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Companies say sayonara to in-house ways, embrace 'open innovation'

TOKYO -- Japanese companies have a long tradition of keeping everything in-house. But increasingly, they are embracing "open innovation," looking beyond their corporate borders for help in developing new products and finding business solutions.

     In early August, Yuko Nakazawa, president of a consumer electronics startup called UPQ, unveiled 24 new products -- including smartphones, an action camera and a transparent touchscreen keyboard -- at a launch event in Tokyo's Akihabara electronics district. All of these products come in the same greenish-blue cyan.

     The 30-year-old entrepreneur set up her company in July. In a period of just two months, she brought the products from the planning stage to commercialization. And she did it all by herself.

Yuko Nakazawa launched consumer electronics startup UPQ by herself. Here, she is sitting in one of her products, the egg-shaped Q-home ISU2 chair, released in early August.

     Before launching UPQ, Nakazawa worked in product planning for mobile phones at Japanese watchmaker Casio Computer. Since leaving the company, she has raised tens of millions of yen from a venture capital company and other entities and hired an outside contractor to turn her ideas into design drawings.

     In June, Nakazawa flew to Shenzhen, in China's southeastern Guangdong Province. From there, she hopped into a three-wheeled taxi to visit the plant of a contract manufacturer that has high-profile clients. It was there that her drawings were turned into actual products.

     UPQ products have simple yet unique designs and come in an eye-catching color. And crucially, they are priced very competitively. For instance, one of her smartphones comes with a price tag of 14,500 yen ($120) before tax, less than half the price of most smartphones made by major players.

     UPQ smartphones went on sale online in August. The first production run has already sold out. Nakazawa plans to market them in large electronics retailers in the future. "Even one woman can start a manufacturer if she uses external assets wisely," she said.

Out with the old

Faced with such nimble rivals as UPQ and its ilk, large companies are discovering that their long-held practice of doing everything by themselves, from development to production to sales -- once a key strength -- is becoming a handicap.

     Japanese online media leader Recruit Holdings is among the big names that is shedding its inward-looking ways. In July, it launched a competition in which it called on contestants to develop artificial intelligence technology that can predict what coupons people will buy. Called the Recruit Challenge, the contest was hosted by U.S. website Kaggle, which specializes in data science.

      The competition is being held for Recruit Ponpare, a major Japanese joint coupon website that offers huge discounts on a wide range of products and services. Recruit is offering a total of $50,000 in prize money for the top three entrants.

     Kaggle has more than 350,000 registered data scientists who love a good information technology challenge. Sites like Kaggle offer companies a way to tap into a pool of bright minds without having to hire new engineers. Leading French insurer Axa is among the multinationals that have used Kaggle's services.


Even Sony is not too proud to seek outside help. "We will incorporate external knowledge and expertise to create innovations."

     The Japanese electronics maker has solicited 450 ideas from its employees for new projects that could involve collaboration with outside companies and institutions.

     One such project came to fruition in August in the form of a remote controller called the Huis Remote Controller, which features an e-paper interface. Before production was given the green light, the company introduced the concept online, saying the device would only become a reality if enough money was raised through crowdfunding. It was the first time Sony had ever brought a product to life in such a way. In the end, consumers voted with their wallets and the device received the go-ahead.

     Similarly, European electronics maker Royal Philips recently announced a partnership with major U.S. crowdfunding services operator The Netherlands-based company has also cooperated on projects with outside companies such as Swiss power and automation technologies company ABB.


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