In July 2020, the government announced a concept of the “global hub city” to build a startup ecosystem like Silicon Valley that will create leading startups. The cities selected included the four urban areas of Tokyo and Yokohama in the Tokyo metropolitan area, Nagoya and Hamamatsu in the Chūbu region, and Kansai and Fukuoka. They will provide a variety of menu items, including open innovation and the formation of startup ecosystems, with the objective of creating five or more unicorn companies in each urban area.
However, in some places public-private collaborative open innovation have a long history. In many local government areas, such efforts have not yet begun. What are the advantages? Today, we are talking to the Finance Bureau of the City of Yokohama and the Mitsubishi Estate. In October 2019, these two bodies established YOXO BOX, a base for supporting the growth of startups and open innovation, in Kannai, Yokohama. They are continuing their activities to create “Yokohama, an innovation city.”
This time, I asked Okuzumi Arifumi, section head in the New Industry Creation Division of the Yokohama Finance Bureau, and Kim Yeonu from of Mitsubishi Estate’s Yokohama Branch, about the advantages of the public and private sectors working together and the secrets to a good partnership.
・The City of Yokohama leads local governments nationwide in promoting open innovation
・“Long-term partnerships” through public-private collaboration
・“Local governments you can meet right away” can be good partners for companies
・The age of separating the public and private sectors will end. Diversity that leverages each other’s potential will create future innovations
Section Chief, New Industry Creation Division, Finance Bureau of the City of Yokohama
In 1999, he joined Mitsukoshi Ltd. (currently Isetan Mitsukoshi Ltd.). Completed IFI Business School on company dispatch. As a buyer of men’s and women’s fashion, he was responsible for purchasing from the Paris Collection and other products from overseas, developing new businesses, and preparing to open new stores. In 2009, he joined the government of the City of Yokohama. He is mainly in charge of support for company founding and startups, the life sciences industry, and for work style reforms at the Finance Bureau.
Mitsubishi Estate, Yokohama Branch
Joined Mitsubishi Estate Co., Ltd. in 2017. After joining the company, she was assigned to the Yokohama Branch and is in charge of asset management, such as the Yokohama Landmark Tower and the development of new properties. She engages in promotion of various area management measures at Yokohama Minato Mirai 21, venture support through YOXOBOX operations, etc.
The City of Yokohama Leads Local Governments Nationwide in Promoting Open Innovation
How was YOXO BOX created as a hub for supporting the growth of venture companies that aims to create innovation through public-private collaboration, which is still rare throughout Japan? In fact, the city of Yokohama has been a municipality with a positive attitude to open innovation. It aggressively attracted major companies and their R&D bases to the Minato Mirai 21 area. In addition, since 2016, the city has been progressively promoting open innovation platforms, such as LIP Yokohama, which supports life sciences, and I·TOP Yokohama, which supports demonstrative experiments for IoT. YOXO BOX is the summation of these activities.
What kind of environment has Yokohama prepared for startups? We asked Okuzumi about its characteristics as a local government.
Okuzumi： As elements related to open innovation, Yokohama has a large number of major companies and others with their headquarters and R&D bases here, such as Nissan Motors, Koei Tecmo Holdings, Shiseido, Murata Manufacturing, and the Keikyu Group, all of which are leading companies in Japan. Since startups may be able to work with these companies, we believe that Yokohama is an area where open innovation and high synergies are expected. In addition, land prices and tenant rents are cheaper than in Tokyo. Also, we have good access to the Shinkansen and Haneda Airport. Isn’t this an environment that makes it easier for startups to expand?
Yokohama provides a variety of support for these startups. For example, we have implemented the YOXO Accelerator Program and Yokohama Venture Pitch to support startup growth and development.
In addition, many research personnel, creators, and engineers live in Yokohama. There is ample opportunity for collaboration with major companies, good transportation, modest office costs, and plentiful human resources. Yokohama can be considered a place with many advantages for startups.
Okuzumi： In addition to these benefits, it has the largest population among municipalities nationwide. The surrounding areas vary from urban to residential. Yokohama is, so to speak, a “microcosm of Japan.” Naturally, it is a big city, so it has various social issues. That is why it is suitable as a field for demonstrative experiments.
Right now, in the IoT support platform “I·TOP Yokohama,” the city is working as an intermediary to coordinate demonstrative experiments to support smart homes, automated driving, and other tech-based operations.
Yokohama is trying to promote open innovation by combining geographic benefits with generous support measures. Next, we invite Kim Yeonu of Mitsubishi Estate to join us to discuss the advantages of the public and private sectors working together.
“Long-Term” Partnerships through Public–Private Collaboration
What benefits can enterprises and government organizations hope for when they join forces? There is said to be a difference in time constraints between enterprises and government organizations.
Kim： I believe that the advantage for businesses when collaborating with government organizations is that they can find partners that can cooperate over the long-term.
Enterprise-led open innovation often requires return on investment and short-term results that tend to turn to business discussions quickly. However, to create new businesses, it is necessary to have a long-term perspective that looks ahead to changes in society and lifestyles. Furthermore, for Mitsubishi Estate (as a developer), developing urban infrastructure, creating new industries in the city, and increasing the number of people who want to live and work there will also benefit the company. As in urban development, new industries do not grow immediately. So, we plan from a long-term perspective.
If organizations that pursue the interests of society as a whole, like government organizations, become hubs, companies can establish loose cooperative relationships with other companies. It’s easy to say, “Even if it’s hard now, please help me when the time comes.”
I believe that this is an advantage of open innovation through public-private collaboration between companies and the government, as well as company–government–company collaborations. I would like to make the efforts of Mitsubishi Estate and Yokohama into an example of open innovation.
Government organizations that work for the public interest can enter cooperative relationships with a relatively wide range of enterprises. In other words, their strength is their widely known reputation. They can link various stakeholders, such as just-launched startups, local organizations, and shopping districts, even if they are in different industries.
“Local Governments that You Can Meet Right Away” Can Be Good Partners for Companies
Of course, Yokohama is also making efforts to maintain its wide recognition. “Finance Bureau staff actively meet with people and companies, aiming to be a government organization that you can meet right away,” says Okuzumi. ” I also hold one meeting with one company every day.”
Kim：The City of Yokohama introduces companies that can work together with and collaborates on solutions when you approach them with a challenge. Sometimes the local government invites us to take part in something. So, it’s an easy partner with which to collaborate.
Yokohama thus maintains an open stance because it emphasizes regional diversity as its growth strategy.
Okuzumi：A future with a super-aging society is approaching, and the working-age population will decrease. To resolve social issues and achieve sustainable growth and development for the region as a whole, it is important to build relationships with people from various positions and organizations, and to share each other’s resources. For this reason, Yokohama must be a “hub” for companies and citizens. I think the openness and diversity of the region is really important.
This attitude is also the driving force behind companies during the COVID-19 pandemic. An example we might give is Sky Farm, Inc., a startup from Yokohama that offers a delivery platform. The company is developing its business mainly in the Minato Mirai area. Sales in local shopping districts and restaurants were sluggish due to the COVID-19 pandemic. In order to overcome this situation, Sky Farm and the Yokohama Finance Bureau concluded a partnership agreement and launched a campaign for local shopping districts and restaurants centered in Chinatown and Motomachi. Restaurants and others were able to gain delivery and takeout opportunities, and Sky Farm improved its results. This is the result of an attitude of willingness to connect and cooperate with anyone, large or small.
The Age of Separating the Public and Private Sectors Will End. Diversity That Leverages Each Other’s Potential Will Create the Next Innovations
In recent years, the Yokohama Minato Mirai 21 area has been concentrating major companies and R&D bases. Taking advantage of the COVID-19 pandemic, the city is expanding its business network and community by leveraging the strengths of corporate clusters in the area and expanding its activity zone.
Kim：I think the COVID-19 pandemic is a critical situation in anyone’s eyes. In order to confront this situation, a variety of people must work together, going beyond their own individual positions.
Mitsubishi Estate aims to create new value by encouraging people with various attributes to mix together. This means fostering diversity—across nationality, enterprise, and age—of people who visit the city. Yokohama Landmark Tower, a leading project in the development of Minato Mirai, opened nearly 30 years ago, but as the progress of development passes 90%, we can now see the completed form of the city. In the future, we will need to shift from hardware to software, to build a community.
How do you link companies and human resources? What is born from it? The results will become the appeal of the city. In the future, we will expand our circle by strengthening cooperation with neighboring regions that have a different appeal from the Minato Mirai 21 area, such as Kannai and Noge. In particular, we believe it is extremely important for venture companies that are clustering in the Kannai area, where redevelopment is building up momentum, and R&D companies that are clustered in the Minato Mirai 21 area to collaborate in order to bring about open innovation. YOXO BOX will be the first step towards that move.
Okuzumi： I believe that it is in the best interests of the region, as a whole, that various players interact and cooperate with each other. For example, there are many large enterprises in Minato Mirai. Startups and small & medium-sized enterprises (SMEs) have gathered in Kannai. Yokohama must play a hub-like role in between them.
Personally, I think that the era of thinking of the private sector and government separately is already approaching its end. We should be able to diversify and make the most of each other’s possibilities in society, without dividing our positions by saying “as a civil servant” or “as a company employee.”
Open innovation is moving from a boom to a phase in which necessity is required. In the future, it will be difficult for a single company to fulfill all services. The public and private sectors must work together to promote collaboration through open innovation and build business models suited to new lifestyles in the face of the COVID-19 pandemic, for example.
Kim： As Mr. Okuzumi says, many things are created through human-to-human connections. As a matter of fact, sometimes, the person whom the City of Yokohama connected me with actually offers another encounter and a new project is born. The first step in generating innovation starts with connections. It is important to not try to solve everything within one organization, whether it be a company or government.
In recent years, social issues have become increasingly complex and rapidly changing. There will be limits to the problems that can be solved by a single organization. By bringing together different technologies, know-how, and assets, individual businesses will become stronger and more competitive. That’s why open innovation is now needed in a manner that unifies the public and private sectors.
・The City of Yokohama has aggressively attracted major companies and their R&D bases, and has provided support for life sciences and IoT demonstrative experiments.
・Yokohama, where the headquarters and R&D bases of major companies are located, is an area where open innovation and high synergies are expected.
・This is a “microcosm of Japan,” with a variety of surrounding areas, from urban to residential.
・For businesses, the advantage of collaboration with government organizations is that they can find long-term partners.
・To resolve social issues and achieve development for the region as a whole, it is important to build relationships with people from various positions and organizations, and to share each other’s resources.
・In the future, how you link companies and human resources and what is born from it will become the appeal of the city.
・The era of thinking of the private sector and government separately is approaching its end.