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What Happened to Japanese Innovation?

Japan was once known for its high-tech innovation and the incredible economic growth that came with it, the organization paradigm for business supported new ideas and the benefits they provided. Today Japan is more often than not associated with corporate decline, sluggish growth and, unfortunately, general stagnation. However, a quick look at Japans Research & Development numbers (both spending and the number of patent applications) will show a Japan that is still highly capable of innovation, at least in the R & D field. If the budget, know-how and technological capabilities are all there, and we all know that innovation leads to new products, and that in turn leads to economic growth, then what is the problem? Is there a new organization paradigm which is hampering innovation? Why arent more Japanese innovations being transformed into products, which are then brought to the market where they will stimulate the economy?

On the Macro Level

There are a few common macro level answers for why Japan is no longer one of the leaders of the world in the creation of innovative products. One is that Japan is heavily regulated and that is making it an unattractive environment for entrepreneurs and venture capital, especially FDI. This lack of available capital is one of the biggest and most complex problems facing modern Japanese companies.

On the Micro Level

While funding is a huge problem its recently been noted that there are also issues within the Japanese business organization paradigm which also pose huge challenges to innovation and the associated opportunities. A survey recently conducted in Japan illuminates some of these problems. The survey showed that both executive and managers in countries other than Japan had far more confidence in Japans capacity for innovation than managers and executives in Japan. The organization paradigm has been adversely affected by peoples preconceived notions, obsessiveness and loyalties, and bias or assumptions which all act as a

restraining force on any potential Japan has for real innovation. Rather than supporting possibility brought about by hard work Japanese companies are now acting as restraining forces on creative thinking and implementation of creative ideas. Two decades of recession have created an organizational paradigm in which new ideas and products are met with only resistance and doubt. This has led to decision making policies which spend the bulk of the R & D budget on very conservative ideas, such as minor improvements to existing and successful product lines. There is little in the budget for the creation of new products and little to support the potential of anything coming from Japan to revolutionize the market.

In Japan there is even a word to describe the various limits in innovative thinking. Taga, which literally describes the metal hoops which keep a tight hold on the wooden boards which make a barrel, is used to describe the current state of Japanese innovation. Taga is what causes organizations to decide unconsciously and automatically what is possible and what is not based on current circumstances, not future predictions, hopes or opportunities. It stops completely the ability of a company to adopt a positive attitude towards any change or new idea. Taga is usually fostered in a tacit agreement to, or unspoken understanding of, customary rules or organizational paradigms within a company. When new people join a company (usually its the hope that new people bring new ideas) they tend to quickly become unconsciously accustomed to thinking along the lines of the existing organization paradigm. This means that it can be extremely difficult for a company to be aware of taga limiting creativity and implementation of new ideas within your own company. If your company is serious about innovation, finding ways to break free from the powerful constraints created by taga, and moving beyond the bounds of self-limiting perceptions should be high up on your agenda.