Open Innovation - Encouraging Business Development

Breaking the Stagnation of Japanese Companies! What is Mr. Chumans's Strategy for Growth in the AI Era?

Topic: "The Recommendation for Business Development in the Style of Open Innovation"
Lecturer: Mr. Kazuhiko Chuman, CBDO Executive Vice President, Mizuho Financial Group
Date and Time: Monday, October 6, 2025, from 10:30 to 12:00
Venue: Tokyo Chamber of Commerce and Industry, Rooms A3・4・5

Growth is hampered by a shortage of new leading companies. Success strategies in the AI era should integrate open innovation with M&A (mergers and acquisitions) and business domain development, combining top-down and bottom-up implementations with data integration, capital raising, and initiating collaborations.

1. Overview

The Tokyo Chamber of Commerce and Industry (TCCI) hosts the "Tousho Innovation School," an educational program that provides strategic thinking methods for starting new businesses. Aimed at small and medium-sized enterprise (SME) owners and entrepreneurs, it intends to acquire practical management skills but currently lacks detailed official overviews or curricula information.

Related educational institutions include the Faculty of Entrepreneurship, Musashino University (EMC) and the Eirene School of Management (EMS) although these are different educational institution than the Tousho Innovation School.

In this lecture, Mr. Chuman discussed the challenges Japanese companies face and the necessary thinking, organization, and strategy for future growth based on his experience in driving business development through Open Innovation at KDDI and Mizuho Group.

The stagnation of Japan is not because "it did not grow" but because "no new star companies were born." On October 6th, 2025, at the Tousho Innovation School, Mr. Chuman presented how to find the winning formula in the AI era through Open Innovation, M&A, and business domain development. He proposed integrating top-down strategies with bottom-up execution, data collaboration, capital procurement, and implementing cooperation starting from "encounters." This article briefly summarizes these points from a management perspective.

2. Changes in the World and Japan's Challenges

First, Mr. Chuman began to speak about Japan's startups and their economic achievements over the past decades.

Over the last 30 years, Japan's economy has been referred to as the "Lost 30 Years," but it is more accurately described as the "Thirty Years Without New Star Companies."
Of the top 10 companies by market capitalization worldwide, many are new ventures established within 30 to 40 years (such as Apple, Google, Amazon, and NVIDIA).
In contrast, Japan's leading companies are still dominated by major firms founded after World War II, with little turnover, which is the essence of growth stagnation.
Even "Mercari," for example, ranks at 271st in global market capitalization. A structural problem of Japan producing no "Google-level" companies has been pointed out.

Although the Japanese economy may appear to be growing, it remains unable to ride the wave of new technology and continues to rely on past successes. The lack of new star companies can be attributed to a culture that does not embrace challenges. To overcome this, it is necessary to calmly reflect on the past and consider how to advance transformation.

3. Common Strategies for Growing Companies

So, what commonalities do companies that have grown from startups to global giants share? Interestingly,

The characteristic of growing companies is not "self-reliance" but rather M&A and collaboration for domain expansion. Google and Amazon acquire dozens to hundreds of companies annually, absorbing technology, talent, and market share.
In Japan, KDDI is a typical example. Despite the stagnation of growth in its telecommunications business, it has achieved continuous profit increases through M&A strategies like the acquisition of Lawson, over 20 years.
According to Mr. Chuman, "The strong win; therefore, you fight 'Openly.'"— Open innovation as a strategy for the weak.

4. New Trends in AI Startups

It might still be remembered by some, but those days are now long gone when an idea alone, with minimal resources and a small team, could survive through incremental improvements.

The traditional lean startup model is unsuited for the AI era. Calculating resources and data are indispensable, and individual effort has its limits.
It has evolved into what is called "Hollywood Startups." Unlike traditional startups that independently develop business ventures, "Hollywood Startups" gather various resources to advance business through a studio model used in filmmaking. They attract funding and partners at the conceptual stage and jointly develop markets.
The condition for success is more about gaining shared vision than short-term revenue. Strategic fundraising through grants and CVCs has become mainstream.
"AI-era startups succeed by collaborating with large corporations." Co-creation and collaboration are essential for survival.

5. Innovation Driven by a Sense of Urgency

What was particularly interesting during the talk was Mr. Chuman's experience with KDDI's international telephone business failure, which gave birth to a sense of urgency.

KDDI has experienced the real collapse of its international phone business, shrinking to 1/10 in 10 years. This "real feeling of business breakdown" became the driving force for change.
Successful companies act under the premise that their businesses are not eternal.
A lack of urgency leads to decline, and conversely, "the power to anticipate crisis" is crucial as a starting point for new ventures.

6. Conditions for Successful Open Innovation

What fascinated me most was when Mr. Chuman spoke about the conditions for successful open innovation.

The fusion of top-down strategy and bottom-up execution is essential. The top provides clear direction and resource allocation, while enabling the field to autonomously take on challenges in an environment that encourages initiative.
Example: BMW's "Venture Client Model"— Treats startups not as "partners" but as customers, integrating new values into the company through real work.

7. Thoughts and Practices on New Business Development

Open innovation involves taking risks, so failures are inevitable. Here are some insights from Mr. Chuman on how to manage that.

New business ventures assume failure. Hence, a "portfolio operation" is essential. Instead of depending on one business, nurture multiple ideas in parallel.
In established businesses, focus on consolidation, while new ventures require diversification—60-70% on assured areas and 30-40% on challenging sectors.
It is crucial to start from points of intersection with others rather than from the company's strengths.

8. The Concept of Business Domain Development

Shifting from a fixed idea-based challenge approach to considering "domains" helps diversify risks.

Think in terms of "domains" instead of individual ideas, as single ventures often stagnate within three years.
Successful companies form business domains by bundling multiple ventures. There is no one-size-fits-all path to success; however, here are a few examples:
Rollup-type: Acquire other companies to win in scale (e.g., GENDA)
Vertical integration type: Control the entire value chain from upstream to downstream (e.g., trading company model)
Horizontal integration type: Expand adjacent areas of the same customer base (e.g., Recruit)
Considering "domains" dramatically improves efficiency, brand strength, and negotiating power.

9. Suggestions for Businesspersons

To summarize my key takeaways:

The reproducibility of success is low, but the gap between "action-taking companies" and "non-action-taking companies" continues to widen.
Sense of urgency, speed, and external collaboration define competitiveness in the new era.
Leaders need to clearly demonstrate strategies while empowering field execution. Only organizations with both these elements will survive in changing times.
The future model for sustainable growth is not diversification but "domain development."
In Mr. Chuman's words, "The combination of strategic top-down approaches and delegating authority bottom-up" truly drives innovation.
For small and medium-sized enterprises, it is essential to complement each other’s strengths and cover weaknesses while forming alliances to challenge innovation.

Summary

The keynote concluded with a strong message addressing the structural stagnation that Japanese companies have faced for years: "Do not fear crisis; grow together with external partners."

In this era of AI, it is imperative to break free from closed thinking and establish open innovation as a cultural norm.

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