Japanese Business Operations in an Uncertain World

Anshuman Khare, Nobutaka Odake, Hiroki Ishikura, Anshuman Khare, Nobutaka Odake, Hiroki Ishikura

• Publisher: Routledge
• Year: 2021
• ISBN:
  9781000511161
• Edition: 1
• Topic: Business
• Subtopic: International Business
• Index: Business

This book looks at Japanese companies in manufacturing and services sectors and how they are trying to emerge from the prolonged uncertainty of the pandemic. The chapters are written by those dealing with Japanese business under the shadow of the pandemic and being influenced by the continuous and rapid adoption of digital technologies in business and our daily lives.

This book brings together the experiences of big and small corporations while looking at how digital transformation and the pandemic combined have led to a transformation in the product, production processes and services. It highlights the role played by robots, 3-D printing and renewable energy in manufacturing while the impact can be seen in the changes coming to future offices, how we work and interact and how we relax through tourism and travel on the service side. The services sector is as much impacted by digital transformation and the pandemic as any other field in business.

Aimed at academics, researchers and practitioners, Japanese Business Operations in an Uncertain World will provide valuable insights into how Japanese organizations are adapting to the dual impact of the pandemic and advancements in digital technologies.

Section 1 Manufacturing

Nobutaka Odake and Anshuman Khare

DOI: 10.4324/9781003216049-1

Manufacturing is a key sector in Japan and plays an important role in its economy. In this section we present six chapters that focus on some interesting developments in the sector due to advancements in digital technology or the pandemic or both. It would not be a stretch to say that the pandemic has provided a much-needed impetus to digitize. However, creating an industrial system which promotes digitalization and aims for a sustainable society will take time.

This section begins with an analysis of the robot System Integrator (SIer) industry which proposes, designs, and builds robot systems, the metal 3D printer industry, and the renewable energy industry, focusing on the IT-enabled intermediary firms in Chapter 1.

Hitachi is featured in the next chapter. Hitachi’s hybrid management style and portfolio reform approach in anticipation of the shift to digital solutions is discussed in Chapter 2. The process of business reform already underway in some Japanese companies may provide a template for a more rigorous response to challenges such as similar crises in the future.

The focus of Chapter 3 is on the various movements toward the diffusion of renewable energy and analyzes the integrator function of the process from the perspective of ecosystem and integration. The engineering and integrator functions are required, and the formation of renewable energy ecosystems is a key point in aiming for a decentralized society.

In Chapter 4, four strategic issues are extracted from the case study of Hyundai Motor Group to respond to the green shift in the automotive industry: electrification, utilization of existing resources, balance between in-house production and outsourcing, and co-creation for the diffusion of hydrogen fuel cell vehicles. It is hoped that the Japanese automobile industry can draw some lessons from the Korean experience.

Japan’s solar and offshore wind power generation is discussed in Chapter 5 using the concept of “environmental upgrading.” The author believes that Japan has lagged in terms of adapting to the new business environment and contributing to sustainability.

Finally, Chapter 6 presents a case study of a service bureau (contract manufacturer) for metal 3D printers, including the construction of a library for modeling data and metal powder data, the upgrading of services by utilizing existing businesses, and collaboration with players in different fields.

1 Diffusion of innovation and the role of intermediaries as system integrators

Nobutaka Odake

DOI: 10.4324/9781003216049-2

1 Introduction

In the era of COVID-19, digital transformation (DX) will be the catalyst for the next generation of innovation, and traditional manufacturing structures are about to change dramatically. In addition, the development of online meetings and telecommuting is changing the way companies are organized, and the interactions within the boundaries of companies, or ecosystems, are influencing demand creation and company competitiveness.

In Japan, IoT, AI, CPS, etc. have been attracting attention in response to global trends, and COVID-19 has accelerated this trend, and the government has established a Digital Agency in charge of promoting IT and DX of national and local governments. Digitalization and cloud computing in factories and manufacturing sites will improve the resilience of manufacturing. In other words, digitalization is a major enabler for the diffusion of innovation, and startups are often the engines of this diffusion. Diffusion here refers to the process by which an innovation is communicated through certain channels over time among the members of a social system. Communication is a process in which participants create and share information with one another in order to reach a mutual understanding (Rogers, 1983).

High-tech products are often systems supported by a platform. In this context, a system is either a coherent whole made up of interacting elements, a combination of interacting elements to achieve a predefined objective, or a set of intermediary products and end products utilized to achieve a given objective (EIA STANDARD, 1999). This includes, but is not limited to, hardware, software, firmware, people, information, technology, facilities, services, and other supporting elements. A SIer integrates multiple technologies and multiple components into one system and provides it to the user. According to Prencipe (2003), a SIer company that utilizes external resources to commercialize its products constitutes a supplier network based on a strategic perspective.

This chapter focuses on three industrial cases. The first is the Robot SIer, whose presence in industrial robotics has increased in recent years. SIers are companies that have developed from engineering education firms, have their origins in equipment systems such as welding, transport, and assembly, or originate from trading companies such as machinery and information equipment. Since a production line is a custom-made product, SIers are responsible for solving users’ problems while forming an ecosystem during the design, procurement of materials, and manufacturing.

The second case is the metal 3D printing industry or metal Additive Manufacturing (AM). The two main technologies in metal AM are laser beam powder bed fusion (PBF-LB) and binder jetting (BJT). The metal 3D printing process consists of equipment, materials, and design/software, and it is important to combine them with 3D measurements, heat treatment, and related processes. The role of the service bureau as a SIer is important due to its management of these components.

The third case is the renewable energy industry. With the demise of Feed-in Tariff (FIT), local energy systems (Distributed Energy Resource [DER]) are shifting to self-consumption models. DER is becoming increasingly popular as an approach that contributes to the promotion of energy conservation, the expansion of renewable energy, and the strengthening of energy systems. Remote monitoring and control of energy storage systems is making it possible to charge and discharge batteries efficiently with AI. SIers that develop solar sharing, blockchain, platform businesses, etc. are becoming increasingly important.

This chapter looks at SIers, which are intermediary organizations that create markets, from the perspective of digitalization, and explores the possibility of innovation diffusion.

2 Related work

Working with customers to co-create production solutions is important to acquire new business, and the specialization of capital and labor allows open innovation along with bringing economies of scope and scale (Chesbrough, 2011). It is important to know how to adapt a company’s capability to the external environment and whether the company has the management capacity, known as Dynamic Capability (DC), to effectively coordinate internal and external resources. The premise is based on the “open and close strategy” pointed out by Ogawa (2014). Teece (2007) argues that value-added investments made within knowledge-based firms are often co-specialized. Co-specialization refers to the combination of assets that do not generate value on their own but generate value in combination with other assets.

One approach that Chesbrough (2011) incorporates into open service innovation is the concept of Service Dominant Logic (SDL), as introduced by Vargo and Lusch (2004). SDL is a comprehensive approach utilized in the field of behavioral economics that does not distinguish between “goods” (tangible products) and “services” (intangible products). SDL is a concept that considers that both goods and services should be treated as services instead of dividing each into separate categories.

Gawer and Cusumano (2002) state that platforms are industry building blocks which have attracted investment from other firms and provide innovation with add-on products or services, having analyzed the competitive strategies of major enterprises. Gawer (2014) identifies a technological platform into three stages: internal platform, supply chain platform, and industry platform.

Iansiti and Levin (2004) typify the strategies of platform companies in business ecosystems into three patterns: keystone, dominator, and niche players, and then argue that firms in a business ecosystem interact with each other in complex ways and that the health of individual firms depends on the performance of the ecosystem as a whole. The keystone strategy is a strategy that enhances the sustainable performance of the keystone firm itself, by working as a network hub, through improving the soundness of the entire ecosystem. Furthermore, Na (2012) points out that interfirm competitiveness is shifting from competition among individual firms to competition among groups of firms, with strong interdependence formed around specific platforms.

Granovetter (1973) pointed out in “The Strength of Weak Ties” that weak ties are critically important in business because they are the starting point for innovation. The first step for companies that want to create new knowledge is to “explore” outside information and combine it with their own in a new way (Iriyama, 2019). March (1991) noted that this exploration includes things captured by terms such as search, variation, risk-taking, experimentation, play, flexibility, discovery, and innovation. A type of ambidexterity, maintaining an appropriate balance between exploration and exploitation, is a primary factor in a system’s survival and prosperity.

3 Development of industrial robots and robot system integrators

3.1 Formation of the robot SIers industry

In the wake of COVID-19, the use of collaborative robots is expected to increase as a way of avoiding the “three Cs” (Closed spaces, Crowded places, and Close Contact). In order to cope with the prolonged nature of COVID-19, industries such as the electronics industry, food, pharmaceuticals, cosmetics, and automotive parts manufacturers are introducing collaborative robots as a way to reduce costs and save manpower. Industrial robots are used in various applications such as material handling, welding, assembly, machining, and electronic component mounting in clean rooms. A robot is a machine, which consists of a robot body, software, conveyor, controller, a safety fence, sensors, vision, grippers, feeders, jigs, etc. In 2018, the Japan Factory Automation & Robot System Integrators Association (hereinafter JARSIA) was established as an industry group, aiming to change the prevailing perception of robot SIers as only being subcontractors attached to robot manufacturers.

Even in the robot SIer industry, where the influence of COVID-19 has been large, automation and remote operation technologies have become more important in order to keep business productive without gathering people in crowded offices and factories. The use of digital twins will multiply and an increased number of tasks will be done remotely. Teaching tasks that used to be done on-site will now be done remotely. The imminent development of the robot SIer is accelerating based on the accumulation of knowled...