Japan still a developing nation in open innovation

Open innovation is essential for companies. It has been said for quite some time now. However, many of Japanese companies seem to be not yet able to make good use of open innovation, comparing to European and American companies.

The Japanese government released the White Paper on Open Innovation (the second edition) on June 27 2018. It shows the current status of open innovation and some successful cases in Japan. The findings are that:

  • Collaborative or contracted research between private companies and universities or public institutions has been increasing both in the number of cases and in terms of expense.
  • However, both the proportion of research expense to universities in the total research expense of companies and the expense per research are lower than those of overseas. Specifically, the proportion of research expense to universities is 0.68 in Japan, while it is 1.12 in the United States, 3.80 in Germany, 2.85 in China, and 2.29 in United Kingdom. Also, the performing rate of open innovation in Japan is lower than in the United States and Europe (47 to 78).
  • In Japan, entrepreneurs and start-up companies are unlikely chosen as a partner form open innovation. Companies rather choose suppliers, universities, customers and even competitors.
  • The primary reason for not performing or breaking off open innovation is the lack of management skills and human resources. Then the second reason is that they don’t see the benefit of open innovation.

The opinion is often heard that Japanese companies lost their competitiveness by sticking to the closed innovation. Indeed, Japanese companies surely have the ability to develop new technologies in-house similar to prior technologies already in widespread use. However, they should understand that there are other companies which already have such prior technologies. By the way, I often hear Chinese people say that they want to buy technologies and talents, in order to buy time. This might be a key to rapid business growth.