Orange Institute (IO) participants at Yokohama Red Bricks, a warehouse turned shopping and park district.
ABOUT ORANGE INSTITUTE Orange Institute was founded in 2009 as a separate subsidiary of Orange with the goal of stimulating ongoing, independent and unbiased investigation of networked models of all kinds, helping its crossindustry community of innovation leaders better prepare for the rapid transformations that digital innovations are spawning in our networked society. Orange Institute organizes intensive multi-day “immersion workshops” in key digital innovation clusters around the world, such as Silicon Valley. Participants in the sessions meet and connect with new people, ideas and products in places that are shaping and defining today’s and tomorrow’s digital landscape. The faculty
of Orange Institute is global, multidisciplinary, and today comprises over 150 world-changing men and women, drawn from industry, academia, nonprofits, and startup ecosystems of three continents. An Orange Institute session is about learning dynamically in a non-linear world. It involves pragmatic altruism—the realization that it is in our organizations’ best interests to share dynamically between members and faculty in an intimate and open discussion, free from commercial agendas. Topics and themes chosen by Orange Institute are selected on the basis of their relevance to global companies, their emergent nature as new trends, and their potential to generate new insights for our members.
RESILIENCE WAVE: COLLABORATIVE RECOVERY AND CITIZEN SCIENCE
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MOBILE MEDIA WAVE: MOBILE MEDIA, AND OFFLINE
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M&A WAVE: COMPANIES AS WEBS
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MOTOE-SAN ON 3/11 SURVIVORS TRYING TO COMMUNICATE WITH LOVED ONES AFTER THE 3/11 EARTHQUAKE
TALENT WAVE: DESIGNING SPACES FOR INNOVATION
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URBANISM WAVE: BIG DATA, SUPPLY CHAIN, AND THE CITY
STARTUP WAVE: STARTUP CREATIVE SAMURAI
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pg_28 acknowledgements_ 3 8
k e y t a k e aw a y s _ 3 2
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Orange Institute: g o i n g fo r w a r d _ 3 9
INTRODUCING IO 10 APRIL 15 - 19 2013
IO participants at Happo-en Garden, one of Tokyo’s oldest parks.
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APAN HAS BEEN A POWERFUL LENS ON THE FUTURE. I am happy to say, as we saw first-hand at Orange Institute #10, that it flourishes more than ever as a gateway to the unexpected that lies before us all. The changes between our first immersion in 2010 and the latest engagement in 2013 are notable, and I’ll mention a few. From Galapagos to Global: the narratives we heard this time were more externally-focused, no longer just looking inward but outward via organic and inorganic expansion onto a world stage. From the Made to the Computed: while manufactured specialities such as robotics are well-known métiers for this region, the extent to which Big Data has integrated everything from convenience stores to automobiles was striking – and important. Also, a strong trend was from the Academic to the Collective with professors themselves leading collaborative, open-source type initiatives such as Archi-Aid and Safecast. Our 10th anniversary session was special to us beyond the fact of the milestone itself – 10 sessions in 3 years – but because of the presence of many new community members. Even more encouraging to us is that those of you joining us for the first time were primarily there because of the recommendation of existing members or friends who have been following our progress. This is the most powerful validation possible, and we are grateful. Orange Institute is about learning together and meet great ideas, great people in great places. And it is above anything about sharing. On that note, I would like to conclude with a reference to The Power of “Gemba” mentioned to us by Takeshi Masuda of Yamato, the “Sampoyoshi-principle” by merchants of the feudal province of Ohmi: “Good in Three Directions” meaning that commerce should not only benefit the buyer and the seller but also the society as a whole That is the type of benefit Orange Institute is about: we all buy, we all sell and we all want to make sure the society as a whole will benefit from what we do. Sincerely,
Georges Nahon President, Orange Institute
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RESILIENCE WAVE
COLLABORATIVE RECOVERY AND CITIZEN SCIENCE
Tokyo University, a world renowned research university, and the site of the first sessions.
W
E START OUR JOURNEY BY REVISITING SHOCK. The lessons of the 3/11 tsunami and earthquake emerge as bright spots of innovative collaboration against the backdrop of destruction and human loss. With no real direction from a central authority, 3/11 demonstrates that corporate actors, NGO’s, and design professionals can converge on a peer-to-peer basis to build powerful assets that inform, coordinate, and comfort a population in crisis. This opening session is far from the narrative we in the West heard about loss of control and governmental paralysis -- it is an insider view of citizen science and skilled improvisation, of spontaneous collaborative structures that in some cases continue to this day.
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FROM DESTRUCTION RISES AD-HOC COLLABORATION
THEY STAND ON BRIDGES AND LIKE FISHERMEN THEY CAUGHT CONNECTIONS TO THE MOBILE NETWORK
MASASHIGE MOTOE ON 3/11 SURVIVORS TRYING TO COMMUNICATE WITH LOVED ONES AFTER THE 3/11 EARTHQUAKE & TSUNAMI
We start at the beginning of the end: 3/11/11, with the disastrous physics of a 9.0 eathquake and ensuing tsunami, the destruction/reconstruction of basic structures – houses, roads, infrastructure. Our guide is Professor Masashige Motoe from the Sendai School of Design, located in the largest city nearest to the quake. His narrative of resilience opens into a discussion of how architects led the post-disaster effort to rebuild housing, in a unique collaboration under the label Arch-Aid (see archiaid.org). The field work is inspiring and therapeutic; building models of the way the villages used to be in conversations with former residents-now-refugees becomes a process of both reimagining and healing. The next layer up is the communications networks, and NTT East’s network specialist (Takashi Ebihara) describes the carnage to the fixed line network – central offices thrown aside like toys, and the digital tsunami of panic-driven voice traffic, and the strategies for connecting those affected with those waiting to hear. The backbone network turned out to be critically compromised, passing as it did so close to Fukushima’s nuclear plants. The behavior of customers desperate to connect and an industry coming together made competition melt into cooperation. Then there is the data layer. Honda Internavi, the world’s most evolved telematics technology fabric, blending Internet, GPS, and visualization turns out to CONTINUED ON PAGE_9
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We start in a beautifully restored building on The Tokyo University Campus
Honda’s Kushida-san talks about sharing data
ONCE WE HAD ONE DEVICE, THAT DATA FLOW STARTED TO GROW…A YEAR LATER WE’RE AT 8 MILLION DATA POINTS AND RISING A MILLION A MONTH JOE MOROSS, PROJECT DIRECTOR AND THE SAFECAST OPEN SOURCE GEIGER COUNTER
Frédéric Josué (Havas Media) speaking with Delphine Manceau (ESCP) CONTINUED FROM PAGE_7
COLLABORATIVE SCIENCE be a case study in Big Data in the service of humanity. In every one of Kushida-san’s slides there is a server cloud in the middle, housing the data collected in realtime from vehicles showing the roads still open. Honda uploads this data to Yahoo, to Google, it is available to everyone – a true case of Data Philanthropy. Next we hear a vivid case study of citizen science rising up. A cluster of concerned scientists, DIY hardware hackers from Tokyo Hackerspace, and tech activists, with Japan’s own Joi Ito, former chief of Creative Commons, as an advisor, decide to hack their own Geiger counters. Using open hardware components including Arduino, they start reporting on radiation levels by driving Safecast-equipped cars everywhere. They put the data out on a website under a Creative Commons Zero license, thus ensuring maximum circulation for much-needed information that government agencies would not release to their own citizens.
70%
Olivier Fecherolle (Viadeo)
Sendai Design School Professor Motoe
DROP IN RADIATION LEVELS IN SOME AREAS OF THE DISASTER ZONE SINCE 3/11, AS MEASURED BY SAFECAST
28,000 NUMBER OF TELEPHONE POLES FELLED BY THE TSUNAMI DURING 3/11
NTT East’s Ebihara talks recovery
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MOBILE MEDIA WAVE
MOBILE MEDIA AND OFFLINE All mobiles out to take pictures from the Shibuya Cross Towers, in Tokyo
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NLINE-TO-OFFLINE (O2O) IS THE DIGITAL MANIFESTATION OF BIG DATA IN THE BUILT WORLD. Japan’s trend-setting mobile media landscape, which goes back a decade to the original app store of i-Mode in the late ‘90s, is in the forefront of this trend. The convergent trend of e-money, widely disbursed via mobile phones, alongside a well-established affection for loyalty programs, and place-based mobile media, makes for a national petri dish of innovation combining mobile and retail shopping.
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JAPANESE PEOPLE HAVE BEEN HAVING THE INTERNET IN FULL COLOR ON THEIR MOBILE FOR 15 YEARS. LOCATION BASED RECOMMENDATIONS FOR MORE THAN 10 YEARS. TOUCH PAYMENT (MOBILE WALLET) ON MOBILE FOR NEARLY 10 YEARS
Olivier Fecherolle (Viadeo), Romeo Machado (Orange Institute)
HARUKO MINAGAWA, TOUCHPOINT STRATEGIST FOR AD AGENCY HAKUHODO
MOBILE MEDIA USING OFFLINE TO GO ONLINE If currency is time encoded, then the afternoon is all about digital time in the real world. We start the investigation led by Kaz Miyazawa, the founder of an industry consortium called Edy, which is primarily controlled by e-commerce giant Rakuten. The deep expertise in mobile that exists in all corners of Japanese culture is embodied by Edy (Euro-DollarYen), which allows for e-wallets that can pay for purchases online and offline – this O2O model is unpacked in great detail in the afternoon session, and for Rakuten, it is a ecosystem approach, with a common standardized layer, and a competitive layer where different players and issuers can tap into the codebase of standardized readers, NFC-equipped devices, and online shopping baskets. The ability to tie payments from a phone to physical stores would seem to open up a Pandora’s
box of personal data issues, since location is involved, but Rakuten’s Miyazawa assures the audience this data is totally anonymized. Linking loyalty currency to the offline world via mobile is the goal of the next presenter, a startup by ex-McKinsey analyst Yo Shibata, who started Spotlight to launch a smartphone O2O app called Smapo. With a patented technology that uses highly precise ultrasonic beams in-store (typically just inside the store entrance) users are attracted to stores displaying the Smapo logo because they know they will get loyalty points just for entering the store with the app on (they needn’t take any other action, since the app turns on the phone’s microphone which picks up the ultrasonic wave and triggers registration). Shibata’s innovation is to create a loyalty points system that is redeemable at any of the 70+ 11
96% MOBILE USERS WHO BROWSE THE INTERNET ON PHONE WHILE OUTDOORS Digital strategist Moriyama from Hakuhodo.
Yo Shibata, founder of Spotlight interviewed by a Le Monde journalist
merchants that participate in the network. The KPIs are impressive: stores report 40% of Smapo check-ins are from new customers. When asked if Smapo’s database is being connected to the merchants’ own customer data warehouse for a powerful location-enriched trace, Shibata diplomatically asserts that this is something they will be led to by their merchants, they are not pursuing this as a business model. This all sounds like something an ad agency should be doing, and the final presentation of the day is from one of the most creative agencies in Japan, Hakuhodo. Two digital specialists describe Grabee, a haptic triggered app that, again taking a cue from store’s displaying the Grabee logo, allows users to enter the store, simply shake their phone, and receive content relating to that store. In a case study for a major convenience store chain, they described a massively viral campaign that delivered up-dated entertainment content (short movies) that was only available that day – again, loyalty points are involved, with prizes for keeping up to date with each day’s campaign installment. That advanced O2O applications should be flourishing in a society that is so far advanced in mobile usages is no surprise. That it has engendered a new layer of virtual currency that is increasingly fungible across a broad set of merchants and use cases is intriguing. 12
Rakuten Edy’s Miyazawa discusses $24 billion e-money market
$24 BN JAPAN IS FAMOUS FOR ITS EXCELLENT RETAIL SERVICE QUALITY. HOWEVER PERFORMANCE OF JAPANESE RETAIL INDUSTRY IS VERY LOW IF YOU LOOK AT THE RETURN ON EQUITY
VALUE OF E-MONEY IN CIRCULATION IN JAPAN TODAY, GROWING AT 10% PER ANNUM
Menno Van Doorn (Sogeti) with the Spotlight team
YO SHIBATA, FOUNDER OF SPOTLIGHT, EXPLAINING HOW HIS O2O APP SMAPO LIFTS RETAIL SALES PRODUCTIVITY
350,000 NUMBER OF RETAILERS AND E-TAILERS WHO ACCEPT EDY E-MONEY AS PAYMENT.
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COMPANIES AS WEBS
M&A WAVE
J
APANESE BUSINESS CULTURE IS CHANGING, FROM AN INTROSPECTIVE, domestic-only Galapagos perspective, to an increasingly acquisitive and outward facing posture. Characteristics of this new wave are: strong corporate cultures, clearly defined visions, willingness to invest in the long-term, and a network approach to their portfolio that creates massive synergistic effects between the properties. To a student of organization design, Japan Inc. looks like the future: companies that are actually constellations of companies, a web of inter-related subsidiaries, sharing infrastructure, customers, and collectively extending Japan Ic to a global stage. So this is a wave of many layers: mergers and acquisitions are the surface, but right underneath, a vision of how companies expand in the future, not in a top-down way, but in a modality that allows literally thousands of subsidiaries to flourish.
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Marunouchi Building, just opposite of Tokyo Station, and one of Marunouchi District’s landmark buildings.
SONY IS BACK
SMARTPHONE IS CORE FOR SONY. WE WANT TO GIVE BACK ALL THE SONY ASSET TO THE CUSTOMER. OUR ASPIRATION IS TO BE NUMBER 3 (REAL NUMBER 3) IN 2013 TO COMPETE WITH APPLE AND SAMSUNG KEISUKE KAKOI – SONY – VP STRATEGIC PARTNERSHIP DEVELOPMENT
Sony has done a lot of work in transforming its many businesses into a single coherent vision of how its products map onto the user-centric activities of: Watch, Create, Listen, Play -- this continuum is branded as Signature Convergence and has at its core the aspiration of a single user experience. The centrality of the smartphone to this UX is via touch: use cases include being able to touch the Xperia device to a speaker and have the music on the phone start playing or touch the Xperia to a TV remote and have the pictures from the phone appear on the screen. This one-touch experience, which we learn is in fact based on the existing DNLA protocol, is already live on 60 different models/products. Sony talks about Discovery as its response to the app stores and media players that have emerged in the ecosystem: they call it the Sony Entertainment Network, and it is a sort of over-the-top initiative for its own properties -- customers will have access to music, TV and movies on any device, in either online streaming or offline downloads. Kakoi admits that there is a Big Data opportunity inherent in being able to observe user preferences in content and device use but he stops short of asserting they will take a Netflix-like approach to recommendations based on this data, we sense the door is open to such analytics downstream.
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INTEL DRIVING CONNECTED CARS TO NEW HEIGHTS
Intel’s Nobe explains Japan’s telematics prowess.
Charles Robelin (Amadeus) and Francois Hisquin (Octo)
From branded consumer product we turn to industrial OEM technology evolution as Tsuguo Nobe from Intel’s Automotive group takes us through the history and extremely evolved current state of telematics in Japan. Here the famous Galapagos Effect is pronounced: in contrast to other advanced economies, where telematics and in-car navigation penetration ranges in the 20% of vehicles on the road, it is a stunning 70% in Japan. After a discourse on related technology development curves, including cellphones, Nobesan holds out the promise that Japan can recapture ICT leadership by leveraging its navigational expertise into other areas. By moving beyond the Galapagos model of entire stacks built in proprietary pieces, and moving to more standardized approaches, he suggests that Connected Car systems (5 million lines of code) could be as relevant a platform as smartphones (3.5 million lines of code) for technology leadership.
SOFTBANK WORKS TO BECOME A COMPANY NEEDED BY PEOPLE AROUND THE WORLD. OUR GOAL IS TO BE VALUABLE TO THE PEOPLE, SOCIETY AND INDUSTRIES… STRATEGY DOESN’T HELP A LOT, VISION IS EVERYTHING AKIRA TADA, EXECUTIVE MANAGER, SOFTBANK
Delphine Desgurse (La Poste) speaking with Delphine Manceau (ESCP)
RAKUTEN BUILDING AND BUYING A GLOBAL E-COMMERCE FOOTPRINT Rakuten’s $10 Billion market cap may seem modest, but its ambitions are scaled far beyond that number. Its portfolio companies cover: Travel, Banking, Securities. Real Estate, Credit Cards, Mobile, and yes a baseball team. They differentiate from Amazon (the obvious comparison) by painting Amazon as ‘product-centric’ and themselves as ‘shopcentric’ -- meaning they feature not SKU’s but merchants. In this sense it seems they are more like eBay but he doesn’t make that connection. The strategy is compelling and clear: leverage a common user identity/ID and integrated loyalty points account across a wheel of activities, so that each spoke in the wheel delivers customer flow to the next business segment. There are more than 40 lines of business in this wheel. It is #1 online player in Japan in 6 major online categories, and its expansion strategy is guided by these sectors: Devices, Logistics, Vertical segments, Social Shopping. An example of this focus is the acquisition of French company Alpha Direct Services, a logistics innovator that it will leverage across many of its geographic markets in the years to come. Rakuten is acquisitive: it has done 15 deals in the past five years. It wants to be in 30 countries, and has a defined strategy of buying into a geography with a core e-commerce acquisition (such as Priceminister in Europe, or Shop.com in the US), strengthening that core business focus, then attaching additional lines of business in that country while making its Regional HQ, then adding additional adjacent geographies to that HQ. Rakuten foresees its regional HQs will be Luxembourg, Singapore, and somewhere in the US, although this was clearly subject to change.
Rakuten’s Hirato-san: “So people can buy anything from anywhere, anytime”
15/5 99.8%
NUMBER OF ACQUISITIONS RAKUTEN HAS MADE IN PAST FIVE YEARS
PERCENTAGE OF TODAY’S COMPANIES THAT WILL FAIL OVER THE NEXT 30 YEARS, ACCORDING TO SOFTBANK’S LONGTERM VISION
SOFTBANK ‘NO GAMBLE, NO FUTURE’ = MORE ACQUISITIONS The final presentation of the morning is from another founder-led acquisition machine, Softbank. Senior strategy executive Akira Tada presents as a modest and hard-working corporate executive, but it is soon clear he is completely aligned with the aggressive and entrepreneurial spirit of Softbank founder Masayoshi Son. Softbank presents a corporate model that would panic any CEO worried about silos: the company portfolio has 900 companies. The aspiration is even more breathtaking: corporate strategy is for 5,000 portfolio companies in the next 30 years. With such a diverse portfolio, Softbank considers itself an “Internet company”, as opposed to a mobile operator, although most of its $8 billion in consolidated revenues comes from mobile.
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BETWEEN SESSIONS
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HAPPO-EN Happo-en is a former Samurai residence, built in 1600, with bonsai specimens stretching back 500 years
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TALENT WAVE
DESIGNING FOR INNOVATION
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ALK OF GALAPAGOS EFFECTS, and the insular nature of Japanese society and organizational culture is familiar to us by now, but in the Talents session, we are exposed to a series of views that could have come straight from Silicon Valley. Our host is Kokuyo, a design firm focused on workspace innovation, and a tour of their offices is a delight to eye and mind. There is a palpable hunger for innovation among the new wave of knowledge workers in Japan, and whether it is the no-fixed desk philosophy of Kokuyo’s own workspace, or the open innovation discipline at ad agency Hakuhodo’s University, or the i.school initiative at the world-famous Tokyo University, the evidence is there: prototyping, collaborative workspaces, a heavy emphasis on user-centered design, perhaps best embodied by Hakuhodo’s motto of sei-katsu-sha , “the living person” instead of the western concept of “consumer.”
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Kokuyo’s showroom sits in the high-tech district of Minato, next to corporate HQ for Sony
YUKI KANAMORI - ON DESIGNING WORKSPACES OF THE FUTURE
INNOVATION USUALLY DOESN’T OCCUR IN MEETING ROOMS
Kokuyo’s multi-level meeting space
THE WORKSPACE AS A BEEHIVE FOR CREATIVES A most seductive irony: 113-year old Kokuyo is reinventing the workspace of the future. Our visit to their Tokyo atelier is a tour of what a workplace designed for diverse communities, co-working, and a new form of open space looks like. The materials are sumptuous, Japanese native woods, contrasting with epoxy and whiteboards everywhere. There are no offices, no permanent desks — a wall of lockers holds laptops, files that are checked in and out and brought to a kaleidoscope of different configurations of desks. They have studied the startup offices of Silicon Valley, but there are no Ping-Pong tables or foosball here: “Workspaces are for working, not for playing” notes Yuki Kanamori, our host. The tour of this beehive of creatives is visually exciting, but more engaging is the invisible: everybody is engaged in conversation, and the collective energy level even late in the afternoon is palpable — quite a contrast from the typical tech workplace with everybody riveted to their computers, headphones cutting them off from their neighbor. This is an array of productivity that hums with productivity and enthusiasm.
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THE DISCUSSION HAS CHANGED. OUR CLIENTS DON’T TALK ABOUT CONSUMERS, THEY TALK ABOUT PEOPLE” KEI WATANABE - HUMAN CAPITAL DEVELOPMENT DEPARTMENT, EXECUTIVE MANAGER, HAKUHODO
HAKUHODO U FOCUSING ON THE WHOLE PERSON At this location we receive a presentation from Kei Watanabe from Hakuhodo, the ad agency, on their University. Designed for employees who want to “meet X” they are joined in teams of 4 to 5 people to work on projects that are of a one-year duration, on themes that they define, such as eco projects, ‘the next peoples’’ movement, working mothers, next generation of agriculture. Key principles that make it work are: flextime, ‘no gain no loss’ a corporate culture committed to the endeavor, setting milestones and publicizing the work.
52%
OF JAPANESE ADULTS AGE 50+ WOULD “PREFER TO SPEND MONEY ON MYSELF” RATHER THAN “LEAVE ESTATE FOR MY CHILDREN” - FAR HIGHER THAN ANY OTHER ASIAN MARKET
91% OF OFFICES IN JAPAN FEATURE LONG DESKS WITH CHAIRS.
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I.SCHOOL RETHINKING THE INNOVATION MODEL
Richard Bosmans (center, Nikon/Essilor Research)
The next presenter is Professor Tamura from the University of Tokyo’s new i.school, which launched recently to cover a major gap in the prestigious science/technical institution’s 15 graduate schools — a lack of a business school or a design school. i.school is built via partnerships with prestigious universities elsewhere (such as Stanford’s d.school) on the one hand, and corporate sponsorships on the other. The basic framework for the curriculum is Understanding: ethnography, Creasing: prototyping, and Realization: modeling and business strategy. Tamura-san unpacks a theory of innovation that is different from the prevailing model of Idea->New Behavior, which he calls Prospective innovation, to a different model. This new model, which he calls Retrospective Innovation, proceeds first from an observation of new behavior and after applying the Understanding, proceeds to new invention of ideas.
Menno Van Doorn (Sogeti, left) and Philippe Dewost (Caisse des Depots)
IT’S DIFFICULT TO GET INSIGHTS THAT PROVIDE US WITH GREAT IDEAS FOR INNOVATION TODAY BECAUSE BENEFITS ARE DIFFERENT NOW, THEY ARE MORE PRIVATE PROFESSOR HIROSHI TAMURA – TOKYO UNIVERSITY 23
URBANISM WAVE
BIG DATA AND THE CITY The Yokohama Red Brick Warehouse where this session took place, a historic building now used as a shopping mall, banquet hall and for events. It was originally used as a customs building.
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MART CITIES, LOGISTICS, SUPPLY CHAINS – these are all IT paradigms at heart, but they are also processes that touch millions of people who enjoy the benefits, protections and consume products and services shaped by the data within. Japan’s lack of natural resources, urban density and sophisticated consumer marketing skills drive optimization of everything: from water and public spaces, to how convenience store shelves are stocked. Continuing on the theme of O2O (online-to-offline), it is clear in this session that Big Data is driving the built world of cities, stores, and transport.
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TOSHIRO MURAMATSU, CHIEF SERVICE ARCHITECTH VEHICLE INFO TECH DIVISION, NISSAN, DISCUSSING INSPIRATION FOR AUTONOMOUS DRIVING TECHNOLOGY
TO REDUCE CONGESTIONS WE INSPIRED OURSELVES FROM SCHOOLS OF FISH: WHY CAN SMALL FISH SWIM WITHOUT CRASHING INTO EACH OTHER?
MARKETING THE SUSTAINABLE CITY The City of Yokohama is our host — Toru Hashimoto had invited us at the 2010 Orange Institute 2 session to visit and now we accept the invitation. He speaks of the largest city in Japan as a model for Smart Cities everywhere, especially in the arena of sustainability: hype-development after the war, now remediation to become a model for water management, waste recovery, green buildings (the Japanese equivalent of LEEDS standard is CASBEE). The waterfront is a jewel of restored warehouses, new shops, and public gardens. From city management we turn to store management, and the use of Big Data to drive the inventory of 7&I Holdings 15,000 convenience stores in Japan. The essence of “close and convenient” means the average citizen of Tokyo is no more than 9 minutes away from a 7 Eleven store: that means microeconomies of scale, a single commissary stages fresh food for multiple stores blanketing a neighborhood. With each store receiving 1,000 customers daily selecting from 4,800 items, 7&I is using Big Data analytics to look at 15 Terabytes of data on sell-through of current inventory, form a ‘hypothesis’ about what sells best, design promotions to optimize sales, and verify the results daily.
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$ 800
BILLION
ANNUAL GLOBAL COST OF TRAFFIC ACCIDENTS (NISSAN) Hoshimoto-san welcomes us to his city, Yokohoma
WE HAVE TO THINK ABOUT COOPERATION WITH E-COMMERCE. AYAKA KONDO, 7&I HOLDINGS, DISCUSSING O2O IN CONTEXT OF CONVENIENCE STORES
5,000
NUMBER OF NEW INHABITANTS IN YOKOHAMA IN 2012, WHICH TAKES CONCERNS ABOUT FUTURE CONGESTION OFF THE URBAN PLANNING AGENDA
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Yamato’s Masuda-san explains power of ‘Gemba’
LOGISTICS, DATA AND THE VALUE OF ‘GEMBA’
IT’S EASIER FOR US TO GO TO EMERGING COUNTRIES WHERE YOU KNOW THERE’S TONS OF MONEY COMING IN MAYUKO TATEWAKI, EUROPE DEPARTMENT MANAGER, NEC, DISCUSSING BEST MARKETS FOR SMART CITIES TECHNOLOGY
Home-grown Big Data in Japan means NEC, and while Mayuko Tatewaki is ostensibly with us to talk about Big Data and Smart Cities, it is clear that it is also supporting customers such as 7&I with advanced analytics. The connection between Big Data and Smart City is clarified by Tatewaki-san, and the repertoire of predictive analytic tools as well as a range of sensors that includes face recognition extends to a wild array of use cases from supply chain management to restaurant guides and even matching pets with owners. “Not so many companies are ready to expose how they use Big Data,” notes Mayuko-san, so we are all the more grateful for the insight. The ability of Japan Inc. to build, deploy, and manage extraordinary logistical chains is embodied in Yamato Express, who’s Ta-Q-Bin home delivery service is legendary. Founded in 1976, the company ranks just under Amazon in terms of customer satisfaction among global service businesses. The corporate principles is headed by “we will have a positive impact on society” and this is exemplified by positioning its 50,000 delivery personnel as “sales drivers”, delivering same-day packages – including goods ordered online – from a network of 71 hubs across the small country. This societal mission means empowering artisans, local fishermen and farmers to extend market reach. Corporate values are huge at Yamato, and in addition to the “power of Gemba” – the place where value is created as problems become visible – leverages a centuries-old concept of Sampo-Yoshi: which literally translates into “good in three directions” a powerful example of what we in the West think of as “triple-bottom line.” When we leave, the entire team who received us stands in the parking lot, waving goodbye.
3 LAWS OF SMART CITY 1. MUST SERVE PEOPLE 2. BE AVAILABLE TO EVERYBODY 3. PROTECT DATAS & LIFE OF PEOPLE
SOURCE: MAYUKO TATEWAKI, NEC
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STARTUP CREATIVE SAMURAI STARTUP WAVE 3D-printed figure derived from 3D scanner by PARTY for client OMOTE
I
F 3D IS THE NEW BLACK, THEN THE HYPER-CREATIVES OF TOKYO ARE ALL DRESSED UP. We are hosted for this penultimate session on Startup Creativity in Loftwork, a 10-story column of startups, including our faculty members from Day One, Safecast. The ground floor of Loftwork is taken up by Fab Café, which is just what it sounds like: a normal café with a laser-cutter printer for geeks to hack on, you got one of those in your neighborhood, right? Read the session notes carefully: the spectrum of creativity in this session runs from startups and incubators that look a lot like some in New York or San Francisco, to award-winning agencies that have morphed advertising into prototyping, to industrial giants reinventing how we move through space. We see humans shrunk to 3D miniatures, and the future of personal transportation from Honda. It is a profound affirmation of the original hypothesis – in Japan we will see the future happening now, and it is amazing.
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A PARTY FOR CREATIVES Our host at Loftwork is Chiyaki Hayashi, who founded Loftwork in 2000 after stints with MIT Media Lab and Creative Commons, where she maintains ongoing liaison roles. Her mission is to facilitate a marketplace connecting creative with corporate clients – think of its as outsourcing 2.0, with extensions to SMB’s from more traditional industries throughout Japan. Hayashi-san is enthusiastic about the future of 3D printing, and the Fab Café is her brainchild, occupying the ground floor of the building and thriving on a sustainable three-tier model of (1) traditional café, (2) rental of laser-cutting machinery within the café, and (3) event production. Fab Café is an export project – satellite cafes are springing up in 20 countries. Qanta Shimizu is a revelation of things to come. A new model is being born at his ‘prototyping agency’ PARTY co-founded with four other creatives. Imagine: an agency with nothing but creative, all digital natives, and a Creative Director who is a CTO. Does the model work? After winning 20 Lions (9 Gold) at the Cannes Festival of Creativity the answer, from clients like Toyota to Uniqlo to Nike to Microsoft, is clearly yes. He starts with the proposition that in the age of social media, brands and their agencies “are in trouble.” With digital advertising mired in social media, brands are no longer being heard: “human beings don’t choose things that are noisy.”
Chiyaki Hayashi is digital ambassador for FabLab, Creative Commons, and a CEO as well.
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5X
LBS
WEIGHT OF HONDA’S U3-X PERSONAL MOBILITY DEVICE
RETURNS FROM INITIAL WAVE OF $2.5 M IN SAMURAI INCUBATOR COMPANIES IN THREE YEARS
Midori Takaso of Telepathy with device
IF EVERY HUMAN BEHAVIOR OR ACTION CAN BE “SEAMLESS” BY PERSONAL MOBILITY IT CAN CHANGE THE SENSE OF PLACE. THE AREA WOULD BE SMALL, DISTANCE WOULD BE SHORT, YOU COULD HAVE A FRUITFUL MEETING EVERYWHERE MAKOTO HASEGAWA HONDA R&D
16,000
NUMBER OF CREATIVES AGGREGATED ON THE LOFTWORKS WEBSITE
Shohei Ando, Samurai Mono
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WE DECIDED TO SWITCH FROM BEING JUST AN ADVERTISING COMPANY TO BECOMING A PROTOTYPING AGENCY THAT COULD HELP BRAND INNOVATE IN THEIR COMMUNICATION… FIRST WE FIND SOMETHING BORING, SOMETHING THAT CAN BE BETTER IN SOCIETY. THEN WE CREATE IDEAS TO IMPROVE THEM WITH TECHNOLOGIES QANTA SHIMIZU CHIEF TECHNOLOGY OFFICER PARTY (PROTOTYPING AGENCY / ADVERTISING COMPANY)
Jean-Gerard Blanc (Paris Chamber of Commerce)
3D printer samples from PARTY CONTINUED FROM PAGE 29
Their solution is to look for “goodies that do not yet exist in society” and code them up. That’s right, PARTY has erased the divide between Creative Director and Technical Director, they are personified in Qanta, “coding man I am.” And yes, 3D printing has come to the agency world: Shimizu-san shows a stunning set of artifacts from a 3D ‘Photo Booth’ for client OMOTE that entails a hand-held 3D scanner that can encode a human figure and print it out in miniature. He spends several slides on the massive amount of earned media from the project, asserting a new model of influence from offshore media back into the home country. That the Galapagos Syndrome is evaporating into a more porous model is clear from the next speaker, VC/Incubator maven Shohei Ando, from Samurai Incubate. With two locations and 60 companies, the Samurai initiative is perhaps not a clone, but strongly reminiscent of 500Startups in Silicon Valley, or any one of a number of incubators in Paris. Speaking of Startup Nation, we are invited to a sneak preview of Japan’s answer to Google Glasses --- without the glass. Telepathy is a sleek bar that wraps around the head, with a heads-up projector that paints video just in front of the eye. And then the wheels, or should we say wheel, starts to
spin – Honda R&D rolls out – literally – its U3-X, the first of two personal mobility devices that we will encounter – and mount – to conclude the session. The other device, the UniCub, is a transformational product: “we should try to move to next stage as auto manufacturer…we think this is not a vehicle but a communications tool.” That Honda is focused on the user and how she relates to the world is clear: they emphasize early on that from the graceful sitting position the Uni-Cub affords, the user can shake hands, roll-up to a conference table, in large part because it is handsfree. This device has unlikely parents – it is the child of a motorcycle and a robot, indeed Hasegawa-san started his career at Honda in the Motorcycle division. A word about him: it is encouraging to see an R&D giant like Honda represented by a product champion as cool as the product itself. Makoto Hasegawa is energetic, charming, accessible, and not at all arrogant. That they are proud of their brainchild is clear, and yet they are thoughtful about the commercialization of it: there is discussion about tests in museums for long tours, and it is clear that the use cases for this new form of transportation are still out there waiting to be discovered.
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KEY TAKEAWAYS
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Orange Institute
E-Commerce Card
E-Book
omer Flow Cust
Life Insurance
Membership Database
omer Flow Cust
omer Flow Cust
Portal + Content
Banking
Travel omer Flow Cust
Securities
Telecom E-Money
Rakuten’s globalization strategy involves a mandala of synergistic subsidiaries
(MANY) COMPANIES + CUSTOMER KNOWLEDGE = WEB OF GROWTH How many of us will be in the workforce in 2040? Do we care on a personal level what that world looks like? As stewards of our companies, we have an obligation to our shareholders to care. If so consider the following pronouncement by Softbank’s Akira Tada: “99.98% of today’s companies will be bankrupted, liquidated, or acquired.” What does a company do to survive this slaughter? The answer, based on the testimony of Softbank, Rakuten, and 7&I Holdings, is not a company, but companies. It seems the most high-growth business engines in Japan Inc. are not monoliths, but many-headed holding companies, synergistically fit together to form globally-facing webs with common supply chains, customer data warehouses, and best practices. To do this seems to involve unceasing mergers & acquisition activity, as we saw with Rakuten’s aggressive buying of European and US-based e-tailers. It also involves
a new approach (for the West) to corporate culture that is societal, customer-based, and adaptive. That the long-term advantage belongs not in the advanced societies but in emerging markets – many of which are in the East and South – seems a distinct possibility. Cultural biases towards collective and servant-oriented perspectives reinforce this scenario: Softbank’s Tada uses words like “harmonious” “buddy-like ties” and aspires to be a “company needed by people around the world.”
OUR TAKEAWAY Corporate DNA focused on adapting to customer behaviors via a web of mutually supportive companies seems a powerful driver of long-term growth and short-term mergers and acquisitions. Societal- and globally-scaled aspirations put riskadverse corporate monoliths at a competitive disadvantage. 33
PERSONAL MOBILITY + DATA = MORE COMMUNICATIONS One observation we heard in conversation was: “the Japanese love their cars.” ..and their motorcycles, and now their personal EV’s…. Safety and Serenity are the objectives for Honda in its Internavi onboard telematics platform. To deliver this the array of sensors is multiplying – as Intel’s Nobe points out, telematics platforms now contain more code than advanced smartphones. It is personal data in the service of others: Internavi informs other users when you pull out of a parking space, so that someone else may grab it. More profoundly, all environmental information about where you travel is factored into a national road conditions database serving all users. This is the intersection of Personal Mobility and Big Data. With personal devices extending the dashboard of the car into your pocket, the range of control and awareness becomes infinite: you can charge your electric vehicle from your smartphone, and get an email when it is recharged. Sensors are evolving to the point where they will talk to each other and drive the car, as Nissan’s Toshiru Muramatsu discussed in his talk about autonomous cars that behave like a school of fish on the road.
OUR TAKEAWAY Advanced telematics in Japan are generating massive amounts of data that can be used for society’s well-being, and applying Big Data to the vehicle will help save lives and the planet. 34
BIG DATA + SMART CITY One of the almost casual comments we heard in a presentation about Big Data and Smart Cities was: “we have all the data, who’s going to pay? Who feeds the investment?….” We saw enough use cases involving automobile telematics (see previous Takeaway), supply-chain management (7/11), smart cities (NEC), and mobile communications networks (Softbank) to realize that Big Data is heavily used by the private sector to optimize operations and take the business to new heights of performance. To many of us, Big Data is a positive, liberating force within society – opening up the massive world of unstructured data to democratic analysis by an expanded range of decision-makers, unchained from expensive, complex legacy IT. This perception was altered in Japan: here the Big Data specialists are not 20-something geeks doing car-sharing algorithms, but very large companies, working on industrial processes, optimizing those processes and algorithmically augmenting them for efficiency. Face recognition as part of Smart Cities (pictured) is an example – in some cases it is a public sector benefit, good for catching bad guys and helping society – but in the hands of private sector players, what use cases are most important?
= NON-OBVIOUS OUTCOMES
OUR TAKEAWAY Separated by an ocean from Silicon Valley’s enthusiastic geeks playing with the webscale new possibilities of Big Data and predictive analytics, we see more clearly in Japan how private sector uses are increasing efficiency and thus the corporate bottom line, giving advantage to the seller, not the customer.
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FROM TOP TO BOTTOM
AYAKA KONDO
System Support CVS Systems Planning, Planning Group, 7&i Holdings
YO SHIBATA
Founder, Chief Strategy Officer of Spotlight Inc.
QANTA SHIMIZU
Chiief Technology Officer, PARTY
YUKI KANAMORI
Worksight Lab member
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SPEAKERS
JOE MOROSS
HIROSHI TAMURA
Volunteer, Safecast
President, i.School
TAKESHI MASUDA
KAZUMASA (KAZ) MIYAZAWA
General Manager, Project of Business Development, Yamato Holdings Company Limited
MAKOT0 HASEGAWA
Project Leader, Honda U3X
KEI WATANABE Executive Manager, Human Resources Development, Hakuhodo Inc.
Founder, Chief Strategy Officer of Rakuten Edy, Inc.
AKIRA TADA
General Manager, Softbank
MASASHIGE MOTOE
Associate Professor, Sendai School of Design
MAYUKO TATEWAKI
Europe Department Manager, NEC
SHINTARO HIRATO
General Manager Global Business Division, Rakuten
TSUGUO NOBE Chief Advanced Service Architect and Director, Intel Corporation
TOSHIRU MURAMATSU Chief Service Architect Vehicle Info Tech Division, Nissan
SATOSHI MORIYAMA
SHOHEI ANDO
Digital Strategist, Digital Technology Department, Hakuhodo
Incubate Associate, Samurai Mono
KAZUMITSU KUSHIDA
TAKASHI EBIHARA
Corporate Planning, Division, Environment + Safety Planning Office. Chief Engineer, Honda Internavi
Senior Director, Corp Strategy, NTT East
TORU HASHIMOTO
VP Strategic Partnership Development, Sony Mobile Communications
CHIYAKI HAYASHI
HARUKO MINAGAWA
KEISUKE KAKOI Manager on International Cooperations, Yokahama
Chief Executive Officer, Loftwork
Touchpoint Evangelist, Digital Technology Department, Hakuhodo
TOMOKO TANAKA
Head of the Green Team and Communication, Orange Labs Tokyo
ROMEO MACHADO
PARTICIPANTS
MARC ALBA
Managing Partner + Vice President of Innovation and Transformation, Everis Group.
MARK PLAKIAS
Vice President, Knowledge Transfer, Business Development Orange Silicon Valley Manager, FRANCIS PERRIN Orange Institute Head of Business Intelligence activities, JEAN-PIERRE Orange Lab Tokyo DICOSTANZO Regional Director, RICHARD Paris, Orange
FRANCOIS HISQUIN
CEO of OCTO Technology
BOSMANS
President, Nikon and Essilor International Research Center Co., Ltd
DELPHINE DESGURSE
Director of Research Institute for the Analysis of New Technology, La Poste
JEAN-GERARD BLANC Deputy CEO, Paris Chamber of Commerce and Industry
MENNO VAN DOORN Director of Research Institute for the Analysis of New Technology, VINT Sogeti
JEAN-MICHEL SERRE
CEO, Orange Labs Tokyo
DELPHINE MANCEAU
Dean of Executive Education & Corporate Relations, ESCP Europe
CECILE DUCOURTIEUX
CLAIRE FULDA
Director Brand Innovation, BNP Paribas
JEAN-LUC NEYRAUT Deputy CEO, Paris Chamber of Commerce and Industry
ANNE-CATHERINE MORENO Business Developer. Orange Institute
BEATRICE MANDINE Senior Executive Vice President, Communication and Brand, Orange
Journalist, Le Monde
PIERRE AUSSURE
WAYNE MACGREGOR
FREDRIC JOSUE
CEO, Orange Silicon Valley
JEAN-BAPTISE SOUFFRON
Senior Manager for Applied Research, Amadeus
Vice President, MIH Internet
OLIVIER FECHEROLLE Chief Strategy and Development Officer, Viadeo
Founder, Ivy Search
Executive Advisor to CEO, Havas Media Secretary-General, Conseil National du Numérique
GEORGES NAHON CHARLES ROBELIN
PHILIPPE DEWOST
Deputy Director, “Investments for the future Program” Caisse des Depots
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ACKNOWLEDGMENTS
W
HEN TAKING ABOUT A SESSION with the number ‘10’ it is an opportunity to take a longer view: we are grateful for the fact that in Japan we were joined not only by new faces with fresh perspectives, but by multiple member companies who were with us for our first session in Silicon Valley back in 2009 – either in person or via referrals. So thanks to Henri Verdier, Michiel Boreel, for your ongoing participation in a rich set of conversations that have spanned the continued narrative arc that is all of us working collaboratively on the Orange Institute platform. As before, we were fortunate to have the curation and contacts of Francis Perrin, working with his colleague Tomoko Tanaka, who put together an amazing sequence of talks, venues, and experiences. That these were of the finest quality is thanks to the CEO and Director of the Tokyo Lab, Jean-Michel Serre, thank you for your team’s work, Jean-Michel. The pictures in this report tell the story better than any words
@orangeinstitute listing #Rakuten and its strategic alliance with edy emoney, aiming at spreading through the world competing with Paypal
about the fascinating venues and vistas that provided inspiration for our discussions. Here we want to express our appreciation to Yuki Kanamori of workspace design firm Kokuyo for his hosting of our Talent session, the form of Kokuyo’s offices fit the innovation function in exciting ways. In Yokohama, the welcome and vision of the city’s ambassador, Toro Hashimoto was the best way to experience Japan’s largest city. Also our thanks to Masude Takeshi and Yoshimoto Oikawa of Yamato Holdings for the tour and vision of Gemba that drives Yamato’s extraordinary customer focus, who can forget their waiving goodbye to us as we left Yokohama. Additionally, our thanks to Chiyaki Hayashi, the dynamic entrepreneur behind Loftworks and FabCafe for hosting our final, most exciting session. As always, our thanks to the gifted team of interns, and Orange Institute staff, Romeo Machado, and our newest colleague Anne-Catherine Moreno, and in San Francisco, Dr. Natalie Quizon. Finally, we deeply appreciate the support from Orange, especially in the person of Delphine Ernotte-Cunci, Beatrice Mandine, and Jean-Pierre Dicostanzo. Most of all, our appreciation to the members of the Orange Institute 10 community, who are visible throughout this book.
@DELPHDESGURSE Touchpoint evangelist [waouh], c’est la classe ;-) cc @orangeinstitute
Tnx to all! @DELPHDESGURSE@pdewost à bientôt pour de nouvelles digital disruptives expérience @ orangeinstitutethanks to great insights
RT @DELPHDESGURSE@orangeinstitute great future question marks raising , 3D scanning as the future camera ?
Merci @pdewost: @orangeinstitute@cecile_le @ BeaMandine@map650 @OlivierFech @fhisquin@ mennovandoorn thank you for this week in Tokyo
@orangeinstitute Day 3 NEC smart cities solution comes w face recognition and Nissan autonomous cars based on schools of fish #pcloud boom!
@pdewost à bientôt pour de nouvelles digital disruptives expérience a Paris !@ orangeinstitute thanks to great insights
What do you Fab? Great@ orangeinstitute session with@ Chiyaki and @qanta in… (w/ Frederic at fabcafe)
#FF @orangeinstitute @cecile_le@ DELPHDESGURSE@BeaMandine @map650@OlivierFech @ fhisquin@mennovandoorn thank you for this week in Tokyo!
@orangeinstitute jap #technoadvance is still here combined with acurate sense of #design for the futur personal #mobility trend by#Honda
iO VIA TWITTER Congrats to @orangeinstitute for this amazing Session & Huge Thanks to the team !!
@orangeinstitute l’industrie japonaise face a la courbe d’adoption, le Japon pays d’early adopters et un gouffre à franchir vers le monde the logistic mystery for all#post incubent how can they earn money? @DirkPalder
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@orangeinstitute je decouvre une nouvelle fonction touchpoint evangelist @icambreleng il est temps de repenser les cartes de visites
@orangeinstitute discovering a new job for #advertising agencies Chief technology officer & creative Director at the amazing PARTY in Tokyo
Keisuke Kakoi at @orangeinstitute : “Sony is Back!” Make•Believe ?#orangeinstitute day 2 in Tokyo
See you soon ! “@OlivierFech: Congrats to @orangeinstitute for this amazing Session & Huge Thanks to the team !!”
@orangeinstitute #rakuten strategy : “going global with a unique ID & reward points program, leading to a global virtual money” @ndebock
Orange Institute: going forward
Orange Institute will continue to conduct at least two immersions per calendar year in 2013 and beyond..
Orange Institute 11 | SF/LA
Orange Institute 12 | Berlin
Orange Institute 13 | Tel Aviv
Fall 2013 is planned as a multi-city exploration of the current art and algorithmic future of narrative and story-telling. The technology of Northern California and the entertainment/content powerhouse of Southern California in an integrated and disruptive perspective.
Spring 2014 will bring the Orange Institute community to the reigning creative digital capital of western Europe, where startup entrepreneurs and edesign geeks are building out the next wave of Europe’s digital economy.
Fall 2014 will mark a return to the startup nation of Israel, where we will immerse ourselves in the continuing recombinant ferment of this unique location for both native startups; and offshore digital giants such as Google, Intel, and IBM who maintain outposts in this region to capture the Next Big Thing.
Orange Institute: where new ideas await Orange Institute community members have been fortunate to share deep insights into the future with each other and their companies for the past three years in locations across the world. Our unique combination of experts providing detailed descriptions of their work, with a conversational, interaction model in an
intimate setting, has delivered proven results for our members, as shown by a high retention and referral rate. With the backing of one of the world’s largest and innovative communications providers, Orange Institute will continue its far-ranging and probing investigations of the digital economy. For those who are ready to go
to next level of innovation thinking and doing, we invite your participation. To learn more and receive a personal consultation, please contact Romeo Machado at +33 1 44 44 04 17, or email us at romeo.machado@orange.com.
Orange Institute 1
Orange Institute 2
Orange Institute 3
The Innovation Imperative
Societal Remix
Creativity Has a New Address
Silicon Valley November 2009
Tokyo June 2010
Beijing September 2010
Orange Institute 4
New Age to New Edge Silicon Valley November 2010
Orange Institute 5
Orange Institute 6
Sensor Networks as the New Growth Opportunity
Where Enchantment Meets Inspiration
Madrid March 2011
Paris June 2011
Orange Institute 7
Orange Institute 8
Orange Institute 9
Innovation as Destiny
Strategic Imperatives in a Post-IT World
Feedback Economy & Realtime Society
Tel Aviv October 2011
Silicon Valley March 2012
Boston & New York October 2012
Designed by: Marielle Atanacio, Sean Murray, Natalie Yemenidjian
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For more information, please contact Romeo Machado at +33 1 44 44 04 17, or email us at romeo.machado@orange.com. Institut Orange, SAS au capital de 30 000₏ - 6, place d’Alleray 75015 Paris - 514 822 568 RCS Paris