Creative Innovative Firms from Japan: A Benchmark Inquiry into Firms from Three Rival Nations

153 Pages·2019·2.357 MB·English

by  Young Won Park, Paul Hong

Young Won Park · Paul Hong
Creative
Innovative
Firms from
Japan
A Benchmark Inquiry into Firms from
Three Rival Nations
Creative Innovative Firms from Japan
Young Won Park Paul Hong
(cid:129)
Creative Innovative Firms
from Japan
A Benchmark Inquiry into Firms from Three
Rival Nations
123
Young WonPark PaulHong
Faculty of Economics Collegeof Business Innovation
Saitama University University of Toledo
Saitama, Japan Toledo,OH, USA
ISBN978-981-13-1680-7 ISBN978-981-13-1681-4 (eBook)
https://doi.org/10.1007/978-981-13-1681-4
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Executive Summary
This book examines innovative firms and their talents in the Japanese, German,
American,andKoreancontexts.The investigationalso focusesonthedevelopment
of thesecharacteristicsoveralongperiodoftime.In1970,500firmswerelistedas
Fortune 500. One third of them disappeared by merger, alliance, and liquidation
within 13 years. This is somewhat shocking. The American Enterprise Institute
(AEI) states that, when comparing the 1955 Fortune 500 companies to the 2016
Fortune 500, only 60 companies (such as 3M, DuPont, GE, IBM, and Boeing)
appear in both lists. In other words, only 12% of the Fortune 500 companies in
1955 were still on the list 61 years later. Many companies on the list in 1955 are
unrecognizable or forgotten companies today. Furthermore, currently there are
7,212 longevity enterprises (more than 200 years old) in 57 countries—3,113 in
Japan, 1,563 in Germany, 331 in France, 315 in the UK, and 292 in the
Netherlands. The USA and Korea are ranked as two of the most innovative
countries in the world. The aim of this book is to compare innovative firms that
have a long history of business operations from the above four countries. The
distinctive features of the book are as follows.
First, innovation practices of Japanese firms are examined and compared with
those of German, American, and Korean firms. This inquiry is based on extensive
interviews of executives and field studies to identify the essential qualities of each
type of country in which these innovative firms and innovative talents are found.
Second, attention is given to theoretical and practical aspects. The theoretical
framework defines the organizational and technological factors for long-term
innovation success. Specific recommendations are given based on the organiza-
tional practices of developing innovative talents in the Japanese, German,
American, and Korean contexts.
The target readership consists of academics, students, and practitioners in the
areas of organizational theory and strategic management. This book clarifies the
critical practices of long-lived innovative firms and creative SMEs (Note: In this
book, the terms long-lived firms and longevity firms are interchangeable.).
Chapter1providesthetheoreticalframeworkthatincludescustomercompetence
(i.e., capability to attract and excite customers through open market environment),
v
vi ExecutiveSummary
technology competence (i.e., internal technical capability to make outstanding
marketable products), and linkage competence (i.e., network shared vision capa-
bilities to realize innovative ideas or product vision) (Park and Hong 2012; Hong
and Park 2014). Linkage competence translates innovative ideas and outstanding
product vision into global market reality. Long-lived innovative firms use linkage
competence to integrate technology competence and customer competence and
expandtheirmarketfrontiersaccordingtothescaleandscopeofsharedvisionand
mission.
Chapter 2. Strategies of Long-Lived Big Japanese Innovators. This chapter
reports case studies of Mitsubishi Heavy Industries, Toray, Toppan Printing and
Dai Nippon Printing (DNP), Shimano, and Mayekawa. Several noted lessons are:
(1) The source of long-lived Japanese firms’ sustainable competitive advantage is
the lasting trust of a growing loyal customer base through technology competence
and customer competence; (2) linkage competence facilitates shared leadership
vision to integrate core competences for firm growth that lasts.
Chapter 3. Paradigm Shift and Black Swan Strategy. This chapter examines the
concept of paradigm shift and applies the Black Swan strategy to the business
realm. We argue that business strategies that rely on history (e.g., past successes
andfailures)arelimitedandpreventonefromanticipatingnewoccurrencesthatare
often disruptive. The three case studies of Keyence, Komatsu, and Nippon Kotsu
highlight the importance and value of the Black Swan strategy to manage even
“high-magnitude, low-frequency upheavals” through unconventional approaches.
Chapter 4. Developing Creative Innovators for Global Competitiveness in the
Japanesecontext.Smallandmediumenterprises(SMEs)regardthe developmentof
innovative talents as crucial for enhancing global competitiveness. In this chapter,
wefocusonproductarchitecture,akeydifferentiatorofJapanesefirms,andon their
abilitytocatchupwithWesternfirmsthatwereaheadintechnologyadoption.We
analyze the relationship between innovators and the product architectures they
select and identify nine characteristics common to Japanese-type innovators.
Chapter 5. Innovation and Knowledge Creation Management in the Japanese
Context.Thischapterisbasedonthepremisethatknowledgeisfluid,andtherefore,
organizational knowledge creation is the product of daily interactive routines.
Based on this framework, we investigate the relationship between dynamic inno-
vationandspace(Basho)throughfourSMEsandhowtheytreattheroleofmiddle
management in promoting innovation at the field level.
Chapter 6. Innovator Companies in Germany. Germany is the nation of hidden
champions. We outline several traits common to many long-lived German firms
and SMEs and argue that they exemplify a convergent business model that is
resilient to external economic downturns. After defining and explaining specific
elements of superior competitiveness, we outline the differentiating factors that
have sustained these resilient businesses.
Chapter 7. Innovator Companies in the USA. Our analysis focuses on the in-
novatorDNA of P&G, 3M,GE, IBM, andFord, which haveat leastmore than 50
years of outstanding performance records. These firms demonstrate (1) market
selectioncompetence;(2)outstandingproductdifferentiationandwinningmind-set;
ExecutiveSummary vii
(3) constructive organizational culture with collaborative labor–management rela-
tionships; and (4) consistently high levels of investments in human resources
development.
Chapter 8. Innovator Companies in Korea. Although Korean firms have a rel-
atively short modern business history, their business mind-set and global market
sensibilityarenoteworthy.WeexaminehowKoreaninnovatorfirms(e.g.,Doosan,
Yuhan, Samsung, Hyundai, LG, ISOL) successfully manage growth in advanced
markets(e.g.,NorthAmerica,Europe)andmoveintootheremergingmarkets.Case
illustrationsreportthefindingsontheinnovativepracticesofKoreanfirmsinterms
of their technology, customer, and linkage competences.
Chapter9. ComparisonofInnovatorCompaniesinJapan,Germany,theUSA,
andKorea.BasedonthetheoreticaldiscussionsandcasestudiesinChaps.1–8,we
summarize key findings. We also present lessons from the innovator firms of the
four countries (i.e., Japan, Germany, the USA, and Korea).
Chapter 10. Concluding Remarks and Future Research Issues. In light of
dynamic changes occurring in the global markets , we briefly discuss noteworthy
trends(e.g.,interfacesofadvancedandemergingmarkets,theprospectofthe Asian
Century, and new global trade models and reshaping of the world order) and
common themes of longevity firms, which are “innovation, technology, and cus-
tomer orientation.” Then, we suggest future research issues.
This book discusses how to develop the characteristics of innovative firms and
innovative talents in different historical, cultural, and political contexts. We iden-
tify the linkage competence as crucial for globally competitive leadership quality.
Based on in-depth interviews with successful long-lived innovative firms and
innovators,wethenexaminetheessentialdimensionsoflinkagecompetencebased
ontwoparameters(exploitationandexploration). This studyexplorestheessential
characteristics of long-lived innovative firms and innovative talents that Japanese,
German,American,andKoreanfirmshavedeveloped toleadthe innovationwarin
the global market. This study thus offers comparative benchmarking practices of
global firms in the USA, Europe, and Asian countries. A brief summary of this
book’s distinctive features is as follows:
First, this book has focused mainly on Japanese firms and then compared
them with German, American, and Korean firms. Extensive field interviews aim
to identify the essential qualities of each country-type of innovative firms and
innovative talents. These are based on the relevant literature reviews as well.
Second, this book offers theoretical and practical contributions. A theoretical
framework presents three core competences (i.e., technology, customer, and link-
age competence). Lessons and implications from numerous case studies provide
practical guidelines for firms to build innovative capabilities (i.e., human talents
andorganizationalsystems)for sustainablecompetitiveadvantage(i.e.,longevity).
In brief, this book highlights the characteristics of innovator firms and innova-
tors in the Japanese, German, American, and Korean contexts. It integrates inno-
vationandknowledgemanagementtheories.Thetarget audienceincludesscholars,
students, and practitioners in the areas of organizational theory, innovation,
and strategic management.
viii ExecutiveSummary
The first chapter describes the framework of long-lived innovator firms and the
role of linkage competence. The entire book notes, explains, and interprets the
practices of long-lived innovator firms .
Finally, we appreciate Ms. YeJin PARK who has supported the book editing
work. This work was supported by The Graduate Program for Social ICT Global
Creative Leaders (GCL) at the University of Tokyo, Saitama University, and
JSPS KAKENHI (Grant-in-Aid for Scientific Research (A, C)) Grant Numbers
JP15H01960 and JP15K03646.
Young Won Park, Ph.D.
Paul Hong, Ph.D., CMA
References
Park,YoungWon,andPaulHong.2012.Buildingnetworkcapabilitiesinturbulentcompetitive
environments:PracticesofglobalfirmsfromKoreaandJapanCRCPress:USA.
Hong,Paul,Park,andYoungWon(2014).Buildingnetworkcapabilitiesinturbulentcompetitive
environments:PracticesofglobalfirmsfromKoreaandJapan.CRCPress(Taylor&Francis
Company).
Contents
1 Research Framework: Creative Innovative Firms and Linkage
Competence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Literature Review: Creative Innovative Firms and Core
Competence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.2.1 Ambidextrous Capability for Creative Innovative
Firms (CIFs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.2.2 Cognitive Dissonance and Sustainable Growth
Efforts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.3 Evolution Model of Creative Innovative Firms (CIFs). . . . . . . . 9
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2 Strategies of Long-Lived Big Japanese Innovators . . . . . . . . . . . . . 13
2.1 Mitsubishi Heavy Industries (MHI) . . . . . . . . . . . . . . . . . . . . . 13
2.2 Toray. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.2.1 Corporate Philosophy. . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.2.2 Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.2.3 Human Resources Development Center. . . . . . . . . . . . . 23
2.2.4 Recent Technology Competence . . . . . . . . . . . . . . . . . . 24
2.2.5 Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.3 Toppan Printing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.3.1 Comparison of Toppan and DNP . . . . . . . . . . . . . . . . . 31
2.3.2 Toppan’s Material Business Is also Expanding . . . . . . . 31
2.4 Shimano. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.4.1 Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.4.2 Customer Competence . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.5 Mayekawa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ix
x Contents
2.5.1 Forming Mayekawa’s Global Network . . . . . . . . . . . . . 35
2.5.2 Technological Innovation Using the Basho
Philosophy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2.6 Other Firms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3 Paradigm Shift and Black Swan Strategy. . . . . . . . . . . . . . . . . . . . 41
3.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3.2 Paradigm Shift and Black Swan Strategy . . . . . . . . . . . . . . . . . 42
3.3 Case Studies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
3.3.1 Keyence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
3.3.2 Komatsu . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
3.3.3 Nihon Kotsu . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
3.4 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
4 Developing Creative Innovators for Global Competitiveness
in the Japanese Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
4.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
4.2 Literature Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
4.2.1 Innovation and Innovators . . . . . . . . . . . . . . . . . . . . . . 53
4.2.2 Product Architecture. . . . . . . . . . . . . . . . . . . . . . . . . . . 54
4.2.3 Organizational Capabilities. . . . . . . . . . . . . . . . . . . . . . 55
4.3 Analysis Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
4.3.1 Traits of Japanese Type of Innovative Talents . . . . . . . . 57
4.3.2 Factors for Developing the Japanese Type
of Creative Innovation Talents . . . . . . . . . . . . . . . . . . . 57
4.3.3 Formulating the Analytical Model. . . . . . . . . . . . . . . . . 57
4.4 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
5 Innovation and Knowledge Creation Management
in the Japanese Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
5.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
5.2 Innovation and Knowledge Creation Management . . . . . . . . . . 63
5.3 Case Study. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
5.3.1 Hosokawa Micron Co., Ltd . . . . . . . . . . . . . . . . . . . . . 65
5.3.2 Nippon Kodoshi Corporation (NKK). . . . . . . . . . . . . . . 67
5.3.3 Miraial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
5.3.4 Univance Corporation . . . . . . . . . . . . . . . . . . . . . . . . . 70
5.4 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
6 Innovator Companies in Germany . . . . . . . . . . . . . . . . . . . . . . . . . 73
6.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73