Innovation and Change: Challenges for Industry in the UK and Japan

‘Innovation and Change: Challenges for Industry in the UK and Japan’, the fourth in this year’s seminar series, ‘Economic Futures: Wealth and Well-Being in the UK and Japan’, brought together complementary knowledge on innovation and the role of government.

 

The Chair, The Rt Hon Sir Richard Needham, an independent director of Dyson Ltd. and a founder member of the UK-Japan 21st Century Group, referred to how Sir Geoffrey Owen’s academic and practical background complements Dr Sata’s scientific expertise.

 

Dr Yutaka Sata, Deputy Managing Director of the Cambridge Research Laboratory, Toshiba Research Europe Ltd, began by saying that in anticipating the types of questions he might be asked after his talk, he surmised that the audience would want to know more about two key issues – firstly, whether in-house research and development is still important for innovation and if so how can it be carried out efficiently and secondly, why Toshiba has a research group in Cambridge.

 

In talking about innovation, Sata referred to Peter Drucker, an authority on entrepreneurship and innovation who defines innovation as finding new and better ways (of doing something). Sata’s definition of innovation builds on this, but integral to his meaning is the concept of creating value for society.

 

Drucker identified seven sources of innovation: the unexpected, incongruities, process need, industry and market structures, demographics, changes in perception, and new knowledge. The five triggers of innovative opportunities referred to by Sata are similar to Drucker’s and result from: finding a gap for an undiscovered product which is the result of combining existing technology (the HDD DVD video recorder, for example, which is a result of combining existing technologies); utilising change made by other’s technological advance; preparing for change in the non-business sector; satisfying clear needs with technological development; and creating new technology resulting in new values.

 

Sata concluded by saying that in-house research and development are still important. The Cambridge Research Laboratory’s move into new premises providing improved laboratory and office facilities for expansion, confirm Toshiba’s commitment to supporting cutting-edge research which, Sata said, is currently being undertaken into quantum physics, speech technology and computer vision. Though research and development are often carried out more efficiently out of the ‘in-house’ confines, some advances can and are only made thanks to the in-house system which provides a great chance for ideas to cross-fertilise.

 

Sir Geoffrey Owen, Senior Fellow, Institute of Management at the London School of Economics, looked at the issues of globalisation, innovation and the role of government and began by pondering why the UK doesn’t have companies such as Toshiba and whether this mattered.

 

In reviewing the role of the British government towards companies in the past 40 to 50 years, Owen related that the general cross party consensus of the 1960s and 1970s was that the UK should compete with high tech industry – in strategic sectors – in the USA and Japan, resulting in considerable government intervention at the time. Companies such as International Computers (ICL) were brought together at government behest to compete with major world manufacturers such as IBM; and British Leyland, when on the brink of collapse, was rescued by government intervention. These policies, aimed at encouraging world leading companies, largely failed. Ironically, the most successful high tech industry of the 1960s, 1970s and beyond was the pharmaceutical sector in which the government hadn’t intervened.

 

Failure was one element contributing to disenchantment with government intervention. Thatcher began encouraging private sector development of technology and innovation in distancing herself from championing national industries other than defence and aerospace. She was largely indifferent to the issue of ownership, simply encouraging companies to go private. Foreign takeovers were not unwelcome and the 1990s saw the sale of Rover (the renamed British Leyland) to BMW and of ICL to Fujitsu.

 

Under the Labour governments a degree of continuity has ensued and there has been no reversal of Thatcherite policies. During this period a number of major companies have, in fact, passed into foreign ownership. So far unaffected by takeovers have been a significant number of UK companies in specialised areas such as software design.

 

In summarising, the UK has adjusted to global competition quite satisfactorily said Owen, proving perhaps that it has been preferable to allow market forces to determine ownership. He went on to say, however, that this doesn’t mean government should have no role or interest in innovation.

 

The Chair thanked the speakers for their interesting presentations and wondered whether British entrepreneurialism continued on the right track and how Japan would cope with the rise of entrepreneurial flair in China for instance.

 

The wide-ranging questions following the presentations conveyed the audience’s interest in the topics raised including wondering why Japan is not more dominant in the mobile phone or computer sectors given the amount of research done by Japanese companies; whether the shift away from manufacturing in the UK is sustainable and whether the move to nuclear energy could be done without government help. There was also interest in the new roles of the Ministry of Economy, Trade and Industry (METI; formerly the Ministry of International Trade and Industry, MITI) and the Department for Business, Enterprise & Regulatory Reform (BERR; formerly the Department of Trade & Industry, DTI); in Britain’s relaxed towards inward investment; in Toshiba’s ability to deal with the declining population and in mergers; and, more specifically, the integration of non-Japanese employees by Japanese multinational companies.

 

In giving a vote of thanks, Professor David Cope, Director of the Parliamentary Office of Science and Technology, reflected that the two speakers had successfully complemented each other and thanked the Chair for his valuable contributions as well. He drew the seminar to a close by commending the audience on their complex and varied questions.

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