Fostering Japanese innovation

The global GDP for Japan in terms of its purchasing power parity dropped to around 4 percent from 9 percent and it was reported that the Institute for Management Development’s World Competitiveness Rankings in 2018 placed Japan at 25th place for international competitiveness when previously it had been in first place.

Fourteen out of the top twenty businesses thirty years ago, with regard to total market value, were Japanese. No Japanese business is in the top twenty today. Could it be that all our best minds are occupying themselves with solving Rubik's cubes and playing online blackjack?

Incredibly, Toyota Motors which is certainly Japan’s best company is positioned at number 35 on the global list of top companies. The cause of this is obvious. Japan was not the creator of GAFA – Google, Apple, Facebook or Amazon. Japan remained immobile and was, therefore, not able to cultivate innovation.

So, what needs to be done in order to make innovation possible?

According to Joseph Shumpeter, economist, “innovation consists of combining existing pieces of knowledge. Our experience shows that the greater the difference between one piece of knowledge and another, the more interesting the innovation born through their combination.” Put another way, the most important thing is diversity.

Silicon Valley is considered the hub of innovation. This is the place where all the top educated folk from around the world are huddled, and deep in discussion. From these discussions, innovation is born. Therefore, the two main elements fostering innovation are, diversity and a high level of advanced education.

The percentage of people in any nation who completed higher education is directly proportionate to the labor productivity of that country. It follows that if you have large numbers of people who are highly educated in specific fields of knowledge and expertise, then they are likely to come up with more new and innovative ideas.

Universities and research organizations are where ideas and innovations are born and these tend to be located in certain areas. If you look at the United States, for instance, those places are Silicon Valley – the San Francisco Bay Area and also in San Diego and in Boston. The areas in China for example are Beijing, Shanghai and also Shenzhen.

Therefore, in order to promote innovation, it is important to boost Japanese universities and other organizations and institutions.

How do we understand what diversity is?

Within the university, diversity would manifest itself as including more women, more foreign students and also adult students. Ritsumeikan University and Ritsumeikan Asia Pacific University (APU), are both run by the Ritsumeikan Trust. Recently the Ritsumeikan Trust appointed its first female vice president. The Trust also supervises four combination middle and high schools and also an elementary school.

The position of women in Japan ranks at number 110 of the 149 countries surveyed by the World Economic Forum. For Japan, which is considered to be an advanced country, this is a surprisingly low position. A quota system needs to be introduced in all fields, in order that the social position of Japanese women will be raised.

What about the inclusion of foreigners?

Could it be that the strength and vivacity found in the United States stems from its ability to attract to its shores the best young people from around the globe? Many of the initiators and managers in Google, Amazon, Facebook and Apple and many unicorn businesses are actually foreigners who initially went to the United States to study.

Perhaps this is something Japan should do – attract high flying students from outside the country, in the same way American organizations do, in order to rejuvenate themselves.

Perhaps Japan should take advantage of the way in which the Trump administration took a stand against admitting immigrants and appeal to those high-level students from around the globe. It would be advantageous to offer entry examinations in English and to have the beginning of the school year to begin in the fall.

The Asia Pacific University (APU) has almost 3000 foreign students, from many countries, and one of the reasons for this is that students are able to apply in English, as well as Japanese, and the they are also able to begin school in the fall. One way to increase the number of foreign students would be for the government to decrease grants that universities receive until they also make these admission changes.

Another step, but no less important, is for universities to get accreditation status from international accrediting agencies. This is crucial in order to attract international students to Japanese universities. The APU does have accreditation from the (AACSB) Association to Advance Collegiate Schools of Businessand also TedQual, a United Nations World Tourism Organization certification.

Currently there are four Universities in Japan that have AACSB accreditation and two have TedQual certifications. In order to foster business development in Japan, regulations will need to be reformed in order to give foreign students equality with Japanese students.

The majority of students in Japanese universities are between 18 and 22 years of age. There is little diversity. Less than 2 percent of students are 25 years or older. The fact that there is little diversity makes for limited educational results.

This is an important issue for APU and it therefore places a high priority on accepting “mid-career professionals” under the auspices of the Global Competency Enhancement Program. This program admits people with job experience to the university for a period of time living as “reverse interns” and they study and live together with the other students.

In order to make continuing education more successful, it may be that Japan needs to introduce a system that will enable workers that have been in the workforce for approximately 10 years to have six months sabbaticals where they are able to study and refresh their education.

Technology and science are advancing at a great pace and it may be important to create a system where people can move between university and their workplace at 10 yearly intervals.

It is important that companies and other organizations are open to paying competitive salaries to those who have graduated. People need incentives. It is crucial that people with higher educational degrees and those with doctorates are given the respect that they deserve and are rewarded respectively.

Unless a corporate culture is created, a push to raise the educational level in Japan will be meaningless. Going ahead with the reforms mentioned above will go a long way to fostering innovation in Japan.