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East meets West
orienting it before the recession hit, and how quickly he has moved to solidify its position,’ Kossoff says. ‘Because he comes from Boeing, he understands the design cycle and every one of the obstacles to success but he also understands a competitive marketplace that is absolutely dependent upon innovation.’
they started out mostly focusing on the US and specifically Silicon Valley. But for a number of years now they have been looking out into other countries and identifying funding opportunities for start-ups. So the money will always be able to find the talent.’
Tech notice Large Japanese combined companies called keiretsu were successful in the 20th century as their breadth provided great stability, minimising the negative impact of risk taking. Because they were often organised around a large bank, ample funding for new projects was always available. Now, Kossoff argues, this model is largely irrelevant because capital can move freely between organisations. ‘In a networked world, the benefits of keiretsu are built in,’ she says. ‘If you take a look at venture funds, for example,
Kossoff believes that technology companies have an especially savvy approach to investment. ‘The question is the extent to which you’re willing to look out and reach for opportunities,’ she says. ‘If you study the models in the technology sector, there is Google, Microsoft and Cisco all buying. These companies have got phenomenal war chests of money sitting there but they’ve also got this orientation towards acquisition. ‘What you don’t hear as much about are the internal venture capital funds that
these corporations have; they will take a piece of a company but it doesn’t mean that they’re going to own the whole thing.’ These internal funds are used to promote innovation in the sector and to foster close relationships with potential future partners. In this ecosystem, the big company is the top carnivore but it benefits from all the life thriving below it. The problem that has beset some Western businesses is an unwillingness to integrate established practices with radical ideas from outside. ‘What everyone at the executive level needs to do is take a markedly different look at how technology has changed the face of innovation,’ Kossoff says. ‘It is a brain switch that is not yet altogether understood. It’s still seen as a threat, not for the opportunities and possibilities that can be created.’
Eastern promise
‘What everyone at the executive level needs to do is take a markedly different look at how technology has changed the face of innovation. It is a brain switch that is not yet altogether understood.’ The Toyota problem in Kossoff’s words ‘For the Japanese, admitting to any kind of mistake happens as rarely as possible. Historically, if someone in a high position lost face, they would commit hara kiri [ritual suicide] as penance and a sign of honour. So, typical of the Japanese, Toyota’s management were slow identifying that the problem was as bad as it was: they’re much better at identifying problems before they happen. ‘The company’s ‘Toyota Way’ requires a level of management scrutiny and attention that it has now learned will need more specificity than it had previously believed. If it has learned anything, it should be that the company’s culture of unmatched quality is one that it will have to manage much more closely than before. I expect that there will be a number of suppliers who will be double- and triple-checking their procedures to make sure they make the grade.
‘I think that part of this problem stems from the inconsistencies between the Western and Japanese culture when it comes to everything from how to identify problems to how to manage an organisation. The one thing the Japanese can’t export is the culture as it operates within Japan. Given Toyota’s size and complexity now, it is going to have to find new ways to manage its external resources. ‘Eventually the trust issue will reverse itself, but whereas over the past decade or so there haven’t been any questions at all about the quality of their cars, now they will be open to greater competition. They’re not the last word in quality any longer. If the rest of the world’s auto manufacturers are paying attention, they’re going to take advantage of this big time.’
Kossoff believes Asian companies have traditionally been more open to new ideas. ‘Philosophically, the East looks at things from a more synthesised holistic perspective whereas we tend to disaggregate and we study it in small pieces,’ she explains. ‘They study the small pieces but always in the context of a larger whole. That difference is at the base of why they can look at everything from a world view and we tend to create blind spots.’ Just as Japanese manufacturers have successfully analysed market trends in the 21st century, they imported ideas to rebuild their shattered economy after the Second World War. It was the work of Americans such as W Edwards Deming on quality control and tolerances, and Japanese manufacturers’ willingness to apply it (the kaizen method), that helped develop the country’s reputation for making incremental improvements and reliable products. ‘The Japanese in the 50s and 60s didn’t steal from the West,’ Kossoff, a former associate of Deming, explains, ‘they invested in the thought leaders of that time, people they knew would be able to turn around their industries. That was why they had Deming and [Joseph M] Juran come over. There was a need for quantitative and management thinking to understand
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