Kazuki Arita × Akihiro Shimura: Part 2 "Realizing True Innovation That Isn't Constrained by the Rails"

Following #6, we present a discussion with Kazuki Arita of ONTROX on the differences in innovation management between Japan and the US. Together with Mr. Arita, we explore how innovation management should be approached in Japan, given differences in human resources and environment.

The U.S. Takes the Lead with Technology vs. Japan Being Forced to Use Technology

Arita: Hadoop (middleware for distributed processing of large-scale data) has been publicly released and is generating buzz, but personally, I suspect there might actually be newer technology out there, and they're releasing it secondhand (laughs). I firmly believe Japan absolutely has the capability to achieve high-speed processing through entirely different approaches.

Shimura: I do feel we're being beaten to the punch. I don't think Japan's technological capabilities are inferior, but because the technology is released in open forums first, we end up being steered toward using that. Returning to the initial discussion about services and tech: when starting a service-based startup, you're building it using technology that tech companies have already worn out. This limits what you can do, and if the specs change, you have to rebuild the service from scratch – it's frustrating. Innovation that follows someone else's rails won't secure equity. I'm deeply troubled by how to facilitate Japanese companies capturing the core elements. Even when trying to drive tech innovation, Japan keeps playing catch-up.

Arita: Back when I did yacht racing, all boats aligned their sails in the same direction at the starting line to catch the wind and get a head start. Since the wind never blows in the same direction forever, you might have to take a gamble and boldly point your sails in the opposite direction of the other boats.

Shimura: How do you think Japanese companies can develop the kind of wisdom needed to take such risks? When everyone is heading toward Hadoop and big data, how can we look in a different direction?

Arita: When many people are heading the same way, competition intensifies and the battle becomes fierce. We need to consider whether what existing technology can achieve can be done differently or in another domain, while also thinking about how to compensate for the shortcomings of existing technology.

Shimura: If you're proficient in existing technology, you can imagine what it can achieve. But I think many people study it simply because it's trendy. What kind of environment or foundation is needed to enable even those with low readiness and no expertise to generate ideas and look in a different direction?

Arita: I think it's about balance. For example, if everyone is focusing on Hadoop, aiming for quantum computing might be overkill. Instead, it's about having the sense to ask, "Can we solve this using a GPU (Graphics Processing Unit)?"

Shimura: Even when I explain to large Japanese corporations that ideation is about exploring any field and isn't tied to performance evaluations, the same types of ideas keep surfacing. When I facilitate sessions asking for more divergent thinking, the only ideas that emerge are things like B2C becoming B2B, or designs with minor tweaks. I sensed they were deeply preoccupied with the need to sell their own products.

Arita: Starting from the premise that current products or technologies aren't needed can lead to interesting ideas.

Shimura: I think the current business gets in the way, preventing that kind of thinking. The problem with large Japanese companies is that they can't think outside constraints like "we don't use that technology" or "we've withdrawn from that business." Companies with labs in the US are doing all sorts of things – is it just a difference in culture?

Arita: The difference lies in whether the corporate culture allows it, or if people just start their own companies to do it. I saw on TV recently an entrepreneur who wanted to build the motorcycle he envisioned. He pitched his idea to motorcycle companies but was laughed at. In the end, he realized his idea himself.

Shimura: Being laughed at is actually just right. Innovation doesn't happen unless you pursue something that 99 out of 100 people reject. People who fear rejection can't create major innovations. That mindset isn't something you acquire overnight; perhaps it needs to be instilled from a young age.

The role of the dealmaker as the final gateway to business realization

Shimura: At SVIP, mentors guide you toward business development. In Japan too, we need more mentors, entrepreneurs, and teacher-like figures stepping forward. How do mentors who stretch ideas and businesses—like teaching competitor analysis—divide roles and engage in commercialization?

Arita: Silicon Valley startups say that to make entrepreneurs successful, you need not just mentors who provide detailed business guidance, but also people who actively seek out deals. There are dealmakers strong in specific fields who work for 3-5 clients, acting as the gateway for startups.

Shimura: In my experience, I've never seen a dealmaker in Japan who acts as the final point of contact for business deals. But what happens when a new venture in an emerging category doesn't have multiple potential deal partners?

Arita: From what I've heard, dealmakers come in several types—from those who can sell anything to those with deep expertise in specific technologies who can also build deal pipelines. Some startups hire both: a generalist dealmaker and a specialist dealmaker familiar with their own technology.

Shimura: Where do you connect with these dealmakers? Is it through projects like SVIP?

Arita: If you join an incubation-type office, they can introduce you. There are also people in Silicon Valley who staff everything from engineers to dealmakers for Japanese companies, handling everything from organizational setup to operations.

Shimura: In Japan, I sometimes hear that when you hire consultants, they only handle the blueprint, not the business design. There's also a sentiment that innovation management and online facilitation shouldn't be left to big consulting firms. Perhaps in Japan, there's a perception that it's shady or might cause delays when it comes to the final business implementation.

Arita: In Silicon Valley, to constantly keep these people motivated, they stack base guarantees with performance-based compensation.
When I was in Silicon Valley, many people had the ultimate career goal of becoming a venture capital (VC) fund manager. Some even launched and sold multiple ventures to get there. To become a VC fund manager, you first need to be well-connected, build networks by talking to many startups, and understand both technology and business.

Shimura: Do such people come to observe Japan's innovation trials? Beyond Silicon Valley, Japan's labs also hold promising potential. If Silicon Valley professionals visited, I believe it could create great synergy. Yet Japanese companies rarely invite them, right?

Arita: I think they would come if invited, and they would want to see it. However, Silicon Valley hosts many conferences and summits, and they likely view speaking at these events as the first step to gaining prominence, which is why their activities center around Silicon Valley.

Shimura: Talking with them, I get the impression that both structurally and culturally, it's very different from Japan. That said, even within Japan's "right-turn-right" culture, there are people riding the wave and succeeding. If all American-style ideas were guaranteed to make money, Japan would have sunk long ago. So, even if you come up with the best idea, whether you can actually build wealth through business is another matter entirely.
For us, it's crucial that the market grows large enough for everyone to prosper and be recognized as partners. Figuring out what goals to stretch our ideas toward is incredibly difficult. For talented startup people like Arita-san, I imagine it's not fun unless you're excited and motivated first. What are your thoughts on the mindset and readiness of Japanese companies and the people involved?

Arita: Yesterday, I heard from an acquaintance who's busy making money building websites. But that doesn't mean ONTROX should create a website development department, right? If you're only focused on profit, you should just take on lots of high-margin work.

Shimura: When commercializing an idea, the ultimate goal often becomes making money. Even during ideation, when we say "anything goes," some people are already fixated on profitability at that stage.

Arita: Silicon Valley has repeatedly emphasized "No Greedy, No Cheap." It means you shouldn't be overly greedy for money or market share, nor should you sell yourself short.

Creating something you want to show people, rather than just focusing on profit, leads to innovation.

Arita: Japan has solid technology and services, so Japanese companies should invest more in Japanese ventures. While there's a lack of ideation and a tendency toward limited variation, if you have specific needs or problems to solve, invest in Japanese companies to build them. When Japanese companies struggle to raise funds domestically, consulting Japanese VCs often leads to being told they won't invest outside B2C. Especially for tech, VCs often say they can't evaluate it because they don't understand it.

Shimura: Some projects disappear not because they fail technical screening, but simply because the paperwork doesn't make sense to them.

Arita: Because they can't raise funds, everything becomes contract work. They build what the client wants, deliver it, and end up with no IP (intellectual property rights) left behind. This means they can't reuse it, and the motivation to innovate disappears.
For example, in Japanese owner-managed companies, the president who holds 100% of the shares is often treated like a god, and programmers are forced to work for low salaries. In Silicon Valley, they realized workers need knowledge, so even engineers get MBAs to achieve a high level of expertise.

Shimura: Even between Tokyo and Osaka, I feel there's a division where new technologies and development happen in Tokyo, while Osaka handles sales and other client-facing roles. I think these constraints hinder innovation.
For innovation to happen within a client-contractor relationship, I believe we must talk face-to-face in the same space, regardless of money or hierarchy. Fundamentally, nothing happens unless we meet and talk as equals.

Arita: My themes going forward are how to make money and what constitutes success. If I'd started this business in my twenties, I might have become greedy, but driving a fancy car now would just be a hassle (laughs). Talking today made me think about where my own goal lies. Ultimately, I think my motivation is to create something I want to show off. I want to show it to everyone, to surprise them, to impress them. If I keep working with that feeling, it will naturally lead to innovation, won't it?

Shimura: Our conversation made me realize how vastly different the levels of readiness are between Japan and the US. I genuinely believe Japan can compete in innovation within its core strength of manufacturing. Therefore, I feel it's essential to facilitate companies seriously pursuing true innovation by helping them avoid themes that only produce solutions running on standard technology rails. Instead, they should narrow their focus to categories where they can compete in uniquely Japanese domains and ideate accordingly.

Thank you for today.