A panel of forward thinkers in Tokyo called on Japanese manufacturers to transform their business to not only future-proof themselves but also help ensure sustainable economic growth. The panel was comprised of members of design and technology firms working closely with major Japanese brands, and therefore in a position to see where traditional strengths remain relevant, and where improvements can be made. They shared insights on how manufacturers should reshape their businesses during a panel discussion called "Technology Innovation: What Needs to be Done to Rebuild Japan Now," held on October 31, 2018.

The panel consisted of media artist Yoichi Ochiai; design engineer Kinya Tagawa of Takram, a design innovation firm; and Ryosuke Okuta, Director & Chief Technology Officer of Preferred Networks, Inc., a company that excels at fusing hardware, software, and computer networks. The Panel moderator was Tomio Kikyobara, Research Fellow of Nikkei Business Publications.

Join the Subscription Economy

To capture the opportunities of the digital age, Japanese manufacturers need to first change their business model. "From the 1950s to the 2000s, the Japanese economy was very much based on mass production of standardized goods. However, manufacturers today need to move away from that and embrace a subscription business model to address the changes due to digitalization," said Yoichi Ochiai.

Media artist Yoichi Ochiai at the Panasonic Cross-Value Innovation Forum

In support of Ochiai's point, design engineer Tagawa spoke about a startup called Peloton to illustrate the rise of the subscription economy. Peloton sells stationary exercise bikes for US$1,995, and charges a US$39 monthly subscription for live video workout classes, which are displayed on a touchscreen attached to the bike. Since the class subscriptions bring in repeat revenue from customers, the six-year-old company is now on track to reach US$700 million in revenue in its fiscal year ending next February, according to Peloton estimates.

Put Customers at the Core of the Business

According to Tagawa, most manufacturers today have a poor understanding of their customers. He asked the audience, "How many toothbrush manufacturers know the number of times their customers use their product?" Then he explained that having such level of customer knowledge, which constitutes putting customers at the core of the business, helps increase an organization's competitive edge.

Through insights on users, manufacturers can develop better products that address individual customer needs and improve the customer experience. "Take a weighing scale, for instance," explained Okuta of Preferred Networks, "consumers will be more likely to buy one that offers other useful functions such as body mass index or body fat percentage, over one that simply reveals your weight," he said.

The discussion moved to Panasonic, a company which, as part of its move to become customer-centric, recently unveiled a new concept called "Lifestyle Update", which emphasizes developing and offering products and services that adapt to an end user's personal preferences and way of life and evolve accordingly.

While design engineer Tagawa lauded the move, he advised Japanese manufacturers planning to do the same to adopt "design thinking." He explained that, by taking a human-centered approach to innovation, they will be able to ensure that their solutions will create value and solve problems for customers.

Create New Value by Leveraging Advanced Technologies

Besides being customer-centric, Japanese manufacturers can improve their competitiveness by increasing their use of advanced technologies such as machine learning and robots. "Japanese companies have yet to take full advantage of high tech," said Ryosuke Okuta. "I hope to see more companies using robots to reduce operational costs, which will subsequently enable them to produce better services to consumers locally and internationally."

Partnering with tech companies could be one way of accelerating innovation. Toyota Motor Corporation, for instance, is working with Preferred Networks to create a fully-autonomous tidying up robot. "Although Toyota is developing the robot, our machine learning and deep learning technologies are the ones that allow the robots to be controlled intuitively through voice and gestural instructions. This robot will be useful for home use or in elderly nursing care homes," shared Okuta.

Find the Right Talent

Citing a challenge plaguing businesses in many world markets, panelists warned Japanese manufacturers to prepare for recruiting talent to manage innovation. Moderator Tomio Kikyobara asked the panelists, "What defines the right talent?"

Media artist Yoichi Ochiai answered, "For me, the right talent is a person whose vision is aligned to that of the business, and is not constrained by the traditional way of thinking. The person must also be persistent to achieve his goals under any circumstances." As people of that caliber are hard to come by, Ryosuke Okuta advised companies to, "provide them the freedom to innovate," as that will be crucial in retaining them and attracting other like-minded individuals.

Takram's Tagawa highlighted the need for organizations to encourage different teams to collaborate, as he believes that "innovation requires cross-pollination." He said, "I have seen cases where marketing teams are regularly meeting up with their fellow research colleagues. We need more of that to enable innovation to thrive." Tagawa also suggested that organizations need to change the way they structure careers and positions "Perhaps half of your employees should take on multiple roles," he said. "By belonging to more than one function or team, an employee will be able to bring his or her ideas and skills to various teams, which means that he can contribute more to the company's growth. This will also help solve Japan's shortage of manpower as we can get more out of an individual."

[Leader Session] Technology Innovation - What needs to be done to rebuild Japan now -
Date and Time
October 31, 4:30 p.m. -5:30 p.m. JST
Mr. Tomio Kikyobara, Fellow of Nikkei BP Intelligence Group, Nikkei Business Publications Inc.
Mr. Yoichi Ochiai Ph.D., Media Artist
Mr. Ryosuke Okuta, Director & Chief Technology Officer of Preferred Networks, Inc.
Mr. Kinya Tagawa, Partner and Design Engineer of Takram design engineering

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