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“Entrepreneur Engineering” with Japanese New Business Model
Nov.4, 1999
US-Japan TMC, Stanford
Noby MAEDA
Research Fellow, NISTEP, STA
Professor, Kochi University of Technology
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Competition & CollaborationCompetition & Collaboration
World Innovation
Neuer KombinationenCreative Destruction
US - JAPAN Mission of
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COC Innovation Index3’99 Council on Competitiveness
The New Challenge to America’s ProsperityFindings from the Innovation Index
• 1995 US No.1
• 1999 Japan No.1 US No.3
• 2005 Japan No.1 US No.6
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Japan Committed to S&T
1981 ERATO Up to date: 57 Projects
Exploratory Research for Advanced Technology
1988 NISTEP established
National institute of Science & Technology Policy1991 R&D Free Ride Criticism1991 R&D Free Ride Criticism
1995 S&T Basic Law S&T Basic Plan $126B $170B/5years (+35%)
1999 Millennium Projects IT, Environment, Bio etc.
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USA Enhancement of S&T
1980 Stevence-Wydler Technology Innovation Act
1980 Bayh-Dole Act
1982 SBIR
1985 Young Report :
Global Competition-The New Reality
1986 Federal Technology Transfer Act
1991 Council on Competitiveness
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Japanese Economy
IMD’s National Competitive Power: 1st 16th R&D: 1st 2nd
1980‘s Japan as No.1
1991 Bubble Broke Out
<Long Depression>
1998 Big Bang-Japan
1999 “Venture Congress”“Venture Congress”
Three Big Tide Behind
Globalization 20 Years
De-Regulation 20
IT Revolution 10
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Venture Boom
USA: 1967~ 1978~ 1993~
JAPAN: 1970~ 1982~ 1994~Now
1st 2nd 3rd
INTEL Micro Soft Internet
Get Out Fin.Ind.VC Gov. PolicyGov. Policy
Many Registrations
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Number of IPO per Year
1986 1990 1996 1999
1,000-
500-
Image chart
USA
JapanGermany
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What You Know as a History
No Entrepreneurs to overcome them.
SONY 1946 Ibuka/MoritaHONDA 1948 HondaKYOCERA 1959 Inamori
Big Entrepreneurial Success
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Company “Establish” “Shut Down” Ratio
1982 1996 1999
20%-
10%-
16%
13%
4.7%
4.6%
Germany
USA
Japan
Image chart
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CEOs’ ages when they founded their firms
'70-'74(n=66)
'75-'79(n=51)
'80-'84(n=59)
'85-'89(n=75)
'90-'94(n=88)
'95-(n=31)
The 20s
The 30s
The 40s
The 50s and over
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What You See Today
• IPO Ave. Year 5~6 29 Year
• No. of IPO/Year 500 100 Co.
• Equity % of Founder at IPO 4 70%
• New Employ’t by SME/Y 1,500 90K
• Univ. of Entre. Lecture 500 50
• Co.Establish, Shut Down 16/13 4.6/4.7%
• VC Support Hands on Loan
USA JAPAN
Recent Development is different!!!
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IPO-orientedOthersPolynomial approximation(IPO-oriented)Polynomial approximation(Others)
The yearly number of start-ups
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Many Recent Success Stories
• HIS Travel 1980 1995 Sawada
• NOVA English 1990 1996 Saruhashi
• Hikari Com.Sales 1988 1996 Shigeta
• Plaza Create Photo 1988 1994 Ohshima
• Doutor Coffee Shop 1976 1993 Toba
• Rakuten Network Shop 1988 2000? Mikitani
• DegiQub Game Sales 1996 1999 Suzuki
Very Few Tech. Oriented Entrepreneurs
Some are over $2 Billion Sales
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Supporting Policy/Registration
10~20 Years Behind USA
US JAPAN
V C Co. 1946 1972 - 26
SBIC 1958 1963- 5
Bayh-Dole Law 1980 1999 - 19
SBIR 1983 1998 - 15
Stock Option 1995
Angel Tax 1997
TLO 1940~ 1999 - 50
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Key Issue of Japan
University
Enterprise
R&D Lab.
R&D Collaboration
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STRATEGY VS KAIZENProf. M.Porter says: Japan has no Strategy.
•
HowOld
NewTo achieve
To improve
What
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BUSINESS MODEL
OLD NEW Keyword
US Large ?̈ Silicon ,u,?,Œ,Œ,…,™ ,l ,?,„,…,Œ Net EconomyNet Economy
Co. GE Portfolio,l ,?,„,…,Œ
EUROPE ,m,?,”,‰,?,?,?,Œ ?̈ Pan Euro Model EURO EURO ,l ,?,?,…,™,l ,?,?,…,™
,i ,?,?,?,? ,j ,?,‰,s,…,? ,l ,?,„,…,Œ ?̈ ?H ?H
Large --> Silicon Valley ModelCo. GE Portfolio Model
National--> Pan Euro Model
Kaizen Model --> ?Japan ?
EURO Money
Net Economy
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Manufacturing : JAPAN < USA
JAPAN 1980’s USA 1990’s
J I T + I T = SCM KANBAN
TQC + I T = Six Sigma KAIZEN
US Exceeded Japan in Manufacturing
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SONY`s
NEW BUSINESS DOMAIN
Analog
Digital
Digital
Distribution
Service
Contents
Music,Movie
Game,Map
etc.
BOX Network Merchandise
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Manufacturing Business Model
Device Box Device OS BOX
OLD NEW
STB, Portable Phone, Automobile, IC Card, etc
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Five-Circle Model
Manufacturing SONY
Device Box Merchandise
OS Network
E-Business
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Built in the Japanese Strength to
Ultra Small Motor,Bearing
KANAGATA/Mold
System LSI
Battery
Device O S Box Network Merchandise
Level up to IT Environment
to keep influence to the Network,
where $$$ comes in the New Age.
$
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Value Chain Approach : US v.s JAPAN
AV1980’s
Japan USA
Device Box Contents
PC 1990’s
Game 1995
Device OS Box Network Merchandise
$
USA
Japan
2000USA
Japan
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OS for Terminals
Home: STB
Automobile: ITS Navigation System
Outdoor: Cell Phone
Windows CE v.s. Non WINTEL
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From Professional Professional IT Society
to PersonalPersonal IT Society
Home Audio WALKMAN
PC Cell Phone
Cell Phone Banking, Shopping, E-mail
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Other Key Factors
for Network Economy Penetration
1. Clever Portable Phone Terminal
2. Physical Portal : 24h Convenience Store
3. Express Distribution Service to Home Highly IT Armed Seven-Eleven, Yamato Express
Japanese Advantages
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“Network” Penetration Ratio
%
No.of Store per 100K persons
Data: 1999 Japan Communication white Paper, etc.
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Three Layers Structure of Japan
1980`s 1990`s 2000`s 2010`s 2020`s
Soft Bank
1981
High Guts EliteHigh Guts Elite
High Tech EliteHigh Tech Elite
Young IT EliteYoung IT Elite
Service Venture
Tech New Wave
Internet Venture
Future Angels
Future Angels
1
2
3
1999
Angels
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Dynamic?@Module?@Combination
University Start up co. Foreign co. Large co.
Device?@?@?@?@?@Box?@?@?@?@?@Merchandise?@?@?@OS?@?@?@?@?@?@?@Network
Small Independent Organization is the Key.
Device OS Box Network Merchandise
Dynamic Module Combination
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New Waves in Japan
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Characteristics of the New Waver
• Blue Chip’s Elite Engineer
• Started with Age 40’s
• USA Univ. or Business Experience
• Global Mind and Action
• IPO or M&A Exit Strategy
• Keep as a CEO, but not to their kids
• Future Angel
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R&D Oriented Emerging Entrepreneurial Company in JAPAN
Technology Co.Name CEO Found IPO Person $M Technical Specialty
Mfg.Tech. INCS 49 ‘90 - 110 30 3D Speed Tooling
SAMCO 57 ‘79 - 100 33 Thin Film Tech.
System LSI Megachips 57 ‘90 ‘98 90 60 Game LSI
Thine 51 ‘92 40 95 AV LSI
Realvision 45 ‘96 40 10 3D Image LSI
IT,Network I I J 52 ‘92 ‘99 270 300 Internet Provider
Rakuten 35 ‘97 - 40 60 Network Mall
Mag Mag 29 ‘97 - 10 5 Mail Magazine
Future 44 ‘89 ‘99 150 40 System Integration
Game Soft many companies
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Key Issue of JAPANKey Issue of JAPAN
- New Combination
- Independent Personality
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Japan is Ready to Compete / Collaborate
with USA
for Global Innovationfor Global Innovation