"The Need for Reinvention: Now is the Time to Harness Japanese Creative Vision" Kazuhiro Mishina

Taro Minami of DENTSU SOKEN INC. Japan Studies Group spoke with Professor Kazuhiro Mishina of Kobe University Graduate School of Business Administration, an expert in management strategy.

It's necessary to sharpen the edge of the top 10%

Minami: Professor Mishina, you examine the factors behind long-term business profitability using extensive time-series data across diverse industries. Could you share how you arrived at this approach?

Mishina: The direct catalyst was being influenced by professors like Chandler and Porter, who conducted large-scale research, during my studies in the United States. Practitioners excel at swiftly capturing micro-level changes and taking prompt action. Conversely, macro-level changes become visible only when distanced from day-to-day operations. I came to believe that the scholar's task is the painstaking work of comprehensively grasping matters over the long term and across broad domains without omission. I have continued this diligently ever since.

Minami: Based on such research, where do you think Japanese companies should find their path forward?

Mishina: There might be a slight misconception among people. In terms of how economies function, it's not necessary for everyone to possess international competitiveness and earn foreign currency. Such individuals need only make up about 10% of the total. The remaining 90% can continue to thrive on domestic demand through the "multiplier effect." For example, when that 10% finds work and invests, the recipients of that investment procure materials. In that process, workers' uniforms get sent out for cleaning, which leads to cleaning shops ordering detergents. This way, the initial investment connects to someone else's income, ultimately generating an economic effect about ten times greater. Japan's current problem is that the edge of that top 10% isn't sufficiently sharp. Japan isn't good at cultivating such talent. This is because it treats everyone equally and tries to raise everyone's abilities to the same level.

Leveraging Japan's Strengths: Opportunities in B2B

Minami: In what areas should that top 10% earn their income?

Mishina: Japan has grown through mass-produced B2C goods. However, mass production favors those with huge domestic markets. It allows significant investment in R&D, production processes, and marketing, and the experience of mass production accelerates improvement speed. We must now prepare for companies from massive market regions like China and India to emerge, skilled in mass production. For Japan, building an economic bloc in Asia akin to the EU or NAFTA is difficult due to relational factors, making such market expansion unlikely. Another often overlooked point is that Japan isn't as strong in B2C products as Japanese people tend to believe. Japanese engineers have a tendency to over-engineer. There's too much focus on creating products to fulfill the engineer's vision, which sometimes fails to resonate with consumers. Classic Japanese-made VCRs exemplify this flaw—their complex operation earned them the American mockery that "even someone with a PhD couldn't use them." In design, too, Japan loses out when competitors like South Korea prioritize aesthetics.

Minami: True, Japan may have gained momentum by winning in markets the US abandoned.

Mishina: Japan's real opportunity lies in B2B. Japanese engineers demonstrate tremendous strength when it comes to components and equipment. B2B involves transactions between specialists, so meticulous craftsmanship infused with otaku-level dedication is highly valued. Japanese companies tried to handle everything in-house, from components to end-user products, which narrowed their market. If they decide not to pursue the end-user market, they can widely sell components and equipment to B2C companies worldwide, enabling a larger business than today. They should abandon the in-house approach quickly and focus on developing areas of comparative advantage.

Positioning Young People's Exceptional Creativity as a New Resource

Minami: Mr. Mishina, you've been using the term "Re-Invention" lately. Is this a concept that could hint at a way forward for Japan in the B2C domain?

Mishina: B2C still holds potential. Japan has a history of success with "light, thin, small, and compact" products. This is the world of comparative superlatives – making existing products smaller, thinner, and so on, improving along fixed development axes. Many engineers poured their hearts into this, but it has reached a dead end. Looking at what succeeds today—Apple products, for example—we see approaches that fundamentally change the evaluation axis. It's essentially the world of "re-". I call this "Re-Invention".

Minami: So, by reimagining past inventions using the latest technology and ideas, we can create new evaluation axes.

Mishina: Exactly. Re-invention requires conceptual power more than technical skill, and this resides not in organizations but in exceptional individuals. That's precisely why more philosophical thinkers, people who think deeply about things, need to step forward. Japanese people have traditionally possessed this kind of creativity, but there's been a tendency to push outstanding individuals into niche creative fields rather than the mainstream of business.

Minami: Regarding this conceptual power, how do you view the young people who will lead Japan's future?

Mishina: I believe they have tremendous potential. Today's youth aren't intimidated and possess the power to spread Japanese creativity beyond cultural and linguistic barriers. Living in an era of affluence and peace, they have a greater proportion of time dedicated to deep thinking compared to people in emerging economies currently growing. They are thinking deeply. There's no reason not to position this as a new resource for Japan. Human curiosity is most keenly sharpened around age 15. If they can pursue their passions wholeheartedly during that period and make a living from it, I believe world-class talent will emerge across various fields, making Japan a truly fascinating country.