SCRUM Ventures, which invests in early-stage startups and creates new businesses between Japanese companies and global startups in Silicon Valley and Japan, held an event called "SCRUM CONNECT 2023" on February 8th to commemorate its 10th anniversary.
In the panel discussion entitled "Japanese companies x startups: From the field of open innovation," representatives from three major companies participating in the open innovation program provided by the company took the stage and discussed the keys to success in open innovation. Ta.
Co-creation through open innovation, “cases of major failures”
Regarding failures in co-creation through open innovation with startup companies and local governments, Shinichiro Gomi, Deputy Director of the Business Development Department, Growth Promotion Office, Mitsubishi Heavy Industries, said, ``There were two cases of major failures.'' talk.
``One is that we continued to run without evaluating the technology, and it was too late to realize that it did not meet the needs of society.I think where to exit is also a very important point. Another problem was that I focused too much on the technical side and got stuck in the depths.The important thing is not to pursue the ultimate in technology, but what to solve, but if there is no axis, things will drift off. .As business developers, we realized that we must always provide guidance so that our perspective does not shift.'' (Mr. Gomi)
Isao Sato, Unit Leader, Innovation Strategy Headquarters, East Japan Railway Company (JR East), also says that "purpose" is important for open innovation.
``I think it's true that Japanese companies exist, but open innovation and digital transformation are a means, not an end, but there was a period of 4-5 years when doing them became a job in itself. It happened before. At that time, I couldn't figure out things like, ``Who is this going to be fun for?'' or ``Who will be happy?'' Sometimes when I'm worried, I ask myself, ``Who will be happy with this innovation?'' I think it's important to think back and think, ``What's good about it?'' (Mr. Sato)
Hiroki Fujimoto, Senior Executive Officer and Head of New Business Planning Department at Sumitomo Life Insurance Co., Ltd., who is in charge of co-creating the SUMISEI INNOVATION FUND business, says, ``We failed because we tried something strange.''
``We introduced a health-promoting insurance called ``Vitality'' because unique services and products are needed at the core of corporate branding, but we are working on open innovation to create the next pillar. I came here to try something interesting so that people at the company wouldn't think, ``What are they doing?'' I started doing strange things like what to do with AI or to run an insurance truck. Our partner companies were providing great services, but it didn't work out because we tried to stand out and do new things without having a big purpose or vision for what we were going to do.Through open innovation, we I realized how important it is to first decide what kind of purpose we want to achieve.'' (Mr. Fujimoto)
The important keyword is "high birth and high death
In large companies, it is difficult for other departments to understand what the new business development department is doing, so what does "success" through open innovation mean? A question arose regarding the definition.
Mr. Gomi of Mitsubishi Heavy Industries cited ``high births and high deaths'' as an important keyword for success.
You approach things with a purpose and strategy, but I think it's really important how much you do them. By doing so, one day you'll suddenly see the points you should be looking at. It's important to find these points quickly. .Therefore, a work process that did not exist at my company until now emerged.In our case, there are many processes for new product development, but we are able to move forward quickly and successfully overcome them like a start-up company. This is a new learning and realization for us. Things like this won't come out unless we do a lot of things. If it doesn't work, it's important to give up immediately and move on, and keep rotating to move on to the next thing. Seriously. In that case, you have to see it through to the end, and even if you finish it, you still end up wanting to go all the way to the end.Of course, there are some businesses that have to be done that way, but if you do that when you need to create a new business, you will be left behind. I think it's very important to take a different approach from the past for the society and world that we need to create from now on.'' (Mr. Gomi)
Sumitomo Life's Mr. Fujimoto says, ``Open innovation is also innovation, and it is meaningless unless it creates new value.''
``As Schumpeter (who proposed innovation theory) said, innovation is ``new combinations,'' so it is not open innovation if we simply use the wonderful technologies and services that startup companies have.What we have I believe that the definition of success in open innovation is to create a new third value by combining what a startup company has. We also want to have the aspiration to do something that is win-win for everyone and is also useful to the world.'' (Mr. Fujimoto)
Mr. Sato of JR East says, ``What is important is after it is implemented in society.''
``In 2017, our company launched the ``Mobility Transformation Consortium'' to promote open innovation, and currently about 130 companies have joined. We have the technology, but we don't have the technology at all.The concept is to have various companies join us and conduct demonstration experiments together.To be clear, it would be easy to go to PoC (proof of concept/proof of concept), but there are problems. From there, we define success as going from PoC to social implementation, and we are working on projects such as self-driving buses using dedicated roads in Tohoku, and robots being introduced at stations to replace humans. There are cases where robots guide customers.However, what is actually important is after it is implemented in society.It is fine to try, but you may end up releasing an app that no one will use or who will use it. Yes, social implementation is a success story, but unless you follow up on it properly and make it take root in society, it will be difficult (to lead to actual success).'' (Mr. Sato) >
Mr. Fujimoto of Sumitomo Life Insurance responded that the consortium format was a very good style.
“N-to-N” has a higher probability of success than “1-to-1” because multiple companies, both startups and large companies, are involved, as well as local governments and academia (academic institutions), and I think it will create value. That's why I really want to work together. JR East and Sumitomo Life Insurance both advocate ``WaaS (Well-being as a Service),'' so I would like to expand our collaboration.'' (Mr. Fujimoto) )
Mr. Gomi agrees, ``That's exactly right. If you do it in one company, you only have one point of view, and that alone won't solve anything.''
``Everyone knows that there is a value chain in the world, and that each company contributes in various ways within that chain, but when you actually try to run your own business, you inevitably have to worry about your own value chain. I tend to only think about my own points.However, we are trying to create an ecosystem that would not be possible unless we all connect with each other.Therefore, it would be better to work with a company that we don't normally work with to gain a new perspective. I think it will come.'' (Mr. Gomi)
How I started working on open innovation
Regarding how they started working on open innovation, Mr. Fujimoto says, ``We created ``Health Promotion Insurance Vitality'' as the core of our branding, and this was actually the result of open innovation.''
``With life insurance, you can ``prepare'' for risks, but you cannot ``reduce them.'' Nowadays, ``healthy life expectancy'' has become important, and it is important to not only prepare for risks but also reduce them. Or, if we want to create even more positive value, life insurance alone cannot do anything.So we created a wellness program through open innovation together with various companies, and created a health promotion type insurance that provides insurance. For the first time, as a company, we understood that we can create great value by combining the services, knowledge, and technology of various companies.Next, if we want to pursue ``well-being'' as a company, we will create new services related to well-being through open innovation. Since there was a need, I was put in charge.'' (Mr. Fujimoto)
Mr. Sato of JR East says the following about how his company started working on open innovation.
``As Japan enters a phase of population decline, the business model of railway companies will collapse.Therefore, around 2017-2018 when we created a medium-term management vision, we incorporated new technologies through open innovation and started new businesses. We started with the idea of creating something, but then the coronavirus pandemic hit in 2020, and the future we thought would arrive 10 years later suddenly arrived, spurring open innovation. What I want to do the most right now is ``Metaverse.'' I don't think JR East will be able to survive on its own railway business in real space, so I want to do the same thing in virtual space so that our customers can enjoy it.'' Mr. Sato)
Mr. Gomi of Mitsubishi Heavy Industries said, ``In 2018, we started an initiative called ``MHI FUTURE STREAM'' to predict the world 20 to 30 years from now.''
``While Japan's population is steadily decreasing, the world's population is rapidly increasing, and the digital society is becoming larger and larger.Then, we can see a future in which energy consumption will rapidly increase.So, what is this energy? What's more, we shouldn't emit CO2.When thinking about how to solve this problem, I think one of the starting points was whether we could really grow with our own technology or not. We have about 700 types of products in the land, sea, and air domains, and support customers in many industries.However, if the same issues occur simultaneously, it will not be enough for one company to develop one technology. "We will have to be prolific. This is where open innovation becomes important. I think that was a big trigger." (Mr. Gomi)
What is the significance and result of participating in an open innovation program?
JR East is participating in "SmartCityX" launched by Scrum Studio in August 2020, and Sumitomo Life Insurance is participating in "Well-BeingX" launched in March 2022. Mr. Sato of JR East said the following about the motivation and benefits of participating in the program.
``I think Japanese people lack a global perspective and tend to think only within Japan.However, if we don't think about innovation on a global scale, we will lose.''Therefore, at a lecture on innovation held within the company, Mr. Miyata, the representative of Scrum Ventures, who is knowledgeable about startups around the world including Silicon Valley, gave a lecture, and we met there. Through that connection, I heard that there was actually a program like this and decided to participate.'' (Mr. Sato)
Mr. Sato says, ``I felt that unless I entered a program like this, I would be able to engage in ``all-round diplomatic open innovation'' in which we partner with a variety of partners, whether domestic or foreign, large companies, or startups.
“All four types have their merits: domestic, foreign, large companies, and startups, but it is difficult for our company to reach overseas startups.If it is a large overseas company like GAFA, we would like to talk. You can do it if you think about it, but startups don't know what kind of companies exist in which countries, and they don't know what kind of companies they match with our needs.The moment you enter SmartCityX, you can instantly understand that. For example, we collaborated with American Miles when they came to Japan. A startup called Oyla, which has technology that detects objects when customers fall from platforms using cameras and lasers (3D LiDAR), is based in Silicon Valley. After learning about this, we are conducting demonstration experiments in the United States and Japan.This would not have been possible without this program.'' (Mr. Sato)
Mr. Fujimoto of Sumitomo Life Insurance Co., Ltd. introduced the co-creation projects announced at the "Well-BeingX Conference 2022" held in December 2022 regarding the results of Well-BeingX.
We originally developed a service related to preconception care (health care for the younger generation, including women and their husbands/partners) together with famione, which provides counseling and support for infertility and pregnancy planning. , happened to have applied to Well-BeingX, and the discussion was that ``Precoception care will not become popular unless we start with sex education for junior high and high school students.'' With Shibuya Ward (Tokyo) included in this program, the startup A group of large companies and local governments was formed.The other idea was that Lion was working with a start-up company called Tomoiku to create a support service during maternity and childcare leave, so we decided to participate as well. I think it's great that N-to-N efforts can be made between local governments, participating companies, and of course startup companies.If more companies could get involved, we would be able to create even greater value.Local governments and I think it would be a good idea to join academia as well.It's a program that will continue to grow, and I find it very appealing.'' (Mr. Fujimoto)
Mr. Gomi of Mitsubishi Heavy Industries is currently working with Scrum Studio to create a program to achieve carbon neutrality.
“We are accompanied by a carbon-neutral program, but it feels like we are all running barefoot through a dark forest. We don't know where we will make a breakthrough, or when we will run into something. I have to run. I am very grateful to be able to share various wisdom with everyone and see things from various angles. I often feel that Scrum Studio has knowledge of various industries and business models. , they come up with a variety of ideas. It's very valuable to be able to have healthy discussions, including debates, between companies. I want to follow in the footsteps of my seniors and produce results as soon as possible." (Mr. Gomi) >
“I want to improve society” What is important for that purpose
Regarding the goals he would like to achieve in the future, Sumitomo Life's Fujimoto said, ``I want everyone to create a WaaS ecosystem.''
``The SDGs will be the global agenda until 2030, but after that I think it will probably be about wellbeing.SDGs are an effort to solve the earth's negative global issues and not leave a negative legacy to the next generation. After 2030, I think the global agenda will be how to leave a positive legacy.Toward that end, I would like to create a new WaaS industry from Japan.'' (Mr. Fujimoto)
Mr. Sato of JR East responded, ``I would like to work on WaaS together in a consortium format,'' and added, ``Japanese society has been exhausted, including the coronavirus pandemic, but there are actually good places in rural Japan. I want to spread the word about many things."
“Railways have stations in rural areas, so I would like to turn local stations into ecological or digital hubs. I would like to use stations as hubs to realize the well-being of local communities.” (Sato Mr.)
Mitsubishi Heavy Industries' Mr. Gomi said that his goal is to ``create a mechanism that encourages changes in our behavior.''
"Our goal is to change our behavior. The important thing is how we can create mechanisms that can change our behavior, such as energy (the way we think about it) and various services. Most of what we deal with is infrastructure. , people don't often realize why there is electricity or how electricity is made.However, I think it would be amazing if we could spread a model from Japan where our behavior changes without us even noticing, and we can do it. I think it's important for everyone to work in the same direction as a consortium, so I feel that WaaS is a very important keyword.'' (Mr. Gomi)
Finally, the participants sent messages for people who want to participate in open innovation, such as large companies, start-up companies, and local governments.
I think both startup companies and companies like ours share the same desire to improve society. We want to continue to take on various challenges and make society even a little better. At that time, we need to ``never give up.'' I think it's important not to rely on startups.I think it's important to not rely too much on startups, but instead to figure out how to make the most of what we each have.I hope everyone can create that kind of atmosphere. I want to do it.'' (Mr. Gomi)
“Currently, our company, JT, Hakuhodo, Lion, and Tokyo Tatemono are participating in Well-Being I want everyone to join us and create something together with startup companies.I want to create a wellbeing industry as an industry that originates from Japan.'' (Mr. Fujimoto)
We will be participating in the third period of SmartCityX, and it's really interesting to see the lineup, so I hope you'll join us. It's a really fun program, and I think we can change Japan. JR East is committed to open innovation. We will continue to do this, but we have completed one activity in five years.We have written a book about our efforts called ``New Generation Open Innovation: JR East's Challenge,'' so please take a look at it.'' (Mr. Sato)
