Hidden Japanese Champions – Why Big Companies Fail: What our TRNSFRMRS learned in their first Club event

On Wednesday June 20th, 2018, WORLDWEBFORUM hosted the first TRNSFRMRS Club event, with the goal of developing a universal mission for the club of thought leaders and change makers. Honorary guests Professor Charles O’Reilly from the Stanford Graduate School of Business and Professor Ulrike Schaede from School of Global Policy & Strategy of University of California, San Diego, presented the roundtable discussion.

To the big surprise of the Club members Professor Schaede revealed that, “Japan is still in fact the third largest economy in the world, despite the popular notion that China is today’s super power”. She talked about a surprising fact where Japanese companies are hidden champions in Silicon Valley – surprisingly, they’re not there to join the local technology rat race. Instead they observe, learn and take home with them what they discover in order to optimize their own techniques back home.

In the first discussion, the members of the Transformers Club delved into the differences between the US, Japanese and European approaches to digital transformation and innovation. Key learnings were that Swiss organizations could adopt a more lateral approach to innovative thinking and integrate high-value-added components to international manufacturing processes. For service-oriented organizations in Japan, it is about adding value with the expertise in niche fields where we have competitive advantage.

This value-adding approach can be seen in an example of the iPhone, which costs roughly US $180 to produce. 34% of value goes to Japan (from high-value components) and 17% from Germany. Only 4% of value is from China. Hence, Japan has moved up the value chain from B2C retail to B2B added-value manufacturing components.

In the second half of the roundtable, the Transformers dissected Professor O’Reilly’s presentation about ambidextrous leadership. “Kodak, Nokia, Blackberry, Polaroid and Blockbusters: at some point of time they were the leaders in their industry and missed the opportunity to maintain their positions, through their inability to adapt and grow.” Charles O’Reilly, author of the book „Lead and Disrupt: How to Solve the Innovator’s Dilemma“, emphasized that “firms must remain competitive in their core markets, while also winning in new domains”. Senior leadership is pivotal in managing the implementation of old business, at the same time implementing strategic innovation so that both sides of the business continue to grow.

On how to be successful during technology disruption phase: ideation is imperative but that’s the easy part, it’s not sufficient on its own. Companies usually run into problems once they get to the scaling part. This is where they need a process to have the assets and capabilities away from existing business in order to be successful.

„What lies beyond our horizon? And what can we as leaders do, to lead the change and how can it be driven?” 

These are some of the questions that the members of the TRNSFRMRS club  animatedly discussed after the roundtable.

Professor Ulrike Schaede is an authority on Japanese business organization, strategy and management. Her core research interest is to analyze and compare different systems of capitalism and ways of organizing business, in order to identify the social economic efficiency consequences.

Professor Charles O’ Reilly has taught in Columbia, Harvard Business School, UC Berkeley and UCLA.  He has consulted for a variety of public and private firms in the U.S., Europe, Africa, and Asia. He also has developed, directed, and taught in executive programs for senior managers in innovation, technology, leadership, change, and human resources.