Video Games and the Shaping of Industrial Transformation

Center on Japanese Economy and Business, Columbia Business School
Tuesday, February 21, 2012
Uris 301, Columbia Business School

Yoichi Wada, CEO, Square Enix Holdings
Discussant: Rita G. McGrath, Associate Professor, Columbia Business School
Moderator: David Weinstein, Associate Director for Research, Center on Japanese Economy and Business, Columbia Business School

This slide showcases my thinking on innovation management.

I believe that the manager needs to conduct himself more like a chemist than a mechanical engineer. Innovation is not the result of combining components, but rather the result of a chemical reaction. When a chemist wants to produce a chemical compound he must first judge the elements that need to be supplied. Then, he needs to design the environment for the proper chemical reaction to take place. And then finally he needs to think about which catalyst will invoke the chemical reaction he is seeking to induce the final compound.

This is the management stance of a chemist. (Though be careful not to think you can become an alchemist!)

The chemist’s stance was the method of innovation that Japanese companies used to be oriented toward. In the game industry, the disruptive innovation came from Nintendo, who was the pioneer, creating new devices, new business models, and new markets. But regardless of culture of origin, this is a rare, special case. On the other hand, Sony established the Playstation market with continuous innovation. This is a typical example of success by a Japanese company.

Now, given the change in social structures, this strength has disappeared. I am not saying that Japanese way of management is good. The management style of Japan or US has its pros and cons. The questions is whether the corporate system and social system are consistent. What Japan is suffering from right now is the inconsistency between these systems.

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