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Japan's Coming Competitive Renaissance

With its success at home, NTT DoCoMo has launched an assertive strategy to turn its i-mode platform into the de facto standard for mobile Web technology worldwide. It has taken the ability to form alliances familiar to generations of Japanese companies and extended it into new forms of strategic partnerships with mobile providers in Greece, the Netherlands, Italy, Spain, France, and North America, and throughout the Asia-Pacific region. It has linked up with such companies as Sony, NEC, and Bandai in Japan, and Disney in the U.S., to jointly develop new products and services. Today, it stands as the premier provider of mobile e-mail, news, and banking services.

Although the company faces big obstacles in its quest for globalization — lack of international experience, a seemingly piecemeal global expansion strategy, and an internal debate over whether it should be a technology- or a marketing-driven company — it nevertheless has great globalization and “network” potential.

Remaining Obstacles
NTT DoCoMo’s hurdles match the three central challenges Japanese companies generally will need to overcome to leapfrog over the lost decade into the 21st century:

Mastering the use of the English language. English is the predominant language of the Internet. Seventy percent of the information on the Internet is stored in English, and 80 percent of Internet communications take place in English. This means that a disproportionate amount of high-tech innovation is first written in English, which further reinforces the link between English and business innovation. Non-English-speaking nations like Japan have a distinct disadvantage. Recognizing this, the Ministry of Education, Culture, Sports, Science, and Technology has formulated a strategy to cultivate “Japanese with English abilities” — a concrete action plan aimed at significantly improving the English facility of the Japanese people.

Managing new customer relationships and service online. The Japanese have traditionally been weak in globalizing service-related businesses — surprisingly, because Japanese society has always had a service orientation. But Japanese companies traditionally relied on their distributors to deliver products and services to the end customers. The challenge now is whether they can learn to deliver services in both the offline and online environments. As network technologies continue to disintermediate complex supply chains, can Japanese firms go online and deliver the same high-quality products and services? Do they know the “cyberconsumers” as well as they do their bricks-and-mortar customers?

Evidence suggests the answer to these questions is yes. The business-to-consumer online marketing site of Toyota, gazoo.com, has become one of Japan’s most popular Internet gateways, peddling items as varied as books, CDs, brake pads, and entire cars. Through online ordering, Toyota can understand and better respond to fast-changing consumer preferences. Toshiba’s business-to-business Web site for dealers, Internet FYI, is similarly successful. Dealers can order photocopiers, fax machines, parts, and supplies, and have the deliveries fulfilled quickly. Toshiba’s primary motivation for launching Internet FYI was to improve service to its dealers.

Building innovation-generation processes. The postwar Japanese business model relied less on innovation than on successfully exploiting the innovations of others. The limits of the “competent copier” model, and of growth through progressive technical innovations centering on process innovations, have been reached. Japan needs to encourage a culture that is conducive to inventing the wheel rather than perfecting it. Japan must maintain and improve its advanced process-innovation capability and manufacturing excellence, while building innovation-generation processes that can continuously generate creative and knowledge-intensive product innovations with high added value. Some leading Japanese firms, including Toyota, have been shaping a new “human-based” business model that stimulates creativity and innovation and supports efforts to achieve agility — the ability to rapidly react to all kinds of change.

These challenges notwithstanding, Japanese firms’ apparent slow start in the New Economy race may have worked for them by giving strategists time to observe the moves of their competitors, craft their transformational strategic moves, and create new business models that will work for the Japan of the 21st century. The traditional Japanese business fundamentals — focus on the customer, global mind-set, a more rounded knowledge, teamwork, strong linkages among Japan’s institutions, and operational efficiency, among others — will set Japanese companies apart from their Western rivals and will be instrumental in transforming the country from Japan Inc. to Cyber-Japan.

 
 
 
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Resources

  1. Angela A. Andal-Ancion, Phillip A. Cartwright, and George S. Yip, “The Digital Transformation of Traditional Businesses,” Sloan Management Review, Summer 2003
  2. Yamada Atsushi, “Japan’s Economic Crossroads,” Japan Quarterly, October-December 2001
  3. Michael E. Porter and Hirotaka Takeuchi, “Fixing What Really Ails Japan,” Foreign Affairs, May-June 1999
  4. Ben M. Bensaou and Michael Earl, “Information Technology in Japan: Are There Lessons for the West?” in Information Technology and Industrial Competitiveness: How IT Shapes Competition, by Chris F. Kemerer, ed. (Kluwer Academic Publishers, 1998)
  5. Philip Evans and Thomas S. Wurster, Blown to Bits: How the New Economics of Information Transforms Strategy (Harvard Business School Press, 2000)
  6. Larry Kahaner, Competitive Intelligence: How to Gather, Analyze, and Use Information to Move Your Business to the Top (Touchstone, 1998)
  7. Miyamoto Musashi, The Book of Five Rings (Bantam Books, 1992)
  8. Kenichi Ohmae, The Invisible Continent: Four Strategic Imperatives of the New Economy (Nicholas Brealey Publishing, 2000)
  9. Michael E. Porter, Hirotaka Takeuchi, and Mariko Sakakibara, Can Japan Compete? (Basic Books, 2000)
  10. Ezra F. Vogel, Is Japan Still Number One? (Pelanduk Publications, 2000)
  11. The Japan External Trade Organization: Click here.
 
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