IVA’s Innovation Leadership Programme visited Japan from 25 to 29 March to look at the research and development initiatives in the country. The delegates visited around fifteen different research environments and companies, and met with public sector officials. The visits involved much reflection and discussion about Japan’s innovations for the future.
The Japan presented to us is a country with world-class research and many highly rated universities. Japan ranks high in various innovation indexes and Japanese industry is doing relatively well. The country is, however, experiencing growing international competition and is focusing on increasing innovative capacity. Meanwhile Japan’s economy is going through a tough time, with low growth (1 percent a year at this time, which is still positive growth) and substantial national debt (234 percent of GDB, which is even higher than Greece). Export levels are relatively low (16 percent of GDP compared to 46 percent in Sweden). But with shrinking markets, exports and foreign acquisitions are becoming an increasingly common growth strategy for Japanese companies and one that is also being used to increase innovative capacity.
The challenges going forward are significant. Japan is ranked number one in life expectancy. At the same time, the birth rate is low (Japan is predicted to have a population of 87 million in 2060 compared with 127 million in 2019). The increasing percentage of older citizens is a growing problem. There is a serious labour shortage at the same time as women are easily falling outside the job market due to a lack of childcare and elderly care options, and also in large part due to the work situation in Japan. Labour migration is very low, even though attitudes towards migration, in particular towards guest workers, are starting to change and the government is working on radically increasing this type of immigration.
As the aging population and labour shortage are key issues for Japan’s future, it is perhaps not all that surprising that people are at the centre of Japan’s vision and strategy for the future – Society 5.0. There is still a belief that technology and technological development will solve the country’s problems. Japan is shifting from Society 4.0, which is about digitalisation, to 5.0, which focuses on connecting cyberspace with the physical space – a strategy with a message being communicated with voices very much in unison.
It is logical that Japan is relying on science and technology given its strong industry and scientific foundation, with areas of excellence in IT and robotics. It is also logical that Japan is turning to science and technology as they can prolong people’s working lives, e.g. through robotics taking care of heavy lifting in health care and reducing personnel needs, e.g. through tools that enable the elderly to do more things themselves. Another technical innovation that is offering new opportunities for the elderly is electronic skin with sensors showing the status of a person’s health., a company that manufactures robotic exoskeletons, and Tokyo University both presented this type of thought-provoking innovation.
On the other hand, the question came up in our discussions of whether Japan is underestimating the importance of diversity and inclusiveness in the development of products and services for Society 5.0. Some of the most radical innovation environments we saw had been created by people with a mixed background and foreign influences – both Sony CSL (Computer Science Laboratories) and Cyberdyne. Still the concept of diversity driving innovation was never one that was brought up or discussed. Both Sony CSL and Cyberdyne are, however, examples of the fact that neither the state nor the private sector in Japan is hesitating to make huge investments in areas which many, at least in the West, think of as being more like science fiction. Sony CSL is, for example, discussing whether it would be possible to develop a robot that uses AI to defeat the world’s best footballer or a culinary robot that could get a Michelin Star. Fujitsu was another example of a company investing in commercialising quantum computing.
AI is a game changer. With AI Japan can solve the problem of jobs outnumbering people. In contrast to the concerns expressed in Sweden that AI is competing for jobs, in Japan AI is seen as a facilitator. AI is the key to Society 5.0. We think it is interesting how the role of humans is clearly in focus in AI development. Companies like Fujitsu are emphasising that it is crucial for people to have confidence in AI for its future development, and say that it is essential to be able to explain how AI works in order for people to trust it. Also, it is not just low-skill occupations or repetitive, heavy or dangerous jobs that will be replaced; highly skilled jobs in areas such as analysis and project management will also be affected through automation of manual functions. Even managers’ jobs may be automated. That this type of automation is welcomed and is taking place in a culture where craftsmanship and precision are highly valued is somewhat surprising, but probably necessary.
Japan is highly dependent on imports for its energy supply. After Fukushima, when most nuclear power plants were decommissioned, nuclear power was largely replaced by natural gas and coal. 90 percent of these are imported today. Delivery reliability overshadows climate issues, and renewable energy sources are finding it hard to reach higher percentages, partly due to problems connecting wind power etc. to the power grid, but also due to tough competition from China. The consequence of this is a lack of serious investment in R&D in areas such as solar and wind.
Sustainability was certainly one component in many of the presentations we witnessed, but there is still a sense that sustainability is not integrated into the corporate culture and in people’s everyday lives in the same way is it is in Sweden. Politicians are, however, now steering a new course towards the global climate goals in the same way as in Swedish and European politics, and Fujitsu did speak about how social benefits and commercial benefits are converging. Companies will probably have to combine the two in order to succeed.
A visit to the AIST research institute and a meeting with battery manufacturer TDK showed that mass production is in Japan’s DNA. TDK is planning to be the first company to mass produce small solid state batteries later this year, with clocks and sensors as possible application areas. In Sweden basic research and applications are important as we explore new areas such as graphene, while in Japan there is a great emphasis on how to set up and optimise mass production.
The strong significance of Japanese culture in industrial development and for production became clear during a visit to mass producers Mazak and Toyota through the “lean” concept (as it is often called in the West) or TPS, Toyota Production System. The constant efforts to eliminate waste while improving and structuring problem-solving processes have led to a fantastic increase in productivity in Japan. Many companies in the West have implemented lean, but with varying degrees of success. People in Japan are proud of this approach and have great confidence that it will continue to be important in the future. The smart factory will not replace lean. Digitalisation of production is seen as another issue.
People often talk about the fact that the lean concept promotes incremental innovation. Japan needs disruptive innovation, among other things, to address the problems presented by an aging population. It could be argued that having too much faith in lean as a concept will prevent disruptive innovation, but we are seeing clear examples of environments where people are working hard to develop new technology, such as Sony CSL and Fujitsu. Perhaps the lean concept does not need to be developed further to work in a world with an ever-accelerating pace of change. It is, after all, essentially a value foundation that can be applied in all areas. It is probably more a case of how to apply lean in, for example, AI development to create a structure for development processes. In a way, lean perhaps even offers some balance in a world where things are moving at an incredible speed, by emphasising the importance of craftsmanship, precision and continuity, and gradually improving what already exists. Toyota has also realised how valuable it can be to allow someone with strong skills to teach and design a robot – so that one plus one makes three.
In terms of production, a visit to the AIST research institute and a meeting with battery manufacturer TDK showed that mass production is in Japan’s DNA. In Sweden basic research and applications are important as we explore new areas such as graphene, but there is not the same focus as in Japan on production and on upscaling and optimisation. We probably have a lot to learn here.
It is impressive how Japan has managed to combine tradition and traditionalism with foresight and innovation. One lasting impression is its gigantic iconic companies in, for example, the automotive, engineering and IT industries, which have managed to develop groundbreaking products despite often having introspective innovation strategies. On the other hand, there does not seem to be the same emphasis as in Sweden on aspects such as customer value, monetary value and business models – aspects which, at least in the West, are central to the concept of “innovation”. Sometimes the innovations presented to us were more like discoveries, in the sense that they were entirely new types of solutions//technological advances from which it might not necessarily be possible to build a business. If a business model is identified this could of course change.
Innovation or not – the strongest impression we came away with was probably from Cyberdyne where we were able to listen to Dr. Yoshiyuki Sankai himself talk about his team’s progress in combining neuroscience with electronics and robotics. Their exoskeleton is already able to repair functions in the nervous system giving mobility back to patients. It is mind-boggling to think about where this could lead mankind. One possible development could be that in future it might be possible to read these mind-boggling thoughts. Will Society 6.0 be about mindreading?