RIETI Policy Symposium

Innovation Process and Performance: Findings and lessons from inventors surveys in Japan, the U.S., and Europe


  • Time and Date:
    09:45 - 18:00, Friday January 11, 2008
  • Venue:
    Otemachi Sankei Plaza
    1-7-2 Otemachi, Chiyoda-ku, Tokyo (Tokyo Sankei Bldg. 3F)
  • Language:
    Japanese/English (with simultaneous interpretation)

Summary of Proceedings

Part 2: Panel Discussion "Future R&D strategy and policy"

Session Outline

Building on the earlier keynote speeches and presentations, this session consisted of presentations by experts from leading Japanese companies on the R&D issues they face, presentations by experts from relevant government agencies on innovation policy initiatives, and presentations from academics on the significance and limitations of inventor surveys, followed by a wide-ranging exchange of views.

The following conclusions emerged from the session as a whole.
(1) The inventor surveys under discussion are highly significant as the first study to focus on inventors and inventions themselves. Key survey results from Japan and the U.S. are largely in accord with perceptions in corporate R&D units.
(2) With a view to realizing a nation built on science and technology, it is crucial to effectively promote open innovation through measures such as effective operation of global R&D networks.
(3) Various issues must be addressed in order to effectively promote innovation, including the reform of overall social systems and the reform of the patent system for cutting-edge fields.

The session began with reports on R&D issues faced by industry experts.

Outline: Hiroshi Akimoto Presentation

(1) R&D in the life sciences entails a great deal of time, money and uncertainty.

  • 15 years required for commercialization
  • Annual R&D investment of up to ¥100 billion. R&D costs represent around 15% of sales, a similar level to Microsoft and Intel.
  • Only 10% of compounds holding potential for new drugs go on to be commercialized.
  • Invention depends on the inspiration of individual researchers, but organizational strengths are the crucial factor in commercialization.
  • Drugs developed in Japan have a significant presence on the world market.

(2) Universities need to take on a greater role in discovery of seeds for new drugs, and new technology startup firms need to play an intermediary role for pharmaceutical companies' product development efforts, to further strengthen the link between basic research and commercialization of its results.

Outline: Masahiro Ezaki Presentation

(1) Energy and safety are the biggest R&D issues faced, and basic research is becoming increasingly important since it is vital to have breakthrough by discovering new scientific principles and new substances.
(2) Initiatives are being launched to strengthen basic research both within and outside the company, with particular emphasis on industry-academia collaboration such as public invitation for joint research project partners.

Outline: Nobuyuki Osakabe Presentation

(1) The market environment is fiercely competitive and corporate strength depends on R&D

  • R&D expenditure represents 4% of annual sales for his company
  • A single innovation involves many activities, from basic research to development, production processes, sales and service, etc.

(2) Issues

  • Technology is becoming increasingly complex, and it is necessary to combine many technologies within a single product
  • Markets are becoming more diversified, complex, and uncertain

(3) Efforts

  • Each year we review the technology roadmap and align R&D direction with business
  • System of rotating researchers between labs and business departments to create more efficient links between basic and applied research

Industry presentations were followed by a panel discussion, as outlined below.

Basic research by Japanese companies

Professor Sadao Nagaoka:
Despite the downsizing of many central research labs in the U.S., the survey showed that more exploratory research is conducted in the U.S. What are your thoughts on this point?

Dr. Osakabe:
I feel the survey results are correct. We have many Ph.D.s in our U.S. laboratory and lots of researchers with a strong "taste for science." At Hitachi, Ltd. in Japan, 85% of the research is commissioned by business divisions. It is usual for basic research to be chiefly funded internally, and 90% of our basic research lab funds come from within the company.

Flow of human resources

Mr. Shuichi Wada:
The flow of human resources between organizations is starting to increase in Japan. Do corporations feel that the traditional system was better or that U.S.-style flow of personnel is preferable?

Dr. Akimoto:
Regardless of corporate inclinations, the flow of human resources is increasing. I think it is good that people move from one organization to another, seeking a balance between fulfilling work and attractive rewards.

Inventor motivation

Professor Nagaoka:
We heard that R&D risks are high in the pharmaceutical industry, yet if inventors are paid according to the resulting profits, we may have the problem that researchers will take on large risks. In the U.S., parties are free to enter into contracts regarding remuneration and other working conditions, but in Japan the Patent Law imposes restrictions. Is there a gap between the two countries in this respect?

Dr. Akimoto:
Since our U.S. laboratory pays in accordance with U.S. labor market conditions, remuneration systems differ from those in Japan. However, researchers do not invent solely for monetary reward, so we also utilize other incentives such as offering a good research environment and respecting researchers' wishes.

Dr. Osakabe:
I agree with the view that inventors do not invent for monetary reward. We offer other inducements including prestige within the company.

Professor Tetsuo Wada then made a presentation raising questions about the significance and limitations of inventor surveys.

Outline: Tetsuo Wada Presentation

(1) Significance

  • The ability to make a three-way comparison of Japan, the U.S., and Europe has enormous value.
  • Aspects of the innovation process that were previously invisible to outsiders have become visible. This will enable links with various studies previously undertaken at the start and end of the R&D process.

(2) Limitations

  • Limiting the domain to inventors narrowed the scope of the survey.
  • There are many activities that do not result in patents - such as know-how building and kaizen activities - and Japanese companies have the strengths in these areas. It is possible that focusing solely on the results of these inventor surveys could lead to underestimating the true strengths of Japanese companies.

Professor Wada's presentation prompted the following discussion.

Research using the inventors' survey

Mr. Ezaki:
We file patent applications for everything that can be patented. Since areas of kaizen that are not patented such as production cost reductions or quality improvements do not have great impact on innovation, there should be no major problem in the coverage of the Japanese innovation survey.

Professor Dietmar Harhoff:
There cannot be many inventions that inventors keep secret for 10 or 20 years rather than patenting. Even in the chemicals field, which has the most secrets, research shows a tendency for inventors to shift from keeping something secret to patenting it as time passes. Regarding the significance of the inventor surveys, previous studies have placed undue emphasis on team activities including marketing and sales. The inventor surveys focus on inventors themselves, a systematic research approach that has not been adopted up to now.

Utilization of patents

Professor Nagaoka:
The survey results show that firms, especially large Japanese companies, are holding quite a lot of unused patents. Have there been attempts to make more use of these, and what results have emerged?

Dr. Osakabe:
To effectively utilize unused patents, we sell patents and stop keeping patents on those that are found to not be useful. As a result, there have been cases where startups and other outside firms have bought up our patents and commercialized them.

The final presentations dealt with innovation policy initiatives.

Outline: Shuichi Wada Presentation

(1) Efforts to create an environment conducive to innovation

  • The Third Science and Technology Basic Plan (2006-2010) prioritizes higher levels of HR development and social return
  • ¥1.4 trillion is spent annually on basic research into unconstrained ideas
  • At the same time, ¥1.7 trillion of targeted investment is made annually in policy mission-oriented R&D. Life sciences and energy represent a large proportion of this amount, and other major fields include information and telecommunications, environmental sciences, and nanotechnology/materials.

(2) Reform of social systems to create a nation of innovation

  • Make the shift to an innovative society
  • Innovation 25 Strategy Council established to address short-, medium-, and long-term issues
  • Policy initiatives including system reforms to accelerate social returns from basic research in fields such as pharmaceuticals

Outline: Ryoji Doi Presentation

(1) R&D expenditure by private Japanese firms is among the highest in the world. However, there is concern that this expenditure is not sufficiently linked through to value.

  • In Japan almost all R&D expenditure is borne by private firms. The proportion of government-funded R&D in the U.S. is higher than in any other major country.

(2) METI produces and publicizes a technology roadmap as a policy initiative.

  • Covering every advanced technology field, the roadmap is drawn up by invited experts from companies and research institutions. It is distributed free of charge.
  • The roadmap is useful in determining government budgets and direction for companies' basic research.

The policy presentations prompted the following discussion.

Roadmap drawn up by METI

Professor Hall:
How is the roadmap used and what kind of effects has it had?

Mr. Doi:
The roadmap is useful for identifying future technology trends and determining government research budgets. The process of drawing up the roadmap also created communication tools for industry, government and academia, enabling them to build consensus. The roadmap enables companies to recognize the future shape of industry, their own firm's position or new technology fields not shown on the map.

Questions and Answers

Q: Concerning the idea of a nation built on science and technology, at present children are drifting away from science and technology studies in Japan. The dearth of human resources trained in these fields will be a serious problem for Japan. I would like to hear the industry representatives' views on how we can promote more in-depth exchange with neighboring countries that have plentiful human resources and how Japan can cooperate with other Asian nations.

A (Dr. Akimoto): We have a research facility in Singapore. It is certainly best to break away from the idea of doing things only in Japan. National-level efforts are also necessary to build a platform for international research, as exemplified by the Asian Gateway Initiative.

(Mr. Ezaki): In China we are building a development center in partnership with a university, and we have a framework for investment in R&D. However, we do not have a Toyota R&D center there. Since the turnover of personnel is high in China, we need to consider the issue of people and know-how flowing out to the competitors.

(Dr. Osakabe): We have research centers in Japan, the U.S., China and Singapore. Our Chinese centers in Beijing and Shanghai conduct joint research with local universities, and effective collaboration with R&D departments in Japan will be an issue for the future. Certainly human resources are plentiful there and they have high potential. Regarding the building of a platform for international research collaboration in Japan, based on our experience in inviting overseas researchers to our research facilities I believe language differences present a major barrier. We first need to put in place various national systems for accepting overseas researchers.

Q: Over the past 10 years in the European and U.S. pharmaceutical industries, new technology-based firms specializing in development have come to play an intermediary role in industry-academia collaborations. Do you think Japan is headed in the same direction? Also, in U.S. research this trend has not always led to results in the form of an increase in new drugs. Therefore, do you think this would be a desirable trend for Japan?

A (Dr. Akimoto): The same trend is evident in Japan. Since major pharmaceutical companies have to reduce their risks and focus on key business, the intermediary role played by new technology-based specializing in development is an important one. It is also difficult to judge the results by the number of new drugs developed to date, since standards determined by national drugs agencies have a large effect on such results. Finally, my personal view is that in Japan patent rights cannot be obtained for many inventions in the biotechnology field and I would like to see revisions on the legal and policy fronts to encourage frontier research. I would also like to see Japanese universities taking positive action to have patent rights in the U.S. if Japan does not recognize such rights. Private firms do this as a matter of course, and I would like universities to take a similarly international approach.