Creativity & Innovation in Japan

The Global Innovation Index 2017

Japan is the third most innovative country in Asia, behind Singapore and the Republic of Korea, as measured by the recently published 2017 edition of the Global Innovation Index (GII). At a global level, Japan is up two spots from 2016 to #14, with Singapore dropping one place, and Korea holding steady. China, which broke into the top 25 for the first time last year, has moved up three spots to #22.

The Global Innovation Index 2017 Top 25 Countries

We have long been interested in the question how creative and innovative Japan really is, at an absolute and relative level. An Adobe-sponsored study in 2012 found that Japan is seen as the most creative country globally, but not by the Japanese themselves. It is this humble and slightly pessimistic view, shaped by enduring economic setbacks, that let Oki Matsuomoto, founder of Monex, insist in a recent conversation that “many people always try to generalize on the bad things, there are lots of good people and talent, so you need to find this interesting space and focus on it.” So let us look at the good and bad in the data.

The Framework

Compared to one-off efforts like the Adobe study, the GII helps to create an environment in which innovation factors are continually evaluated. Published since 2007, it covers 127 economies this year, representing 92.5% of the world’s population, and 97.6% of the world’s GDP (in current USD).

Framework of the Global Innovation Index 2017

Four measures are calculated: the overall GII (the simple average of the Input and Output Sub-Index Scores), the Input and Output Sub-Indices, and the Innovation Efficiency Ratio (the ratio of the Output Sub-Index score over the Input Sub-Index Score). There is a total of 81 indices, some of which we will highlight further in the below.

It is worth noting that the efficiency of innovation in Japan and Singapore is below par, with global rankings of 49 and 63, respectively, while Korea punches just about at its innovation weight at #14, and China excels at #3.

Innovation Quality

Not all innovation is created equal. Measuring the quality of innovation-related input and output indicators is as essential as tracking their magnitude. For this purpose, the GII looks specifically at (I — orange) the quality of local universities, (II — yellow) internationalization of local inventions, and (III — blue) the number of citations that local research documents receive abroad.

GII Innovation Quality Ranking

Based on these indices, innovation quality in Japan is world class, neck-to-neck with the US and Switzerland. What contributes to that?

Innovation Clusters

It is generally accepted that successful innovation clusters are essential for national innovation performance. However, the availability of reliable innovation data at the sub-national level is severely limited. The GII attempts to formalize an approach for the first time in the 2017 edition.

With Tokyo-Yokohama ranked as the #1 innovation cluster, Osaka-Kobe-Kyoto at #5, and Nagoya ranked as #9, Japan has three entries into the top ten. In terms of population, this Kansai/Kanto corridor is about the size of Germany, and it features a highly homogeneous population. It might come as a surprise that San Jose-San Francisco follows Shenzhen-Hong Kong only at position #3.

Creativity Index Components

Looking at the seven pillars constituting the sub-indices, Japan performs amazingly consistently across the first six. Institutions rank #13 globally, human capital and research are #14, infrastructure #9, market sophistication #12, business sophistication #11, and knowledge & technology outputs #12.

However, creative outputs, next to knowledge & technology the other pillar in the output sub-index, ranks a lowly #36, with the online creativity sub-grouping an even less competitive #50. For comparison, Korea ranks #15 in creative outputs, China #26, and Singapore #30.

It is the adoption (or lack thereof) of online business practices in Japan that we want to come back to in our next post. Stay tuned.

P.S.: If you would like to discuss this topic further, join us for the second Tokyo FinTech Meetup on Wednesday, July 19, at the NYU School of Professional Studies — this time, we will focus on Open Innovation & Design Thinking.

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Norbert Gehrke

Passionate about strategy & innovation across Asia. At home in Japan. Connector of people & ideas.