Tokyo for Startups and SMEs

TOKYO FOR SMES
DARREN MENABNEY
GLOBIS SCHOOL OF MANAGEMENT
APRIL 25, 2016
ENTREPRENEURIAL CLIMATE CHANGE

TOPICS
PART 1 - ENTREPRENEURIAL OVERVIEW
PART 3 - HUMAN FACTORS
PART 4 - FINAL THOUGHTS
PART 2 - CLIMATE CHANGE
© Darren Menabney, 2016

ENTREPRENEURIAL
OVERVIEW
PART 1

TOKYO FOR SMES PART 1 - ENTREPRENEURIAL OVERVIEW
GDP (PPP) QUIZ! a) 1.5x Australia?
b) 1.1x Canada?
c) 3.5x Singapore?
d) 4.3x Switzerland?
e) All of the above?
$1.6T
38M people
GREATER TOKYO
METROPOLITAN
AREA GDP =

DARREN MENABNEY
▸ 10 years at R&D Tax Credit program (Outreach, FDI)
▸ 5 years at Defence R&D Centre (Business development,
technology licensing & building innovation ecosystem)

MY NON-HR LIFE
Writing and delivering
pitches
Judging pitches
Attending a LOT of
pitch contests
Coaching startups
Teaching entrepreneurs at
an MBA program
Public speaking

JAPAN'S INNOVATION PROFILE
▸ Innovation is not
just about patents
!
▸ Value creation?
!
▸ New businesses?

JAPAN'S INNOVATION PROFILE

SCHÖPFERISCHE
ZERSTÖRUNG VS
破壊

CREATIVE
DESTRUCTION VS
DISRUPTION

SCHÖPFERISCHE
ZERSTÖRUNG VS
破壊
"IN JAPAN, INNOVATION IS GOOD,
WHILE DISRUPTION [破壊 HAKAI]
IS NEGATIVE, IMPLYING ‘TO
DESTROY.’”
MASAKI TAKAHASHI
PRESIDENT, UBER JAPAN

NET JOB CREATION IN JAPAN AS OF 2012
1
http://bit.ly/1Sx5AVu1
-4
-3
-2
-1
0
1
2
FIRMS EXISTING PRE-1996 FIRMS CREATED IN 1996 OR LATER
MillionsofJobsCreated

SUPPORT FOR ENTREPRENEURS?
960 1,000
48,000
24,100
Japan Angel
Funding ($M)
Japan VC
Funding ($M)
USA Angel
Funding ($M)
USA VC
Funding ($M)

TOKYO FOR SMES PART 2 - CLIMATE CHANGE
ZOMBIE BANKS AND DINOSAUR COMPANIES
!
“LARGE JAPANESE BANKS OFTEN ENGAGE IN SHAM LOAN
RESTRUCTURINGS THAT KEEP CREDIT FLOWING TO
OTHERWISE INSOLVENT BORROWERS WHICH WE CALL
ZOMBIES. . . . THE CONGESTION CREATED BY THE ZOMBIES
REDUCES THE PROFITS FOR HEALTHY FIRMS, WHICH
DISCOURAGES THEIR ENTRY AND INVESTMENT. . . . ZOMBIE-
DOMINATED INDUSTRIES EXHIBIT MORE DEPRESSED JOB
CREATION AND DESTRUCTION, AND LOWER PRODUCTIVITY.”
Ricardo Caballero, Takeo Hoshi and Anil Kashyap,
“Zombie Lending and Depressed Restructuring in
Japan”, 2008

RISK TOLERANCE
"In 2014 the rate of early stage entrepreneurial activity (TEA)
was 3.84%, which is the second lowest of all economies
surveyed, after Suriname. Japan’s TEA rate is less than that of
its neighbours, such as China (15.53%) and Taiwan (8.50%). "
Global Entrepreneur Monitor, 2014
Education system penalizes risk-taking (failure is bad)
Parental pressure to go work for a big company
Get into a good university = Get a good job at the end

TRIGGERS FOR CHANGE?
China and ASEAN rise
2008 Financial Crisis
March 11, 2011 Disasters
Demographic shifts
Vertical markets
Services focus
Social innovation

DISRUPTIVE ENTREPRENEURS
Tomoko Namba,
DeNA
Masayoshi Son,
Softbank
Hiroshi Mikitani,
Rakuten
Yoshito Hori,
GLOBIS

THINGS ARE CHANGING
▸ VC funding doubled from $1B to $2B from 2014 to 2015
!
▸ Favorable view of entrepreneurs up from 52% to 58%
from 2014 to 2015
!
▸ People under 40 increasingly disillusioned with traditional
career path
▸ Especially young bilinguals with overseas experience

WAR FOR TALENT
TOKYO FOR SMES PART 3 - HUMAN FACTORS

WAR FOR TALENT
▸ Everybody wants bilinguals
!
▸ Engineering talent comes cheaper in Japan
!
▸ Bilingual Sales and Marketing talent is even rarer
!
▸ The language barrier is signiﬁcant

...TOKYO IS NOT JAPAN
Other regions have distinct business cultures, strengths, & needs
!
!
Kansai area (Osaka, Kyoto, Kobe)
Home to many innovative companies,
strong entrepreneurial spirt
Fukuoka City
Promotes itself as gateway to Asia
Provides entrepreneur visas and
support for non-Japanese

"ANY FOREIGN BUSINESS LOOKING TO SUCCEED...IN ANY
PART OF JAPAN, MUST BE REALISTIC AND REALIZE THAT
BOTH THE GOVERNMENT AND MARKETPLACE WILL REQUIRE
A TREMENDOUS INVESTMENT IN PRODUCT LOCALIZATION:
ONE MUCH MORE INTENSE AND COSTLY THAN FOR ANY
OTHER COUNTRY."
Jasper Cheng, medium.com

JP-CH CULTURAL COMPARISON
Indirect
Communication
Indirect
Negative
Feedback
Relationship-
based Trust
Avoids Direct
Confrontation
Contract-
based Trust
Direct
Confrontation
Deductive Reasoning,
WHY then WHAT
Punctual, stick
to agenda
Hierarchical

EIGHT CULTURAL DIMENSIONS – THE MODEL

FINDING THE RIGHT TALENT IS CRITICAL
① Professional expertise
② Language & cross-cultural skills
③ National & regional market knowedge
...AND YOUR COMPETITORS ARE LOOKING FOR THE SAME THING

ENTREPRENEURIAL CLIMATE CHANGE
▸ Environment for SMEs is improving
!
▸ Attitudes shifting, more ﬁnancing is available
!
▸ Mindset (esp. under-30s) match to overseas companies
TOKYO FOR SMES PART 4 - FINAL THOUGHTS

THRIVING FROM CLIMATE CHANGE
▸ Leverage Switzerland as a brand
▸ Tap into disillusionment of talent
▸ Look for talent who are seeking non-traditional careers,
want to leave a big traditional corporation
▸ Job search sites like
Jobs for startups Social job search Corporate recruiting
Justa

SCHÖPFERISCHE
ZERSTÖRUNG >
破壊

SHOW JAPAN THAT
DISRUPTION IS A
POSITIVE

THANK YOU FOR YOUR TIME!
!
darren.menabney@globis.ac.jp
!
jp.linkedin.com/in/dmenabney
!
@darmenab

REAL WAGE SHRINKAGE
APPENDIX

APPENDIX
B2C AND CONSUMER MINDSET
Quality is king
▸ Includes services
!
Willing to pay for premium & convenience
!
Extremely trend & brand-conscious
▸ Nation branding matters too
!
Made In Japan less important than previously

APPENDIX
B2B AND CORPORATE MINDSET
High level of risk aversion
!
Long term perspective
!
Companies ﬁll a role as a social safety net
!
Large layoffs still relatively rare, "job for life" and stability still the dream
!
Relationships matter
▸ Building relationships (see Culture Map)
!
Know growth lies overseas

Tokyo for Startups and SMEs

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