Japan is, and always has been, a place of remarkable contrasts. About two weeks ago, as I spent some time visiting Zen Buddhist temples in Kamakura, Japan, the calm, serene environs and the enveloping sense of timelessness cemented my belief that the innovative future of Japan is grounded in its history. I had just concluded discussions at the 8th TOPOS conference on the Internet of Things and Innovation in Tokyo where I had been invited to deliver one of the keynote addresses. There were many CXOs, futurists, policy makers and distinguished university professors – and the discussions were deep and insightful.

 

3100_01      Prasad

Great Buddha of Kōtoku-in – Kamakura, Japan                                                                   TOPOS Conference – Tokyo, Japan

 

In a land noted for its tectonic instability (and, yes, I did experience some dramatic moments when an offshore quake registering north of 7.0 on the Richter scale sent some tremors through Tokyo), the social and corporate fabric is held together by stable, consensus and hierarchy-driven family and corporate structures such as the keiretsu. Considered feudal when first contacted by Europeans, the Japanese have been able to industrialize with such speed and skill that their electronics and automobile industries have become the de-facto standard on many fronts.

Japan’s success after the last industrial revolution brought in the high point of the Lean and Kanban (Just-in-Time) models of manufacturing. Today, the achievement in the world of business is measured by other terms – Pivot, Agile, Consumer Driven, Real Time rather than Just-in-Time enabled by the ongoing proliferation of internet-connected devices.

It is those devices and the related opportunity that I came to Japan to discuss, for they are not merely sensors pinging away with statistics. Internet of Things (IoT) and the Industrial Internet is rapidly breaking down existing products, services, business models, and value chains, and repainting the lines on the competition map. Even traditional industries such as Mining and Agriculture are undergoing rapid transformation. “Agricultural technologies could increase global crop yields as much as 67% and cut food prices nearly in half by 2050,” according to the International Food Policy Research Institute. Oxford Economics estimates 53% manufacturers will offer smart products by 2016.   Verizon shows a 46% Y-o-Y growth in IoT connections in the public sector. Even more mind-blowing, Morgan Stanley predicts, in the long term, annual $1.3 trillion in savings in the United States (with over $5.6 trillion globally) from driverless cars. Each case, individually, is an important change for the global economy. Together, they are a fundamental shift into a new way of thinking, a new way of operating.

As the leader of the Customer Innovation and Strategic Projects unit at SAP, I am often in conversation with customers and partners to build many game-changing IoT applications. These frequently relate to Predictive Maintenance, Asset Management, and the use of Wearables. The goal is often to help businesses reimagine their processes and customer experience. Building on this experience as well as observations and discussions with thought leaders in Japan, my humble view is that a recipe for success for Japan in this rapidly evolving world ought to include the following ingredients:

  • Build upon the Japanese competency and culture of finesse, miniaturization, simplicity, and autonomous machines
  • Open up innovation and share IP for the common good and mutual benefits
  • Create a sense of urgency – experiment early, fail fast, fail cheap
  • Go beyond keiretsu, “All Japan”, and acquire and partner with global companies and startups
  • Lay the foundation for a strong future by infusing creative, entrepreneurial and international talent challenging the existing structures
  • Make customers and partners an integral part of the success through Design Thinking and co-innovation

As a country, Japan has before it a moment of remarkable inflection. Given its rich culture, it has the foresight to see beyond the corporate impact of technology by understanding and incorporating its social and environmental impacts. It has to take its first steps into the onrushing age of the Internet of Things and Real Time. Even though Japan did not capitalize as expected on the Internet revolution over the last few decades, Japan has a great opportunity with IoT and Industrie 4.0 given its strong foundation of automation and innovation. Now is the time for the Japanese to excel once more: by embracing an outside-in view. I have no doubt that the light of innovation will shine again on the land of the rising sun.

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