Seiichiro Yonekura

Yonekura maintains that the old Henry Ford "Model T" economy is fading in Japan, and he wants to replace it with his own "Model J" -- a distinctive approach to corporate management that will lead Japan out of its technological wilderness and eventually change the way others think about Japanese innovative capacity. His latest book, Model J: The Neo IT Revolution, is focused on the application of a less centralized and more environmentally user-friendly society. Professor Ronald A. Morse of Reitaku University in Tokyo visited Yonekura at his institute.

What do you mean by innovation?
The history of business is about the strategy of innovation. And innovation is the central theme in the battle of ideas over Japan's economic future. I believe that all of the current hype in Japan about "IT" (information technology) is "old think" -- it is not really about innovation. IT in Japan is about how to squeeze more value out of the old entrenched businesses simply by improving the use of information and using existing technology. IT fits the old keiretsu model of incremental change in Japan, but it has nothing to do with real innovation. Innovation -- the Silicon Valley venture business model -- means the software, communications, business plans, and the creativity that links the "I" to the "T" of information technology. Most Japanese don't understand this linkage and miss the real challenge that innovation poses.

What's the significance of the Internet for Japan?
The Internet is a change agent because it forces people to differentiate between the Old Economy and the New Economy. How successful the Internet is in Japan will determine whether Japan is going to have real Schumpeter-type "creative destruction" of the Old Economy or just have a selective modification by the conglomerates seeking to prop up the old regime. The Internet shifts value from the producers to the customers. The Internet also means decentralization, individual creativity, the power of freedom, and new value creation -- all radically different concepts from the conventional business model that has dominated Japan. Those of us who understand this potential for "creative destruction" have to move quickly to foster change before the old-guard firms can reestablish their market dominance. My fear is that the big business counterattack on Internet ventures might already be under way.

The Internet will also help Japan break the pattern of alternation in US-Japan high-technology relations. Until now, Americans have done all the innovating while the Japanese manufacture and selectively improve on basic designs. Playing catch-up has been easy and Japanese didn't have to think for themselves. They focus on process innovation rather than product innovation. Now, to really compete, we have to lay the groundwork for true innovation.

Why is it so hard to get innovation going in Japan?
A major problem is that our educational and employment systems have not provided the business and engineering skills needed in the Internet age. For every 100 Internet-focused engineers in the US, there is only one in Japan. And for every 1,000 professional CFOs in the USA, there is only one in Japan. A backer of our institute, Hiroshi Fujiwara, the president of the Internet Research Institute (IRI), pointed out that it was almost impossible to find the right management people to staff new startups in Japan. IRI was the first company to go public on the new Tokyo Stock Exchange's Mothers market.

But Japan is still strong in selective manufacturing fields, isn't it?
Of course, a manufacturing base is important for new business development, but that alone is no longer enough. The numbers speak for themselves. Manufacturing jobs are disappearing fast in Japan because of our high-wage, high-cost economic structure. Nissan builds its new factory in the United States, not in Japan. I still maintain that Japan's economic future is with venture businesses.

Are Japanese universities behind in the digital revolution?
Yes, unfortunately. Universities have been excellent at providing a very high level of general educational and engineering literacy in Japan. We have creative students and we know their potential, but once these kids enter Japanese universities or the business world they are shut down. Shuji Nakamura, the inventor of the blue, green, and white light--emitting diodes and the blue diode laser is one recent example of how universities and businesses don't reward innovation. He was the head of R&D for a relatively small Japanese firm, but when it came to wanting a free environment for his research, he had to leave Japan for the University of California, Santa Barbara.