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The forgotten mistake that killed Japan's software industry

Fan Favorites, Japanese Business Culture, Japanese Culture, Podcast,
Tim on Japanese Startups

The forgotten mistake that killed Japan's software industry

This is our 200th episode, so I wanted to do something special.

Everyone loves to complain about the poor quality of Japanese
software, but today I'm going to explain exactly what went wrong. 
You'll get the whole story, and I'll also pinpoint the specific
moment Japan lost its way. By the end, I think you'll have a new
perspective on Japanese software and understand why everything might
be about to change.

You see, the story of Japanese software is not really the story of
software. It's the story of Japanese innovation itself.

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Intro

Welcome to Disrupting Japan, straight talk from Japan's most
successful entrepreneurs.

I'm Tim Romero and thanks for listening

Shakespeare only wrote 37 plays, Orson Wells only made 64 films,
Mozart wrote 41 symphonies, but Disrupting Japan? Well, as of today,
Disrupting Japan has 200 episodes.

So, what to talk about on this special occasion? Well, I'll be giving
an in-depth answer to the one question I get asked most about
Japanese software and Japanese software startups.

This is a piece I've been working on (on and off) for over three
years. I know that seems like a long time, but a lot of my solo
podcasts come together like that. I know what I want to say, and will
let it will bounce around in my head for months or years before I
figure out how to turn it into an interesting story that you will
find worth listening to.

Some ideas are too short to develop into full-length shows, some I
end up talking myself out of before a finish, and some -- like this
one -- just take me a long time to craft in a way that I'm happy
putting it out into the world.

I have about 30 of these article in progress, and that's far more
than I'll ever develop into podcasts. I've been thinking of starting
a Substack newsletter to publish some of these in a much shorter
form. Let me know what you think. Is that a good idea?

Anyway, on our 200th episode, I want to thank you for listening, and
making this show possible. I realize that "thank you the listener"
has become cliche in and podcasting, but I don't know what other
words to use here.

I feel incredibly honored to be able to sit down and have these deep
conversions with some of the most creative and visionary people in
Japan, and to have thousands of people around the world care enough
about my thoughts and options to listen, and to get in touch, and to
tell people about it.

So thank you for listening,  and thank you for coming on this journey
with me. Let see where it takes us.

And now, on with the show!

 

The Elephant in the Room

Japanese software has problems.  By international standards, it's
just embarrassingly bad.

We all know this, but what's interesting is that there are perfectly
rational, if somewhat frustrating, reasons that things turned out
this way. Today I'm going to lay it all that out for you in a way
that will help you understand how we got here, and show you why I am
optimistic about the future.

And no, this is not going to be just another rant about all the
things I dislike about Japanese software.

I am not going to waste your time or mine cataloging and complaining
about the many, many bad practices, user-hostile design decisions,
mind-boggling complex workflows, and poor development process that
afflict Japanese software.

If you want details and debate about exactly how Japanese software
falls short, or if you just in the mood for some good old-fashioned
venting about being forced to use it, check out Reddit or maybe
Hacker News. This topic comes up pretty often there.

No, for the sake of this podcast I'm going to assume that we are all
in agreement that on average, Japanese software. is just ... awful.

That way we can spend our time talking about something far more
interesting. We are going to walk though the economic events and the
political forces that made today's poor quality of Japanese software
almost inventible,

And by the end, I think it will give you a completely new way of
looking at the Japanese software industry.   

You see, the story of Japanese software, is not really about
software. No, this is the story of Japanese innovation itself. The
story of the ongoing struggle between disruption and control. It's a
story that involves, war, secret cartels, scrappy rebels, betrayal,
rebirth, and perhaps redemption.

 

How This Mess Started

So let's start at the beginning. The beginning is further back than
you might expect.

To really understand how we got here, we need to go back, not just to
the end of WWII, but to the years after the Meiji restoration, the
late 1800s, back when the Japanese economy was dominated by the
zaibatsu.

Now, "zaibatsu" is usually translated as "large corporate group" or
"family controlled corporate group." While that is accurate, it
grossly understates the massive economic and political power these
groups wielded around the turn of the 20th century.   

Japan's zaibatsu were not corporate conglomerates as we think of them
today.

You see, although the Meiji government adopted a market-based economy
and implemented a lot of capitalist reforms, it was the zaibatsu,
with the full support of the government, that kept the economy
running.

And the zaibatsu system was almost feudal in nature.

The national government could, and did, pass legislation regarding
contract law, labor reforms, and property rights, but in practice
these were more like suggestions. In reality, as long as the zaibatsu
kept the factories running, the rail lines expanding, and the
shipyards operating at capacity, the men in Tokyo didn't trouble
themselves too much with the details.

In practice, the zaibatsu families had almost complete dominion over
the resources, land, and people under their control. They were the
law.

At the turn of the pervious century, there were four major zaibatsu
(Sumitomo, Mitsui, Mitsubishi, and Yasuda). And each zaibatsu had its
own bank, its own mining and chemical companies, its own heavy
manufacturing company, etc. But it wasn't just industry, each of
these zaibatsu  groups had strong political and military alignments.
For example, Mitsui had strong influence over the army, while
Mitsubishi had a great deal of sway over the imperial navy.

At the start of WWII, the four zaibatsu families controlled over 50%
of Japan's economy. This fact, when combined with their political
influence, quite understandably, made Japan's military government
very uncomfortable, and during the war, the military wrested away a
bit of the zaibatsu's power and nationalized some of their assets.

After Japan's defeat, the American occupation forces considered the
zaibatsu a serious economic and political risk to Japan becoming a
liberal, democratic fully developed nation. They targeted 16 firms
for complete dissolution and another 24 for major reorganizations.

 

Rising from Ashes

Now, that was supposed to be the end of the zaibatsu. I say "supposed
to" because those of you who know Japanese history understand that it
never really happened.

Of course, many things changed. Important political and social
reforms were implemented, the legal system was greatly strengthened,
a lot of zaibatsu assets were nationalized, and the zaibatsu
themselves ceased to be.

At least, officially.

You see, the zaibatsu were quickly allowed to restructure in greatly
weakened , but very familiar, forms, as keiretsu.  This was permitted
for two main reasons.

First, as the cold war heated up in the 40s and 50s, America's
idealistic vision for a democratic and progressive Japan took a back
seat to the more practical and pressing need to develop Japan into a
bulwark against Communism. And that meant prioritizing economic
growth over social reforms. With these new goals in mind, both the
American occupation forces and the Japanese government, quite
correctly, concluded that having something like the zaibatsu groups
would to lead to faster, more predictable growth than tearing
everything down and rebuilding from scratch.

The second important, and kind of surprising, reason was that almost
no one in Japan really wanted to see the zaibatsu broken up. Not the
politicians, certainly not the leaders of the zaibatsu, not the
public at large, and to the endless frustration and confusion of
western labor organizers, not even the rank-and-file zaibatsu workers
and employees. In fact, at one point 15,000 Matsushita union members
signed a petition demanding that the Matsushita zaibatsu^(1) not be
broken up.

So in the end, important changes were made. Labor rights and contract
law were strengthened significantly, and even more zaibatsu assets
were confiscated. The traditional family holding companies were
dissolved, but they were replaced by cross-company shareholdings  and
interlocking corporate boards that achieved much the same result, but
in a much more transparent and manageable way.

And so, most of Japan's zaibatsu were allowed to morph into the
smaller, less threatening, and much more manageable keiretsu.

 

Japan as a Global Innovator

In same way that the zaibatsu defined the economic miracle that was
Japan's Meji-era expansion, the keiretsu would come define the
economic miracle that was Japan's post war expansion.

Today there are six major and a couple dozen minor keiretsu groups,
and during Japan's economic expansion, as much as possible, they kept
their business within the keiretsu family.

Projects were financed by the keiretsu bank, the materials and
know-how were imported by the keiretsu trading company, and the final
products would be assembled in the appropriate keiretsu brand's
factory. And supporting all of these flagship brands were, and still
are, tens of thousands of very small, exclusive manufacturers that
make up the keiretsu supply chain -- and the bulk of the Japanese
economy.

And with the exception of a tiny handful of true startup companies
like Honda and Sony, all of Japan's brands that were famous before
the year 2000 or so, are keiretsu brands.

And for those of you who think big companies can't innovate, let me
remind you that from the 50s to the 70s, these keiretsu groups began
innovating, disrupting, and dominating almost every industry on the
planet; from cars, to cameras, to machine parts, to steel, to
semiconductors, to watches, to home electronics, Japan's keiretsu
simply rewrote the rules.

But how did the keiretsu do in the world of software development?  
Well, pretty darn well, actually.

It's important to remember, though, that the software industry in the
60s and 70s was very different than it is today. The software
development process itself was actually rather similar. Fred Brooks
wrote The Mythical Man Month about his experience during this era,
and it remains as one of best books on software engineering and
project management today.

But the way software was bought and sold was completely different. In
the 60s and 70s, software was written for specific and very expensive
hardware, and the software requirements were negotiated as part of
the overall purchase contract. Software was not viewed so much as a
product, but more like a service, similar to integration, training,
and ongoing support and maintenance. It was usually sold on a
time-and-materials basis, and sometimes it was just thrown in for
free to sweeten the deal. The real money was in the hardware.

Software in this time (both in Japan and globally) was written to
meet the spec. It did not matter if it was creative, innovative, easy
to use, or elegant, it just had to meet the spec. In fact, trying to
build exceptional software in this era was considered a waste of
resources. After all, the product had already been sold and the
contracts had already been signed. The goal back then, just like many
system integration projects today, was to build software that was
just good enough to get the client to sign off on it as complete.

Software that met the customer's spec was, by definition, good
software.

Japan's keiretsu did well in the age of big-iron. Although Fujitsu,
NEC, and Hitachi never seriously challenged IBM and Univac's global
dominance in the 60s and 70s, they did pretty well in mini-computers
and large office systems.

They were innovators.

 

Japan Turns its Back on a New Industry

However, when the PC revolution arrived in the late 1980s, Japanese
industry as a whole was hopelessly unprepared, and not for the
reasons you might think.

The reason Japanese software development stopped advancing in the
1980s had nothing to do with a lack of talented software developers.
It was a result of Japan's new economic structure as a whole, and the
keiretsu in particular.

As a market, personal computers were something fundamentally new.
Sure, the core technology and the hardware were direct continuations
from the previous era, but this new market was completely different.

The PC market quickly coalesced around a small number of standardized
operating systems and hardware architectures. The keiretsu did pretty
well in hardware side of this market, making some really impressive
machines, particularly laptops.

But a market for non-spec or "shrink-wrap" software was something new
to everyone. It required delighting the customer, and knowing what
they wanted before they did. It was the kind of challenge that the
keiretsu of the 60s and 70s would have thrown themselves into
whole-heartedly, innovated aggressively, and then dominated.

But things in Japan had become very different in the 1980s.

Here was a chance to define and lead a new global industry. A chance
for the keiretsu to build a software industry from the ground up.

But, wait a minute. Why should they?

Sure, back in the 60s when Japan's economy was small, survival
required looking outwards, competing globally, making long-term
investments, and innovating to make the best products in the world.

But this was the 80s! Japan was the second-largest economy on the
planet and in the middle of the largest economic boom the world had
ever seen. This was the era of Japan as Number 1, with economists
predicting Japan's GNP would be larger than America's within a
decade.

With such a lucrative, and pretty well protected, market right at
their fingertips it made much more sense for for the keiretsu to
focus on the easy money rather than to take risky and expensive bets
on an uncertain and emerging global market.

Each keiretsu group had their own technology firm who started selling
PCs and software, some to consumers, but the big money was in
corporate sales.  And since the keiretsu liked to keep the business
in the family, these technology companies grew and profited by
selling to their captive customers within their keiretsu group. And
just like before, they made the real money in integration, and
customization.

An unfortunate result of this is that the big Systems Integration
companies or "SIs" emerged as powerful players, and Japan's software
firms never had to compete globally, or even with each other.

Japan simply missed the opportunity to develop a globally relevant PC
software industry.

 

The Beginning of the End of Innovation

Japan's software industry in the 80s and 90s remained much like it
was in the mainframe area. The software had to be just good enough
for the client to sign off on it, and since they were largely captive
clients unable to look outside their keiretsu group for support, that
was a very low bar indeed.

But hey, as long as the economy was booming, no one minded spending
lavishly to keep all the work in the keiretsu family, and all those
little software defects could always be fixed in "phase two" of the
project.

Software development was an exercise in box checking. You implemented
a feature once the customer had asked for it and the contracts had
been signed.

This not only caused Japan to miss out on the global software
industry, but it marked the beginning of the collapse of innovation
across Japanese industry.  Over the next 30 years, software would
become a key driver of both innovation and efficiency. But by
outsourcing their IT strategy to a single integrator, Japanese
enterprise had tied themselves to an anchor that would ensure almost
every industry fell further and further behind the technology curve
with each passing year.

Japan still has not recovered from this. Even today most enterprise
systems are decades behind their global competitors. But, as we'll
see a bit later, things are happening now that could enable a quantum
leap forward in Japan.

 

Life as a Developer in Japan's Dot-com Bubble

So, what was it like to be a software developer in Japan the 80s and
90s?

It was pretty bad. Software development was considered rather
low-skill work. It didn't pay well and was viewed as a kind of
clerical work. The job was simply to write software that was close
enough to whatever sales had promised the client while they were out
drinking last week.

New hires with degrees in literature, business, or law, or whatever
were rotated though software development for a few years to give them
a sense of how different parts of the company worked. There was no
real career path in software development. I mean, maybe you could
move up into project management or over into sales, but if you were
still actually writing code when you were 30, people kind of wondered
what went wrong.

Of course there were some great, even visionary, software developers
in Japan at that time. I knew some of them. People who wanted to make
computers do new things. People who saw how technology could disrupt
other industries, and developers who simply had a passion for making
software that delighted users.

There were plenty of developers like that in the 80s and 90s. They
were miserable.

Interestingly, hardware engineers were viewed very differently. Both
then and now, hardware engineers are highly respected in Japan.
Engineers are some of the most admired people at companies like 
Toyota, Mitsubishi, and Sony.

So, perhaps unsurprisingly, hardware innovation continued at a
furious pace during the 80s and 90s. Products like the walkman and
the Nintendo consoles achieved global success and the domestic market
was filled with electronic diaries, dictionaries, and planners that
were way ahead of what was available in the West. 

And of course, eventually i-mode. Japanese consumers were sending
email and browsing the web from their phone years before the
Blackberry was released, and almost a decade before the iPhone.

 

Falling Down

But the rest of the word was moving in a different direction. The
rest of the world was moving away from dedicated hardware and towards
innovative software running on standard hardware platforms. As Marc
Andreessen would later point out "Software was eating the world."

As the dot-com bubble started to inflate, Japan began to realize they
needed talented software developers, but without a a software
industry that actually valued software developers, companies had no
idea where to find them. The best talent was usually unrecognized and
trapped at the lower levels of the org chart. There was not much of a
future pipeline. Since software engineering was not a respected or
profitable career, few students opted to pursue it.

Some did of course, but these were the people that just loved
programming. It was like becoming a musician or a manga artist. It
was great you are following your dreams. You might make it, but the
odds were not in your favor.

When the foreign software companies starting crashing into Japan in
the 90s, the domestic industry could barely put up a fight.

The dot-com boom of the late 90s was the first wave of
venture-funded, disruptive innovation in Japan, but it was not yet
time for Japan's software developers to step into the spotlight.

The successful founders of that era were mostly well-connected or
incredibly scrappy businessmen. The general opinion of software
developers had hardly changed at all. They just weren't the kind of
people you would trust to run a company.

I started my first Japanese startup during the dot-com boom, and at
that time, I think the fact that I was a technical founder was even
more unusual than the fact that I was a foreign founder.

Of course in one sense, the dot-com boom was an amazing time to start
a software startup in Japan. You could call up almost any talented
developer you knew, let them know hat they would be working on
something important, that they would have meaningful input into
product development, they'd be on a team that cared about code
quality, and that their skills would be respected ... and yeah, they'd
want to come on board.

 

The Lost Decades Were Never Really Lost

The late 90s and the naughts is often referred to as Japan's "Lost
Decades." It was not a good time for the keiretsu companies. Not only
did their power continue to weaken, but increased scrutiny of their
cross-shareholdings and financials, and the merger of several banks
across keiretsu lines meant that business as usual was over.  And
pushing the knife in deeper, all of the implied economic and social
guarantees that the keiretsu system was based on began to unravel.

In previous decades, Japan had focused on exporting domestically made
goods, but now, not only was the domestic market attracting a greater
focus, but Japanese industry began moving production out of Japan
into cheaper overseas markets.

This was considered a betrayal by thousands of mom-and-pop
manufactures who had spent their lives (or sometimes generations) as
a highly integrated and specialized part of a single keiretsu's
supply chain, and who now found themselves suddenly cut off.

Japan's famous lifetime employment system effectively ended during
this period as well. It made sense for corporate groups to promise
lifetime employment and predictable promotions when profits kept
rising and labor was scarce, but now faced with mounting losses,
corporate Japan began walking back all these implied promises.

This was a shock for Japan. It was a breech of the social contract
that holds everything together. If hard work and loyalty would not be
rewarded, then why dedicate your life to the company? To the distress
of pundits and politicians, many young Japanese started saying they
had no interest at all in joining the corporate world.

But the truth is, especially now that we can look back on it, these
decades were not really lost decades at all. Growth slowed, and the
changes were incredibly painful, but they were absolutely necessary
to set the foundations for the coming wave of startup innovation and
for Japan's software developers to finally get the respect they so
deeply deserve.

 

The Triumph of the Japanese Software Developer

I mark 2010 as the year Japan's software developers finally started
stepping into the spotlight, although things starting moving a bit
before that.

There were two triggers that led to this development. First, the
emergence of cloud computing and second, the introduction of the
smartphone. Although these were both technological developments, it
was not the technology itself that led to the change.

Cloud computing drastically reduced the capital and time required to
start a startup. In the dot-com era a decade before, starting an
internet startup required purchasing racks of servers and paying
system administrators to keep them running, but suddenly fully
configured, maintained, and secure serves could be had for a few
cents per minute -- pay as you go.

Suddenly Japan's software developers didn't need to explain their
idea to a VC and convince them that it would sell. They could just
build things and get people to start using them and start paying for
them. And that's just what they did.

The other important development was the introduction of the iPhone in
2007 and Android a year later. Not just because of the technology,
but because of how it changed the software business model.

Japan's i-mode was years ahead of the West when it first came out,
but getting your app on i-mode was largely a matter of lengthy
negotiations with the telcos for one of the few highly-coveted slots
on the menu. The smartphone ecosystems were different. Anyone who
could develop an app of reasonable quality could deploy and sell it.
There were no business connections, exclusive negotiations, or
revenue commitments required.

2010 marked the beginning of the end of the software startup
gatekeepers. As more and more talented developers realized how easy
it was to start a startup, more and more started choosing startups
over the traditionally low-status career path at large companies.

This, combined with a large dose of Silicon Valley glamour, has
complexly transformed Japan's image of the software developer.
Software developers are valued and respected today. Unlike the
dot-com days, both startups and enterprises compete aggressively to
recruit and retain talented programers, even though there are a lot
more of them today. Thankfully, people also talk a lot more about
code quality.

Of course, this attitude shift was much broader than just developers.
With the safety net of lifetime employment and guaranteed promotions
removed, people have had to become less risk averse and more
innovative. Those workers who had rejected the corporate life, became
freelancers and formed the core of Japan's flexible startup
workforce, and some of those tiny supply-chain companies began to
rethink their business models.

This brings us to the start of the Disrupting Japan podcast about
eight and a half years ago. We've talked to the innovators and
followed the development of the startup ecosystem together during
that time.

 

So, Where Do We Go From Here?

As we talk here together at the start of 2023, what does the future
look like for Japanese software?

Japan has had a lot of catching up to do over the past fifteen years.
After basically sitting out the global PC and dot-com revolutions,
Japanese software developers have been making up for lost time and in
the startup space. Japan is developing a competitive software market
in some areas, but on average, there is still a long way to go.

Japan's once dominant Systems Integrators will continue to see their
power decline. Their customer lock-in is fading fast, and B2B SaaS
software startups are letting Japanese enterprises leapfrog to modern
IT systems for less than costs to maintain their SI-run legacy
systems.

The SIs won't disappear, of course. There will always be a need for
good systems integrators, and the more forward thinking ones are
already trying to reinvent themselves. However, the days when the SIs
dictated their clients' IT strategy are coming to a close. That is a
very good thing for Japanese software, Japanese startups, and
Japanese competitiveness as a whole.

The Kishida administration has made startups a national priority, and
the importance of quality software and software startups in Japan has
never been higher.

Even the old keiretsu firms have come around. They are increasingly
looking to software startups to supplement internal R&D though both M
&A and through long-term partnerships. In fact, last year Keidanren,
Japan's largest business federation, an organization that was one of
the main architects and drivers of Japan's post-war economic
expansion, called on its member companies to greatly increase their
startup investment and partnerships.

I am optimistic. As always, things will develop differently in Japan.
In the same way the zaibatsu defined Japan's Meja-era economic
miracle, and the keiretsu came to define Japan's post-war economic
miracle, from some new combination of startups, enterprise, and
academia will emerge something that will define Japan's next economic
miracle.

Today is a very good time to be developing software in Japan.

 

Outro

Thank you for sticking with me for this 150-year history of Japanese
software development and for over eight years and 200 episodes of
Disrupting Japan.

And you know, after all this, I feel like things are just getting
started.

If you want to talk more about Japanese software, and come on, I know
you do! Come by Disrupting japan.com /show200  and and let's talk.

Hey, and if you enjoy the show, share a link online or just tell
people about it. In this age of over-the-top hype, you'd be amazed
how much power your honest recommendation has.

But most of all, thanks for listening, and thank you for letting
people interested in Japanese startups  know about the show.

I'm Tim Romero and thanks for listening to Disrupting Japan.

---------------------------------------------------------------------

Footnotes

1. An astute reader pointed out that Matsushita was not a zaibatsu. 
While this is technically correct (the best kind of correct) there is
some important nuance. While, Matsushita was not one of four
traditional zaibatsu families, the power and profits they amassed
during the wartime years lead the US occupation forces to label them
as a zaibatsu family and target them for dissolution in 1946. Due
largely to the reasons outlined in this episode, the zaibatsu
designation was removed and the dissolution order reversed in 1950. 

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28 Comments

 1. JF
    JF on January 11, 2023 at 3:35 am

    the game industry would seem to be an outlier, perhaps.

    Reply
      + Tim Romero
        Tim Romero on January 11, 2023 at 7:03 pm

        Hi James,

        Thanks for listening. I only touched on the games industry
        briefly because it is quite complex. Console, PC, and mobile
        gaming are different enough to almost be considered different
        industries. It's a really interesting topic, and I might do a
        podcast on it in the future.

        Tim

        Reply
 2. Lyal Miller
    Lyal Miller on January 11, 2023 at 3:16 pm

    You forgot to mention that Japanese S/F & H/W were always double
    byte systems while US and other systems had been single byte
    systems up until the late 80's/ early 90's. This was a
    technological wall that had been protecting and separating the
    Japanese domestic market from the international market.

    Reply
      + Tim Romero
        Tim Romero on January 11, 2023 at 7:07 pm

        Hi Lyal,

        Thanks for listening.

        I didn't forget. It just wasn't that relevant. For example,
        the Japanese-made mini-computers also supported double-byte
        OS, but the sold pretty well in the single-byte markets. The
        double-byte OSs might have protected the domestic industry
        for a few extra years, but I don't think it made much of a
        difference in the long run.

        Tim

        Tim

        Reply
 3. Denis Win Thein.
    Denis Win Thein. on January 11, 2023 at 5:49 pm

    Congratulations and many thanks for your explanation of Japanese
    Software history. I learned a lot from you in one article about
    the subject instead reading lengthy academic narratives. Well
    done. I shall subscribe to your podcast and support your efforts.

    Many thanks and appreciate your efforts and also for me to
    motivate and support your work.

    Reply
      + Tim Romero
        Tim Romero on January 11, 2023 at 7:09 pm

        Hi Denis,

        Thanks for listening. I'm glad you enjoy the show. It's
        really a labor of love. I can never quite understand why the
        whole world does not find these topics as fascinating as I
        do. lol

        Tim

        Reply
 4. mikusingularity
    mikusingularity on January 12, 2023 at 2:44 pm

    "Japan was the second-largest economy on the planet and in the
    middle of the largest economic boom the world had ever seen. This
    was the era of Japan as Number 1, with economists predicting
    Japan's GNP would be larger than America's within a decade. With
    such a lucrative, and pretty well protected, market right at
    their fingertips it made much more sense for for the keiretsu to
    focus on the easy money rather than to take risky and expensive
    bets on an uncertain and emerging global market."

    Basically, the answer is complacency. However, there is one
    thing: "larger than America." The United States had already been
    the largest economy in the world for decades. So how come it
    didn't become complacent with software? Because American hardware
    manufacturing industries (like automobiles and televisions) had
    weakened by that time.

    From "The Japanese Software Industry: What Went Wrong and What
    Can We Learn from it?" by Robert E. Cole and Yoshifumi Nakata:
    "Japanese leaders, with their strong success in manufacturing
    hardware, found it much more difficult to envision software as a
    full partner, much less alternative model. It is also a plausible
    hypothesis that the weakness of American manufacturing globally,
    relative to Japanese firms, gave American firms stronger
    incentives to search, sense, monitor, and respond to the new
    opportunities created by software." (pg 17)

    Reply
      + Tim Romero
        Tim Romero on January 12, 2023 at 9:26 pm

        Thanks for listening.

        That's an interesting perspective, and I think it is true as
        far as it goes. The question prompted by their hypothesis,
        however, is why even the pure software companies did not
        develop competitive software. In those cases, there was no
        hardware division who had to consider them partners. I think
        the financial incentives provide a stronger and more complete
        explanation, but I agree that those authors make an
        interesting and generally correct point.

        Tim

        Reply
 5. Marcus
    Marcus on January 14, 2023 at 9:34 am

    Thank you for the excellent article, it was well thought out and
    provided some very interesting historical context to the issue.

    I think another important aspect is cultural - Japan has
    traditionally been exceptionally good at technical perfection,
    organizing itself around the master/apprentice model (senpai/
    kohai) passing on skills from generation to generation and
    striving for perfection at each step (kaizen). This has clearly
    shown itself in the mechanical, electrical and especially civil
    engineering worlds, where Japan has been (and still is in my
    opinion) a world leader in quality.

    When it comes to software a different model has shown success and
    Japan has (in general) found it very hard to adapt. Software
    development is cheap and the 'agile', try-it-and-see model, 'fail
    fast and often' mantra is leading the way. Silicon valley is the
    living embodiment of this philosophy.

    However, over on this side of the Pacific, the desire to provide
    high 'omotenashi' levels of service to an unforgiving public
    means that the bare minimum often suffices. If it isn't broke
    don't fix it. There is no desire to improve especially if this
    introduces a risk of a system failure, extra cost or confusion
    for the users.

    I think these aspects have also had a major contribution to the
    sorry state of software here, but perhaps these are the symptoms
    of the broader forces mentioned in your article, anyway, it's a
    fascinating topic!

    Reply
      + Tim Romero
        Tim Romero on January 14, 2023 at 2:36 pm

        Hi Marcus,

        Thanks for listening.

        There is a lot of truth in what you say. The question that
        always fascinates me is how things got this way. While it is
        somewhat true to say that Japanese industry and startups tend
        to be quality obsessed, my inclination is to use that as the
        starting point. "OK. So what factors cause this obsession
        with quality?" Attributing it to "culture" cuts short some
        really interesting discussions.

        Tim

        Reply
 6. shanen
    shanen on January 14, 2023 at 5:47 pm

    A bit cumbersome to log in here. My initial comment was just
    about the spelling glitch of "pervious" for "previous". Pretty
    close to the beginning.

    On the presentation, I was reading it rather than listening, and
    it started to feel kind of tedious, so I didn't finish. At least
    in written form, I felt you had teased me with an answer, so I
    expected you to summarize the answer and then explain the
    details, but I still couldn't figure out where you were going
    after a long time. Couldn't even figure out what to search for to
    peek ahead and then come back...

    On the substance of the topic it may be an intersection with some
    recent reading on power structures. At least in the early parts
    you were describing unilateral structures. The archetype is the
    military, where orders always flow downward. A situation with
    strong unions can be a case of bilateral power, with some sort of
    balance. However the real world tends to be much more complex
    than that, with multilateral flows between many players. (Not
    part of my original source, but now I'm wondering if that's why
    democracy matters?)

    As it relates to creativity, unilateral control is not so hot.
    Hard to order people to be creative, and even harder for the top
    power to tolerate the kind of important new ideas that can change
    things. Big corporations favor unilateral power structures, but
    then they can't sustain the creativity they need for many
    purposes, including the creation of good software.

    Reply
      + Tim Romero
        Tim Romero on January 15, 2023 at 1:06 pm

        Hi,

        Thanks for reading. Don't sweat it. It's a complex issue. I
        think if could be summarized in a few bullet points, there
        would not be so much misunderstanding around the topic.

        On power structures, I think it's misleading to view Japan
        management as operating with a top-down or a unilateral power
        structure. It's closer to a "middle-up" structure were
        various and fluid factions and cliques must be appeased. Very
        few Japanese leaders/organization can operate successfully in
        a top-down manner.

        Tim

        Reply
 7. David Macdonald
    David Macdonald on January 15, 2023 at 12:38 pm

    Thoroughly enjoyed your podcast, the research and conclusions. I
    was on the inside of i-mode in the early 2000s and while some of
    the take on placement is a little off from reality, I've always
    been frustrated by how far we were ahead until the iPhone and
    then Android emerged. My successive career has been in media and
    entertainment and I see some foreshadowing here!

    Reply
      + Tim Romero
        Tim Romero on January 15, 2023 at 12:58 pm

        Hi David,

        Thanks for listening. I'm glad you enjoy Disrupting Japan.

        I'd love to hear your i-mode insights if you are comfortable
        sharing them. Even from the outside it was frustrating to
        watch. It was launched in a few overseas markets, but never
        really seemed to get the traction it should have.

        Tim

        Reply
 8. CH
    CH on January 18, 2023 at 8:43 pm

    Hi Tim,

    Thank you for making this podcast and sharing your insights about
    Japanese SW industry. I am a Chinese student, studying in the US
    and will work in Tokyo as an Infra Engineer later this year. I
    find the focus point of Japanese companies for new grad is quite
    different from China and US. They care more about why choosing us
    than your technical background. I am not sure if this is an
    effective recruiting system tho. But I still feel very excited to
    have a look at Japanese software industry and hopefully to
    witness its new miracle.

    Reply
      + Tim Romero
        Tim Romero on January 22, 2023 at 6:29 pm

        Hi CH,

        Thanks for listening.

        You are right. IN that respect, Japanese corporate culture is
        very different than the US or China. In Japan there is a lot
        of attention paid to why you want to work in a certain
        industry or a certain company. In addition to technical
        interviews.

        Tim

        Reply
 9. Mark Topping
    Mark Topping on January 21, 2023 at 6:13 pm

    Here is some support for your argument:
    https://fsi-live.s3.us-west-1.amazonaws.com/s3fs-public/
    Rowen_Toyoda.pdf

    I have only scanned it but it definitely draws on many of the
    same themes (post-war keiretsu, focus on hardware, labor market,
    etc.). In 2002, there was little hope of fortunes changing in the
    immediate future. Hopefully you are right about new opportunities
    for Japanese startups. Maybe the combination of AI and robotics
    will be the seeds for a new trajectory.

    Reply
      + Tim Romero
        Tim Romero on January 22, 2023 at 6:33 pm

        Hi Mark,

        Thanks for listening.

        Thanks for the link. I've downloaded to read later. AI and
        robotics are an interesting combination. Japanese startups
        are doing really groundbreaking things in robotics, but the
        Japanese AI technology has a hard time making it out of the
        university research labs.

        TIm

        Reply
10. shanen
    shanen on January 23, 2023 at 2:59 am

    Can I clarify my earlier comment? Or am I going to run into
    unsolvable login problems again?

    Not really blaming WordPress, though I have found it cumbersome
    to work with on a number of previous occasions. It's the spammers
    that make the tedious and cumbersome login mechanisms necessary,
    but it's the imbalance of motivational forces that then make
    WordPress (and other websites) so close to unusable. My
    motivation to jump through hoops to post a comment is limited,
    but the spamming scammers believe it's an unlimited source of
    money and their motivations to break any reasonable login
    mechanism are without limit. And as long as the spammers keep
    making money, they will continue to do it.

    So let's see if this approach to replying works...

    Reply
11. shanen
    shanen on January 23, 2023 at 3:26 am

    Okay, so the communication channel is partly open now... However my
    second attempt to open it was several days ago and now I can't
    remember the details of my original deeper response. Lost in a
    cloud of frustration with login attempts when I was notified of
    your initial reply.

    Let me say that I am not trying to "sweat" anything. However I
    try to read at many levels at once. At the lowest level of the
    spelling mistake, I see (via a quick text search) that it's still
    here in your original piece, so either you are also struggling
    with WordPress and can't fix your mistake, or your real reply to
    feedback is that you don't pay much attention to feedback.
    Perhaps "Don't sweat it" is not advice so much as projection?

    By the way, I was hoping that the successful reply I just wrote
    would also have resulted in a "logged in" state that would permit
    me to use the "REPLY" button associated with your initial reply.
    But no.

    The resulting situation is a loss of dialog, which is quite
    important in the formation and expression of good reasons. "The
    Enigma of Reason" by Sperber and Mercier may be the best book
    I've read on that particular topic. However I also notice that
    none of the replies to this blog led to dialog, so now I think
    the "REPLY" buttons are also fake buttons that do nothing. Maybe
    there's a setting for that and you have it set for "No dialog".
    Laugh's on me for trying so hard to "REPLY"?

    But the main conclusion is that I think I was open to being
    motivated to make the effort to read the entire thing. But that
    was past tense, and now I am definitely not so motivated nor
    likely to become motivated in that direction. Actually now I am
    somewhat annoyed and motivated in the direction of disabling the
    email notifications that have been reminding me of activity in
    this non-discussion. (But I'm not saying it's easy to host an
    online discussion of any depth... I think the best online
    discussions I participated in were decades ago. Places like the
    BBSes of Austin and ye olde usenet (before perpetual September).
    Still looking for interesting discussions after so many years,
    most recently via the cumbersome Mastodon.)

    Reply
12. Lorenz Granrath
    Lorenz Granrath on January 26, 2023 at 8:21 pm

    Tim, very good article and thinking and I hope it will go well in
    the future. We might see the end of giant IT companies and
    smaller and agile one might come up.

    Reply
      + Tim Romero
        Tim Romero on January 29, 2023 at 2:07 pm

        Hi Lorenz,

        Thanks for listening.

        I do think it is possible the one of the ways the big SIs can
        reinvent themselves will be to align with smaller, agile
        software startups. I don't see much interest in it from the
        SIs yet, but it could be very good for them.

        Tim

        Reply
13. Kinkuma
    Kinkuma on March 15, 2023 at 1:10 pm

    Really great podcast Tim. As a UX Designer and Solution Architect
    working for a global software vendor here, it is a topic I am
    often grappling with. Of course, I tend to focus more on the "how
    to address it / move forward" side of the discussion, but
    understanding how it came to be is a useful part of that. Would
    be interested to have another episode on your thoughts on "the
    fix". For myself I find executives and the workers onboard with
    better software UX, its the middle where a lot of pushback
    occurs. Cheers!

    Reply
      + Tim Romero
        Tim Romero on March 17, 2023 at 6:59 am

        Hi Kinkuma,

        Thanks for listening.

        You're right. "The Fix" is not a simple topic. In the podcast
        we talked about three possible approaches; some "bad" design
        is not actually broken and does not need to be fixed,
        nemawashi is the way to make change happen in the short run,
        and in the long run better design is winning in the
        marketplace, particularly on mobile.

        Tim

        Reply
14. Drew
    Drew on March 21, 2023 at 2:40 pm

    Hi! Truly awesome episode. In the US, Toyota Production Systems
    methodologies are widely studied and held in high esteem for many
    of the disruptive and innovative digital product development
    organizations. Concepts like Kanban, Gemma, and Kaizen permeate
    our landscape and are rapidly gaining traction. Why do you think
    these concepts are only now gaining traction here in the US and
    do you see Agile/Scrum based strategies for organizing people
    around work in Japan?

    Check out my episode of my podcast on the origins of Scrum and
    Agile. I feel like you can fill in many blanks and errors in my
    knowledge. I would love the insight!

    Thanks again!

    Reply
      + Tim Romero
        Tim Romero on March 25, 2023 at 11:09 am

        Hi Drew,

        Thanks for listening. I'm delighted that you enjoyed the
        episode.

        Agile is something close to my heart. Beck's Extreme
        Programming changed the way I thought about programming and
        about managing developers. In many ways, I still view it as a
        kind of Platonic Ideal. Scrum and Agile as commonly practiced
        today have strayed a long, long way from those ideals. Not
        that I am against either methodology. It's just that "Agile"
        today seems to have a much broader meaning than it used to.

        But to answer your question, Scrum and Agile processes are
        reasonably popular in Japan, but I don't think Agile
        processes as practiced today are as conducive to innovative
        software the way Agile processes from 20 years ago were.

        Tim

        Reply
15. Zicheng
    Zicheng on July 13, 2023 at 12:27 pm

    It's really inspiring. I am a Chinese enterprise software
    investor. Although China's personal software and the Internet are
    very developed, Chinese enterprise software service providers
    also face the problems of Japan in the 1980s. The needs of
    enterprises are acquired by system integrators. Some of these
    integrators belong to large state-owned enterprises, and some
    have customer relationships. In any case, there are very few with
    product competitiveness. So more often there is software
    customization and outsourcing, and the development of
    productization is very slow.

    Reply
      + Tim Romero
        Tim Romero on July 13, 2023 at 7:01 pm

        Hi Zicheng,

        Thanks for listening.

        It's really interesting to hear that Chinese enterprise is
        facing a similar situation as Japanese enterprises in the
        80's. My impression was that China was a more dynamic market,
        but enterprise software is always a special case. I hope
        Chinese enterprises can break free of their systems
        integrators and wont face 30 years of frustration and falling
        behind like Japan's enterprises did.

        Tim

        Reply

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