Solving a country's problem through SNS "Crowd Sourcing"

Last week, I was named to the national strategy commission by Prime Minister Noda of Japan. The commission was empaneled to focus on existing problems in Japan and to find practical solutions by the year 2050. My area of focus is on economic prosperity. I assume they are expecting my background in entrepreneurship, innovation and global perspective to be incorporated.

Therefore, I wanted to be entrepreneurial in framing the problem, innovative in receiving ideas and solutions, and global in implementing them. To do this, I am using my vast social network to "crowd source" from everyone about some problem issues they perceive as well as practical ideas/solutions for them.

Looking forward to hearing from you all!

-William

Getting ready to tape 3-hour NHK special (broadcast 1/1/12) on disparities of Japanese (<40) youth: soliciting opinions.

St. Gallen Symposium

As a speaker at the last two St. Gallen Symposium, I cannot recommend enough how valuable an experience it is to attend this event. If you are a graduate student who understands the importance of interacting in a global community and discussing very current issues with your peers from around the world, this is the event for you.

The St. Gallen Symposium, a conference organised by the International Students’ Committee (ISC), a student initiative of the University of St. Gallen, is the world’s premier conference for intergenerational, interdisciplinary and intercultural debates. The 42nd St. Gallen Symposium will be held under the topic “Facing Risk” from 3 – 4 May 2012 at the University of St. Gallen.

Two hundred Leaders of Tomorrow engage in challenging debates with 600 Leaders of Today from all over the world. In the past, these distinguished personalities contributed to the intergenerational dialogue with the Leaders of Tomorrow and included Dr Josef Ackermann, Deutsche Bank AG; Robert John Aumann, Nobel laureate; Robert Dudley, BP plc; Prof Niall Ferguson, Harvard University; Christine Lagarde, International Monetary Fund (IMF); and Tharman Shanmugaratnam, Minister of Finance of Singapore. Notable past Japanese speakers were Fujio Cho, Toyota Motor Company; Toshiki Kaifu, Former Prime Minister of Japan; Hiroshi Mikitani, Rakuten; and many others.

One hundred graduate and postgraduate students have the opportunity to qualify as “Leader of Tomorrow” for participation in the St. Gallen Symposium by submitting a contribution to the student essay competition. The three most outstanding pieces of work will receive the St. Gallen Wings of Excellence Award, endowed with EUR 20,000, and will be presented to the audience by their authors. Detailed information can be found on www.stgallensymposium.org.

If you have any questions, please feel free to contact Johannes, the ISC Representative for Japan through kre@stgallen-symposium.org.

Venture and Social Capital: A Vision for Japan (Part 3 of 3)

Continued from last week, my essay on "Venture and Social Capital":

3. Break through the glass ceiling
In a future in which business will he under extreme pressure to eliminate waste and increase efficiency, it’s hard to see how Japan can continue to underutilize half its population: women. The higher ranks of corporate Japan, in particular, are astonishingly absent of women.
According to the 2009 report Corporate Women Directors International (CWDI), women accounted for only 17 of roughly 1,200 seats on the boards of Japan’s 100 biggest companies – roughly 1.4 percent. Japan even lagged behind Arab countries such as Oman, Jordan and Kuwait. Some of the most truly international Japanese firms were the worst offenders. Toyota, Nissan, Honda, Panasonic and Toshiba do not have a single woman director.

Japan’s top universities turn out large numbers of exceptionally bright, talented women who then cannot find suitable employment in Japanese companies. In a phenomenon known as “gender arbitrage,” Western firms are hiring these overachieving women, giving them responsible positions and good salaries. It is Japanese companies that are missing out on this talent pool.

The biggest problem Japanese firms have in promoting women to directorships is that there are so few women managers to promote. Even companies whose customers are all women are generally run by men. In other words, a bias in hiring and a quite low glass ceiling after entering a Japanese company create a self-perpetuating situation.

Looked at from any perspective, getting more women into work is the only economically rational choice for Japan. The population is both aging and shrinking; there is substantial resistance to increasing immigration; and the economy desperately needs ways to revitalize growth.

A recent study by Goldman Sachs examined this assertion and concluded that if the rate of female participation in the labor force rate could be raised to that of men (almost 80 percent), it would create over 8 million jobs and add as much as 15% to GDP. Because Japan is the only advanced industrialized nation with such a huge, skilled, untapped resource, it has a golden opportunity to accelerate growth quickly and sustainably.

Conclusion
Changing Japan in these three areas---studying abroad, cultivating volunteerism, and promoting women--would be catalytic for society as a whole. One important area that could benefit is venture capital.

While it is true that Japanese corporations and financial institutions make micro-investments in venture companies, an American-style venture capital industry does not exist. It’s harsh but not entirely unfair that the VC community in Japan is derided as “Very Conservative” or even “Very Cowardly.” There have been many attempts, especially at the Ministry of Economy, Trade and Industry (METI), to kick-start the entrepreneurial process. Several programs give loosely defined grants of between $100,000 and $1 million to exceptional researchers and projects in universities or research labs. Unfortunately, many researchers use this money simply to fund more research, not to build businesses. In the past few years, these investments have returned less than 1% on average, compared to 3.9% for private venture capital, according to a 2009 Japan Venture Research report.

There are also government-backed VC companies that were created to invest both private and public money into entrepreneurial ventures. Unfortunately, they lack the kind of real-world experience that is essential to understanding the challenges facing venture companies. While the ideals underlying these and similar government programs are noble, they have ended up becoming a moral hazard to Japanese entrepreneurs. Simply put, governments are not good at picking winners, nor should they be trying to do so.

In the U.S, the principals of venture capital companies are usually former entrepreneurs themselves, so they understand the problems intimately. American VCs also expect to take an active role in their investees, not merely injecting cash but also hands-on management skills, personal contacts, and more. For every dollar in cash a VC invests, he also invests a dollar of knowhow.

In Japan, venture capitalists typically take only observer seats on a company’s board without voting rights. The ostensible purpose is to protect the VC firm from liability and criticism. The VC provides only small levels of capital and no management advice. This inactive, risk-phobic approach will never support a healthy venture economy.

To be successful, a venture capitalist must understand entrepreneurs’ needs and truly want to help them succeed and must also understand the dynamics of the marketplace. Obviously, this echoes the three priorities I have identified for the Japanese economy.

Like the economy as a whole, the VC industry needs well-educated, insightful, analytical people – male or female. It needs creative problem solvers imbued with a broad, global perspective. And it needs people with the ability to understand multiple perspectives and a genuine desire to help other people to become successful – an empathy that can be sparked through volunteerism at an early age.

I firmly believe that if Japan could harness only a fraction of the power in its disenfranchised female working class and foster a new generation with a broader global outlook and a willingness to help others, it would not only revitalize its economy, but become once again a model for other nations to emulate.

(End of part 3 of 3 - Your comments are always welcome)

Note: This article originally appeared in Reimagining Japan: The Quest for a Future That Works, McKinsey & Company, Shogakukan (Japan), Simon & Schuster (USA), July 2011. Used with permission.

Venture and Social Capital: A Vision for Japan (Part 2 of 3)

Continued from last week, my essay on "Venture and Social Capital":

2. Encourage a culture of empathy through volunteering
At my high school in California, every student had to perform 100 hours of community service in order to advance to the next grade level. The focus was not on impersonal activities like cleaning up a park, but on providing meaningful service to the less privileged people in our community. Volunteering to help people instills the idea in young minds that “giving back” to society is a natural part of life. Young people discover that volunteering pays rich dividends in community appreciation, self-esteem, compassion, humility, and gratitude. Equally important, they learn that asking for help is nothing to be ashamed of.

Japan would benefit from such a program for a number of reasons. First, it would help young people learn empathy for others, and thus grow into compassionate adults. Second, it would lead people of all ages to reflect on their own strengths and weaknesses. And third, it would teach people to ask for help when they need it and both give and receive assistance from others as a matter of course.

A broader, deeper culture of empathy could also help to energize the business environment. One of the main reasons that so few venture businesses appear in Japan and far fewer succeed is that people in established companies, in banks, and so on, feel no sense of responsibility toward or even kinship with individuals who build their own businesses. Reaching out to help others is essential to helping a venture business succeed, just as employees being willing to help each other inside a start-up company is essential to its success. Many Japanese are too concerned with their own department, their own company, their own clients. The empathy response to help others, especially those who are somehow disadvantaged, is just not there. This characteristic is evident not only in the lack of support for venture business but also in the abysmally low level of philanthropy in Japan.

This is important because it applies directly to a nation’s ability to germinate and cultivate new businesses: start-up companies are all disadvantaged. Venture businesses are handicapped by a lack of experienced management, lack of access to capital, and lack of appeal to attract talented employees. Ventures succeed when people in the business community see their potential and offer them different kinds of assistance to help them grow.

While the effects of a wide-scale volunteer program are impossible to estimate, one result would certainly be an increase in personal empathy, a greater feeling of kinship with and responsibility to help others who need help. And that would include businesspeople feeling more inclined to help rather than hinder others, both within their companies and in the business community at large. In this sense, the growth of venture business---which I see as essential to invigorating this economy---will rely at least as much on individual and corporate assistance as on government support. So, as volunteerism promotes empathy, it not only “humanizes” society but indirectly helps to energize the economy.

(End of part 2 of 3 - Your comments are always welcome)

Note: This article originally appeared in Reimagining Japan: The Quest for a Future That Works, McKinsey & Company, Shogakukan (Japan), Simon & Schuster (USA), July 2011. Used with permission.

Venture and Social Capital: A Vision for Japan (Part 1 of 3)

I recently had the honor of providing a chapter for the best-selling book in Japan titled Reimagining Japan: The Quest for a Future That Works, published by McKinsey & Company. You can buy the book in many forms, including two types of electronic format. I am posting my essay as a 3-part series.

*****

In the 1980s, it was "Japan bashing." In the early 2000s, it was "Japan passing." And now it has become "Japan missing."

In the past two decades, the country’s once-vocal critics have fallen silent, largely because the world is no longer interested in Japan (with the possible exception of manga and anime). The sad truth is that Japan is becoming increasingly irrelevant, even though it is still one of the biggest and strongest economies in the world. It deserves more attention than it receives.

Japan bashing was never useful. But there is value in constructive criticism, especially if it can be offered in the form of a careful examination of the issues or characteristics that may be holding Japan back. I have spent my career in and around venture businesses, as an entrepreneur, an investor and as a judge of venture competitions worldwide. Along the way, I’ve developed some strong views about what works and what doesn’t in growing young companies. Some of the problems that I see in Japan today relate to social capital issues that are necessary precursors to the growth of a vibrant economy.

My recommendations might seem unusual, coming from someone with a technological background. But one thing I have learned from my career is that sometimes an indirect route is the best way to bring about the kind of change that is needed. Here are three paths that I believe Japan might follow in order to invent a more promising, more dynamic future.

1. Build global social capital
My experiences in managing and evaluating many business ventures---from high-tech startups to established global competitors---have convinced me that certain characteristics for success are universal. Among the most important is a sense of perspective.

The broader a person’s outlook and experience, the better the chances that he or she will grasp changes, understand opportunities and challenges, and perceive market relevance. How does one gain such perspective? One way is to read and study about different aspects of the world, and Japanese people are adept at that. From my teaching experiences at universities both in Japan and overseas, I have had a chance to observe hundreds of students. I have found Japanese students to be extremely bright and well-informed. And yet, something important is lacking. There’s a huge difference between accumulating knowledge about the world and experiencing it first-hand.

Japanese students benefit from a far narrower range of experiences than their counterparts in the U.S. or Europe. In the West, when young people go off to university, they often find themselves thrown together with people from vastly different religious, ethnic, cultural and ideological backgrounds. They are exposed to a broad variety of studies and perspectives, both in and out of the classroom. Moreover, the general education courses required at most U.S. universities are designed to broaden students’ perspectives early on so that they might make informed choices about their major field of study and, eventually, their careers.

In contrast, Japanese universities attract few foreign students and few Japanese students study abroad. This in itself is a problem. Secondly, Japanese students generally choose and then focus on their field of specialty early on. The result is that four years at a Japanese university, however prestigious or difficult to enter, does not represent the same kind of stimulating, personally broadening experience common in other developed economies. Even at Japan’s best universities, too many students lack key qualities possessed by their counterparts (and in today’s interconnected world that means their future rivals) from other countries. They have memorized large quantities of raw information without being exposed to the sort of creative problem solving that is further developed, challenged and tempered by numerous encounters with people of different backgrounds.

Japan is certainly not homogenous in the sense that everyone thinks or acts alike. But in important ways, compared to much of the rest of the world, it seems homogeneous. This has many advantages for society, but the development of broad, visionary thinking is not one of them. In my dealings not only with university students, but with Japan’s corporate executives, politicians and government officials, I find, to my frustration, that their lack of cultural interaction has created an intellectual myopia. For example, when I showed a newly released iPhone to the president of a major Japanese electronics maker, he was totally unimpressed: “Our phones have most of the same functions if not more.” The idea that a cellphone was more than the sum of its parts, that it could be a platform for a myriad of independent applications, or that his company should be developing value-added platforms that would attract people from all over the world to create software and services to run on his company’s products simply did not reach him.

Traveling almost constantly, I find great value in immersing myself in foreign cultures and ways of thinking. The goal is not to mimic any particular culture or society, but to learn from them all. The more intellectually (and culturally, philosophically and spiritually) diverse your environment, the greater the potential to grow as an individual and the more value you can bring to any company or organization. In a globalized world, this is essential social capital -- and it is missing in Japan.

In the 1860s and ‘70s, the Meiji oligarchs sent some of their “best and brightest” on overseas missions to learn about the world outside Japan. The famous Iwakura Mission included both government ministers and university students, and many of the students (including several women) stayed on in foreign countries to continue their studies. The government understood that gaining first-hand experience and perspective on the world was essential to Japan’s survival.

To reclaim a global perspective, Japan’s future leaders must expand their comfort zone. The ideal time to start doing so is during their university years. The first step would be for the government to partner with other stakeholders to fund and promote scholarships for study abroad. For this to have the desired effect, private industry has to adapt too by changing traditional hiring practices, such as the strictly defined hiring season and eliminating the stigma of chuto sayo (“in between” hiring into a company). And so does society. For example, many Japanese parents would discourage their children from taking up such opportunities. When I offered two promising students four-year scholarships abroad, both declined the offer at the urging of their parents. This was an eye-opening experience.

The world outside can look frightening to those who have not been there. A more important consideration is that parents fear that anything that separates their child from the peer group creates a competitive disadvantage when it comes to promotions. And the way things work now, they are right. That needs to change. I believe that nothing will produce a higher “return on investment” for Japanese universities, companies, and government organizations than a steady flow of new, globally minded talent.

(End of part 1 of 3 - Your comments are always welcome)

Note: This article originally appeared in Reimagining Japan: The Quest for a Future That Works, McKinsey & Company, Shogakukan (Japan), Simon & Schuster (USA), July 2011. Used with permission.

A Trojan Horse to Spark Innovation and Globalization (part 3)

Continued from 2 weeks ago, we discuss implementing an effective and wide-reaching scholarship fund for Japanese students. In order to do this, creating an organization that helps coordinate the various requirements becomes a critical necessity.

The third (and last point) is the importance of getting private industry involved.

3. Get private industry involved
A lot of companies "talk the talk" - they complain about their incoming hires not being worldly or knowing English - but they can "walk the walk" by participating in this program. As mentioned before, the program should be funded primarily by private companies. The reason is that this would give businesses a certain amount of "buy-in" - making them active stakeholders in the program and giving them an interest in its success and the success of the participating students. Private companies would also help by defining the types of people they want to hire - namely, people with overseas experience - as well as creating a willing job market for the students who return from overseas. To ease this process a certificate could be created for alumni, so that employers can tell who participated in the "official scholarship program." This is especially true in this country, since the Japanese love certificates and rankings.

Private companies would also provide crucial feedback on what is globally relevant and what the real world trends and needs will be in the next generation of leaders and creative thinkers.

In the longer term, having a pool of globally oriented, bilingual people can only be an enormous advantage for forward-looking Japanese companies. A global perspective helps companies understand that global "needs" are not the same as domestic "wants," and knowing this can help ensure that the products Japanese companies send overseas are globally relevant, and meet the needs of global consumers.

Implementing a program that encourages study abroad on a wide scale might uncover a number of problems in the Japanese establishment. But it would go a long way toward helping to renew and reinvigorate Japan and help it shake off the fetters that have been holding it back all these years - allowing this country to regain its natural innovative, competitive spirit and to prosper once more.

Your comments are always welcome.

Nominate a young leader to the World Economic Forum

As a Young Global Leader and Global Agenda Council member of the World Economic Forum, I was asked to become the Founding Curator for the Japan hub of the Global Shapers Community (GSC).

If you know of any passionate young leader in their 20’s living in Japan, please nominate them to the Global Shapers Community of the World Economic Forum. It will be quite a program. For more information or to nominate, please visit: http://impactjapan.org/gsc/

The "Hidden" Key to Economic Growth

As an upcoming YGL participant at the Annual Meeting of the New Champions 2011 (aka “Summer Davos”) of the World Economic Forum in Dalian, China (14 – 16 September 2011), I was asked to submit an opinion piece on "Mastering quality growth" for discussion and publication at the summit. I am posting the article to my blog so that you may send me questions that you would like to have addressed by the WEF.

I will select several questions to incorporate in two sessions I am participating in: "New Perspectives on Growth" on Wednesday, Sept. 14, and "Women Entrepreneurs - How are women changing entrepreneurship and driving growth?" on Friday, Sept. 16.

The Hidden Key to Growth:
Ready, Willing, and Waiting for an
Invitation to the Boardroom

There are several factors contributing to anything that could be termed “quality growth,” including environmental sustainability, better distribution of global income, and new metrics to calculate that growth. All worthy topics, but I would like to address a social issue that may get overlooked in the enthusiastic search for such growth.

It would be nice to think that discrimination is the kind of unwanted baggage we left behind in a previous century, but that is not the case. Discrimination based on national, ethnic, racial, or religious causes is still common. Yet evil as these realities may be, one type of discrimination is even more common: Women, regardless of their ethnic, racial, religious or national backgrounds, remain second-class citizens in most of the world.

What does this have to do with growth? Everything. The real cost of discrimination is considerable, and for many countries in Asia and the Mid-East it represents a significant piece of “missing GDP.” In order to achieve higher and more balanced growth, all nations, and especially the more male-dominated societies, need to let go of this useless baggage so as to achieve their full potential.

For the last half decade I have resided in Japan, one of the world’s largest and most backward economies. By “backward,” I mean a nation whose major corporations make gender discrimination a matter of policy. Companies hire women by the tens of thousands each year, then give them mostly menial jobs while their male counterparts, no matter how incompetent, are promoted regularly. The reasons for this lie deep in Japanese cultural tradition, and to those who argue that “outsiders should not criticize or try to change our culture,” my response is: When your traditions are choking your own economic health, insiders not outsiders should be crying the loudest for change.

A survey conducted last year by a prominent U.S.-based nonprofit examined the top 200 companies on the Fortune Global 500. It found dozens of giant corporations that had no women directors of any kind. None. Japanese companies took the dubious honor of having 19 companies big enough to be ranked among the world’s top 200 but not open enough to find room for a single woman in their boardrooms. Some of Japan’s most internationally active firms were on the list: Toyota, Nissan, Honda, Panasonic, Canon, and Toshiba had not a single female director among them. The final tally was 265 board seats. Total female representation: 0.

A 2009 survey of Japan’s top 100 companies found 17 women out of a total of roughly 1,200 board members, and of those 17, 16 were classified as “outside,” i.e., non-executive directors. Observers could be excused for thinking that Japanese companies are more interested in window dressing than in meeting diversity issues head-on.

Let’s focus on the bottom line: Gender discrimination hurts business and robs national economies of vitality and growth. To put it positively, many countries could add percentage points to their GDPs just by moving more women into the workforce.

In Japan’s case, a Goldman Sachs study concluded that if the labor force included the same percentage of women as men, that change alone would add 8 million new jobs and boost GDP by 15 percent. In other words, this massive but dismally performing economy could grow by more than the entire GDP of Canada and Israel combined if only it was willing to give women a better chance to work. I have seen time and again how bright, motivated women workers not only equal their male counterparts but often outperform them by a wide margin. Foreign companies have known this for years. In a phenomenon known as “gender arbitrage,” they compete to hire these legions of overachieving women and give them good jobs and salaries. They certainly don’t do that to win CSR awards; they do it because it helps their bottom lines. Who loses? The domestic firms that put tradition ahead of profitability and bigotry ahead of growth.

This is not a Japan problem; it’s a global problem. Increasing women in the workplace, and attracting and promoting capable women is a sign of efficiency. It makes sense for business. How many nations today can say they don’t need to increase GDP growth, especially if the solution is completely domestic and inexpensive?

William H. Saito

Tokyo, Japan

The Forum of Young Global Leaders is a unique, multistakeholder community of exceptional young leaders who share a commitment to shaping the global future. Each year the World Economic Forum identifies 200-300 extraordinary individuals, drawn from every region of the world. Together, they form a powerful international community that can dramatically impact the global future.

A Trojan Horse to Spark Innovation and Globalization (part 2)

Continued from last week, we discuss implementing an effective and wide-reaching scholarship fund for Japanese students. In order to do this, creating an organization that helps coordinate the various requirements becomes a critical necessity.

The second (of three points) is the type of scholarship organization needed.

2. Scholarship organization
Regarding a coordinating organization to run such a scholarship program, I helped setup an organization called IMPACT Japan, a non-profit created for supporting events such as Global Entrepreneurship Week (GEW) and TEDxTokyo. An organization such as this could be used to coordinate and do the following (not in any particular order):

• Coordinate with government agencies and ministries, since this issue overlaps with what many of them do very well;


• Vet appropriate target universities and curricula and make sure the participating students are placed in an appropriate curriculum/environment;


• Vet the student applicants to ensure they are motivated and have the required knowledge and maturity;


• Help with visa processing;


• Help with handling money (living expenses/tuition) for the students;


• Assist in finding host families, dormitories, apartments and other housing issues;


• Coordinate and receive funds from sponsors;


• Help with job placement for returning students;


• Send out solicitations for scholarships;


• Issue certificates - which may become important for job hunting;


• Assist with coordination and networking of program alumni.

Next week, I discuss the final point of getting private industry involvement and why that is critically important for the success of a vibrant and sustainable scholarship program. Your comments are always welcome.