The Journal The Authority on Global Business in Japan

In early October, I was invited to attend the 12th Science and Technology for Society (STS) Forum held in Kyoto, where I made a presentation at its plenary session. Over 1,000 participants attended this annual event, which invites Nobel laureates from various countries, along with leaders from politics, business, and the media.

The theme of the session at which I spoke was “Society Changed by Information and Communications Technology (ICT).” One of the topics I touched on was the factors shared by some of the world’s rapid-growth enterprises.

Take Uber, for example. Despite becoming the world’s largest taxi company, it does not own a single vehicle. Airbnb, the world’s largest hospitality exchange service, doesn’t own a single hotel room. By the same token, the Alibaba Group, operator of the world’s largest e-commerce site, maintains no inventory. And Facebook, the world’s largest media company, produces no media of its own.

The common factor in the above business models is the construction of a platform by which a variety of companies and consumers are brought together, with happy results. Experts on technology find this to be of great interest, serving, as it does, to reaffirm how ICT is of major relevance to society as a whole.

Another point I raised concerns the similarities between cyber security and such fields as biology and immunology. As I mentioned in a previous installment of this column, I graduated from a faculty of medicine, and have been fascinated by this topic for quite some time.

What similarities are we talking about? Stated simply, the mission of living organisms is to live. Over the past 400 million years, through repeated innovation, DNA evolved and, through this process, organisms developed excellent security functions to protect themselves from pathogens, accidents, and so on.

The Internet is also a living organism, so to speak. For it to continue developing, security is essential. Considering this, there are many things we can learn from biology and immunology that can be applied to cyber security.

I believe that next idea may come not from a vendor in some field of business, but through collaboration with biology or some other life science. While I spoke for only eight minutes at the forum, the audience reaction was gratifying, and after the talk many people approached me to exchange business cards.

It would be laudable if the participants at this event were to use the occasion to combine their various genres of knowledge and engage in “open innovation” leading to the creation of new values.

BIOMIMICRY
Now, briefly, I’d like to touch on what I meant by cyber security and biology. The amazing invention of the thing we call “money” is essential for economic development.

When I pass a ¥10,000 note to someone, I am departing from physical objects and, in effect, passing along the value of ¥10,000. But it’s extremely difficult to make transactions by a digital currency such as BitCoin. The difficulty is in linking the “I am sending data” with “I am receiving value.” And this has made it the target of hackers.

As readers know, eggs are fertilized by a single sperm cell. The process has been devised by nature so that only one cell out of hundreds of millions performs the task. At the moment of fertilization, the surface of the egg changes its disposition so as to shut out all other sperm, thereby according protection to that one sperm cell.

In the case of cyber security, however, it has proved much more difficult to shut out subsequent entries. If a logic similar to fertilization could be developed, it would be a boon to digital currency transactions.

While, at first glance, there appears to be no relationship between biology and cyber security, I believe that bringing them together in the desired manner will hold great possibilities for the creation of new ideas. I therefore urge those of you with an interest in this to engage in research.

JAPANESE INNOVATION
While Japan does have companies similar to Amazon.com, they’ve been unable to break out of the mold of being imitators.

By contrast, take Alibaba, for example. The EC site of the Alibaba Group, which maintains no inventory, offers an extremely innovative business model, and one that even transcends Amazon.com. How did this come about?

In the background was the social environment of China. When people made online purchases, some would pay, but not receive goods. Or, the goods they received were defective. Or, the reverse occurred, with some receiving goods but not paying for them.

So Alibaba came up with a transaction system using its own electronic money. The system was set up by which the consumer would obtain the money from Alibaba, and use it to pay for the merchandise.

When purchases were made, the money would be transferred from Alibaba to the seller. In the case of a cancellation, the shipping charge would be deducted and the remainder credited to the consumer. This kind of innovative business model came about through the resolution of issues confronting society.

What sort of innovation, then, can we expect from Japan? One area likely to develop is the response to the so-called “super-aging society.” According to the 2015 edition of the White Paper on Aging Society issued by the Cabinet Office, as of October 1, 2014, the Japanese aged 65 and older accounted for 26.0 percent of the population, up from 25.1 percent the previous year.

By 2060, this ratio is expected to increase to 39.9 percent, at which time one person out of every 2.5 will be over the age of 65, and one person out of four will be aged 75 or older.

In the future, Japan will have to devise a variety of services to deal with its super-aging society. Naturally this won’t be simple, but we can expect it to spawn a multitude of new business opportunities.

By virtue of its leading the world in terms of the aging of its society, Japan will also have opportunities to nurture future export industries. While the Internet of Things (IOT), power-assist robots, and other businesses that cater to the aging of society are conspicuous, an important aspect of these will be ideas on how to combine and systematize them.

Some years ago, after my daughter was born, I devised a crude “IOT crib,” equipped with several sensors, that could monitor her condition. I thought it would be useful in caring for her to equip a crib with a dozen or more cameras or sensors.

Of course, at that time the IOT didn’t yet exist, but I was able to build a makeshift “IOT crib” by purchasing sensors and other components in Akihabara [, the electronics distric of Tokyo,] and interfacing them with a personal computer.

The net result was a monstrous jumble of wiring sprouting from the crib, under which I had several computers running—and the heat they generated was almost enough to keep the baby warm.

They also recorded her expressions, sounds and movements, along with the ambient temperature, humidity, and the pressure on the mattress. Naturally, with the technology currently available, it’s possible to realize a much smarter system.

However, the world has yet to come up with an effective prescription for dealing with the super-aging society. To resolve such a major issue, we’ll have to depend on “idea leaps” that transcend the common wisdom of current laws and regulations—as do the business models I mentioned earlier.

Just as the ideas from the 1980s generation revolutionized our world, now is the time for Japanese enterprises to invoke innovation and attempt to reclaim world leadership.

Divider

William H. Saito is an entrepreneur, venture capitalist, TV commentator, speaker, and author of bestselling novel The Team. He has founded several businesses and serves as a special advisor to the Cabinet Office of Japan and other G-8 governments.

Divider