strengthen its development and improve the company's competitiveness by using open innovation is not shared within the company, the "Mechanism" ends with a rice cake. Looking at this example, it is understood that open innovation is insufficient only by management's determination, and it will succeed just after awareness at the site.

Discover the strengths of your own technology by industry-university collaboration

Not only large companies but also SMEs are about to change. However, unlike large companies that have many businesses, small businesses are often single projects, so there is an excellent risk to business transformation. As car sharing and electric cars become popular, manufacturers such as engine parts and transmission parts may lose their jobs. SMEs are faced with survival competition as to how to do business from now.

Even so, SMEs who find their way of working find businesses that can divert their technology and do business. Suppliers of watch parts around Lake Suwa, Nagano Prefecture, the market for watch parts have almost disappeared due to changes in the market, but we are diverting our business by diverting our technology to medical equipment and space development. Although the proportion of sales of watch parts accounted for less than 10%, it survives by microprocessing technology, which is regarded as a strength. Industry-university collaboration has triggered this supplier to notice the possibility of diversion. It was the beginning of my university researchers to analyze what their technology is like. Unexpectedly, SMEs do not grasp the strengths of their technology. With this attempt, we were able to tell customers the contents of the technology that was difficult to explain so far, and we have received orders. Also, there are other merits of industry-university collaboration. As a researcher announces at a conference on joint research, creditworthiness rises, and it is easy to collaborate with large companies. The industry-academic partnership may seem far from SMEs, but in reality, this is not the case.

Promote trustworthy cooperation partners and open innovation

What is essential when SMEs collaborate with large enterprises is to know where a large company, a client company, is about to head. For automobile manufacturers, there is a culture that waits for suggestions from suppliers when developing a new model, but if you do not know the shape of the automobile that the customer company is aiming for, the closing will not be remembered. Furthermore, we must imagine not only the work we are currently working on, "Imagine how society is changing in five years," and have a spirit to suggest customers ahead of time. And efforts to create customers as well as future customers are indispensable.

It is not to cooperate with a company that "Just make it on this street" with a high emphasis on cost alone. It is also true that there are companies that steal intellectual property and force sales contracts of conflict with antitrust laws and subcontract law. Especially, ownership of deliverables is often damaged. Like Japan, as Japan is becoming a contract society, risk management will be more critical than ever. The important thing is to find a company that will cooperate with each other, judging the actual condition whether it is a company that is sufficient for collaboration.

Since it is important here, let's briefly explain the business ecosystem in "Open Innovation 3.0". The business ecosystem consists of "Keystone" and "Niche players," which are mutually complementary relationships. Keystone acts to expand the whole pie and acts as a platform, while niche players provide their strengths and play the flexibility and diversity of the business ecosystem. In general, Keystone will be a big company; a niche player will be a small business. For example, in the case of the "iPhone," there is a keystone called Apple, and you will notice that there are niche players offering applications.

There is also the idea that the company that is a small business becomes a keystone, but it may be unexpectedly challenging to behave for the organization with her interests sideways. There are cases where municipalities and others lead the platform making, but it is not impressive. It would be better for open innovation that big companies with diverse needs become keystones.

Open innovation in SMEs is a matter, of course, the CEO's job. It is always important to seek new opportunities. Fortunately, there are many second generations in the whole country that have a broad perspective and have room to accept new technologies. I would like to have the courage to step up open innovation before the business becomes slender and businesses are in danger of survival.

< series 2 / complete >

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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