#Asia #Japan 91: I Was Wrong. Startups Are Not the Future of Innovation in Japan


This is a rather personal episode. We have no guests this time.

It’s just you and me.

We talk a lot about Japanese startups on this show and the role they will play in shaping Japan’s economic future.

Well, today we are going to look at this from a different angle; one that puts the hype aside and looks at some cold hard numbers. The result is sobering, surprising and,  believe it or not, kind of inspiring

So let’s get right to it.

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Disrupting Japan Episode 91
Welcome to Disrupting Japan straight talk from Japan’s most successful entrepreneurs.
I’m Tim Romero and thanks for listening 
Once again, I’ve got a special show for you today. There will be no guests, no beer, no playful banter with someone speaking English as a second language. Today it’s just you and me. For the next 20 minutes I’ll be whispering in your ear about something I consider very important, but that not enough people are talking about.
It’s been a while since we’ve done one of these solo shows. They tend to among my most popular episodes, I get a lot of requests for them and I love doing them. I would like to do more, but you might be surprised at the amount of research and revisions that go into these solo-shows. Not to mention the times when I get two-thirds of the way putting one together only to realize the primary thrust of my argument is flawed and the whole thing needs to be reworked.
Unfortunately, I’m not really smart enough to just turn on the microphone and talk for 20 minutes.  It’s so much easier sitting down and talking to amazingly creative Japanese startup founders and innovators who are doing and saying crazy things. 
Well, today, I’d like to share something with you that first occurred to me about a year ago. And the more I research it, and the more people I speak with, the more I become convinced it’s right.  I’ve haven’t talked about it a lot before, because well, frankly, it’s something that a lot of people in the startup community here will disagree with — and some will disagree in very strong terms. But it’s important, so let’s strap in and get right to it.
Over the next twenty years, startups are not going to revive the Japanese economy, nor are they are they going to be the primary driver of innovation in this country. Don’t misunderstand, startups have a role to play, a very important role to play, but they will not be the primary drivers of change.
No. Japan’s mid-sized companies will be the primary drivers of both large-scale innovation and economic growth over the next ten years.
For this to make sense, we are going to look at the role that mid-sized companies play in the Japanese economy today, we’ll then step back in time both to see how things get this way and to understand why Japan is at such a pivotal juncture today, and then look at how thing are likely to shake out over the next 15 years or so.
Now, to the average podcast listener, this would sound like a dry topic, but you as a DJ listener are of a special breed, and you’ll be rewarded for coming with me deep, deep into the weeds. If you come along, I promise that in twenty minutes you will have a new way of looking at mid-sized companies in Japan, and perhaps a new way of looking at Japanese startups as well.
You see medium-sized enterprises are the middle child in Japan’s corporate family. The large companies, the brands you know Toyota, Mitsubishi, Panasonic, Mistsu. For the most part are the remnants of the once incredibly-powerful keirestsu groups.  These companies are are the oldest child. Everyone knows who they are. They are in the news. They have influence. They work closely with the Japanese government, both the legislators and the bureaucracy, to ensure that the needs of Japan’s large corporations are reflected in national policy and international trade agreements. And of course, the vast majority of government grant money, primary contracts,

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