No. 9: Restructuring of the industry and market provides opportunities of innovation (November 12, 2011)

As Peter Drucker taught us, restructuring of the industry and market provides opportunities of innovation. In Japan, both industry and market are undergoing drastic restructuring because of the dwindling birthrate and an aging population. The manufacturing industry accounts for less than 30% of gross domestic products now. The GDP of the manufacturing sector including the construction industry decreased by 48 trillion yen and the number of workers decreased by 5,700,000 in the past 20 years. It is estimated that the number of workers will decrease another 4,000,000 over the next 10 years. It is critical for Japan to increase the productivity of the service industry and create new industries.

Gakken Holdings developed a new business field for elderly people. Taking note that pay nursing homes require a large sum of lamp-sum payment for moving in, the company renovates idle company dormitories to low-cost rental housing for elderly people, eliminating the lamp-sum payment and asking each resident to conclude a contract for the nursing service independently to keep the rent at a low level. It hit the mark. It receives lots of inquiries from companies in the manufacturing and distribution sectors that have difficulty in dealing with idle places. Actually, there are lots of idle assets that can be renovated to build nursing homes. With the development of an aging society, home delivery of water has been growing quite rapidly. It is now a market of 60 billion yen that is five times bigger than it was six years ago.

The number of new houses decreased to about 800,000 per year, which is a half in the peak period. Housing makers need to develop attractive products with features as the competition intensifies. This trend makes Elly Power, a producer of stationery batteries, even more active because houses with a storage battery introduced by leading housing makers attract wide attention nationwide. Instead of electric vehicle market, the company focused on the housing market and hit the mark. It is building a new plant to mass produce its lithium-ion batteries that can be installed in a house as an emergency power source. Idemitsu Kosan, one of Japan’s leading oil refineries, acquired a medium-sized agrichemical maker for 5 billion yen to enter into the agribio business.  

The next 100 years will be a century of energy, foods, and environment. Every company, both at home and abroad, is required to think about its business seriously, abandoning its successful experiences