Japanese innovators search for their lost mojo
Japan’s finance ministry has decided to tackle one of the big unanswered questions in innovation and finance. Can $ 100 billion buy back a nation’s mojo?
In an effort to rekindle the flame of Japan, the government revealed last month that it would create the world’s largest university endowment fund in March 2022. The initiative has a lot to do with Kazuto Ataka, a refreshing neuroscientist, artificial intelligence evangelist and chief strategist at Yahoo Japan.
At the moment, Japan is not creating enough innovators ready for a challenge, Ataka tells me. Researchers are also not pushing to turn their work into something tangible. Everything, he adds, depends on their emergence.
This time last year Ataka released a bestseller, Shin nihon (New Japan). It sold out quickly and managed to convince a large number of readers that the country had a fundamental problem (indeed, many interrelated problems) with innovation, disruption, and the conversion of basic research into usable products. And the window to solve the problem quickly closes.
Over the years, crisply-told tales of existential threats have at times captivated large Japanese audiences. This one seems to have resonated even further and has been noticed by government policy makers.
Japan now has only one company, Toyota, in the world’s top 50 in terms of market value. Once an innovative technological leader, the country is now far from being an instinctive and intrepid challenger of borders. Three decades ago, 32 of the top 50 companies were Japanese. This slide coincides with the steady fall of Japanese universities across global university rankings and a worldwide drop in citations of Japanese research articles. from fourth to 11th place since 2000.
The missing mojo is not irremediable, argues Ataka. But its absence is painfully noticeable at a time when China, South Korea, Taiwan and other Asian countries appear to be leaning hard towards a “fourth industrial revolution”Driven by AI, molecular machines, big data and other technologies.
Over the past two decades, Japan in the world share of patent grants went from over 30% to 10%. Researchers found last year that the total planned R&D spending of $ 160 billion for just five U.S. companies (Amazon, Facebook, Apple, Microsoft and Alphabet) was larger than that of all Japanese companies.
“Today’s Japan cannot even ride the waves of technological and industrial innovation, let alone create them,” begins a chapter with Ataka.
Armed with warnings that Japan’s position as a nation was threatened by its inability to invest in research, Ataka pitched the idea of a state-funded endowment to the government. The ministers were exceptionally decisive. In early February, Prime Minister Yoshihide Suga’s administration approved a plan to create a giant endowment fund that will fuel research with its annual earnings.
The fund will be started with 4.5 billion yuan ($ 42 billion) in public funding and, if all goes according to plan, will grow later to 10 million yuan through university fundraising and debt. additional government.
Its goal – while simply increasing the availability of research funding – is to foster a less restrictive approach to scientific risk-taking. As a symbol of an intention to remain competitive, and a refusal to accept the decline indicated by the world rankings, the movement is powerful.
Celebrations can be premature, however. Early indications from officials, the government plans to run the fund with roughly the same risk profile and portfolio allocations as the government pension investment fund Y179tn – a successful monster. annual return of about 3.4%. At these levels, the university endowment would generate approximately $ 3 billion in new research funding per year.
This is certainly not insignificant, but maybe not enough, given that Harvard’s $ 40 billion fund generates more than that on its own. The government must convince a nation of young researchers that they are now living in an entirely new area of funding.
In order for the Y10tn fund to win back the Japanese mojo, it needs to be paired with wider acceptance, says Ataka. An innovative society needs a permanent pool of people who are not only different from others, but who are actively cherished for their desire to disrupt everything.
At the end of World War II, the country’s innovators had an easier time as the binding hierarchies were broken. “Japan today is not broken that way, but everyone understands that it cannot be left as it is,” he said.