William H. Saito's Official Blog

2011-12-10T12:53:00.001+09:00

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

St. Gallen Symposium

2011-12-03T00:28:00.002+09:00

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)

2011-11-14T08:43:00.000+09:00

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)

2011-11-04T18:51:00.002+09:00

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)

2011-10-27T22:25:00.002+09:00

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)

2011-09-18T18:55:00.002+09:00

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

2011-09-10T11:25:00.002+09:00

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

2011-09-07T15:34:00.003+09:00

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)

2011-09-01T22:20:00.001+09:00

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.

A Trojan Horse to Spark Innovation and Globalization

2011-08-24T09:58:00.000+09:00

What if one simple concept, such as implementing a wide-reaching scholarship fund for Japanese students to study overseas, actually became, in a sense, a sort of "Trojan horse" into the Japanese establishment, unearthing a whole slew of inefficiencies, barriers and problems to be solved in Japan's government, education system and society?

There are at least three points to consider when establishing an effective scholarship fund. The first, I present this week.

1. Expand beyond existing programs
First of all, there is little point in simply recreating existing programs like the Mansfield fellowship (U.S. government employees only), Rhodes (Oxford University only), National Science Foundation (for researchers/scientists) and Fulbright (graduate students only) scholarships, in which elite students go overseas to do post-graduate research. Researchers are important, of course, but Japan also needs to nurture people who will become the next generation of entrepreneurs, venture capitalists and international business leaders, as well as artists, writers, musicians and people who support such endeavors.

This point is very important. The program should catalyze cross-pollination and well-rounded experience in a global way. Existing programs send students to meet similar peers to reinforce their area of knowledge. With the Japanese the opposite is needed - their education is currently very focused, so giving them a chance to interact, to exchange ideas with people of different backgrounds, both culturally and educationally, so they can see things from different perspectives. If there was one main point to this new scholarship program, it is to provide opportunities for such cross-pollination. Therefore, the program should be open to students from all fields of study.

In addition, the institution to which the students were being sent would have to be carefully vetted. Sending large numbers of Japanese students to community colleges or ESL programs, where the temptation would be to get together with other Japanese students, would be counterproductive. The program's organizers should check out the situation overseas and also "load balance" the target universities to avoid a situation in which the students all end up at one institution and spend all their time together.

Next week, I discuss scholarship organizations and what functions they should perform to be effective.

Your comments are always welcome.

Barriers and Solutions for Setting Up Study Abroad Programs

2011-08-11T21:33:00.007+09:00

As a long-time proponent of study abroad, I am convinced that students who live and work overseas gain a wider perspective and a global viewpoint. They can expand their networks and get valuable experience in learning how to negotiate, exchange ideas, and discuss opposing opinions respectfully.

The primary reason Japanese students, particularly male students, are not going overseas is that they have little incentive to do so, even if they have the desire. Indeed, the educational system - and corporate society in general - seem set up especially to put roadblocks in the way of this kind of activity. People can have serious problems if they get off the corporate escalator where they are expected to do one thing at 20, another at 21, another at 22, get married at 25, and so on.

One barrier in particular is the dreaded shushoku katsudo, or job-hunting activity, a stressful period of job interviews and examinations which now begins in the third year of university or even earlier. The hiring cuts and belt-tightening of the last 20 years have resulted in a work force too frightened of the future to dare venturing "off the beaten path."

We must banish the real and paralyzing fear among the Japanese about getting off track and acquiring the stigma of a chuto sayo, or "in between hire," that is one who is hired in mid-career or as anything except as a shin sotsu, or new graduate, snatched up immediately after university and put on a steady, age-based promotion track.

There are many cases in which students receive scholarships but are vetoed by parents worried that their children will be frozen out of the shushoku katsudo, if they are absent from the country and therefore the job-hunting process. Even more important in Japan is moving through the ranks with your peers who got hired with you as new grads - not matching up with your normal age group makes people suspect something is wrong with you. So there are many hurdles even when the money is available.

Action, solutions
An obvious first step is to set up a scholarship program to encourage and give incentives for students to go abroad.

Just giving scholarships is not the end goal or the solution. In the process, the program will uncover a host of latent issues that will highlight/pinpoint areas within the Japanese government and educational system that need to change.

These include tie-ups between educational institutions to realize tuition reciprocity, so that students are not forced to pay tuition to both their home institution and the exchange one (exchange students at Keio going to Harvard, for example, have to pay tuition at both institutions), and credit transferability, so that students can use credits earned while studying abroad toward their degree.

These changes would start with a policy to encourage scholarships at the high government level; the government would instruct the Ministry of Education to set up fair exchanges on reciprocity of credits, tuition subsidies and waivers; income taxes (Finance Ministry); visas (coordinating with foreign embassies); and take steps to tackle other barriers (such as parental concerns).

On the private industry side, companies would need to change their thinking somewhat to accommodate the program and the new, globally inclined individuals coming out of it. Firms would have to loosen or eliminate some of their traditional hiring practices, such as the strictly defined hiring season, job-interview schedule, as well as the stigma of chuto sayo, rigid adherence to year of entrance into a company, and so on.

They might consider setting hiring criteria, a 5% quota for example, for hiring people who have actually studied abroad and/or give incentives to companies that hire such people.

With government, academic and private industry cooperation (a topic for next week), a number of creative solutions could be put forth to encourage a new generation of innovative thinkers and entrepreneurs who add spark and energy to a sluggish economy.

Your comments are always welcome.

Why Japan Should Promote a Study Abroad Scholarships

2011-08-04T07:21:00.002+09:00

Even in this age of globalization, the number of students going abroad is in serious decline. In recent years, I had conducted an informal survey on the subject of overseas experience among university students and found that about a third of them, most of them female, had three months or more of overseas experience. Another third, mostly male students, had two weeks or even less of overseas travel. The remaining third had never been overseas, and most of them didn't even hold passports.

By contrast, U.S. students are studying abroad in record numbers. According to the IIE, the number of Americans studying abroad increased by 8% in the 2006/7 academic year, part of a decade that saw unprecedented growth in the number of U.S. students receiving academic credit for their experience abroad, with an increase of close to 150%, from less than 100,000 to nearly 250,000 in 2007.

At the same time Asia, outside of Japan, is the region sending the most students to the U.S., with increases of 10% every year for the last decade. For example, in the 1994 and 1995 academic years, the number of Japanese students studying in the U.S. totaled 45,000; by 2006-2007, it had declined to 35,000. At the same time, by contrast, last year China sent 98,510 grad and undergrad students to the U.S., and India over 100,000. The "stay rates," that is the number of students who receive advanced degrees, such as PhDs, and then stay to pursue research, are similarly skewed. According to data from the Oak Ridge Institute for Science & Engineering, for PhD recipients who remained in the U.S. after 5 years, the rate for China was 91% and for India it was 81%. Japan is way down the list at 33%.

Why bother with overseas experience?
By going abroad, students gain a wider perspective and a global viewpoint. They expand their networks, exchange ideas, and learn how to debate and discuss respectfully. They get an idea of the breadth of the world, and the wants and needs that drive the actions of people in other parts of the world. They also get used to differences - monocultural people have a tough time when going overseas for the first time, particularly in dealing with foreigners in this increasingly global world. Since Japan is a country with relatively few foreigners in the population, Japanese within Japan don't have many chances to speak English or interact with foreigners.

People need to learn to adapt to different ways of thinking - interacting with different cultures, building relationships, getting comfortable with other nationalities and so on - and to do this at a young age. It is important to do this at the university level at the latest, though high school exchange programs should also be looked into. Once people go into the work force, it is too late. By the time they reach the corporate career level, the learning process is different - less forgiving of mistakes, and less tolerant of people who are trying to find their feet in a new situation. Japan educates its students to conform, memorize and fear failure - whereas in this globalized world, cooperation, team building, interaction, discussion, negotiation and understanding are critical qualities.

Study abroad also promotes independent thinking, a crucial attribute of strong leaders with vision.

Finally, and this is perhaps most important, experience abroad in an international environment teaches people to be comfortable with English. Like it or not, English is the language of global business, science, diplomacy, and most other international interactions. At a time when China (incredibly) has more English speakers than the U.S., yes, it matters whether Japanese speak - not just speak but are comfortable using - English. If you want to be effective on the global stage, then you must be confident in English, and so must your key staff.

However, English proficiency among Japanese college grads, as indicated by TOEFL scores, is the lowest among 27 Asian countries. This is a recurring issue for Japan. Japanese students supposedly "learn" English for 6-7 years in junior, middle and high school. However, they can't really use it or speak it, since this learning amounts to little more than memorizing word lists, taking tests and obsessing about TOEFL/TOEIC scores. And with little opportunity to use English in real situations, the students lack the confidence to use their language skills and little motivation to perfect them. Having this scholarship program available would help in efforts to overhaul English education in Japanese schools - if students expect to go overseas in the near future, then the focus will shift to language they can use, rather than passing tests.

Spending time abroad helps people understand that the common language of the world today is not proper, flawless English; it is, in fact, "broken English." Experiencing this first-hand and understanding it allows people to be more confident, relaxed and effective when interacting within this globalized world in spite of their imperfect English. This in turn gives them the freedom and ability to work with people from a variety of cultures, backgrounds and ways of thinking. And that is a major advantage for companies and other organizations with an interest in operating overseas.

Indeed, speaking is only half the issue. Understanding, accepting and expressing different viewpoints - culturally, technically, etc. - are just as important. Silicon Valley, to take a famous example, is not so much a place as a way of thinking. The Americans there are part French, English, German, Chinese, Japanese, and on and on. All of them bring their quirks, feelings, emotions, understanding, culture, background, etc., as they proactively - regardless of age or seniority - debate, discuss and argue to create the best product possible. In Japan, in contrast, there is little debate; everything ends up looking like conventional Japanese since only the most senior advice gets implemented.

Next time I'll look at some of the barriers to creating a study abroad program. Your comments are always welcome.

TV Interview on BS11's "Inside Out" Program

2011-07-29T20:14:00.006+09:00

Getting ready for my first live TV interview in Japan (by @Fujiyo Ishiguro - be nice!) and in Japanese. Hoping for a lively and interesting 1-hour discussion. It's on BS11's "Inside Out" program, from 10 p.m. tonight.

Japan Needs More People with Foreign Experience

2011-07-19T20:06:00.000+09:00

As I write this, the Japanese women's soccer team "Nadeshiko" Japan won the World Cup for the first time ever. This was a tremendous accomplishment by a team composed of Japanese women who have studied or played outside of Japan for many years. It was interesting to listen to the sports commentator mention how Japan could comeback (after getting behind on goals) because several of the players had played in the United States and "know" how their opponents think and play. To understand how the world "plays," I feel, is very important to the future of Japan.

Unfortunately, the number of Japanese students going overseas to study has been plummeting in recent years, and this is a serious matter for anyone concerned about the future of Japan. To reverse this trend, a new scholarship fund is needed to encourage students at Japanese universities to spend time overseas. The program would be funded from both private and public sources - generously enough to be noticed and taken seriously, and comprehensive enough that it would be available to a diverse array of students who want to take part, from any field of study. Soliciting funding primarily from private companies would ensure that these firms have a stake in the success of both the program and the students taking part.

The problem
Japan has been in a serious malaise for the last 20 years. In the 1980s, Japan was the envy of the world, an industrial powerhouse set to take over the world No. 1 spot from the U.S. Today things are somewhat different. From "Japan bashing" to "Japan passing" and now "Japan missing," this country's prominence on the world stage is sadly diminished. While the reasons for the deep sense of gloom gripping the nation are many and complex, one this is inarguable - Japan's global competitiveness has suffered.

More specifically, most Japanese products are currently designed and marketed only in Japan and have little global presence or relevance. This is due both to Japanese companies not going overseas for various reasons - among them lack of English-speaking staff and fear of conditions outside Japan. This in turn is directly attributable to employees of these companies lacking overseas experience. In addition, companies are designing products that are not globally relevant - such as $800 cell phones with functions that only Japanese can understand or use. This is due to people not experiencing the real world and understanding what people in Africa, for example, really need, and other "bottom of pyramid" issues. This is also serious from a national security standpoint - Japan's position on the world stage is fading fast.

These two decades of malaise have been accompanied by a growing insularity, in business, academia and other segments of society. And this insularity is spreading to Japanese young people, as evidenced by the decline in numbers studying overseas.

At the core of Japan's problems - sagging academic performance among Japanese students, the declining competitiveness of Japanese industry, and a glaring absence of leadership in every segment of Japan's society - lies this disturbing tendency toward insularity.

Japan can do a lot to fix itself, but if it wants to lay the foundation for a better, more vigorous Japan, it must shuck off this insularity and engage with the world. And the best way to start - the investment in the future with the greatest potential return - is to promote study abroad. Let's learn from the women of Nadeshiko Japan! Your comments are always welcome.

Busy (media) week!

2011-07-18T22:55:00.003+09:00

I don't know what happened, but what started as a slow, hot and muggy summer week in Tokyo ended up being a media frenzy for me. Since this is a first for me, I thought I'd blog about it.

On Monday (7/11), The Nikkei Weekly published my opinion piece on "Entrepreneurs: Japan's hidden resource" (pg. 26) where I talk about how governments have an opportunity to encourage innovation and entrepreneurship.

On Tuesday (7/12), McKinsey held the launch party for their book, "Reimagining Japan: The Quest for a Future That Works", in which I contributed a chapter entitled, "Venture and Social Capital: A Vision for Japan" (pgs. 318-323).

On Wednesday (7/13), the Swiss Chamber of Commerce and Industry in Japan (SCCIJ) invited me to speak at their July luncheon where I spoke about "Reigniting the Entrepreneurial Spirit in Japan: Now is the Time."

On Wednesday (7/14), the magazine Think! by Toyo Keizai published my Reimagining chapter in Japanese titled "日本に提案する未来像" (pgs. 90-93).

On Friday (7/15), The Economist quoted me in their print publication about "Innovation in Japan - Samurai go soft: Japan’s preference for hardware over software is fading." ~~Later, I was interviewed on~~ ~~The Today Programme~~ ~~on BBC Radio 4 where I spoke about the future of Japan and the opportunities that abound here.~~ (rescheduled for later due to breaking news)

Today, Monday (7/18), I got interviewed by TV Tokyo's World Business Satellite (WBS) to talk about young (20-something) entrepreneurial ventures and the importance of them going after global markets. This was one of my first long interviews in Japanese so it was definitely not my best performance - need a lot more practice!

Phew ... what a week. I wonder how long this will keep up! For those who read, saw or listened to any of this, please feel free to send me any comments.

2011-07-12T12:44:00.002+09:00

Preparing for my speech at the Swiss Chamber of Commerce tomorrow on "Reigniting the Entrepreneurial Spirit in Japan" http://bit.ly/p7GJzD

The "Stop Ten" Steps to Entrepreneurial Growth in Japan (cont.)

2011-07-11T13:12:00.001+09:00

Continued from last week, I discuss government programs and actions that should be "stopped" versus started to encourage entrepreneurial growth in Japan. (The first five can be found here.)

Six: Stop mindless paperwork and regulation - If the same attention to process efficiency that has driven Japan's manufacturing success were focused on government bureaucracy, the country's business environment might change overnight. While its competitors move rapidly to adopt streamlined, paperless process, Japan remains mired in a legacy of mindless paper-shuffling. This is reflected in Japan's ranking in a World Bank measure of the ease of starting a business. Out of 183 countries, Japan is ranked 91, behind Mexico and not far ahead of Zambia.

Areas where process reform might usefully stimulate entrepreneurship include requirements for guarantors, bankruptcy procedures, privacy laws and hiring/firing practices.

Seven: Stop wasting women's energy and talent - Facing serious demographic challenges posed by an aging society, Japan has no excuse for wasting the tremendous untapped capacity of its working-age women.

Perhaps because they face barriers to advancement in the mainstream corporate world, Japanese women are already among the nation's most dynamic and creative entrepreneurs. If gender-specific barriers were lowered, we could expect to see women spearheading even more ventures. While social safety nets are not an ideal solution, if Japan is to produce new generations of children and at the same time care for a vast population of retirees, we need to support working mothers with enhanced child-care options and opportunities to return to the workforce as the workload of parenthood decreases.

Going one step further, we need to create frameworks for women to start new businesses that are flexibly compatible with the other roles they must fill.

Eight: Stop holding Japan's door closed - Faced with a dearth of home-grown entrepreneurs, one obvious solution is to import. And Japan has many attributes that foreign "knowledge workers" prize: safe, efficient and cosmopolitan major cities; highly dependable infrastructure and services; proximity to key Asian markets and production bases.

Foreign talent can meanwhile fill key gaps in the skill-sets of home-grown start-ups: global perspective and communications skills; lateral-thinking skills neglected by Japan's education; and more.

In fact, the lack of diverse global skills threatens to "hollow out" Tokyo's role as a global head-office hub. In many key functions, such as marketing and public relations, monocultural head office staffs effectively devolve work to overseas subsidiaries simply because they are incapable of managing it. This puts Tokyo at risk of becoming "Asia's Delaware," an empty city of corporate shells where little actual business takes place.

To reverse this trend and attract a new wave of overseas talent, Japan's immigration authorities need to shift from grudging acceptance of foreign knowledge workers and entrepreneurs to an active welcome. One key measure to signal a change in attitude would be the repeal of "re-entry permits" - the cash grab by government that forces all resident foreign passport-holders to pay every time they leave and re-enter Japan.

A more substantive measure would be to eliminate the crushing burden of school costs imposed on foreign-resident families and their employers. Although foreign residents pay local and national taxes that support public schools, in practical terms it is impossible for a 14-year-old moving from Silicon Valley to Tokyo to fit into a standard local middle school.

At present, the only alternative is for families or employers to pay 2.5 million yen or more to send that child to an international school. The government should institute a system that provides any foreign resident who pays "ward tax" with educational vouchers for use at international schools.

Nine: Stop ministerial "silo mentality" - Having been involved in the start-up of several ventures in Japan, I can testify that one fate any entrepreneur should fear is getting trapped among a web of competing ministerial bureaucracies. Depending on the business involved, you many find yourself running between MIC, MOF, METI, MLIT, MLHW and a surfeit of agencies in search of permits and "case-by-case" approvals. The demand you receive from one will inevitably conflict with the requirement posed by another.

The only possible solution I see to this problem is an office of "Innovation & Entrepreneurship" at the level of the prime minister's office. This would be a "one-stop-shop" where new ventures could take inter-ministerial snafus for quick and painless resolution. It could also encourage "cross-pollination" among the various ministries.

Ten: Stop Ageism - Japan's customary system of automatic promotion on the basis of seniority exacts an enormous toll on both public and private-sector organizations, breeding complacency and sapping ambition. The government needs to lead the way by instituting merit-based promotion across the board. Competition and meritocracy are not antithetical to Japan's working world. The problem is that university entrance examinations are currently the last time in life that most Japanese are foced to compete to get ahead.

Breaking Down Walls Beats Building Ladders
To even entertain the notion of doing less-not-more, of ceding control to unseen forces, may cause Japanese government bureaucrats to break out in a cold sweat. The notion is antithetical to their historical modus operandi. But if increased entrepreneurial activity is the objective, breaking down walls will beat building ladders every time.

The Japanese people are, by nature, creative, clever, hard-working and socially adept at forming highly competitive teams. The challenge is not to change their essential nature - but to set it free. Your comments are always welcome.

The "Stop Ten" Steps to Entrepreneurial Growth in Japan

2011-07-04T18:18:00.001+09:00

As I have mentioned in the past, the reflexive bureaucratic approach - proactive efforts to cultivate entrepreneurs - amounts to trying to grow seedlings in the artificial environment of a greenhouse. These will never survive transplanting.

The more effective approach is to simply stop practices that impede the emergence of entrepreneurs and create a fertile environment in which they can naturally grow. To that end, Japan's government could usefully embrace the following series of measures to stimulate real and sustainable entrepreneurship. To hammer home the message that the government's role needs to be "stopping" not "starting," I call these ...

The "Stop Ten" Steps to Entrepreneurial Growth in Japan

One: Stop propping up dead trees - By artificially prolonging the existence of enterprises that would otherwise disappear, the government actively prevents the emergence of new growth. Quick dispatch of the remains of failed companies would free up capital, labor and customers. Importantly, this would clearly signal commitment to a level playing field and that Japan looks forward not back.

Even where corporate failure is not a factor, government policy needs to address the bureaucracy's strong tendency to favor entrenched interests over new market entrants, home-grown or foreign. This actively hampers the emergence of new entrepreneurial ventures.

Two: Stop trying to pick winners - Any effort by bureaucrats to determine which ventures or industries merit government support is doomed to failure. Given that even savvy venture capitalists expect two out of three ventures to fail, no amount of bureaucratic scrutiny is going to be any more accurate. Worse, direct grants are prone to what economists refer to as "regulatory capture," which means that the lion's share of any funding goes to the favored clients of political interests. Government grants create a moral hazard that distorts entrepreneurial activity.

Three: Stop stifling entrepreneurial energy in infancy - Japan's mandatory school curriculum, implemented nationwide without deviation, is designed to produce a uniform product. Learning centers on rote memorization and the pursuit of one right answer. The underlying lessons that creative problem-solving and risk-taking (the core skills of entrepreneurship) are wrong and counter-productive. Thus, anyone who survives a Japanese education with his or her entrepreneurial instincts intact represents a failure of the system.

Therefore, the most profound step government could take to stimulate entrepreneurial energy is to stop systematically squeezing it out of the nation's youth. Given that, in the U.S., many successful entrepreneurs started in their mid-20s, an effective Japanese effort that began with high-school students could produce an initial crop of entrepreneurs within a decade.

Realistically, though, any meaningful change to Japan's education system would likely take a decade, if it succeeded at all. A more certain route would encourage diversity, allowing private schools to follow alternative curricula without sacrificing graduates' ability to enter university.

Four: Stop stigmatizing failure - As mentioned in an earlier post, entrepreneurship is about the ability to accept the fear, the reality and the lessons of failure. But despite its celebration of gambare spirit (battling against all odds) Japanese society imposes a heavy stigma on failure. From university-entrance exams through loan applications and the bankruptcy process, any record of failure is a black mark. By contrast, lack of ambition seldom attracts criticism.

The government could usefully lead the way in "changing the atmosphere" around this issue. For starters, bureaucrats might well review all governmental procedures and criteria to weed out instances where those who have "tried-and-failed" face discrimination. Beyond that, the nation's leaders could usefully articulate the message that "trying and failing is okay; failing to try is not."

Five: Stop penalizing risk - Instead of tasking bureaucrats with deciding which ventures deserve government funding, stop penalizing private investors who support entrepreneurs. Angel investors in the U.S. can write off losses on failed investments, those in Japan cannot. While this may diminish tax revenues in the short run, over the long term we can expect such provisions to generate increased economic activity and thereby a net gain in tax revenue.

Angel investors have a key role to play in any new venture. Their decisions to participate are typically based on an informed appraisal of the entrepreneurs' character, skills and motives. They are often motivated by skills and experiences that give them informed insight into the business opportunity. And as their own funds are at stake, angels are concerned to see that funds are spent wisely. The tax system should stop penalizing them.

Next week, I will post the remaining five government roles that should be stopped. In the mean time, your comments are always welcome.

Never Fear: Entrepreneurship Is About Failure

2011-06-24T16:32:00.001+09:00

One fundamental problem in reinvigorating Japan's entrepreneurial economy is a misapprehension of the nature of entrepreneurship, and the factors that lead an individual to become an "entrepreneur." While in the last blog, I mentioned how entrepreneurship is a mindset that everyone should embrace, today I will concentrate on the venture-building aspect of entrepreneurship, which Webster's defines as "one who organizes, manages and assumes the risks of a business or enterprise." The key phrase in this definition is "assumes the risk." Entrepreneurship is all about the willingness of individuals to assume risk -- and their ability to calculate and mitigate against it. Not the blind willingness to just "take risks" as many tend to associate (incorrectly) with the definition of an entrepreneur.

In evaluating a business plan, although we might be able to discern something of its promoters' awareness of risk and their readiness to contend with it, no amount of "process" will eliminate it. We must embrace failure as a factor required for success.

As only 18% of entrepreneurs in the U.S. succeed with their first venture (Gompers et al., 2008), many, if not most, only achieve success after repeated failure. Thus, entrepreneurship is as much about failure as success. Its essence is a capacity to accept the fear, the reality and, above all, the lessons of failure. This capacity is required of the entrepreneur and - critically - everyone surrounding him or her: spouses, in-laws, bank managers and peers. Without this capacity to accept failure, a grant from government to become an entrepreneur represents a poisoned chalice.

As an entrepreneur who has started ventures - successful and otherwise - in both Japan and the U.S., in this regard I can testify to a profound divergence in attitudes between the two nations. While Americans tend to have high regard for individuals who succeed by taking risks, there is a corresponding tolerance for those who try bravely but fail. In Japan, by contrast, as Robert Kneller wrote in a July 2000 article in J@pan Inc. magazine:

"Failure is regarded not as a valuable learning experience but as a sign of ineptitude or moral turpitude. Family members are likely to be ostracized. Credit ratings are ruined. Obtaining a housing mortgage or renting an apartment becomes impossible."

In fact, failure is only such if it is not taken as a learning experience and one builds upon what was ascertained to correct and try again. Since we are born, we have failed continuously at many things (walking, riding bikes) but have eventually learned to overcome them. However, just because we have become adults doesn't mean the process stops.

From this observation, one might attempt to hypothesize an inherent flaw in Japanese civilization, to say that Japanese somehow lack entrepreneurial DNA. If so, how could one account for two outbreaks of unbridled entrepreneurial vigor in the nation's modern history?

Both in the Meiji Era (1868-1912) and following Japan's defeat in 1945, Japan's development was propelled by surges in entrepreneurial activity that created what are now the nation's largest companies. Post-1945, due to wartime devastation, even established firms were effectively "restart-ups."

Even without offering a comprehensive analysis of Meiji versus post-war entrepreneurship, in both instances it is evident that Japan's established order was disrupted and that the barriers to assuming risks were lowered.

In both periods, disorder created an atmosphere of opportunity. In Meiji, a new-found sense of freedom encouraged entrepreneurs to assume risks. Post-war, it was hunger and desperation that lowered the barriers to assuming risk. Prospective entrepreneurs had nothing to lose. They started with nothing - but nothing stood in their way.

In this hungry environment, people like Masaru Ibuka and Akio Morita, the founders of Sony, were not deterred by the absence of government grants.

Beyond dispute, the Japanese have enormous latent entrepreneurial effort. But set against it is a corresponding societal instinct to smother anything that moves in bureaucratic process; to eliminate anything that smacks of disorder, randomness or risk. The result is unparalleled excellence in manufacturing but stunted entrepreneurial energy.

This gives rise to a disturbing notion that Japan grows like a forest in which new saplings can only emerge once fire releases the seeds from pine cones and allows sunlight to reach the forest floor. Although perhaps an effective mechanism, it requires undue suffering among ordinary people.

So how might Japan learn to grow without burning its entire structure to the ground? In my next post, I'll look at some practices that need to stop in order to start up a reinvigorated entrepreneurial economy.

Do Japanese Lack Entrepreneurial DNA?

2011-06-14T16:02:00.006+09:00

Having just returned from the World Economic Forum - East Asia in Jakarta, I was very impressed by the high caliber of participants (high government officials, Fortune 100-level executives, NPO/NGO leaders and numerous entrepreneurs) from around the world. For me personally, it was three days of incredible discussion and dialog with a large number of very smart and passionate people. From time-to-time, I was asked how Japan was doing--not only in the context of the recent disaster but also for the future going forward--and if they will "ever come back." This got me thinking about this topic once again and also provided me with a foreigner's perspective on the matter. I've been thinking about this issue since returning to Japan.

To assert that "Japanese bureaucrats can no more create an entrepreneur than a man can give birth" may seem an obtuse preface to a clarion call for Japan's government to focus on creating entrepreneurs. But without such an emphatic proscription up front, the bureaucrats can be expected to charge off in the wrong direction.

While Japan's government (or any other government) cannot proactively "create" a cadre of entrepreneurs, it is well within Tokyo's power to stop practices that effectively prevent the emergence of successful entrepreneurs. Furthermore, as I have mentioned repeatedly, many of the most innovative companies in the world were founded during times of crisis. Therefore, it is critical to remove any barriers that inhibit entrepreneurial activities and to correct (well intentioned, yet) ineffective methods that have continued to waste public funds with very little to show for it.

The need is clear. If Japan is to stem an economic decline that continues after two decades it must generate a new wave of entrepreneurial energy. Since 1975-76, when Microsoft and Apple were founded, the U.S. has consistently produced a stream of entrepreneurial ventures that have become pillars of the nation's economy, including Oracle, Dell, Amazon, Google and many others. Over the same period, only a handful of Japanese ventures (e.g., Softbank, Uniqlo and Rakuten) have achieved success on a large scale. Yet, even these companies have yet to make the global impact that their brethren have.

When confronted with a gap like this, Japan's bureaucratic response is reflexive and predictable. Plans are drawn up with catchy numerical targets: "Create 10,000 entrepreneurs in 10 years." To make the initiative concrete, plans for a state-of-the-art "Entrepreneur City" may be unveiled -- echoing the near-empty, heavily subsidized "Science Cities" left over from Japan's surge of enthusiasm for R&D in the 1990s. At the same time a costly nationwide advertising campaign may be launched with slogans like "Be an Entrepreneur!"

With whatever budget remains, we can expect the centerpiece of such an initiative to be a program of cash "research" grants, allocated equally among the prefectures, and administered by a small army of bureaucrats tasked with processing voluminous paperwork from applicants. This is the trap that bureaucrats are most likely to fall into when administering any disaster relief fund.

What we can predict with near certainty is that Japan's usual approach will fail to generate the required increase in entrepreneurial activity. Not that the reasons for failure are specific to Japanese bureaucrats. Too little spread too thin without the right support (management, resources, etc.) will lead to the same ineffective result. The inherent folly of targeted state intervention to spur entrepreneurship has been demonstrated decisively by scholars such as Josh Lerner and William Kirk & Ramana Nanda of Harvard Business School.

Anyway, back to the forum in Jakarta, I had the opportunity to listen to the vice chair of Keidanren (Japan Business Federation - 日本経済団体連合会) during the "Creating Jobs in Asia: The Entrepreneurship" session where he (Yorihiko Kojima - Mitsubishi) mentioned that "Entrepreneurship is not about the size of a company but about a mindset." I just hope all the leaders of Keidanren really feel that way, but to make a significant difference both the organization and the government need to become more innovative and entrepreneurial in how they foster entrepreneurism in Japan.

In my next post, we'll look at one characteristic that seems to be a particular barrier to entrepreneurial growth in Japan: fear of failure.

Reigniting Japan's Entrepreneurial Energy

2011-05-18T19:58:00.007+09:00

When I lecture at universities on innovation and entrepreneurship, I show students a slide (below) of the top 50 innovative companies in the world and the year they were founded (the list source is not important, but in this case, it was from Business Week). Besides the fact that only four Japanese companies are listed here, there are some other striking points to note:

1. No world-class companies have been founded in Japan since 1946; and

2. Japan's major companies (and others on the list) grew out of a time of crisis in that nation's history.

(Actually, there are at least five unique points in this slide - maybe a future post...)

This begs the question we will deal with first: Why? And another essay will look at what kinds of innovative companies we can expect to emerge from this current crisis, caused by unprecedented natural (and manmade) disasters.

Japan's defeat in 1945 unleashed a wave of entrepreneurial energy that stunned the world as it swamped global markets three decades later.

It began in burned-out cities with demobilized soldiers desperately seeking rice to put on the table and a way to recover their shattered pride. With nothing to lose, they had no fear of taking risks in order to succeed.

In Shinagawa, Sony's founders, Masaru Ibuka and Akio Morita, tinkered with rice cookers and radios. In Hamamatsu, Soichiro Honda strapped small engines on bicycles. On the very edge of Hiroshima's blast radius, survivors at Toyo Kogyo scrambled to produce three-wheeled trucks under the Mazda brand.

This desperate entrepreneurial energy drove postwar Japanese to amass more wealth in the span of a single lifetime than any generation of human beings in history. For awhile their momentum seemed so unstoppable that rivals began to contemplate the likelihood of "Japan as Number One."

Then, the momentum suddenly disappeared after 1991.

At first, the meta-shock of a bursting Bubble Economy seemed to explain it. But 20 years later this country is still nowhere near regaining its mojo. Even Japan's strongest competitors now seem to be losing steam. Korean upstarts like LG and Hundai are overtaking Panasonic, Honda and Nissan. America's Apple and Dell are surpassing Sony and Toshiba. Even General Motors, recently arisen from the grave, looks like it might recover its global crown from Toyota.

What happened here - and why?

Even after 20 years, Japanese still don't know what hit us. But now that it's clear the problems will not solve themselves, we need to answer a fundamental question: Why did Japan's entrepreneurial drive disappear?

Who am I to answer this question?

Born to Japanese parents who immigrated to Los Angeles, I grew up in California's "techno-geek" culture. So it seemed perfectly normal to start a software company in my college dorm at age 19. Without disturbing anyone's parents, friends and I could stay up all night coding for clients like NEC and Toshiba. But when a Japanese client announced a sudden visit on route home from a trade show, I knew he'd be shocked to find where his code was coming from. So we had to set up an office over the weekend.

From that haphazard start, we went on to establish I/O Software as global leaders in data security. Nine years later, in 2000, Microsoft adopted our core authentication technology, BAPI (Biometric Application Program Interface), into the Windows operating system.

For a veteran of California's freewheeling entrepreneurial start-up scene, the Japanese business world was a stark contrast. To my eyes, the problems were clear.

Many large Japanese companies became global without globalizing. Monocultural teams, devoid of foreign-language skills or global awareness, focus narrowly on domestic concerns and fail to spot emerging wants and needs in distant markets.

Given Japan's love of order and organization bureaucracy spreads in companies like kudzu vines: the bigger the tree, the thicker it grows. After three postwar generations, initiative and decision-making in Japanese companies have been strangled by bureaucratic process.

Add to that the Godzilla of bureaucracy, government functionaries who seek order and conformity in all things. Not so long ago they unabashedly quashed "excessive competition" for fear of "market confusion." No wonder we ranked 187, between Mexico and Zambia, in a global ranking of the ease of starting a new business.

Japan's major companies sprouted, almost literally, after a forest fire: the postwar period when bureaucrats and zaibatsu were in disarray. Over 60 years, along with government, they have grown like a grove of sugi, the tall Japanese cedars whose thick canopy prevents any sunlight from reaching the forest floor below.

True, small-and-medium-size enterprises (SMEs) are thick on the ground in Japan. Over 80% of Japanese firms have less than 40 employees. They generate 70% of GDP, but few grow to major scale. And that is a problem.

Since 1975-76, when Microsoft and Apple were founded, the U.S. has consistently produced a stream of entrepreneurial ventures that have become pillars of the economy, including Amazon, Dell, Google, Oracle and many others. You can count the equivalent Japanese newcomers on one hand - and on the other hand you can count established Japanese players that consistently rank among global innovators.

Arriving in Japan in 2005, I expected to find legions of frustrated entrepreneurs waiting, like Egyptians, for Twitter to signal the onset of revolution. "After all," I thought, "Japan has tens-of-thousands of brilliant engineers and scientists. Surely, with dreams stifled by corporate bureaucracy and academic hierarchy they must be yearning for liberation." As mentor or venture capitalist, I imagined myself unlocking the door.

Instead, I discovered that only 12% of Japanese dream of being their own boss, versus 49% of Chinese. And where 73% of Americans respect entrepreneurs, only 32% of Japanese feel the same way. This goes a long way toward explaining why Japan has the lowest rate of "Total Entrepreneurial Activity" as a percentage of GDP among the OECD nations: 3.2%.

Japanese have been conditioned to fear and avoid risk in every aspect of life. Today's youth, coming of age in a harsh economy, are even more risk-averse than their elders. Not only are fewer willing to risk venturing overseas, a growing contingent of hikikomori won't even risk leaving their bedrooms.

These kids are the product of schools - micromanaged by Kasumigaseki bureaucrats - that energetically stamp out any trace of individuality, creativity, ambition or appetite for risk. Conditioned to memorize and regurgitate the answers to maru/batsu (right/wrong) questions, they enter university with few critical thinking skills and scant ability to debate or discuss.

These kids come from families obsessed with "what the neighbors might think." If young Taro were to start his own business, and it failed, the family name might be stained forever. Worse, if Taro made a pile of money in his 20s, the Watanabes next door might presume he was a gangster.

To be an entrepreneur is to take on risk, intelligently gauging and mitigating it. As we know from the U.S., failure is part of the learning process. Only 18% of successful American entrepreneurs succeed with their first venture.

Why has Japan's entrepreneurial drive disappeared? I say it's because our national dream has shrunk to little more than a safe step on a predictable escalator. Get into a good university and ride up to graduation. Then get into a safe company, stand obediently to one side, and ride patiently up the escalator to retirement.

How can we turn this around? That is the subject of another post. Your comments are always welcome.

Post 3/11 (continued)

2011-05-06T11:21:00.000+09:00

(...continued from last week)

While change is inevitable after so much devastation and loss of infrastructure, the question becomes: what form and character will those changes take? And how much change will result from how much human energy unleashed?

One cruel scenario is the possibility that this disaster wounds Japan’s ossified postwar paradigm but leaves intact its stultifying bureaucracy (corporate and governmental) and the conformist systems of education and advancement that sustain it. Japan suffers without achieving rebirth.

Assuming that Japan does find the momentum for change, the second question is: What if this momentum takes Japanese society in a negative direction?

Some historians cite the upheaval following the 1923 Kanto Earthquake – a disaster of much greater magnitude that leveled the capital and killed more than 105,000 – as precursor to the 1930s militarism that led the nation into a much worse manmade disaster that culminated with our first two nuclear tragedies. Japan compounds tragedy with foolishness that brings further tragedy.

Worst case stated, I believe an optimistic scenario much more likely to unfold.

Across the Middle East, we have seen systems far more change-resistant than Japan’s topple in weeks as citizens shed their apathy and discovered common cause. Online social media has been the catalyst.

I feel a similar wave gathering strength in Japan. Driven by that innate Japanese disaster reflex, people have shed their apathy and are riveted to the news and social media. With no barriers to free speech, the Japanese web is abuzz with discussions of disaster relief, nuclear fact versus fiction, alternate energy sources, conservation… and politics. Impromptu aid efforts and protest movements are springing up. Rumors abound but propaganda and cover-ups quickly get exposed. The momentum for change is bottom-up.

Populism might provoke a slight up-tick in ultra-nationalism, but to little consequence. Japanese thought and fashion is much more intertwined with the Western democracies than it was in the 1930s. But with no shared passion for guns, religion, lower taxes or libertarianism, America’s Tea Party leaves Japanese cold. The Western trends that catch youthful imagination here are mostly green and lefty. If you want an audience, offer organic, sustainable, alternative energy surfing.

Sneer all you like at the objects of youthful idealism; young Japanese are unlikely to join the nation’s coming wave of entrepreneurialism without some sort of motivating passion. Few are driven to be entrepreneurs by desire to be their own boss.

Those that do take the plunge face fewer barriers than their parents did. Twenty years ago it was nearly impossible to reach a international audience without massive support from large corporations with access to mass-media and control of key station-front retail locations. Today, a web-savvy 20-year-olds can hope to capture imagination from Hokkaido to Okinawa and the world.

Its magnitude remains to be seen, but we can anticipate a coming wave of youthful creativity and productivity in Japan. In circumstances like these, it’s hard-wired. Foreign investors, direct and indirect, have a key role to play in encouraging it.

As the next Honda or Sony is will inevitably be born from this crisis, to foreign angels these shoots spell opportunity. Given the proper amount of support and encouragement built on top of an already strong innovation base, these foundlings may one day make adoptive parents proud.

So if a fund manager or prospective direct investor were to ask me how they should view Japan right now, this would be my answer. If you play the weather and not the climate I have no advice. But if you are among those whose investments are informed by awareness of the fundamental forces of natural evolution, then Japan is an intriguing place to be.

If looking for a bellwether, watch for reform of Japan’s electoral law that prohibits candidates’ use of social media once an election has been called. A restriction of democracy that is almost Egyptian, this reduces politicians to driving around in annoying loudspeaker trucks blasting nothing more sophisticated than, “My name is Tanaka, please vote for me.”

Japanese are finally in the mood to talk about change. Given an opportunity for thoughtful discussion they will vote to make it happen. Your comments are always welcome.

Post 3/11

2011-04-29T08:07:00.000+09:00

Today marks the 49th day since the multiple disasters that took place on 3/11. Called Chuin (中陰), this is the period (in Buddhist religion) when one's being is in transition between death and the next life. As the earthquake, tsunami and nuclear crisis have revealed to the world Japan’s faults, both seismic and social, the transition the living will have to make will be critical.

First came the terrible reminder that we live perched on the edge of a massive chasm deep as Mt. Everest is high, the fault line where two massive tectonic plates meet. Then came evidence of human fallibility: our failure to anticipate the disasters and the shortcomings in our response. People everywhere have seen the tragic consequences.

If what you have seen so far has not shown Japanese at our best, though, watch what happens next. Disaster triggers an innate, visceral and predictable response in Japanese: a highly cohesive explosion of productivity. Everyone pushes together with all their might. In the cold clarity of urgent need, fixed thinking gets thrown aside; rules get rewritten.

The last time we saw this response in action was after Japan’s defeat in 1945. The result was a wave of entrepreneurial energy and focused productivity that, within a generation, turned a devastated nation into the world’s second-largest economy.

The cruel paradox may be that Japan’s immense human power is only unleashed by the external force of disaster; and that the paradigm created in response to disaster eventually becomes so entrenched that only another disaster can reset it.

Prior to March 11, Japan remained in the grip of a postwar paradigm that had run its course. At home and abroad, it was obvious to one and all that Japan was stuck on autopilot, unable to change course. The question on all minds was: “How can we find a catalyst to change?”

Like the forest fire that sweeps away deadwood and releases seed from pine cones, could this tragedy be the catalyst to Japan’s rebirth? Aware of this awful cycle of nature, can we not find less painful means to change in the future?

At every level of society, the events since March 11 have been so overwhelming that change to some significant degree is inevitable. We are likely to see that characteristic Japanese surge of human energy and productivity.

(to be continued...)

The Economist Debate - Rebuttal

2011-03-11T02:26:00.003+09:00

As I mentioned last week, I am participating in an online debate with The Economist. You can follow the debate and vote online for the issue you feel is more important.

Here is the rebuttal I just posted based on the opening statements by my opponent, the moderator and feedback/comments I received from the various participants.

My rebuttal:
I am delighted by the response this debate has produced. Many thoughtful readers have pointed out that the initial premise of the debate is unnecessarily dualistic: it suggests an either/or dichotomy that seems unrealistic. Most people seem to believe that we need some combination of incremental and disruptive innovation, and both Mr Merrill and I agree. Where we differ is in the relative importance of the two.

Although I firmly believe there is an important distinction to be made between invention and innovation, several readers have brought up examples of famous disruptive inventions to bolster the case against incrementalism. What strikes me in looking at the history of great inventions is how often the same innovative steps happened in parallel. The major advances that gave us the radio, telephone, automobile and airplane took place in different countries at roughly the same time. In fact, the people we call “inventors” were often just the first to file an acceptable patent application. This goes to show that in every period there were sufficient incremental innovations creating an environment that allowed various people to achieve similar results. It was this huge, fertile field of experience and knowledge that allowed multiple individuals to connect the dots in the same way and move to the next step. In retrospect, that next step was truly disruptive, but the process of getting to it was unquestionably one of assimilating and building upon earlier developments.

For instance, many readers pointed to the automobile as an example of disruptive innovation and Mr Merrill brought up Henry Ford, who of course did not invent the automobile, did not invent mass production and was not the first to apply mass production to the automobile. In fact, Henry Ford’s greatest contribution to the disruptive power of the automobile was in marketing—in pricing his cars as low as possible and raising his employees wages to bring these products within their grasp.

The auto is often used as an example of disruptive innovation, but in reality it is just the opposite—a perfect example of a disruptive force born from thousands of incremental changes. The history of the auto spans not years but centuries (the first US patent for an automobile was granted back in 1789). While it is much simpler to teach children about Karl Benz or Henry Ford, the truth is that no one individual invented the automobile; it had a hundred fathers over a span of 250 years.

If the automobile’s history is complex and paternity uncertain, consider the much-disputed history of radio or the telephone. The airplane’s inventors are less in doubt, but its history is no less a product of thousands of incremental improvements by hundreds of contributors.
No one would deny the disruptive nature of the automobile, the telephone, the airplane, radio, television, or the computer. They were all disruptive to markets, lifestyles, business models and more. However, if we examine them closely, none of these these can be attributed to a single disruptive invention. All of them involved a long process of innovation by dozens or hundreds of contributors. These disruptive inventions were all the result of an incremental (and remember that “incremental” does not necessarily mean “slow”) process of improvement on prior art.

Even the transistor, a remarkably disruptive technology, as one reader pointed out, was developed by Bell Labs engineers working to improve upon ideas that were patented 20 years before. The microwave oven, also held up as an example of disruptive technology, was not technically innovative at all: the innovation lay in re-purposing magnetron technology which had been around for decades.

My honourable opponent claims, “the issue becomes whether incremental change makes it more likely that your company will win. Alternatively, does disruptive change ... improve your chances?” Unfortunately, this phrasing of the argument presumes that disruptive change is ready at hand and a CEO has only to look at the menu and choose between the relative merits of two types of innovation. Needless to say, that is not the case. In the real world, CEOs must decide whether to bet their company’s future on a series of low-risk, uncertain-return constant improvements, which may or may not lead to some radical development down the road, or to focus resources on costly, highly speculative attempts to produce high-return disruptive results. After disruptive innovation has appeared, history (and shareholders) will amply reward the executive who bet on the latter and won. But what of those who made the bet and lost? For every successful breakthrough technology, thousands of others blew up, evaporating large amounts of capital and putting armies of talented people out of work.

If we limit the discussion to the potential success or failure of individual companies, the idea that “one guy wins, a thousand others lose; that’s business” is palatable. But when we’re also talking about public policy (as the moderator suggested), that equation becomes unsustainable. We cannot bet a majority of our resources on a crapshoot. Note that this does not mean that governments cannot champion kaizen (improvements) as a basic foundation for industrial policy while at the same time promoting R&D that might someday lead to breakthrough technologies. That, in sum, is exactly what Japan and other Asian economies have been doing for decades.

An article about me in The Japan Times newspaper

2011-03-09T20:16:00.004+09:00

I was interviewed recently by Alex Martin of The Japan Times, and the article appeared in today's paper, entitled, "Entrepreneur: Turbulent times breed innovation." I've already received a ton of e-mail from people congratulating me both on the article and on the YGL announcement. I'm very honored and touched by all the responses. What's ironic is that I'm travelling overseas and haven't actually seen the physical copy of the newspaper.

Selected as Young Global Leader Class of 2011 - World Economic Forum

2011-03-09T20:05:00.006+09:00

I'm incredibly honored to be selected as a Young Global Leader (YGL) Class of 2011 for the World Economic Forum (WEF).

From the official announcement:
The YGL class of 2011 is composed of 190 Young Global Leaders from 65 countries and all stakeholders of society (business, civil society, social entrepreneurs, politics and government, arts and culture, and opinion and media). The new class represents all regions. The Young Global Leaders reflect different kinds of leadership in different parts of the world and society. Set up as an independent not-for-profit foundation, under the supervision of the Swiss Government, the Forum of Young Global Leaders works in close cooperation with the World Economic Forum to integrate young leaders into deep interaction with other stakeholders of global society.

The others from Japan include:

Kanae Doi (土井香苗), Director - Japan Human Rights Watch
Masatada Kobayashi (小林正忠), Director and Senior Executive Officer - Rakuten Inc.
Shinjiro Koizumi (小泉進次郎), Member of the House of Representatives
Haruo Miyagi (宮城治男), President - ETIC (Entrepreneurial Training for Innovative Communities)
Ken Noguchi (野口健), Alpinist
Yoshikazu Tanaka (田中良和), Chief Executive Officer - Gree.jp
Kouichi Yamauchi (山内康一), Member of the House of Representatives
Naoko Yamazaki (山崎直子), Astronaut - Japan Aerospace Exploration Agency (JAXA)

Here is a brief text of the letter I received:
It is with great pleasure that we inform you that you have been honoured as a Young Global Leader (YGL) 2011. This honour is bestowed by the World Economic Forum each year to recognize the most distinguished young leaders nominated below the age of 40 from around the world.

The Selection Committee, chaired by Her Majesty Queen Rania Al Abdullah of the Hashemite Kingdom of Jordan, selected you after carefully screening the profiles of thousands of young leaders from every region of the world and from a myriad of disciplines and sectors. Your nomination is in recognition of your record of professional accomplishments, your commitment to society and your potential to contribute to shaping the future of the world through your inspiring leadership.

Klaus Schwab
Executive Chairman

Participating in The Economist's online debate on innovation

2011-03-08T09:06:00.005+09:00

I've been asked by The Economist to participate in an online debate. I've spoken for The Economist on several occasions as panelist and even keynote speaker, but this is a first for an online debate. The motion for the debate is "This house believes Japanese ‘incremental innovation’ is superior to the West's ‘disruptive innovation.’" The debate will run online from March 8th to 18th.

Ex-Google CIO Douglas Merrill will be debating that 'disruptive innovation' is superior. You can follow the debate and vote online about which you feel is more important.

My intro opening:

Growing up in the West, we learn the myth of disruptive innovation early on. We are taught that inventions such as the telegraph, telephone, automobile, airplane and yes, even things like the iPod and Google prove that real genius lies in inventing something that shakes up the world and shatters the old status quo. We instinctively prefer sensational, disruptive innovation because it catches our attention and it reflects the qualities in both the individual and the organization that we admire most.

Yet I believe that the Western emphasis on disruptive innovation is not as desirable — for either a company or an economy — as a culture of steady, incremental innovation such as that found in Japan.

Of course, there is no modern economy that has only one without the other. Some disruption is always necessary, and the two approaches ultimately work hand-in-hand. Disruption creates new product categories, while incremental refinement polishes them and makes them smaller, cheaper, faster and better. Incremental innovation is like evolution: it may move slowly, but it may also produce what appear to be radically new, even disruptive events. On closer examination, though, we see that these disruptive forms grew out of the same creative gene pool as their predecessors. For example, we would not have created the telephone or airplane through incremental innovation, yet that is precisely the process that led from those early inventions to the iPhone and the 747.

I believe that disruptive innovations are over-emphasized in the West, and if one of the pair is to be held up as a model for industry and policy-makers, it is certainly Japan’s approach to endless incremental improvements.

Toyota is one of the best-known examples of Japan’s ability to make incremental innovation seem disruptive. Toyota did not invent the “just-in-time” system, but refined it to the point where it became the new bible for hundreds of manufacturers around the world. Toyota did not invent the hybrid car nor radically change its design or structure, and yet, by a thousand systematic adjustments, it has created the market leader in that field for more than a decade.
The company is famous for its “million ideas” program whereby every year tens of thousands of employees suggest ways to improve assembly, quality control, parts delivery, new business expansion, etc. This ability to constantly innovate and refine every aspect of corporate growth based on cost-free internal suggestions is one reason that Toyota continues to be seen both domestically and abroad as a symbol of Japanese business.

It also points to the truth that incremental innovation can produce disruptive effects. Just as the mass production of inexpensive, fuel-efficient cars severely disrupted America’s Big Three automakers, the application of those same quality control processes to high-end vehicles delivered a serious shock to the German luxury car makers.

All of this grew out of Toyota’s characteristically gradual, strategic process of innovation. No pressure for disruptive technologies, just a firm belief that 10,000 small improvements are just as effective as one radical new innovation.

Toyota is just one illustration of why I believe a nation needs an environment that supports steady, progressive and perhaps undramatic innovation. In fact, without this solid underpinning, disruptive innovation is not even possible, since disruptive events are not created ex nihilo; they grow out of the technical and social frameworks that came before. It is only by standing on the shoulders of past achievements that a few firms are able to reach for the stars and take on the massive risks associated with disruptive innovation.

As someone who built a successful business in California during the 1990s, I have seen first-hand the results of worshiping the disruptive innovation approach: for every successful firm on the road, there were miles of dead, burned-out companies. Of course, that is a risk that many young, entrepreneurial managers are willing to take, and the system should support them if they do. However, stockholders rarely want an established company to risk its existence on a turn of the roulette wheel.

Even in the case of venture business, companies find that targeting disruptive innovation is easier said than done. Truly disruptive events are more often the result of serendipity than the product of corporate strategy; no one can reliably produce breakthrough technologies. Once again, this doesn’t mean that radical, disruptive innovation is bad — quite the contrary — but it’s no way to run a sustainable company or underpin an economy.

Thus, I am increasingly convinced that it is more advantageous to build a climate like Japan’s that provides widespread support for sustained, incremental innovation and allows for “outlier” individuals and businesses to make disruptive bets every once in a while. The better economy is the one that emphasizes constant minor improvements, with a capacity to produce larger and faster innovation when necessary, and even, in a minority of cases, truly game-changing developments that appear to have been born spontaneously. The alternative — emphasizing disruptive, game-changing innovation at the expense of a stable foundation of constant improvement — may produce headlines, but it won’t prove sustainable.

TED 2011 - Long Beach

2011-03-04T20:58:00.004+09:00

Yes, I attended this year's TED conference in Long Beach with several people from Japan, including my friends, Dr. Kiyoshi Kurokawa, Dr. Mario Tokoro, Dr. Ken Mogi, Patrick Newell, Ken Okuyama and Kumi Fujisawa. I will write up my experiences at the incredible event, but as they say, "when it rains, it pours." These last few weeks have been incredibly crazy in preparation for a debate and several other announcements. Anyway, I will definitely return to this topic once things settle down (is that possible?). In the mean time, Bill Gross has done a great job of summarizing the busy week in just 300 Tweets. At least my pictures are uploaded here and even a few videos - enjoy!

Spoke at a law conference

2011-02-01T10:26:00.061+09:00

In early January, I was invited to speak at a law conference in Malaysia. At first, I turned them down politely, since I didn't know who they were, and it was somewhat short notice. I had a potential conflict with another event later that month, and what did I have to do with the legal profession anyway? The organizers were persistent and upon further investigation, I realized it was being organized by an old acquaintance from Microsoft - Bill Neukom. Therefore, I agreed to be one of their keynote panelists and flew to Kuala Lumpur to attend the World Justice Project APAC Rule of Law Conference.

At the conference, I was one of the few (less than 1%) non-lawyers at the event, but, I must say, it was one of the best conferences I have participated in. Perhaps because lawyers are naturally predisposed to discussion and debate (which, for anyone who knows me, I like very much). There were actually three other people from Japan at this conference, led by the Honorable Kunio Hamada, a former member of the supreme court of Japan - a very kind gentleman - and we spent many hours talking about a variety of topics.

Initially, I was concerned that my topic (titled "Japan 'leading' the way" - a play on words) would not be germane to the listening audience. I ended up speaking about how innovation and entrepreneurship is often hindered by well meaning laws and regulations when, in fact, they have many unintended consequences; and how Japan has been a good (and bad) example of this "experiment" over the past 20 years. I specifically focused on how Japan's aging and shrinking population is going through a grand experiment that many countries in the world will encounter shortly (and therefore should learn from). Since it is "leading" in this area, I focused on three main points that government, corporations and society in general have attempted to address, but which haven't gone as planned: 1) Addressing risk, 2) The role of governments, education and research, and 3) The role of women.

In the end, the speech went over very well, and I received a lot of great feedback during and after the conference. There have been numerous requests for my slides, so I have posted them here as well.

Your comments are most welcome.

2010 - A Year in Review

2011-01-01T10:27:00.005+09:00

What a year 2010 turned out to be. I have been amiss in updating my blog postings, but this year has been truly busy. I thought 2009 was full of trips and general busyness, but this year has been the most I've travelled in one calendar year. According to my Tripit logs, in 2010 I flew to 23 countries (some multiple times) on 69 flights (some were the same leg), covering a total of 412,940 miles! This did not include miles from my road trip across the United States (yes, by car) in September (see below). Here are some highlights, which include many "firsts" in 2010.

The year started off with looming deadlines, as I was writing and editing a long article for the Harvard Asia Quarterly on the relationship between medicine and climate change. It was a challenging article, but it was a special honor to be co-author with Dr. Kiyoshi Kurokawa. We spent most of January writing and polishing this 7,000-word article, which was published in June. Later that month, I was asked by the Ministry of Internal Affairs and Communications (MIC) to give a lecture to ministry officials on the evolution of communication technologies around the world. This was an unusually long lecture, lasting some 75 minutes with 15 minutes of Q&A. Unfortunately, the Q&A portion was probably the least interactive of all the lectures and speeches I gave for the remainder of 2010.

In February, I had the honor of giving a TEDxRyukyu presentation in Naha, Okinawa. Since I wanted to make it not only interesting but also informative (i.e., what is TED?), I tried to stuff 10 lbs. of content into a 1 lb. bag (E.g., trying to explain the Technology, Entertainment and Design concepts at one time). When you add the fact that I was speaking on an unfamiliar topic, under a strict time constraint, and all in Japanese, well, let's just say it wasn't my best performance. Immediately after Okinawa, Dr. Kurokawa and I left for Botswana at the request of the Botswanan Ambassador to Japan to help their country diversify from diamonds and to help create a science and technology initiative. This was the first time I had actually flown south of the equator (which I end up doing twice in 2010).

In early March, I flew from Botswana to Dubai (for the first time) in the United Arab Emirates (UAE) for a conference on entrepreneurism held by the Kauffman Foundation. After returning to Tokyo, I participated in my first Economist Conference, entitled "The Road Forward for Japanese Companies." (The Economist magazine is one I truly admire and read religiously.) The month ended not only with my last birthday in my 30's but also with an interview for an article in the American Chamber of Commerce in Japan (ACCJ) Journal.

April is the new fiscal year in Japan and I transitioned from my role as "Startup Advisor (SA)" at the National Institute of Advanced Industrial Science and Technology (AIST) to "Advisor," since I spun out one of the startups I had been advising. This new company, called Bursec (of which I am chairman), is developing a new cryptographic key management technology based on a concept called "Leakage-Resilient Authenticated Key Exchange."

May was a busy month which began with a flight to Zurich, Switzerland, to speak at the St. Gallen Symposium on the topic of "Entrepreneurs - Agents of Change" (2010 was definitely the year of Entrepreneurism). In mid May, I participated in my second Economist Conference, this one entitled "Charting the future of finance in the Asia-Pacific." Later that week, I had a private dinner (definitely a first) with the Royal Couple - one of the most treasured (and nervous) few hours of my life. I then ended the month in Rome (another first), Italy - a most beautiful city where I could easily spend weeks taking photos.

From Rome and now June, I then flew to Leksand, Sweden (another first), for the 5th Global YES Summit, again to speak about entrepreneurship. Unfortunately, this was not the conference I expected it to be. I wrote to the organizers after the event and, based on their reply, I hope they have a better one this year.

In July, I was asked by the Russian government to offer advice on their Skolkovo project, or "Russian Silicon Valley," and soon found myself in Moscow (another first) for a few days. Apparently, the project is running way behind schedule, but that seems to be normal for this type of thing. After Moscow, I left for my third trip to Dubai and decided to open an office there to help channel Japanese products into the EMEA marketplace.

For my summer vacation in August, I decided to take a break from all the "around the world" travel and do something equally crazy. Landing in Los Angeles, I drove for the next two weeks (longest in 20 years) on a cross country fishing trip, taking many pictures along the way. After returning to Japan, I made a quick detour to Hayman Island, Australia, to attend the Australia Davos Conference with Dr. Kurokawa.

In September, I was mainly busy preparing for the "Innovation in Globalization" class I was helping Dr. Kurokawa teach at Keio Shonan Fujisawa Campus (SFC). This year's speakers included Mr. Kazuhiko Toyama (IGPI), Mr. Kohei Nishiyama (Elephant Design), Dr. Mario Tokoro (Sony CSL), Mr. Ryoji Noritake (Health Policy Institute), Ms. Maria Yogo (Kalifa University), Ms. Naoko Tajima (Hakuhodo), Ms. Fujiyo Ishiguro (Netyear Group), Ambassador John V. Roos (United States Embassy Tokyo), Mr. Akira Tsuchiya (World Economic Forum), and Mr. Daisuke Kotegawa (International Monetary Fund). Thank you to everyone who made the 2010 class such a success!

October was the month for science. I was honored to be asked to speak for the second time at the Science and Technology in Society (STS) forum in Kyoto. After I returned from Kyoto, I was again honored to give the keynote at my third and final Economist Conference of the year entitled “One Strategy: dream or reality? How can firms ensure their operations and diverse businesses work together as one?” Later that month, I was invited by the National Science Foundation (NSF) to be on one of their review committees. I cannot disclose what committee, but regardless, I was asked to come back again this March.

November started with my testimony to the Ministry of Education, Culture, Sports, Science & Technology (MEXT) on "Elementary, Junior and High School Education in Japan and Around the World." This was actually a first for me in the sense that it was recorded, covered by the press, and my (Japanese!) transcripts were publicized on the official ministry website. Later that month, the third annual Global Entrepreneurship Week (GEW) Japan events were held. This year's theme was on "Design Thinking." Ironically, I did not speak on the subject during GEW but was asked to give a lecture on the topic at Tokyo University later that month.

In December, things were very entrepreneurial, indeed. First, it was truly an honor for U.S. Ambassador John V. Roos to speak to the class at Keio. Given his background as the former CEO (before becoming ambassador) of the most prominent law firm in Silicon Valley, his comments and viewpoints were truly inspirational. Furthermore, it was nice to get NHK (the Japanese public broadcaster) to tape this class and to broadcast it only three days later. Later that month, I was asked by the Ministry of Economy, Trade and Industry (METI) to come and speak on innovation and entrepreneurship from a global perspective.

In closing, there were several organizations that I helped form in 2010. Probably one of the most important is called IMPACT Japan. It was created to foster innovation and entrepreneurship in Japan on an ongoing basis (not just per event) in order to apply entrepreneurism to the vibrant innovation in Japan and to grow new businesses on a truly global scale.

For 2011, I have several publications coming out this year that I am in the process of writing, editing or proofing. These will include books on:

"Passionate Teams" (working title) - Nikkei BP, Japanese (Spring)
"Re-Imagining Japan" - McKinsey/Shogakukan, both English and Japanese (June 1, 2011)
"The Essence and Future of Security" (working title) - John Wiley & Sons, English (Fall)
"William Saito on Entrepreneurship" (working title) - John Wiley & Sons, English (Fall)

Not to make excuses, but with all this book writing, my blogs have fallen behind. However, I now plan to twitter more on current topics that affect innovation, entrepreneurship and/or Japan. Please follow me here: @whsaito.

For a more detailed list of activities, please visit my homepage at: http://saitohome.com/speaking-public-engagements/

Other Stats for 2010:

Photo's taken: 7512

Dr. Kiyoshi Kurokawa - ACCJ Person of the Year for 2010

2010-12-10T14:56:00.002+09:00

Congrats to my friend Dr. Kiyoshi Kurokawa (@kiyoshikurokawa) who was named the American Chamber of Commerce in #Japan #ACCJ 2010 Person of the Year.

St. Gallen Symposium

2010-11-20T17:51:00.004+09:00

I'm helping the St. Gallen Symposium gather student nominations. This is a great program I participated in last year. The 41st St. Gallen Symposium, a student initiative organized by the International Students’ Committee (ISC), takes place from 12 – 13 May, 2011, at the University of St. Gallen. The main topic this year is “Just Power.” Two hundred Leaders of Tomorrow encounter 600 Leaders of today from all over the world and debate this year's topic, "Just Power." In the past, distinguished personalities, such as Dr. Josef Ackermann, Deutsche Bank AG; Prof. Niall Ferguson, Harvard University; Tharman Shanmugaratnam, Minister of Finance of Singapore; and Prof. Dr. Robert John Aumann, Nobel Laureate, contributed to the inspiring, intergenerational dialogue with the Leaders of Tomorrow. One hundred graduate and postgraduate students have the opportunity to qualify for participation as a Leader of Tomorrow at the St. Gallen Symposium until 1st February 2011 by submitting a contribution to the student competition, which was established 22 years ago. The three most outstanding pieces of work will receive the St. Gallen Wings of Excellence Award, which is endowed with a EUR 20,000.– prize, and will be presented by the authors of the prize. Additional information can be found at: www.stgallen-symposium.org

Impact Japan

2010-11-17T22:18:00.003+09:00

Check out the new organization created specifically to promote innovation and entrepreneurship in #Japan http://impactjapan.org/

Global Entrepreneurship Week (GEW) 2010

2010-11-16T12:25:00.003+09:00

Global Entrepreneurship Week (GEW) Japan 2010 starts off with today's "Design Thinking" event. Visit http://www.facebook.com/GEWJapan #Japan

Quotes from the book "Where Good Ideas Come From: The Natural History of Innovation" by Steven Johnson

2010-11-02T03:00:00.000+09:00

It's rare (actually this is the first time) that I write about a book. Anyway, I'm reading the chapters in this book and am finding great paragraphs on things I "felt" but couldn't describe.

"Innovative enviornments are better at helping their inhabitants explore the adjacent possible, because they expose a wide and diverse sample of spare parts - mechanical or conceptual - and they encourage novel ways of recombining those parts. Envirronments that block or limit those new combinations - by punishing experimentation, by obscuring certain branches of possibility, by making the current state so satisfying that no one bothers to explore the edges - will, on average, generate and circulate fewer innovation than environments that encourage exploration." (So true - W.S.)

Science and Technology in Society forum

2010-10-02T14:59:00.002+09:00

Getting ready to leave for Kyoto to attend the STS Forum (http://www.stsforum.org/). Speaking on Monday but still need to finish speech!

Economist Conference: One global strategy?

2010-09-30T09:56:00.002+09:00

Giving keynote at Economist conference next Wednesday at Hotel New Otani. Speaking on whether one global business strategy can work or is Japan unique? Seeking comments.

Awesome App for Frequent Flyers

2010-09-01T15:48:00.002+09:00

When you fly as much as I do, knowing which flights are available is critical. I don't usually plug software, but OnTheFly by ITA Software is awesome!

Final Session - ADC Forum

2010-08-29T11:29:00.002+09:00

About to start my last session, "Japan - Perspective on change," at the ADC Forum w/ @kiyoshikurokawa. Looking forward to the questions/comments.

Cybersecurity Panel at ADC Forum

2010-08-29T09:05:00.002+09:00

It was very exciting to be on a cybersecurity panel moderated by the BBC's @bbcnikgowing at ADC yesterday. Dialog was exciting, fast and in-depth.

ADC Forum in Australia

2010-08-28T10:02:00.002+09:00

Participating in two panels today at the ADC Forum on "Research & Innovation" w/ @kiyoshikurokawa, and another on cybersecurity. Should prep but the weather is too nice.

"Gadgets I use" page updated

2010-08-21T15:15:00.002+09:00

Its been awhile, but I just finished updating my "Gadgets I Use" page. I've replaced/retired many devices this summer. http://bit.ly/aZe0I1

2010 Cross Country Summer Road Trip

2010-08-20T12:25:00.026+09:00

With absolutely no plan, this summer, I drove to places I've always wanted to go to (after Salt Lake City, all the places I drove were my first visits). Obviously, I had some ideas of national parks and monuments I wanted to see, but most of the trek was along famous fly fishing (started last year) holes.

Landed (from Narita, Japan) Los Angeles

Got speeding ticket

Inyo County, Callifornia - Fishing (hotel)
Through Nevada
Salt Lake City, Utah (hotel)

Bought radar detector

Through Idaho - Fishing
Yellowstone, Wyoming - Old Faithful
Big Sky, Montana - Fishing, A River Runs Through It (hotel)
Devil's Tower, Wyoming - Close Encounters
Mt. Rushmore, S. Dakota - North by Northwest
Through Nebraska
Kansas City (hotel)
St. Louis Arch, Missouri
Nashville, Tennessee (hottel)
Atlanta, Georgia
Returned to Narita, Japan

With the long road trip finally finished, I drove a total of 3931.5 miles over 13 days. New Prius drove 45.6 gallons/mile at an average speed of 55mph.

Here are the 874 pictures from the trip: http://www.flickr.com/photos/whsaito/sets/72157624642459743/

Internet is not easily available in the darndest places

2010-08-12T14:39:00.002+09:00

I'm supposed to be on a cross country roadtrip/fishing vacation but was upset wrestling with the hotel's internet connection for 4 hours!

Scheduling for Fall '10 quarter for 3 Universities

2010-08-06T02:59:00.004+09:00

Busy scheduling and programming three different courses on two continents for the upcoming Fall semester. Hope to make it really interesting!

On the Ground in Dubai

2010-07-25T18:03:00.002+09:00

The problem is, when going outside in Dubai's humid/roasting 42 degrees and the room was a cool 21, your glasses are fogged for minutes!

Interview on InterFM

2010-07-16T09:34:00.003+09:00

Wow! The time flew by. Just finished my "live" radio interview on InterFM. Think it went okay. No major hiccups, even though it was all in Japanese.

Many tastes of caviar

2010-07-11T03:38:00.004+09:00

Having a variety of caviar dishes on the flight to Moscow. Never thought you could have "too much caviar" but was proven wrong. Neat to see all the ways it's served.

The future of SPAM - Audio

2010-07-09T14:58:00.003+09:00

Interesting. Japanese elections coming up and you see ads and get emails all the time. Politician friend of mine (will remain nameless) sent me a blank email (from an unknown address at that) with an mp3 attachment. Thought it was spam, but it was a verbal campaign pledge that I had to hit play to hear.

Upcoming trip to Moscow

2010-07-09T10:18:00.005+09:00

I will be advising on the creation of Russia's "Silicon Valley" right outside of Moscow. I'm starting this process by applying for a visa (which everyone needs) for entry into Russia TOMORROW.

Anyway, I honestly was half expecting to not succeed in getting it today and cancelling the trip. However, I was very impressed (surprised?). Got my Russian visa in less than an hour from start to finish - this included waiting in line for about 15 minutes. Was allocating half-a-day of running around.

The new science park, also sometimes called Inograd, Russian for Innovation City, will concentrate in the areas of energy, information technology, communication, biomedical research and nuclear technology. This new "city" will be located in Skolkovo - 40km outside of Moscow.

Selected by the president of Russia, the project is managed by Mr. Viktor Vekselberg, who is the owner and president of Renova Group, a large Russian conglomerate. For this trip, I was invited by the Renova Group. On the government side, Vladimir Surkov, the first deputy head of the presidential administration, is the one overseeing the creation of the project.

Obviously, I'll talk about how the trip went and post the usual pictures. If anyone knows of any good places to visit while I'm there the few short days, please e-mail me.

== Update ==
Here is a link http://www.flickr.com/photos/whsaito/sets/72157624518862872/ to the photos from my trip.

Security in the news - June 2010

2010-06-22T10:15:00.001+09:00

This last week, I had an embarrassing moment when my Facebook account started posting weird "Likes" (in my case, "97 Hottest Women in the World :D :: on www.97hottestwomen.com" - seriously, not my interest), which claimed that I endorsed the site. What makes things worse, in an SNS enviornment like Facebook, your network of friends supposedly share the same interests, ideals and trust, so there is a higher tendency that your friends will further click on these links based on a "Like" endorsement. I was only made aware of this "Like" link because a friend happened to comment on my interesting taste in pages.

Anyway, when I decided to research this issue, I began to realize how often security has been featured in the news this month. Therefore, I thought I'd take this opportunity to summarize the most interesting security stories for the month and post them to my main blog site (as opposed to my security blog site) on a periodic basis.

Back to the Facebook issue. Apparently, earlier this month over 100,000 people (at least it wasn't just me) were victim to both Facebook and the users' browser issue that made them unwitting endorsers of various scam pages. This practice, now commonly referred to as clickjacking, exploits a bug in the user's Internet browser by overlaying an invisible iframe on top of a web page link. This then effectively creates an invisible "Like" button on the website, which tricks the user into pressing it. Website and browser security is now at a point where users cannot authenticate the actual website they are interacting with.

In other interesting security news, who needs key loggers when Dr. Doug Tygar of UC Berkeley can pick up just the acoustic emanations and use two types of frequency analysis to find out what you are typing. The first thing his software does is to assign keys to the frequency they emit when a key is pressed. Next, his software uses "old world" code-breaking techniques and the frequency of the keys with a statistical model of the English language in order to determine what is being typed. This can become a very easy exploit since an attacker only needs to run a piece of software in the background that uses the computer's built-in microphone to pick-up the key press noise.

In other news, AT&T exposed the e-mail addresses and ICC-ID, or integrated circuit card identifier of the SIM card, of 114,067 early adopters (another hazard of buying things early) of the recently released iPad 3G. This alone would usually not mean much (except for the e-mail addresses and the rash of phishing and SPAM attacks - as I have personally noted an increase in), but, unfortunately, the way the Apple iPad ICC-ID is coded, the International Mobile Subscriber Identity (IMSI) for AT&T can be figured out relatively easily, and all sorts of other mischief can result (a future article).

In other news there was also an increasingly rare, yet worth noting, vulnerability in the XP and 2003 versions of the Windows operating system. What makes this noteworthy is that it allows attackers to take full control of a PC just by luring the user to a booby-trapped website. Speaking of booby-trapped websites, this month, it was noted that over 100,000 websites were infected by attackers, which included large corporations, police and even news outlets like the Wall Street Journal.

On a good note, Intel was in the news this month, showing the company's proactive stance at a recent semiconductor conference by stating that security was "job one." However, it is interesting to see how the speed of encryption and decryption (the heart of security) is always balanced with power consumption. Furthermore, a technology like true random number generation (which is actually very hard to do) is now finally becoming a reality at the chip level. At least someone is starting to get serious about security.

Finally, here is a list of recently released products that had a little "something extra" for the users this month:

1700 of the new Olympus Stylus Tough 6010 Digital Camera came pre-shipped with a virus on the XD card
Several Samsung S8500 Wave phones sold in Germany had micro-SD cards that were infected with W32/Heur
IBM handed out infected USB flash memory devices at the AusCERT conference in Australia. This was a conference where high level professionals in the security field were infected with the W32/LibHack-A and W32/Agent-FWF virus. This was both awkward for IBM and ironic for the attendees.

These aren't actually unique or isolated incidents. In the past, some prominent examples have been:

Energizer Duo USB battery chargers that draw power from a USB port, which also installed a hidden backdoor that allowed attackers remote access
TomTom GO 910 satellite navigation devices with two pieces of malware, the W32/Perlovga.A Trojan and TR/Drop.Small.qp which also installed a backdoor on a users computer
Apple video iPods had shipped with the TR/Bdoor-DIJ Trojan horse
McDonald's Japan recalled 10,000 MP3 players which were infected with the W32/QQPass.worm that captured passwords from a users computer

All of these products exploited the AutoRun feature of the Windows operating system. While it makes it convenient for the user when the install/setup program runs automatically the first time you plug in these devices, it also allows malicious software to run as well. I highly recommend that you disable (and make sure it is) the AutoRun feature to eliminate these and other scarier threats (another future article).

Your comments are always welcome.

My article on Harvard Asia Quarterly just came out

2010-06-14T00:02:00.003+09:00

My Harvard Asia Quarterly (Volume XII, Number 2 - Spring 2010) article co-authored with Dr. Kiyoshi Kurokawa just came out. The article is on page 25-33 and is titled, "Global Climate Change: The Interconnection with Medical Technology and Health Care."

Here is a summary of the article:

Medicine, along with culture and technology, can both cause and resolve the problem of climate change. Medicine has helped reduce infant mortality and increase longevity, thus contributing to overpopulation which results in excessive pollution and resource consumption. But it can also help solve these problems by providing better forms of contraception and education.

Your comments are always welcome.

Two new security posts

2010-06-11T09:54:00.002+09:00

I just finished two posts on my Security blog. The first post talks about authentication and the second post talks about biometrics, one of four ways to authenticate in today's digital world.

Authentication post:
http://security.saitoblog.com/2010/06/authentication.html

Biometrics post:
http://security.saitoblog.com/2010/06/biometrics.html

Hope you enjoy them and find them informative. Your comments are always welcome.

Sweden & The Tällberg - 5th Global YES Summit

2010-06-09T04:11:00.001+09:00

This last week, I was in Sweden, attending the Youth Entrepreneurship and Sustainability summit, or the 5th Global YES Summit - Rework the World, in Leksand, Sweden. I was invited to go to this event by my friend Dr. Mario Tokoro, President of the Sony Computer Science Laboratories (Sony CSL). The event itself is an annual gathering of 2000 entrepreneurs, opinion leaders, local and global leaders in politics, civil society and business. "Rework The World" is a collaboration between Tällberg Foundation and YES Inc. The Tällberg Foundation was founded by Bo Ekman, a former executive from Volvo. YES is an international organization represented in more than 55 developing countries with a focus on youth, entrepreneurship and sustainability.

Anyway, I was asked to speak at several sessions at the event, including:

6/4/2010 - Featured session: Rethinking the role of enabling technologies (462)
6/5/2010 - Rethinking Finance - Future financial mechanisms (533)
6/5/2010 - Plenary session V - Investment Forum

This is actually my first trip to Sweden, and since I was on my way from Rome (via London), there was no real time-zone change. While the flight was only about 4 hours into Stockholm-Arlanda airport, I then transferred to a train, heading to Leksand via a city called Borlänge (transfer station). This trip was scheduled to be only 2.5 hours. Unfortunately, about an hour into the trip, my train apparently hit and killed a person. Apparently, this is a relatively common occurrence in Sweden too. (I read somewhere that countries that have tough gun laws invariably have high suicide rates by train.) Anyway, long, long story short, what should have taken an hour or two at most to clear up ended up taking 13 hours. My reading of the situation was that the person killed was hit several kilometers before we stopped. The train driver only realized what had happened after we stopped at a train station and someone had to tell him before we left again. If the story had ended here, it wouldn't be that bad. Unfortunately, when we arrived at the station, there were no taxis for 1.5 hours and when I finally arrived (at 2:30 am) at the hotel, it was closed (obviously) so I spent another 30 minutes banging on doors to get someone to let me in. Interestingly, it was still relatively bright outside and getting brighter from around 3am. To make matters worse, multple phone calls and e-mails (sent from soon after the accident) to the organizers were never answered.

Anyway, I digress. This year, the summit ran for 3.5 days and had many young people (in their 20's) attending from all over the world (over 100 countries). Unfortunately, Gunter Pauli had to cancel his trip; therefore, I was the ONLY attendee from Japan. Most of the discussions I had were with people who had a strong motivation towards social/BoP-type entrepreneurial activities. The remaining people were interested in sustainable and/or clean technology entrepreneurship. Therefore, my pure capitalism entrepreneurship was a little out of place. Nevertheless, I was hoping to share my first-person experiences, as well as what has been going on in Asia and Japan.

The conference was also interesting in that the dinner was at the "tent," which is almost like a circus tent where people ate, and the local elementary school and junior high performed musical acts throughout the night. However, what was more interesting was that most of the people would eat outside the tent in the grass and form spontaneous study groups on one particular topic or another. The scene almost looked like an entrepreneurial Woodstock which would last until very early in the morning with various bands playing onstage. On the other side of the tent, there was a section where various vendors setup ethnic Swedish shops that would sell baskets, food, clothing, etc. I did get comments from the older participants that the Tällberg participants from years past did not show up this year and that most of this year's participants were dominated by the YES members a generation or two younger. That I'm using the word "young" or "younger" is somewhat depressing because it tells me that I'm just getting older....

As for the conference itself, apparently this was the first year the Tällberg Foundation decided to host an event with YES. After experiencing this first hand and talking to many original Tällberg participants, this didn't turn out to be such a good idea. Unfortunately, when an event grows from several hundred people to several thousand, the logistics are completely different and it showed the event staff could not handle this change. In fact, for my first presentation, they made a last minute room change to a space that was about 15 minutes away. What was confusing was the change of venue was not announced in time and when it was, it showed the wrong time. Moreover, the change of room sign was posted on the new venue and not at the original room. Therefore, while the other panelists (from industry) eventually made it to the new room, many of the audience members either stayed at the old venue or gave up. Ironically, due to the drastically smaller sized group, we actually had a better dialog with just the other panelists - however the sponsor (Erickson) was not happy.

Furthermore, to put together a ton of people in their early to mid 20's with a smaller number of people in their 50's and 60's, created a situation where conversations were difficult to carry. Specifically, many of the young participants, without much real world working experience, all had environmental, social, BoP related ventures in mind. While this, in itself isn't bad, their activist style either berated (as evil) people who were "pro business" or were demanding ("just give me the money" - seriously) investments without cause, reason or justification. When questioning them on the use of funds, what to expect in returns and other similar investor relatd questions, many got defensive, angry and argumentative - on multiple occasions. It almost felt wrong being a "classical" capitalist entrepreneur at this event - at least in front of the younger generation.

On the third day, I got to judge a BoP centered business plan competition. This was actually kind of interesting. The organizers told us to be "nice" to the presenters since this wasn't a real business plan competition (i.e., don't critique their ROI, financials, etc...) Nevertheless, out of the 10 contestants, I found that the Solarcool concept (providing solar-powered refrigerators for $5 a unit) from a venture in Sweden and Peepoople (Self-sanitizing, single use biodegradable toilet bag) idea were actually very interesting if they work as claimed.

Regardless, while there were several low points in the conference, the few older Tällberg participants I did get to meet were all very interesting and educational. By the end of the 2nd day, we tended to cluster up in our own group. I have even spoken to some of them already on getting involved with similar activities that they are involved in. Unfortunately, the student part of the program was not well run - especially compared to events such as St. Gallen.

Some interesting observations of Sweden:

Taking a number is very popular - from information booth, changing currency to buying train tickets. Instead of waiting in line, you get a number and wait for it to be called.
Sony Erickson cell phones are very popular here.
Most (except for 3 channels) of the TV programming was in English and subtitled in Swedish. This is compared to Italy, which had no English programming and any shows from the US were dubbed in Italian.
Everyone here can speak English, whereas the Italians will tend to ignore you.
The country of Sweden is in such a northern latitude that the sun does not set. When I arrived at my hotel at 2:30 am, it was bright enough to see without any lighting.
Since it is always so bright outside, you need those eye masks (that they conveniently hand out in the plane) to sleep.
Satellite dishes are pointed level to downward to get the satellite signals in equatorial orbit.

Photo's from Europe

2010-06-08T22:13:00.004+09:00

I just finished uploading 1,600+ photos from my recent trip to Italy and Sweden. My favorites are at: http://www.flickr.com/groups/1404481@N22/

The Italy pictures (1,204) are all grouped here:
http://www.flickr.com/photos/whsaito/sets/72157624100183691/

The Sweden (202) pictures are here:

http://www.flickr.com/photos/whsaito/sets/72157624102137297/

Enjoy!

Summary of iPhone 4 announcement by Apple

2010-06-08T03:46:00.003+09:00

Here is a summary of the World Wide Developer's Conference (WWDC) 2010 announcing the new upcoming iPhone 4 (not iPhone 4G).

Display upgraded to an IPS 960 x 640 pixel (326 ppi) screen with 800:1 contrast ration

4x resolution compared to the 3G

Wireless networking upgraded to 802.11n
512MB of RAM (versus 256MB for the 3GS and iPad)
Back camera upgraded to 5 megapixel but with the same pitch (1.75um) as the older 3G camera (= better low light sensitivity)
Front camera (new) has VGA (640x480) resolution
Camera will also have LED flash and can record 720p video at 30 fps
It will also have a front facing camera, allowing for the newest feature - FaceTime - a "video calling" software
The iPhone 4 will be 25% thinner than the 3G
Battery life

7 hours of 3G talk
6 hours of 3G browsing
10 hours of WiFi browsing
10 hours of video
40 hours of music

Pricing:

32GB for $299
16GB for $199

Availability:

Pre-order on June 15th
Available on June 24th (including Japan)

Some other stuff:

iAds = advertising platform for developers
Support for Microsoft Bing search
6-axis motion sensor with the addition of a gyroscope
A4 processor just like iPad
Limited multitasking support
Support for folders
Comes in black or white

Birds have more leadership - Japanese politics

2010-06-04T19:32:00.005+09:00

So I am here in the middle of Sweden attending an entrepreneurial conference with over 2,000 other people from over 55 countries. When I inevitably meet people, introduce myself and say I'm from Japan, I always get asked what is going on with our prime ministers. Therefore, I thought I'd put together this little recap of this rather confusing topic.

After 259 days in office, in a somewhat rambling 20+ minute resignation speech, (via Twitter) Mr. Yukio "the alien" Hatoyama resigned as the prime minister of Japan on June 2nd (coincidentally, Mr. Horst Köhle, the president of Germany also resigned a few hours earlier). Most incredibly, in his speech he mentioned it was the sight of a little songbird (which he initially got wrong) that gave him the idea to resign. His biggest accomplishment, however, may have been to get Mr. Ichiro Ozawa, the powerful secretary-general (and de facto leader) of the Democratic Party of Japan (DPJ), to resign with him.

It all looked so hopeful after the 2009 elections wherein Mr. Hatoyama led the Democratic Party of Japan to victory over the ruling Liberal Democratic Party (LDP), which had ruled almost continuously since 1955. Apparently, this was the worst defeat for a governing party in modern Japanese history - leading to the resignation of then PM Taro Aso.

Here are some interesting (but sad) statistics to consider:

Since 2006 Japan has had five prime ministers
All five PM's were either son or grandson of a former prime minister
Three of them lasted less than one year in office
In the past 20 years, only one lasted more than three years - Junichiro Koizumi
In the same 20 years, the GDP has not changed

Mr. Hatoyama now leaves behind (for new incoming PM Naoto Kan) several big (and immediate) headaches:

Debt to GDP ratios of around 200%
More economic headache of persistent deflation
An angry Okinawan people who were promised to have the Futenma base moved - something Hatoyama brought on himself as a campaign pledge
Rising tensions with North Korea
Postal system privatization/consumption tax increase debates

What will happen next? Personally, I have a little more hope in DPJ version 2.0. Namely, that the lightning rod role that Mr. Ozawa (who only resigned from office and, unlike Hatoyama, will not quit politics) played will not be as big an issue (hopefully) going forward. Second, that the various financing scandals have all rung themselves out. Finally, unlike the last several PM's, Kan is a self-made man who made his own way up the political ladder.

Incredibly, even with all this political musical chairs, Japan has (still) remained the 2nd largest economy in the world. It goes to show that at every level of Japanese society, they have very good managers (i.e., the various ministries) yet lack great leaders. At this point, I don't really care which political party is in charge. I just hope there is more sustained leadership to help guide Japan out of some huge problems.

We shall see. Your comments are always welcome.

A review of gadgets I use

2010-05-24T10:33:00.002+09:00

I am frequently asked by many people about the devices I use and why, or about what I would recommend when it comes to gadgets. Since I'm a sucker for anything new and will try using something at least once, I can understand why that question comes up a lot.

Therefore, I thought it would be fun to keep a list of gadgets that I actually use day-to-day and update this list from time-to-time. I also think this will be interesting 50 years in the future when my grandkids ask, "Granddaddy, how did you ever do X, Y and Z with so little memory or CPU power?" Come to think of it, my very first PC had 128KB (that is K, not M, and certainly not G) of memory and this was upgraded!

This list will primarily be a hardware list since it is easier to compare/contrast between products. I have made this a perma-link page so it'll be easier to find:
http://www.saitoblog.com/p/gadgets-i-use.html

On this one, I would definitely love to hear everyone's comments and feedback. Please let me know how to make the review more useful. I also hope to learn about even more interesting gadgets, possibly purchase them and offset the current incumbents on this list.

Interesting (changing?) Japan

2010-05-23T10:07:00.003+09:00

Born and raised in the US, I still had numerous opportunities to visit, live and get educated in Japan. Whether it was spending time in Japan during the long summer and winter school vacations or the dozens of times I came here on business trips to work with our Japanese customers, I had a lot of interactions with Japanese at many levels. I am very glad to be able to not only speak the language (almost) like a native but to understand the culture, mindset and background of the Japanese people (or so I think). Now that I live here, I can pass as a native Japanese and feel comfortable doing so. Nevertheless, I've recently had some once-in-a-lifetime experiences (and hope I can talk about it here some day) where I wish I had studied more.

Knowing enough to be dangerous, I still find many things in Japan that surprise me, blow me away or just leave me flabbergasted. I thought I'd share some of these thoughts with my non-Japanese friends around the world. Perhaps they can also share their perspectives of Japan from another country's viewpoint.

To start off with, if you ever wanted to know some specific statistics about Japan, I found this interesting site that explains Japan in 12 minutes. Unfortunately, the creator of the video took down the English version (the voice over was done very well) due to comments of racism (oh, brother ...). I still think the graphics are fairly understandable and educational. Likewise, here is an acknowledgment to the power of Manga (kanji: 漫画; hiragana: まんが; katakana: マンガ) in Japan found in an advertisement that Microsoft created for Windows 7.

On a more serious note, Japan is going through some tremendous changes. Examples of this are in the news everyday, such as: the once innovative Sony losing its consumer gadget edge to Apple; companies like Toyota and Honda recalling close to a million vehicles worldwide on some pretty lame issues; the national flag carrier, Japan Airlines, filing for bankruptcy. It is worth noting that just yesterday, Toyota teamed up with Tesla motors and Sony teamed up with Google in an attempt to leapfrog the competition. This is in light of the fact that the Wall Street Journal recently reported that Samsung Electronics’ operating profit of $3.14 billion is TWICE as large as the combined operating profit of nine of Japan’s largest consumer electronic companies. To put things into further perspective, the GDP of Japan has not grown at all in the last 20 years while China's has grown over 14 times and is about to surpass Japan as the world's second-largest economy. Furthermore, in a recent IMD World Competitiveness Yearbook ranking, Japan's competitiveness fell to 27th in the world and stated:

The largest “old” industrialized nations – from Japan to the UK – will all suffer a debt curse, in the worst case lasting until 2084. Nowadays, budget deficits are soaring and it is estimated that the average debt of the G20 nations, for example, will climb from 76% of their combined GDP in 2007 to 106% in 2010. Although the “great recession” is over, the consequences of the crisis will continue to be felt for quite some time.

As this report points out, Japan has one of the highest government-debt-to-GDP ratio in the developed world. While people complain about the spending in the U.S., with a debt ratio around 200%, the Japanese government is twice as irresponsible. The Japanese population is both declining and aging rapidly with no real immigration reform on the horizon to help it allow more foreigners to live in Japan and to create a younger economic support base. On top of this, contrary to popular belief, the household and national savings rates are declining at a very fast rate. Up until recently, with all the trade surplus that Japanese companies were generating, the government financed the deficit out of those savings. Unfortunately, with the aging population, the household saving has declined from around 20% to less than ten and still declining. Putting this all together, with both deflation and deficit spending, the Japanese government soon may not be able to make its interest payments, causing a sudden and uncontrollable jump in inflation - making today's problems look cute.

With all this bad news, it's probably easy to see why suicides are a common occurance here in Japan. In fact, I feel that the rate of suicide is steadily increasing since I personally feel it everyday through the increased delays in the train system when someone commits suicide by jumping in front of an oncoming train. In the past, this used to be rare, since it was something that caused a lot of shame and inconvenience to the parents of the suicide victim, because the bill for clean-up and delay were sent to them. Whether this was true or not, I heard that this penalty is now often being waved. It is incredible to think that almost 90 people take their own lives EVERY day.

Perhaps knowing both cultures and languages doesn't matter here, but it's pretty frightening to know it from the cultural perspective and see that many regular Japanese people either don't know it, don't want to believe it or aren't really worried about it. Here are some past blog entries (1, 2) and a column by my friend Dr. Kiyoshi Kurokawa that talks about different aspects of this disturbing trend. When coming to Japan as often as I did in my youth, I was very proud to be Japanese. How things have changed so quickly in 30 years - from Japan "bashing," "passing" and now "missing." I just hope it can fix itself and come back just as quickly.

Your comments are always welcome.

Japan's financial markets - The (in)complete story

2010-05-21T00:56:00.003+09:00

On Wednesday, I had the honor of participating in an Economist Conference panel titled "Japan's financial markets: The whole story". I was one of four participants and was the speaker representing entrepreneurial interests that didn't come from the finance industry. During my opening remarks, I mentioned that I have personally been involved in at least a dozen financing mechanisms and would love to talk about them during the panel discussion. Unfortunately, we did not have enough time yet several people expressed interest in hearing about the 12 points. Therefore, I decided to put it up on blog.

Here is (my) list of financing methods that many entrepreneurs and start-ups go through. Not everyone does every step but I have generally listed them in the general progression based on the maturity of the venture.

The 3 F's - Friends, Families and Fools

This is quite literally people who go to their parents, uncle, siblings and friends to "invest" money into your idea or concept.
Most people who invest at this stage really don't expect much and mentally have tagged this money at the same level of going to Las Vegas.
Similarly, these people usually don't get involved, sit on boards or provide feedback, oversight or other assistance.

Microfinancing

This type of loan is not usually found in developed countries but in a lot of developing countries.
It is primarily used in countries that don't have established banking systems or where the amount of monies does not make sense economically for a bank to make.
Many of these loans are made to people in poverty who make less than a few dollars a day.
The most famous and one of the first is the Grammen Bank, founded by Nobel Laureate - Professor Muhammad Yunus.

The VC - This VC does not stand for "venture capital" but stands for the "Visa Card'

Popular in the United States, especially with college students since one of the first things you get are tons of credit card applications.
This is one of the key sources of the funding for my 1st company - highly not recommended.

Crowd funding - Soliciting funding from a group of people with similar interest or hobbies

This method of funding small projects is becoming popular.
Artists who want to create a CD recording, publish a book or even bottle wine can find a group of like minded people to purchase shares in the interest.
Typically the amount invested is between $500-1,000 and in some cases, the artist can raise up to $250K.
When the item gets published, the profits are distributed to the shareholders per their percentage stake.
In Japan, Music Securities is a good example of company who helps create this market between fund raisers and interested investors.

Research funding

In the US, agencies like DARPA provide research funding for very well defined project areas that have future Department of Defense related uses.
Many projects are broken up into stages and increasing level of funding are provide to lesser amount of selectees, thus focusing in on a specific issue.
In Japan, there are broad organizations that provide funding based on general themes. Applicants are selected and provided funding usually for two years and funding can range from $50-500K per year.
The problem with this method is that once you get approved by one agency, its very easy to reuse the application and apply for another agency two years down the line and continuing this process forever.
Furthermore, since the themes/topics are overly broad, most anything may apply if the application is well written. Finally, since there is no specific output goal/requirement, it is very hard to judge whether the final product is useful/valid.

Angel investor

This investor is just above the 3F's in sophistication. The money that this person invests is an order or two larger in magnitude than the total combined 3F's.
This investor has also see other ventures or has started or succeeded as an entrepreneur in the past.
Therefore, this investor also tends to help entrepreneurs out in small matters and may also serve as a board member.
In Japan, only recently has the tax code changed (gotten a little better) to help faciliate the investments by Angel investors and the ability to write off losses fairly compared to the amount taxed on gains.

Bank loans

A straight bank loans to a venture company in any country (including Japan) is almost something unheard of.
In the U.S., you have institutions such as the Small Business Administration or SBA to help ventures.

The SBA does not make loans directly to small businesses but does help to educate and prepare the business owner to apply for a loan through a financial institution or bank. The SBA then acts as a guarantor on the bank loan

Similarly, in Japan, you two institutions at the country and local level that provide a similar kind of support.

Japan Finance Corporation – New business start-up support loan. These need to be paid back within 5 years and provide 2x matching fund up to $720K.
Credit Guarantee Corporation of Tokyo (or other major cities)
In the (recent) past, these two institutions did not coordinate their lending so some ventures received loans from one entity and parlayed the 2x matching funds from the other. In effect, it was possible to get close to $1M in loans with just $100K of seed money.

Strategic corporate investments

This type of money is probably the best kind for an up-and-coming venture.
It provides both needed capital, a strategic partner, potential customer/user of the product and name recognition.
The only negatives is that many companies don't have systems in place to make venture investments. Therefore, sometimes it takes a long time to get all the necessary approvals for an investment to take place.
Another potential negative is that when you align yourself to a particular company, depending on certain Keiretsu's that still exist in Japan, you may not be able to sell to their competitors.

Venture capital

Unfortunately in Japan, I always say that Venture Capitals don't exist here because they neither venture nor invest a lot of capital.
Many VC's in Japan are extensions of banks and therefore are manned by people from the parent bank. This usually means that:

The people are usually on short term rotations (about two years) where they will eventually return to the main bank (especially in times of economic distress).
They want to make the least mistakes (and hence decisions) as possible so that any investments they make won't come to haunt them when they are climbing the corporate ladder back at the main bank.
The people don't have any practical and real venture or entrepreneurial experience and therefore do not add any other value (i.e., experience) to the venture beyond just capital
The investments decisions are made based on metrics unrelated to the potential success of a company.
Once VC's invest, many just care about going IPO as quickly as possible. Therefore, they do whatever it takes to go IPO but don't help the company develop the plan AFTER IPO. They forget that the "I" in IPO standards for "Initial" and end up making an IPO and end goal.

Government backed VC's

Even worse than the typical VC since they have irreconcilable goals to meet.
Adding government bureaucrats into the decision making process only ends up hurting the entrepreneur.

Initial Public Offering (IPO)

Many people forget that IPO's are used to raise funds through the public market in order to implement their next stage of growth.
Exit and cashing out using IPOs should not be the primary goal.
Many companies (especially in Japan) are not meant to go public and don't have the critical mass (i.e., revenues) to sustain it. Some do it for the sex appeal but cannot sustain the various regulations, overhead and growht requirements.

Private Equity (PE) Firms

PE firms have had a bad rap in Japan (and the world) by giving the impression that outsiders will come in and disrupt the harmony of a Japanese company for the pure motive of financial gain. While this is true in the case of some well publicized hostile take overs, there are many situations where the company themselves call on the PE firms for assistance.
Unfortunately, many Japanese companies, after they have gone public, use PE firms to further leverage for the wrong reasons.
Once the company leverages, many of the follow through issues were either not thought up ahead of time and/or weren't implemented correctly.
Given the over leveraged nature of the company, they are forced to take drastic measures which usually have them ending up in a worse state.

Anyway, these are based on some personal experiences working in getting financing for ventures and post ventures. This is by no means a complete list and the opinions are just generalities and not absolutes. I am VERY interested in receiving other people's comments and to add them here. Hopefully, making this a convenient resource for all those entrepreneurs and ventures who are looking to raise money.

Entrepreneurism around the world

2010-05-18T17:00:00.003+09:00

Lately, I have been asked to speak at a LOT of events on the topic of entrepreneurism. I just returned from Switzerland and the St. Gallen Symposium and this week, since I've been back, I've been asked to talk about innovation and entrepreneurship to a variety of crowds. What's interesting is that on one day, it would be a group of 20 or so MBA students from the United States. On another day, it was half-a-dozen fund managers, foundations and hedge funds with total assets of over $450 billion under management. The rest of this week I'll speak at two Economist conferences and some smaller events throughout Tokyo. While I'm honored to be asked to speak at these events, I also enjoy learning something new every time I meet a new set of people.

It goes to show how, in the last year, people are looking for ways to think innovatively. This is a good thing. Like I have said before, it's sad to see people lose their jobs during economic crises, but it's good to see people reevaluating the risk/reward of their current situation and wanting to do something new. While education, culture, risk profiles and politics drive entrepreneurship in a country, at the end of the day, it's the individual who must take that leap of faith and execute.

While I don't have all the answers and don't claim to even know 1% of what makes a successful entrepreneur, I hope to help steer people away from making some obvious and not-so-obvious mistakes when going down this path. Being an entrepreneur, starting a venture and converting innovation into something profitable is a very difficult endeavor, even when the stars are aligned. While each situation is different, by sharing information, experiences and examples, hopefully, the number of hurdles against a prospective entrepreneur can be reduced.

In that spirit, I love participating in conferences done by The Economist. Not only do I love their publications and read them judiciously, as well as clip/copy articles (iPads are very useful for this - a future article) to pass around to my friends and associates, but I think they do a very good job of putting on events that talk about business, particularly since they can elicit answers from the participants and get to the heart of the topic.

In the next few days, I will participate in two back-to-back Economist conferences (unrelated to one another). The first, on May 19th at the Mandarin Oriental, is the Bellwether Series: Japan - Charting the future of finance in Asia-Pacific. I will be talking on the topic: "Japan’s financial markets: The whole story" which will discuss:

A panel discussion on the structure, efficiency and sustainability of Japan’s financial markets. With experts from all sides of the industry—from venture capital to commercial banks, from major capital market players to niche operators. This session will look at the supply and demand for finance in Japan.

The panelists will include:

Seiji Yasubuchi, President and CEO, GE Capital Japan
Tetsutaro Muraki, President and CEO, Tokyo AIM
Masato Marumo, Managing Director, The Carlyle Group
Me

The second event will be on the following day on Thursday, May 20th at the Peninsula Hotel, and is run by the Economist Corporate Network (ECN). This is an event I helped put together based on the topic: "Lessons from Softbank: How do you make a large company based in Japan entrepreneurial?" Two of my good friends, Mr. Ted Matsumoto, Chief Strategy Officer of Softbank, and Mr. Jun Yamada, President of Qualcomm Japan, have agreed to join me on a panel to discuss this topic.

Japan Inc is often criticized for rigid business practices and a lack of creative business solutions. Some companies and leaders, however, break the mould. The latest Forbes survey of Japan’s richest individuals showed Softbank’s Masayoshi Son as the fourth-richest man in Japan. In the style of Microsoft’s Bill Gates and Steve Jobs from Apple, Masayoshi Son has grown his company from garage startups to national leader. In 2006, he carried out one of the boldest M&A’s in Japan’s business history, when he took over the Vodaphone Japan in a gigantic deal.

I'm allowed to invite people to the second event so if there is anyone reading this blog who is interested in attending, please let me know. I look forward to seeing many people who told me they were coming and have this important dialog to help Japan become more innovative and competitive in the global marketplace.

Next week, I fly to Europe to attend both the Ernst & Young World Entrepreneur of the Year Award in Monte Carlo, Monaco. This was the award I received way back in 1998. Since then, I have felt this is a very important program that highlights entrepreneurs from around the world (now 48 countries). I also helped start this event in Japan from 2000 and have been a judge in the United States, Japan and the world event. Rumor has it that I have judged this contest more times than anyone in its history. The 2009 Entrepreneur of the Year for Japan is Mr. Hideki Shoji, founder and president of Toyo Systems, who will compete in Monte Carlo for the world title against 47 other entrepreneurs - good luck, Mr. Shoji!

Finally, I then fly to yet another entrepreneurial event called The 5th Global YES Summit - Rework the World conference in Leksand, Sweden, where YES stands for "Youth Entrepreneurship & Sustainability." This is the first time for me to attend this event. I will be participating in the plenary session, where I will be part of the World Investment Panel. This event plans to have over 1,500 participants from over 90 countries in a small town 250km northwest of Stockholm. I'm very excited to meet all these up-and-coming entrepreneurs.

As you can see, there are MANY very worthy entrepreneurial events that are happening around the world. I'm excited about participating in all of them and hope to share my experiences with you. Your comments are always welcome.

40th St. Gallen Symposium

2010-05-16T15:21:00.010+09:00

The St. Gallen Symposium is an event (its 40th this year) led by the students of St. Gallen university and is held in the small city of St. Gallen, Switzerland. This is a very compact city that is incredibly clean with houses and streets having this movie set like appearance (pictures below). The city itself is about one hour outside of Zurich and was my first opportunity to spend several days in a Swiss city besides my jaunts into Geneva in years past.

Apparently, the weather was unusually wet and cold for the season but I didn't mind at all. While it was raining from time-to-time, the weather was nice and crisp. In fact, I believe we were very lucky because the rain stopped at critical times (i.e., in between sessions when we had to walk between venues or when the Swiss air force or Patrouille Suisse gave a demonstration of their aerial acrobatics - twice). Furthermore, since this was the last leg of my month long trip out of Tokyo, I did not pack any warm clothes so I couldn't complain. <g>

Anyway, the symposium was attended by approximately 1,000 attendees. What is unique about this event is that it is completely organized and run by students. While they have many world renowned advisers, the students basically run the 2 day (May 6-7) event. The symposium was actually founded 40 years ago and the organizers make it a point to let people know that they are 6 months older than the Davos event next door. Out of the attendees, approximately 200 are graduate students (this year was the first year they limited it to graduate students) from around the world who have shown an active interest in entrepreneurism. The students were selected to come to the event via an essay contest (in English) and/or nominations by their country heads. This year, out of all the essay contests and nominations, Japan sent (selected) eight students (out of the 45 students that applied (6)/nominated (2) - while this was the most out of all the countries, perhaps because English was a limiting factor, the percentage acceptance was the lowest). The remaining participants included entrepreneurs, politicians, heads of corporations, academics and business people.

From Japan, we had several people come including the following who had an active role in the symposium were:
Speakers

Hiroshi Mikitani - Chairman & Chief Executive Officer, Rakuten Inc.
Me

Topic Leaders

Yoshinori Imai - Vice President, NHK Japan Broadcasting Corporation (moderating my session)
Prof. Yoko Ishikura - Professor for International Business Strategy, Hitotsubashi University (moderating Mr. Miktani's session)
Rintaro Tamaki - Vice Minister of Finance for International Affairs of Japan
Dr. Hiroshi Tomono - Representative Director & President, Sumitomo Metal Industries, Ltd.

My presentation was the 2nd set of work sessions on the first day of the symposium. I had the difficult job of coming AFTER Mr. Mikitani's session. I say this because, while I had heard, paneled or spoke with Mr. Mikitani in the past, I was very impressed by his eloquence and appropriateness of his answers. Meaning, many of the answers he gave, I can either relate to or learn from. I think I also saw this unique angle of Mr. Mikitani because the 1.5 hour sessions are structured so that the speaker only has a formal component of about 5-10 minutes where he/she can give a prepared presentation. The remaining 80 minutes is intended to be all Q&A. Therefore, given that this was a very international group of participants, all sorts of questions came. Furthermore, there were some sessions where the participants "called" the speakers on certain answers and started some pretty intense debates which included yelling. Thankfully (?), neither Mr. Mikitani's or my sessions got that heated. Nevertheless, given the free nature of the questions compounded by being outside of Japan and answering in English, many people (including myself) felt that Mr. Mikitani gave answers that were very honest, thoughtful and probably wouldn't hear in Japan (especially the parts he was critical of Japan).

For my presentation, I had a about 15 PowerPoint slides ready to setup the discussion where entrepreneurship and politics intersect. Mr. Imai had opened the session by introducing himself, his fascinating background and me. Slightly through my presentation, I noticed that the mouse did not work as well and didn't realize why. Nevertheless, unfazed, I proceeded. After about halfway through my presentation, the laptop ran out of batteries (someone forgot the plug the laptop in) and the screen went blank. Murphy's law would have it that I was one one of my more complicated (not busy)/involved slides. Since the staff had to look for an AC adapter, reboot the machine, have it sync with the projector, there was probably a good 3 minutes where I had to improvise verbally. Obviously, God was challenging me to be flexible and entrepreneurial here - it could have been worse.

Running a little late, we started Q&A. Here, I felt I could have done better. Honestly, I think my answers were a little too long. Regardless, this was a unique opportunity to get about 70 minutes of raw questioning (usually, Q&A is no longer than 5-10 minutes in Japan - effectively inverted from the St. Gallen format) from very smart people from around the world. I enjoyed this period and learned a lot - never underestimating different perspectives and viewpoints from other countries. The only question that threw me off was the negative sentiment towards the United States (which is not uncommon in conferences outside the US - esp. Europe) and how governments may have had a part in affecting people's lives when it came to certain nationally sensitive research (i.e., nuclear scientists and their research). I suppose this was a fair question given that the topic was on politics and entrepreneurship.

All-in-all, I always take these opportunities as a humbling lesson on where I need to improve to become a better public speaker. I have a LONG ways to go. Obviously, there were many other speakers and some of the people were truly great speakers. My goal would be to be able to speak 50% as well as them. I've noticed that really great speakers not only have superb oratory and presentation skills, great presentations, can think quick on their feet but most importantly, add a little humor (in the right amount - this is actually very difficult to accomplish, especially so in a multicultural environment where certain jokes may not translate well) to the presentation to keep things interesting. The following speaker/sessions, I found truly fascinating:

Lord Griffiths of Fforestfach - Vice Chairman, Goldman Sachs International
Christine Lagarde - Minister for the Economy, Industry and Employment of France (taped)
Judy Leissner - Chief Executive Officer, Grace Vineyard
Prof. Kishore Mahbubani - Dean & Professor in the Practice of Public Policy, Lee Kuan Yew School of Public Policy, National University of Singapore

I won't go into details in describing the sessions since I can't do them justice. However, you can view many of their video's here: http://www.stgallen-symposium.org/Media-Channel/Video-40.aspx

The other neat thing about this symposium is that the lunches are buffet style and there are probably seats to accommodate only 1/3 of the lunch crowd. This is actually pretty smart because it created situations where people had to stand and move from table-to-table and naturally meet people. Though, this, I had the opportunity to meet many people, especially students, who had great ideas and very optimistic views about their future. What was more interesting is that many of the students I met didn't know what they wanted to do in 3 years. Not that they didn't think about it, but on the contrary, that they had too many ideas in their mind that it was obvious they needed/wanted to use an opportunity like St. Gallen to get feedback on their futures and not be locked in/destined for a particular dead end job.

For dinner, the second evening was very interesting. I had the opportunity to have sit with the group from Japan (including students) to meet and exchange ideas. This year happened to be the 100 year anniversary of the founding of Swiss aviation so our venue for this dinner was at an aviation museum. Obviously, most of this was related to the future of Japan and how things looked for them going forward. What was more interesting was that during this exact time, the DJIA well almost 1,000 points (the biggest one-day drop in history) so a lot of the discussions also involved Greece, GDP/debt and financial crises. This conversation was naturally occurring with both the students and other participants.

Update: I've added links from other participants to the end of this blog.

For some pictures of the St. Gallen Symposium and the city of St. Gallen, you can view my pictures here: http://www.flickr.com/photos/whsaito/sets/72157623910177957/
For Professor Yoko Ishikura's blog on the symposium can be found starting here: http://www.yokoishikura.com/english/?p=1637
For Ryo Umezawa's (nominated Knowledge Pool participant) blog on the symposium: http://am6.jp/b0aicm

For Kanetaka Maiki's blog: http://d.hatena.ne.jp/kanetaka/

Your comments are always welcome.

Softbank iPad restrictions

2010-05-11T00:00:00.003+09:00

Apparently, it's even worse. 3G iPad's sold by Softbank in Japan will actually be SIM locked (unlike other countries) http://bit.ly/9NAw2g

BTW, here is a comparison of the various international 3G rates for the iPad. Japan seems to have the more expensive plans.

NTT not supporting iPad in Japan

2010-05-10T23:52:00.003+09:00

NTT DoCoMo decides not to offer wireless service for the iPad in Japan. Time to experiment and see if/what works. http://bit.ly/9UKwna

3G iPad roaming between carriers

2010-05-09T16:54:00.003+09:00

Interesting observation, while stuck in a no coverage Softbank zone, my iPad switched to NTT. I doubt Japanese iPad's will do that.

Trains and humans

2010-05-09T16:51:00.002+09:00

People who hold up trains by jumping out in front of them should... Oh wait. A "human accident" (Yokohama) is holding my train from Narita!

3G iPad roaming in Japan

2010-05-09T15:55:00.003+09:00

1st thing I did after arriving in Japan - fired up my iPad of course. 3G works great (Softbank) and quick (feels quicker than US or Europe)

New venture company

2010-05-04T14:05:00.003+09:00

One of the ventures I'm starting up in Japan (spun out of AIST) as reported by Asahi newspaper. http://bit.ly/9AbSKD (in Japanese)

Yet Another Economist Presentation (YAEP)

2010-05-04T04:44:00.002+09:00

Preparing for my Economists presentation on VC's in Japan. Now crowdsourcing comments on your views. Good, bad, useless, non-existent?

3G iPad arrived

2010-05-01T02:19:00.003+09:00

Yeah! My new 3G iPad (64GB) JUST arrived via Fedex. Will share my experiences on my blog at http://saitoblog.com/ later.

Politics and Entrepreneurship

2010-04-30T13:04:00.007+09:00

I just finished my PowerPoint presentation for my 10 minute intro speech at the 40th annual St. Gallen's symposium next week. My work session with Mr. Yoshinori Imai (NHK) will be on Thursday, May 13th after Mr. Hiroshi Mikitani's (Rakuten) session. Basically, my presentation talks about the intersection of politics and entrepreneurship. I hope it will be a catalyst to instill debate with the audience during the session.

I'm posting excerpts of the presentation here both for people who cannot come to Zurich and attend as well as people who have additional comments, suggestions and ideas that I might be able to incorporate/mention during the 1.5 hour session. Again, crowdsourcing has been working very well for me so I'll use it again here.

As I mentioned in a previous blog, the symposiums theme for this year is titled "Entrepreneurs - Agents of change". Obviously, this is a timely topic given all the turmoil throughout the world due to the current Great Recession. Personally, I have seen the interest in entrepreneurship grow tremendously in the last 18 months. Not only due to the rapid globalization and technological change but because entrepreneurship helps meet new social, political and environmental challenges. In fact, many countries have made entrepreneurship an explicit policy priority due to this economic crisis and thus, has resulted in me travelling to numerous countries around the world to talk about this topic (and sometimes in conjunction with innovation).

While I am not personally happy about anyone losing their jobs, I believe economic crises are historically times of industrial renewal or creative destruction as described by Schumpeter. Basically, that throughout human history, less efficient firms fail while more efficient ones emerge and expand during these times. Specifically, during times of economic prosperity, legacy industries and technologies can survive due to momentum, established networks and infrastructure. However, when a downturns occur, new business models and new technologies merge - particularly those leading to cost reductions and greater efficiencies.

Some examples of companies that were founded during a recession include household names such as: 3M, Adobe Systems, Amgen, Apple, Broadcom, CNN, Chevron, Disney, Electronic Arts, Exxon Mobil, Facebook, Genentech, General Electric, Google, Home Depot, Honda, Hyatt, IBM, Johnson & Johnson, Kraft, McDonalds, Merck, Microsoft, Nintendo, Pizza Hut, Princeton Review, Skype, Sony, Twitter and Whole Foods. Obviously, there are many more but I had to select ones that people know from around the world and still fit on one PowerPoint slide.

Obviously, my point is that entrepreneurship is key to an economic recovery and many other people feel the same way. In a recent Kauffman survey of Americans and found:

79% said that entrepreneurs are critically important to job creation, ranking higher than big business, scientists, and government
By three to one, Americans favor business creation policies as opposed to government creating new public and private sector jobs
72% said the government should do more to encourage individuals to start businesses
Almost half think the laws in America make it more difficult to start a business

Similarly, the St. Gallen's International Students’ Committee (ISC) surveyed Leaders of Tomorrow on current opinions on a wide variety of topics and produced a report called the 2010 Global Perspectives Barometer. From the report, I was able to pull similar comments including:

Majority felt there is too much regulation in their country

Western Europeans and North Americans disagreed with this

38% felt that government should regulate corporate risk

However, only 24% risk regulation to free markets

70% favor a free-market, federal state system as opposed to centralized state intervention
Wanted a state with strong armed forces

I included the last bullet since I actually found that quite interesting.

Anyway, back to the main topic and the history of government and entrepreneurship. Personally, I think a lot of the modern entrepreneurial activities started with the formation of the Small Business Investment Companies (SBICs) was formed in 1958. It was created to foster funding for growth-oriented small businesses with the understanding that entrepreneurial companies would spur technological advances. The interesting and actual motivation for the creation of this entity was so the US could compete against the Soviet Union. Eventually, this led to the formation of the infrastructure for much of the modern venture capital industry.
In the 1980's, government and politicians in Western countries began to realize that they were unable to sustain traditional manufacturing/production and thus started shifting industries to service based sector. Furthermore, the privatization of publicly owned enterprises and reduced regulatory controls on industry happened during this time. With this "perfect storm", many large manufacturing industries started losing out to smaller, more nimble, knowledge based ventures.

In today's financial crisis, many governments were forced into massive public interventions and become super venture capitalists. Unfortunately, the monies (e.g., TARP) that were invested focused on most troubled and poorly managed firms. With the electorial base complaining, politicians liked the "fun stuff" of handing out money by creating several program such as loan funds, SWFs, government subsidies, government funded venture capital, business centers and tech parks that have not had much track record of success. To further complicate matters, this situation has created numerous moral hazards where cheap, politically influenced and motivated money is wasted on short term pain and not long term gains where there are no incentives to becoming financially viable.

So what action should governments take? I believe the role of government is not to try to create wealth but to create an environment in which the entrepreneurial spirit can flourish. Namely, that economic freedom is best public policy that fosters entrepreneurship. As there is a strong correlation between economic growth and ease of doing business in a country, governments should make every effort to change their policies to make doing business easier and fair.

Along these lines, governments must do all it can to create a fair playing field for companies while protecting them once they become established and not smothering them in the process.

Rule of law - For example, bankruptcy laws should not be so punishing as to scare away potential entrepreneurs to start-up business, or worse, be afraid to fail
Property rights - Intellectual properly rights with the right balance of protection but not protectionism
Tax burden - Depending on how taxes are structured, this can encourage or discourage entrepreneurship
Bureaucracy - Ease of doing business in a country becomes a competitive advantage in this global marketplace
Regulations - Should encourage fairness but not be unfair, unreasonable or illogical
Lack of coordination - Different ministries should not have conflicting regulations that prevent industries from developing

All governments also need to look out for issues that put them on a more competitive footing in this global environment. With mobility of people and ideas today, countries need to compete for commerce. Why would anyone choose to setup a business in Brazil where it takes 18 bureaucratic steps and 152 days to get the company whereas in Canada, it only takes 1 step and 1 day? Globally minded entrepreneurs now measure the following items when deciding on a place to start their business:

Steps and complexity in starting a business
The ease at obtaining construction permits
Employing workers - both the ability to hire and fire employees
Registering property
Getting credit
Protecting investors from lawsuits and taxes
Paying taxes
Trading across borders both physically and governmentally
Enforcing contracts and the court system
Closing a business and associated liabilities

Anyway, I hope to talk about these points and other in the opening 10 minutes. As I always say in the end “Think Globally, Act Locally”. Your comments are always welcome.

Blogger feature, blogging and update

2010-04-30T11:08:00.002+09:00

Yeah! Blogger's latest editor now has a spell check feature. Its frightening to see all the mistakes in my older blog entries. Fix or not?

The feature itself is a little buggy. Namely, if you save/post a blog entry with "spell check" on, it will leave the highlights (in yellow) in the post itself. Nevertheless, even with its very basic features, its a godsend to those with bad spelling habits - and will continue to perpetuate them. Its also embarrassing to see all the misspellings instantaneously.

For the 3 people who read my blog, no I have not lost interest in writing periodic entries. I have been a little busy with a number of activities, but mostly in creating presentations for four (1, 2) presentations I have in the coming weeks. I hope to post excerpts of those presentations here.

One of the four presentations I will be speaking is at yet another Economist Conference (YAEC - my third this year) on Thursday, May 20th. This particular presentation will be put on by the Corporate Network group at The Economist and I will be on a panel with my two friends Ted Matsumoto (SVP Softbank Mobile) and Jun Yamada (Chairman Qualcomm Japan). I will talk about this event in a near future blog when I finish the presentation.

Finally, I received many comments on how ugly my personal website looked. Therefore, I am in the process of updating the content and porting it to WordPress. I decided to use WordPress since Blogger didn't give me the flexibility of making the site non-blog looking. How is my website and blog site different? I asked myself the same question. I guess I'm using the website to show relatively static information organized/grouped in a logical format and the blog site a more dynamic chronological representation of my thoughts and activities. Anyway, I hope to have the new site up in the next couple weeks.

Stay tuned!

iPad+ review - Real world

2010-04-20T01:04:00.009+09:00

It's been about 5 years when I had flown a non-Oneworld carrier (Delta) within the United States. This meant having no status with them and making a flight change should have already been a warning sign. Anyway, long story short, I was very surprised by the steep cost of the "extra baggage charge." Essentially, I had to pay an extra $60 since I had check-in two pieces of luggage. Furthermore, since one bag was 6 lbs over weight (over 50 lbs is considered overweight) after trying to load balance with the other bag, I got charged an additional $90 for a total of $150 which was probably more expensive than the ticket themselves. I even asked how much it would cost to check-in 3 bags, all under 50 lbs, but the system was well built and that option would have cost $150. Oh well. Thankfully, all my bags made (unlike my recent trip to Botswana) my final destination. I couldn't even begin to imagine the hell I would have raised if they didn't AFTER paying that much.

Since I just paid for baggage, I was pleasantly surprised to find that my flight had WiFi service for only $7.95. After paying $150 for baggage, frankly, paying another $7.95 was a no brainer. Of course, with WiFi, I was able to use my new iPad and all its wireless functions. The provider Gogo Inflight Internet, works on a series of cellular antennas providing air-to-ground (ATG) internet across the U.S. and provides internet service to several airlines. This is completely different from the satellite based system used by the now defunct Connexion by Boeing. The Gogo system uses CDMA EVDO as the wireless protocol and can apparently send 12-27Mbps to an airplane. My personal experience with the service was actually pretty good. I measured the speed by downloading the Speedtest iPhone applet and getting the following results (average of 5 tests): 1101 kbps down, 270 kbps up with a 19ms ping. The only other thing I found interesting with this service is that it only works above a certain altitude (since these are basically cell towers pointed up) and during cell hand-offs, there is momentarily delay (10 seconds?) in service but really fast downloads afterwards. I wasn't able to test this, but apparently, the service also works up to 100 miles off the coast. This essentially means that a single cell tower has the power to transmit that far. Aircell, the infrastructure provider, also provides internet service to business jets - in case you have one.

Anyway, back to the iPad. Now that I have been using this for almost 10 days straight, I thought I'd share my real world experiences here. First, what is most interesting is that while there is only one iPad (at least for now), no iPad is the same. This might be the distinguishing aspect of the iPad - not too hot, not too cold, unlike WinCE or Android devices, there is a well defined hardware specification that further consolidates the "look and feel" both physically and the user interface. This not only allows for a vibrant market of 3rd party add-on's, but allows software developer's to create really unique yet consistent applications. The other neat thing about the iPad is that its location and situation dependent. Specifically, when you use an iPad in the morning, it can be a newspaper reader. At work, it can be your note taker, voice recorder and presenter. Back at home in the evening, it ~~doubles~~ triples as an entertainment device, movie player, etc... all different - from one device.

The newspaper applications (I use WSJ, New York Times, USA Today) are really good on the iPad. It allows the newspapers to display their look-and-feel and uniqueness yet, given the fixed environment of an iPad, going from one layout and interface to another is intuitive (when you swipe a finger from left-to-right, they all work the same) and very easy. Furthermore, while the display is smaller than the Kindle DX (which I also own), the color adds a level of fidelity which allows for more information to be displayed. Having used the DX which I felt was too large, the iPad is actually the right size. Similarly, using similar apps on an iPhone, the layout is more menu based and there is more finger flicking while reading the article. Yes, its a little heavier than I like, but that is a small price to pay. The biggest difference between the iPad and other readers like Kindle and software based readers (such as Zinio) is that its fast - important from a "real world" feeling perspective. By the time the iPad 5XY comes out in the near future, there will really be no reason to print on dead trees any more. Other major differences (which aren't a big deal for me since I don't use them) is the lack of cut/paste for iBooks and the lack of a voice reader (perhaps a future upgrade?). Similarly, the Kindle reader on the iPad does not allow cut/paste or voice reading but more important, the subscription based items do not get sent to software based Kindle reader (which means no BusinessWeek and The Economist for me). This wouldn't be so bad if iBooks had subscriptions items such as magazines, but they don't - yet. However, once they do and/or the Kindle app on the iPad accepts subscriptions from Amazon, I would ditch the Kindle completely.

Obviously, to make this all possible, the display has to be good. On the iPad, the 9.7-inch 1024-by-768 resolution display is bright, crisp LED backlit with a wide 178 degree viewing angle. This is possible because the iPad uses a new LCD technology called In-Plane Switching (IPS). This was first developed by Hitachi to address poor viewing angle and color's of LCD's. Furthermore, the iPad uses an LED back light versus some sort of fluorescent lamp used in many laptops today. By using LED's, you get both higher color fidelity (better color gamut) and lower power consumption.

For portable devices to be useful, the battery also has to be really really good. It is always frustrating to forget your AC adapter or not finding an outlet in the waiting area or on the plane itself. If you are always in the habit of charging your iPhone (or your laptop, camera, etc...), you will be pleasantly surprised by the batter life of an iPad. Honestly, this isn't your typical laptop which claims 5 hour battery life and you only get 2 at most. On the iPad, they claim 10 hours and I actually get about 11.5 hours of non-stop video. Obviously, you'll get a lot more power if you reduce wireless use and video playing, but 10 hours of what is essentially a full computer is very good. Furthermore, if you are still in the habit of connecting the iPad, it knows if it needs to be recharged and will only charge when it requires it. This is actually important for portable devices when you can't replace the battery since lithium ion batteries have a fixed number of times you can charge them, thus reducing the number of charge cycles is one way to increase the life of the device.

Interesting, for the Apple accessories that you can buy with the iPad, I found them a little lacking:

Case - The case if pretty hard to get on the first couple of times until it "stretches" a little. Unfortunately, when it stretches, where the case meets the display, the seam becomes somewhat loose. Furthermore, with a case like this, you can use it with the stand or keyboard with stand (below). However, the way this case is designed (unlike other 3rd party cases), this allows your iPad to stand in landscape mode to watch movies or as a photo display.
Stand - Fine in portrait mode and allows for charging, but it doesn't allow you to display the iPad in landscape mode since the connector is in the way. It would have been nice to retract the connector. Unfortunately, this stand and the keyboard with stand (below) does not work with the iPhone.
Keyboard - The keyboard connects to the iPad via BlueTooth. Just your regular Apple keyboard. I will try to see if the iPad works with my other BT keyboards later.
Keyboard with stand - At first, I thought by having this accessory and the iPad, I wouldn't need a laptop for most of my work related activities. Unfortunately, this accessory is basically the stand and keyboard glued together. Since the stand portion is at right angles to the keyboard, storing the unit in your briefcase, bag, etc... becomes rather cumbersome. Also, just like the stand, you can't put it in landscape mode.

One of the other biggest complaints with the iPad is the lack of an easy way to transfer files to it. When you purchase applets like Keynote or Pages, you actually need to copy your Word documents or PowerPoint files via the Apps tab in iTunes. Unfortunately, connecting your iPad to a PC will not mount it as a drive. To alleviate some of these problems, I use the iPad version of SugarSync. This allows me to keep all my files on various PC's, laptops and now iPad in sync.

Otherwise, the speakers are pretty good and loud. Watching movies is a lot better than the iPhone. Though holding it at a particular angle while seated in an airplane can get tiresome. The only issue is if you purchase a lot of movies from iTunes, the HD version of the movies take up a lot of space on your computer. In my case, I sync using my SSD (ironically, the same capacity as my iPad - 64Gb) based laptop so I got a low disk space warning while doing this too often. The Keynote applet is nice but doesn’t allow for much fine tuning (i.e., font size hard to change) and if you load certain PowerPoint files (especially large ones), it has a tendency to crash.

Finally, as I write this, due to both the international version being delayed and the volcano in Iceland, many Europeans stuck here have bought a LOT of iPad's, leading to shortages in many stores on the East coast. I have also heard that many campuses have started banning the use of iPad's because of the strain it causes on their wireless networks. It'll be interesting to see how AT&T holds up when the 3G enabled version comes out later this month. More then....

Your comments are always welcome.

Apple iPad review

2010-04-11T22:59:00.007+09:00

This last week has been very busy with my preparations in going on an around-the-world trip. At the same time, after taking all (250+) those cherry blossom photo's last week, I had a miserable week from either pollen allergies and/or a cold. Hopefully, it is a cold and once I get over it, it won't come back versus seasonal allergies which tend to get worse as you get older. I still want to think (mentally deceive myself) that I don't get allergies..... The rest of the week was an interesting combination of dinners with friends, interviews and planning future events in innovation and entrepreneurship. I hope to talk (blog) about those in more details in the coming weeks.

Anyway, I left Narita like I usually do for the United States. Unfortunately, since I ~~usually tend to~~ always fly Japan Airlines and my final designation was Dulles airport in Virginia (next to Washington D.C.) so I had to transfer via Los Angeles (LAX). The "silver" lining was that I had a 3 hour layover with nothing to do. Therefore, immediately after exiting customs, I made a beeline into a cab to buy me an iPad. Actually, I had already pre-ordered one of the 3G versions coming out later this month. However, many of my close friends (usually very picky) were using words like "cool" and were generally excited about their purchase so, of course, I had to get one (non-3G) version ASAP.

Asking the driver to take me to the nearest Best Buy, we drove a few miles and found one. I quickly ran into the store and asked if they had any iPad's but apparently they were out of stock. Luckily, I then returned to the waiting cab (who also had all my unchecked luggage - ie., Leica camera, passport, etc...) and used my iPhone application Yelp! and searched for the nearest Apple store. Thankfully, there was one about 2 blocks away. After finding the Apple store after two circumnavigations of the shopping center (it was inside a Macy's not visible from the outside), I went inside probably the only store in the whole center with a lot of people. Statistically, I'd say about 30% were playing with iPad, 30% were asking computer questions on their existing products, 30% were looking at other products. Net, I'd say only 10% were actually there to purchase an iPad. Regardless, during the 7 minutes I was there, I say five devices sold. Personally, I purchased the 64GB flash version for a somewhat expensive $699 ($775.15 with tax). Note: I noticed Apple has replaced the HP based WinCE devices used to process purchases with their very own iPhone attachments to scan and process credit card payment without having to go to the cashier.

After quickly returning to the airport, round trip - 30 minutes/$50 with tip, I quickly checked in and went straight to the AA Admirals Lounge. After the getting some food, the complimentary wireless pass and unpacking the box (which I left in the lounge with I'm sure briefly excited someone afterwards), I hooked it up to the PC. My first impression is that the device "feels" heavier than it should. This is probably because I'm comparing the weight to one of my favorite laptops the Sony X1 made out of carbon fiber. Frankly, it reminded me of the other Apple laptops where they tend to use a lot of aluminum for structural stability but probably more for aesthetics. It is probably too bad that they couldn't use a material like carbon fiber to reduce the weight (more on this later). Since the "user manual" is really a piece of paper that tells you to hook it up to iTunes (really) and to explain the 4 buttons, I felt this wasn't necessary since when the device is powered on, it shows you the same thing graphically. (The button explanation could have probably been printed on the plastic wrap that the iPad comes with.) Ironically, when I first connected the iPad to my Windows 7 PC, it had some problems recognizing the device so I had to unplug/reboot once to get the driver to install properly. Once this happened, I had to start and re-start iTunes twice because it didn't like the iPad initially. Anyway, I didn't find this too much of an issue, but I assume this could be disconcerting for other people (like Slate during their live podcast review). So with about an hour before boarding the plane, I started to both synchronize with my existing iTunes and purchased a few iPad specific programs (namely Apple Pages $9.99 - a word processing application and Apple Keynote $9.99- a presentation software/portable PowerPoint killer). I also downloaded iBooks (free) but could not download any books at this point. Unfortunately, with close to 500 pictures, 1300 music tunes, 100 applications and most importantly 50 videos from TED, I was only able to sync about 60% of all this stuff in an hour. Most of the time was due to iTunes re-sampling my photo's for the higher solution of the iPad.

After boarding, I was able to watch about 4 hours of TED video's on the iPad in pretty good resolution with only 40% battery loss. The only complain I have is that the device is too heavy to hold with your hands to keep it vertical. After about an hour, you end up setting it down on your lap or tray table. The angle of view doesn't decrease in contrast substantially like some LCD based computers and the iPad itself doesn't get hot like other media players or computers, but the angle is sometimes awkward. What I found somewhat interesting is the addition of an extra switch that allowed you to "lock" the orientation of the screen. Initially, I didn't quite understand what the point of the switch was, but as soon as you view movies on your lap or table, the iPad sometimes loses its orientation (portrait or landscape) and will auto rotate into the wrong view if you don't have it locked.

Some other interesting thoughts, observations and comments:

The iBooks application looks really promising and the selection of books looks interesting. In the future, I probably will carry the Kindle or the iPad but not both. If the selection of magazines and books on the iPad catches up to my Kindle, I will switch. However, the problem with the iBooks application is that you have to buy the books via iBooks. This means you need a WiFi connection at this time. I would have bought books to read but since I only had one lounge WiFi access, I couldn't.
The number of applications missing from the iPad versus the iPhone is disappointing. Namely, the voice recorder and calculator. However, I was able to download some pretty good apps for free.
The Picture Frame feature is a serious feature on the iPad. When I heard another review by Walt Mossberg describing it as a picture frame, I didn't think he was serious. However, there is a dedicated button next to the unlock slider that turns the iPad into a very expensive (yet very beautiful) picture frame.
Typing on the iPad is actually not as bad as some people have written. Since I'm a 10 year BlackBerry user, typing in weird, contorted fashion has become easy for me. Regardless, since the iPad is multitouch, the typing is not that bad. Holding the iPad in portrait mode in your hands and typing using your thumbs is only a bit smaller than the Blackberry (though, if you have small hands, it may not be possible to hold the iPad stably and type). In landscape mode, putting the iPad flat on the table works well though not having any key pitch can be a little awkward for some. You won't be able to speed type, but things like e-mail (blog...?), I think it would be adequate. Yes, I have purchased all the docks and keyboard accessories but they have not arrived yet. I will update my thoughts on this later.
Having WiFi connected tends to decrease battery life a lot faster. This is not a scientific observation but just a feeling. I can't wait until the 3G version comes out to see what the "real world" battery life will be. Regardless, with a display this large and great performance, the battery life is already very good.
I am syncing both my iPhone and iPad to the same iTunes application and account. I am currently downloading a movie (over the hotel wireless, apparently this will take 51 hours though) and I'm curious to see how the digital rights of the movie will be managed. Will I be able to watch on both? Just one? Furthermore, I should be getting my 3G iPad later this month. Again, I'm curious to see how many devices you can "share" applications and content on. Another test is to see how content purchased on a specific iPad (via iTunes or AppStore) will be copied to iTunes and then transferred to yet a different iPad. Stay iTuned.

Net net, my initial advice is that if you already have an iPhone, I would think seriously about adding the iPad to your gadget collection. If you have a Kindle on top of this, there may be no reason. At the very least, I would wait before purchasing the iPad until the 3G version comes out later this month. To have this connect/authenticate with WiFi (via the Safari sometimes - requiring awkward zooming, etc..) and its associated battery consumption, I would have some concerns. If you like showing off your pictures, the picture frame feature is useful - furthermore, for photographers (or wannabe's like me), the ability to display RAW files is also useful. If you do PowerPoint or Keynote presentations, this might be a portable device you can take to conferences and not haul your laptop. You will need a CRT adapter to connect to the iPad if you want to connect to a projector though.

Your comments are always welcome.

Speaking at another Economist Conference

2010-04-05T15:08:00.002+09:00

I recently spoke at the Economist CFO Roundtable and they have just asked me back to speak at next months event themed "The Bellwether Series: Charting the future of finance in Asia-Pacific".

Japan’s financial sector and its financial system are no longer the sick men of global finance. Asset rich, with players varying from its mega-banks to regional and local institutions, from private sector to public sector, from domestic to foreign, the finance system is a vital part of Japan’s economy and must evolve accordingly. It must cope with financing vast government debt; it must provide funds to the private sector, and has a role to play in encouraging growth, dynamism and innovation. How can all these objectives be met simultaneously?

Anyway, I speak on Wednesday, May 19th on "Japan’s capital markets: the whole story". My sessions will address questions such as:

What is the capital raising model currently, and what is the impact of low economic growth?
Banks versus capital markets: what is the optimal balance for providing capital?
Can Japan’s capital markets ever adequately service start-ups and non-investment grade credits?
How can private equity be constructively encouraged?
Which entities can best finance SMEs? Can this ever be market-driven, or will there always be a role for government entities?

Since this crowdsourcing thing (1, 2) is working pretty well and I get a lot of really good feedback, advice and input on what I should emphasize during these presentations, please feel free to comment - I look forward to them.

Update: The event will be held at the the Mandarin Oriental Hotel - Grand Ballroom 3F.

Japan - A season of change

2010-04-04T22:11:00.002+09:00

The last two weeks have been very busy in Japan as March 31st marks the end of the fiscal year for most companies. Conversely, April 1st traditionally marks the start of many new things including the newly graduated college students who start their new jobs and the start of spring when the cherry blossoms bloom - a very big event here. The sheer amount of change is something I found very interesting to experience both first hand and from several different perspectives.

For the last few weeks in March, companies and especially their sales people, it is a very hectic time where everyone is trying to book any last minute sales for the fiscal year. This rush actually creates a measurable increase in the amount of traffic - both on the streets/highway and on the train. During this time, its hard to get anything done (with another company) that is not directly related to sales. Conversely, as I had mentioned in a previous entry, many (especially) public entities are busy using up any remaining budgets before the close of the fiscal year for reporting purposes. Any money left on the books could lead to penalties and/or lower apportionment the following year. In parallel, the recent college graduates are probably enjoying their longest and perhaps last stress free extended vacations they will ever have before the start of their careers on April 1st.

In the last week of March, many companies will celebrate the retirement/farewell (soubetsukai, 送別会) of their now former co-workers. The word farewell in this case may mean that they were transferred, promoted or let go. Regardless, this is a time where all co-workers are supposed to get together and have a “last drink” together. The person leaving is usually given a bouquet of flowers and everyone gives a quick speech on their experience together (usually positive) and finally ending with a speech by the actual person(s) leaving. At this point, most people (co-workers) tend to show up because it would be bad form not to and because it usually involves (usually company provided) food and alcohol. What happens after is always pretty interesting since, after the final speech and group pictures, many people break up into their different cliques and go for a second round of drinking, partying and/or karaoke. Depending on which clique you belong to, it might be a continuation of festivities or it might be the start of bashing and complaining (where the true feelings come out) about the guy that just left (obviously, he’s in another group at this point).

Since I also teach a class, some of evenings during this last week I celebrated with my newly graduated students (gakusei, 学生) who will soon (on April 1st) become a fellow member of society (shakaijin, 社会人). Many of these students have spent the year prior looking for their new job and were accepted around six months ago. On April 1st, all the new employees of Japan then attend the “opening ceremonies” of their new company where everyone from the founder, president and various HR people will make speeches about the philosophy, history, goal or whatever about the company. I have actually given a couple of these speeches and it is an interesting sight to see when you may have several hundred college graduates sitting in their seats, impeccably dressed in the same black suit looking and acting the same way! From this point, the students will be put up in a hotel, bussed off to a training center or commute to a training facility and spend the next 3-4 weeks getting “trained” by HR and future managers. This training includes (almost always) how to exchange business cards, how to bow, how to speak to customers, etc… as well as the ritual hazing by older colleagues. Depending on the company, some may make new employees (only a few days old) obtain a quota of new business cards by approaching random people on the train platform (or similarly awkward places), introduce themselves (usually in a very loud voice) and request to exchange business cards. The first time I saw someone running up to me and do this, I was freaked out. Anyway, back to the night of March 31st, it is sometimes disconcerting to see your students have one final drink right before the last train leaves at 12:30am of April 1st. I hope they all made it to their first day without any problems…

Finally, this is also the season of the all important cherry blossom. The season is officially opened by Japanese meteorological agency who actually have very serious bureaucrats that go out and measure specific trees around the city and determine whether or not the correct percentage cherry blossoms have opened up on a set of trees. Once the agency announces that the cherry blossom season has started, people are generally allowed to stake a plot of land around a cherry tree, enjoy the blossom, party well into the evening (many trees are lit up by environmentally friendly LED lights) and legally allowed to be a public nuisance within their own plot (usually demarked by a blue tarp). To tie this whole story together, at certain companies, one of the first jobs of the newly hired is to go out in the morning in order to make sure they stake out the best/appropriate venue for their fellow (could be dozens) co-workers when they arrive later that evening.

Anyway, as you can probably imagine, the common theme here is a LOT of drinking (present company included). Some evenings, it means going to 2-3 events per night. Next week, it is assumed to be a slow week in Japan because everyone will be nursing their hangover. In a few weeks, one more official party left - to welcome the new co-workers and/or to break-in the green employees.

For the rest of my cherry blossom pictures, please visit: http://www.flickr.com/photos/whsaito/sets/72157623640320137/ Your comments are always welcome.

NHK's new Eco-Channel

2010-04-03T13:11:00.003+09:00

My friend at NHK (Japan Broadcasting System) made me aware of a new portal website at NHK that consolidates all the enviornmental content from prior years into one area.

Japan has always been an environmentally conscious nation before words like "eco" and "green" became fashionable. Personally, I believe the Muskie Act (a.k.a. the Clean Air Act of 1970) became Japan's framework for developing energy efficient, less polluting appliances, cars and other products. Obviously, being a nation with limited natural resources, this limitation also further compelled companies to make "eco friendly" products out of need.

Anyway, I think this is an important site that will eventually include video's and other archive footage from Japan's history of being an ecologically sound nation over the last several decades. The new NHK Eco Channel page can be found here:
http://www.nhk.or.jp/eco-channel/ 日本語版 (Japanese)
http://www.nhk.or.jp/eco-channel/en/ English

Security Blog

2010-03-31T17:11:00.003+09:00

Due to popular demand, I have broken out the security portion of my blog and created a separate dedicated site: http://security.saitoblog.com/.

I hope to create a repository of information security tidbits so that people can have a better understanding of how difficult "real security" is. This blog/repository will be a place where I add things from my experience in information security and hope, over time, it will become a reference for those who don't want to repeat common mistakes.

Obviously, I welcome all comments and would like to improve the content through interactive dialog.

Made (only) in Japan (by hand)

2010-03-28T21:23:00.001+09:00

Not to be constantly critical about Japan, but it is actually a country that actually doesn't shun bad news and, in certain cases, asks for more. Personally, I was invited by one of the prefectures in Japan about two years ago. They wanted me to brief me on a "tech park" they were developing and have me speak on how this would stimulate the local economy and thus create the next "Silicon Valley". Afterwards, several of the press requested interviews where I gave them a somewhat negative impression of the Japanese habit of creating "boxes" but forgetting to program them correctly and tie them to a local competency/strength. At that point, I thought I would never be invited back and/or have to leave Japan. However, to my surprise, three agencies from the central government contacted me and requested me to sit on several boards/panels to advise them on similar issues. Anyway, I don't enjoy just talking about the negative aspects of Japan but I've noticed that many are very interested and want to change. I was talking to a friend about this and why this is. She actually made a good point that perhaps many Japanese share the same feelings (internally), but it takes an outsider to point it out and vocalize it.

So to balance my articles on Japan, I thought I'd share two interesting companies that I hear about from time-to-time here. The first company is called Japan Steel Works and is located in one of the more remote locations in Northern Japan. They were founded in 1907 and make Samurai swords that cost over USD$10,000. However, what makes them really famous is that they are the only company in the world that makes a nuclear reactor's containment vessel (probably the most important component to a nuclear power plant) from a single piece of 600-ton ingot. The process used to make these vessels is actually very similar to the methods they use to make the swords.

The second company is called Yamashita Kogyosho. The company was founded in 1954 by its current at the age of 17. This company is unique because it currently makes about 30% of the noses of the most modern Shinkansen's using just a simple hammer. The shinkansen travels at over 200 mph and has carried over 7 billion people without a single fatality. The tip of this train is a piece of aluminum hammered out by humans (not machines) with a simple hammer that you can buy anywhere at a rate of about one a week. Apparently its not easy since it takes about 10 years for an apprentice to learn the skills necessary to do it correctly.

Your comments are always welcome.

Hacker sentenced to 20-years

2010-03-27T16:27:00.001+09:00

It used to be that when a hacker stole money from a bank via the internet and got caught, the sentence was a lot less than a robber going into a physical bank and holding it up. The sentencing of computer hackers have finally caught up with the modern era.

As I have mentioned in a recent blog, online thefts have doubled in the last year to over half-a-billion dollars. During the same period, bank robberies (the physical kind) only took in $9.5 million or about 1/50th. However, the sentencing for hackers (considered a white-collar crime) was only a few years (if any) while bank robbers usually got over five. Granted, many bank robbers used guns (but I assume you kind of have to) so the sentencing guidelines change accordingly. However, the average take from these robberies is "only" around $5,000.

In the case of the hacker in question, Mr. Albert Gonzalez (28 years old), the scale was something else. Apparently, he stole over 90 million credit card numbers equaling over 80 gigabytes of data. The main victim, TJX, apparently suffered close to $200 million in damages. For this, Mr. Gonzalez will now spend 20 years in jail. A good article on the complicated case can be found at Wired.

For more entries on security, I have created a new blog section at: http://security.saitoblog.com/

40th St. Gallen Symposium

2010-03-25T15:13:00.004+09:00

I have been selected to be one of the speakers for the 40th St. Gallen Symposium in Swizerland from May 6-7, 2010. The best way I have come to describe the event is that it's the "Davos for Entrepreneurs". From Japan, other (confirmed) participants include Dr. Yoko Ishikura and Hiroshi Mikitani. I'm excited since the event will bring several hundred entrepreneurs, leaders, top managers, politicians, academics and decision-makers together from around the world to "stimulate thought and action for the sustained success of companies and societies in a globalised world."

Anyway, the overall symposium theme is "Entrepreneurs – Agents of Change" and I will be speaking on the topic of "Entrepreneurial enviornment" and more specifically, how the world of politics and entrepreneurism intersect.

"Each entrepreneurial activity takes place under conditions set by society and the political system. The world of politics and the world of the entrepreneur are not separate entities; depending on the prevailing economic and political circumstances, to a greater or lesser degree they merge. The political reactions to the economic crisis show how precarious this relationship can be. That being said, entrepreneurs must always be critical about the desire of politics for authoritative controls. This session will thus take a critical look at the economic and sociopolitical impact of political concepts designed to handle crises."

In my last attempt at crowdsourcing comments from my social network, I received over 130 comments, advice and ideas. I would like to take this opportunity again and solicit input from both my SNS and blog network. I look forward to your feedback.

Breakfast with William F. Miller

2010-03-25T00:20:00.003+09:00

Today, I had the distinct honor and pleasure of having breakfast with Bill Miller of Stanford University - someone I admire very much. I use a number of his quotes and research in my presentations on entrepreneurship. I've met Bill at a number of functions on both sides of the Pacific, but this was the first where I was able to sit down and have breakfast with him, Robert Eberhart and Michael Gucwa.

We spoke on a number of subjects but the topic of "women entrepreneur" was the most interesting. Specifically, how Japanese men (generally) in their 20's do not have the interest, motivation or passion to be entrepreneurial due to the very rigid, scheduled, and structured social/professional expectations they are burdened with. Conversely, how Japanese women do not want to abide by or face traditional social expectations, find the freedom to try new things including going abroad, learning a new language and/or starting a venture. This led me to two interesting words that I could not explain very well during breakfast which I will attempt here.

The first word, soshoku danshi which literally translates to "herbivorous men" describes men who are generally not competitive, enjoys shopping with their mom's, are fashion conscious and are not interested in women or dating. The opposite, nikushokukei (carnivore) is sometimes used to describe women in the same age group - typically for those looking to start a family or the start-up entrepreneur. There are many reasons why this phenomenon is occurring, but one thing is for sure - for the last 20 years, the generation currently in their 20's and 30's have never experienced what it's like to live in good economic times. Perhaps the women are just taking it into their own hands to change that. Here is a good article that explains this in more detail.

Update: In the March 5th edition of Spa!, they polled 300 men in their 30's and found that only 35.4% had one or more close friends. The article explains that many of the interviewees were introverted and didn't have many friends until college. Unfortunately, after graduating, many of these people had to work very hard, getting transfered and losing touch with friends. This seems to then cause a negative spiral where men are afraid to ask their friends for help or advice as they are more worried about "losing face".

“Successful entrepreneurs are motivated more by desire to “change the world” than merely by desire to make a lot of money” -Prof. William F. Miller

2010-03-24T06:54:00.001+09:00

Thank you to all those who left me the kind words, thoughts & wishes for my birthday. Last year was great, I hope this year will be better!

Innovation Japan

2010-03-22T14:09:00.006+09:00

Here is an interesting statistic I use in my entrepreneurial class, various speeches and eluded to at last Saturday's MIT D-Lab event. The statistics is from the BusinessWeek/Boston Consulting Group (BCG) World's top 50 innovative companies for 2008. Obviously, the main intent of this list is to rank the innovative companies for that year. While the companies listed and the ranking itself may be debatable, I find this list useful in explaining the current state of Japan. The slide I've created includes just the top 25 companies ranked in order. On top of this, I've added the year each corporation was founded.

1. Apple	1976
2. Google	1998
3. Toyota	1933
4. GE	1892
5. Microsoft	1975
6. Tata Group	1868
7. Nintendo	1889
8. P&G	1837
9. Sony	1946
10. Nokia	1865
11. Amazon.com	1994
12. IBM	1920
13. RIM	1984
14. BMW	1916
15. HP	1939
16. Honda Motor	1946
17. Walt Disney	1923
18. General Motors	1908
19. Reliance	1966
20. Boeing	1916
21. Goldman Sachs	1869
22. 3M	1902
23. Wal-Mart	1945
24. Target	1902
25. Facebook	2004

Some interesting things that I find from this list to point out. First, all four Japanese companies (hilighted in red) were all formed on or before 1946. Second, about half the US companies on the list were formed AFTER 1975. Finally, that most of the companies on this list were founded in times of recession or other financial crisis.

It might be interesting to compile the cap tables for these companies and see how the newer companies are valued (I'm guessing higher) relative to the older companies. I guess the conclusions I'm coming here is how there hasn't been any new Japanese companies in the top 25 for over 60 years. In my class and various discussion sessions, we try to discuss why that is. Perhaps a future blog entry. Your comments are always welcome.

Japan Go Global

2010-03-20T09:55:00.019+09:00

For the last several weeks, I have travelled to several countries in Africa and the Middle East to talk with various governments about their S&T, innovation and entrepreneurial policy. Everywhere I go, everyone has the same comments about how Japan is mature, stable and a nation that has everything. People look to Japan as an innovative country with money, technology, global corporations and name brands. Many countries also recognize Japan as a leader in clean technology even before the word "green" became popular and fashionable.

Unfortunately, over the last 20 years, Japan has been in a economic and political malaise. GDP has not grown at all (in comparison, China has grown 9x in the same period) and it has responded by retreating ever deeper inward. With this, the number of companies, bureaucrats and especially students who go overseas have declined sharply. The only benefit that has come from this is that the governments who lauded and admired Japan during my trip only had the view of Japan from 20 years ago - during the heydays of the bubble era. However, the bad news is that Japan has become increasingly globally irrelevant - in the 1980's, it was "Japan bashing", in the 2000's it was "Japan passing" and now its "Japan missing".

The reality is that no one has been willing to make hard choices. People continued to work without sense or purpose while the government creates various moral hazard by propping them up with taxpayer money and creating a debt load that approaches 200% of GDP. Similarly, private corporations have missed out on globalization and are becoming globally less relavent. In fact, at several trading companies (who's job it is to facilitate global trade with anyone and everyone), many new employees specifically request domestic assignments only.

Japan going and thinking global is important and it starts with students. By the time someone in Japan, graduates and starts a career, it becomes extremely difficult to leave the career track and start anew (okay, this is true in a lot of countries but especially true here). In fact, I have personally seen men get pressured by numerous external factors. However, the most dominant and compelling pressures come from their mother/girlfriends in their 20's, the wives in their 30's and their mother-in-law in their 40's. Therefore, to start thinking globally beginning with college (even high school) students is very important. That is why I fully enjoyed and support programs like D-Lab. Unfortunately, the major current trend is somewhat disturbing. I have included some figures that show the percentage of temporary residents receiving S/E doctorates in 2002 in the U.S. and those who stay after five years. (Source: Oak Ridge Institute for Science & Engineering)

	PhD Recipients	% in US after 5 years
China	2,139	92%
South Korea	814	41%
India	615	81%
Taiwan	451	43%
Turkey	315	42%
Thailand	312	7%
Canada	258	55%
Mexico	173	32%
Germany	164	52%
Russia	161	77%
Japan	144	33%
Romania	121	86%
Brazil	119	31%

This trend was recently confirmed where the number of Japanese (undergraduate) students who attend Harvard University has steadily decreased and is now at five whereas the opposite trend is true for other countries. I believe one of the key elements for learning to "think globally" is to get educated abroad and/or understand what the real global (BOP) needs are. Not a good sign but hopefully the problem will become self correcting when the students begin to realize they need to take this extra step to get ahead in the new ~~Japan, Inc.~~ Global, Inc.

Why I think "thinking globally" is important, I'll cover in a future blog. In the mean time, here is a much better analysis, by Dr. Hisashi Kobayashi, of the situation. Your comments are always welcome.

"University x Technology x BOP" - Innovations that will change the world from Japan!

2010-03-18T16:03:00.001+09:00

I'm currently starting to write, what will hopefully be, an inspiring speech for my keynote at the MIT D-Lab Japan event this Saturday. I think this event would be a great kick-off opportunity for "Japan, Inc." to work effectively with universities to create globally relavent technologies and products.

From the D-Lab program:
Capacity building in developing countries is one of the enormous challenges we face this century. Despite the prosperity of developed nations like the US, Japan, and European countries, we cannot ignore the fact that 1.6 billions people still do not have access to safe drinking water, and most of them live on less than $1 per day. The fight against poverty and hunger is the challenge for the entire global citizen — the impoverished will suffer the most if effective policies and plans are not put in place.

Technology has a great power to dramatically help poverty alleviation, and university can play a major role in creating new technologies. Especially, cost-effective and user-centered technologies (also known as appropriate technologies) can provide affordable and reliable tools for capacity building in many areas. The projects on appropriate technologies are beneficial in many ways; the programs help the poor, but also help to improve the design process and education programs in developed countries through hands-on experience, real-world experience, and human-centered designs.

This one day workshop will introduce some of the leading projects in Japan on international development and appropriate technologies. You will also learn the projects at one of the leading universities in the US, Massachusetts Institute of Technology (MIT). José Gómez-Márquez and Ken Endo from MIT D-Lab will introduce their projects on improving the quality of life of low-income households through the creation and implementation of low cost technologies.

Plenary Speech - Kiyoshi Kurokawa (GRIPS)

Location: National Graduate Institute for Policy Studies (GRIPS)
Registration site is here

Innovation in Japan, India, and the U.S.

2010-03-18T11:16:00.004+09:00

Will be moderating a session on "Innovation in Japan, India, and the U.S." tomorrow at the Tokyo 21c Club, Marunouchi - "Innovation in Japan, India, and the U.S." http://www.uclajapan.gr.jp/upcoming.html

Update: I felt the event went very well. I was especially encouraged by the makeup of the audience and how international it was. The unfortunate thing about all these events is that Q&A is never long enough. This is usually tough in Japan because there are very few questions (if any). In the case of this event, there were too many questions that we had to cut it off.

We spoke on several cross border topics on innovation and building businesses in both Japan, India and the US. The panel included a good mix of academics from both UCLA and IIT and business. Good sign.

Cyber crime loss almost doubles in 2009

2010-03-17T17:37:00.006+09:00

In continuing from my NHK cyber security piece, the annual FBI-backed Internet Crime Complaint Center (IC3) report published last Friday reports that cyber (internet based) losses almost doubled.

Update: I now talk about this and other security topics in more detail on my security blog at: http://security.saitoblog.com/

The rest of this article and analysis can be found here: http://security.saitoblog.com/2010/03/cyber-crime-loss-almost-doubles-in-2009.html

Budget season

2010-03-15T11:20:00.006+09:00

This is the season for budgeting in Japan. Most companies and government entities end their fiscal year on March 31st. With the world economy the way it is as well as the Hatoyama administration cutting government funding, it is interesting to see all the maneuvering that is going on these last few weeks.

Working in several government based or related organizations, the first thing I'm always amazed at is the effort put into zeroing out the funds left in this fiscal year. Apparently, it is incredible bad form for leaving money on the table unspent. In some cases, the budget for the following year is reduced or in worse cases, you need to pay back double the money you did not spend.

For some entities, they are starting to allow the roll over of funds to the next year. Unfortunately, most departments will zero out their accounts by buying unneeded office supplies such as copy machines, printers or computers. Perhaps that might give the economy a slight bump this month, but the long term waste is incredible.

Your comments are always welcome.

Interview by the ACCJ Journal

2010-03-15T00:06:00.003+09:00

I was recently interviewed by the American Chamber of Commerce in Japan (ACCJ) Journal. My interview is now in print on the March 2010 issue (pg. 26-29) in the Think Tank - On The Spot section and available online at http://accjjournal.com/william-saito/. I'm sure you can pick-up copies at the ACCJ, but I picked my copy up at the Foreign Correspondents' Club of Japan (FCCJ).

NHK cyber security program

2010-03-11T12:46:00.014+09:00

Just finished a 2.5 hour interview with NHK (the equivalent of Japanese BBC) on cyber security (or the lack thereof) and how things are building to a "Digital Pearl Harbor". This will be a TV program that runs from late Spring to early Fall here in Japan. The program's genesis is based on the 50 years of US-Japan security alliance.

Of course, instead of the threats of nuclear missles, tanks and fighters, the threat of cyber security affects us everyday with many of us not realizing it. When the producer and I sat down, I had to start from the basics by defining what sort of cyber security he wanted to talk about. Apparently, things like the difference between G-to-G, G-to-B and B-to-B did not occur to them.

Anyway, since this was a pretty good opportunity to document what I spoke about (and often speak about at conferences), I've created a perma-page at http://security.saitoblog.com/2010/03/information-security-threats.html which I will update from time-to-time when I remember or hear something new.

I hope the program can turn into a series that will fully educate the public on the various aspects of information security. Many of our fundamental internet, communications and daily transactions are done on the basis of information integrity and that the underlying infrastructure is secure. I talk about this and other security topics at my security blog here: http://security.saitoblog.com/

My presentation at the Economist Fifth Japan CFO Roundtable

2010-03-10T14:36:00.008+09:00

Getting ready to speak at The Economist Fifth Japan CFO Roundtable on "The Road Forward for Japanese Companies" - Four Seasons Hotel - Chinzanso, Tokyo.

Update: I spent about 10 minutes speaking about how Japanese corporations should approach innovation, entrepreneurship and going global. The speech went by very quickly, but since I did it in English, I believe I did a better job than my recent TED experience. After the presentation, it switched to a moderated session where we had a pretty good Q&A session.

Unfortunately, due to jet lagg or something, I ended up giving a long winded non-answer to the last moderated question which was along the lines of "Many Japanese say basic innovation and research should be the responsibility of large companies and government. What would be your response to that." I should have said that "Yes, things like the Internet, only governments can really initiate. However, things like Facebook (Mixi here), Twitter, Amazon (Rakuten) or eBay would not have been possible by either large companies or governments."

I forgot what answer I actually gave....

Recent trip to Dubai

2010-03-06T14:59:00.025+09:00

I just got back from Dubai. My initial reaction was that it looked very much like a larger scale Las Vegas. There are a tremendous amount of new buildings that have been built. There are even MORE new buildings being built (apparently, I heard that by next year, there will be 40% more building/capacity or another 10,500 rooms).

I also went to neighboring Abu Dhabi as well and its easy to see many differences even though they are part of the same UAE.

Some comments, the city of Abu Dhabi "feels" more mature. It is greener, but if I had to think what made it more "mature", it was the age of the trees. The trees were obviously older and larger. It was interesting to see how it made the city feel different.

Coming back to Dubai, the city looks like it is trying very hard to become modern. Therefore, the architecture has no consistency and the buildings all look like they are trying to out do each other in terms of grandeur and shock value.

Unfortunately, I could not climb the worlds tallest building (at least of this writing) Burj Dubai (aka Burj Khalifa) because of some electrical/mechanical failure in the elevator system. This happened a month ago and would have hoped it would have been fixed by now. Unfortunately, no go. I also couldn't go to the new Giorgio Armani hotel housed in the skyscraper. Apparently, it has 160 guest rooms, 144 private residences and 8 restaurants.

The mall next to Burj Dubai called the "Mall of Dubai" (also where you enter to take the elevator to the top of Burj Dubai) is HUGE. Since it probably just opened, about 1/4 of the shops were empty or under construction.

In fact, the whole city of Dubai seems to be "under construction" and all the tourist guides/books label various attractions "under construction" when some of them have clearly been abandoned.

Anyway, I have several hundred random pictures that I took of Dubai here. Sorry for too many pictures of the Burj Dubai as it was REALLY difficult to get the whole building in one frame. I was even using a 35mm lens on my Leica from several blocks away and still failed.

By the way, here is a great 45-gigapixel panorama (not by me) of Dubai. http://gigapan.org/gigapans/48492/

Your comments are always welcome.

2010-03-02T04:01:00.001+09:00

First time I got disinfected (sprayed) as part of the boarding procedures before departure - but after door closed on aircraft.