world’s most crowded countries. With 2.7 percent of the world’s population yet only 0.3 percent of the land area, Japan has few natural resources and is located on the fringe of the Asian continent, which is far from the world’s main markets. Yet in 1986, Japan achieved a GNP of $2.3 trillion, 11 percent of the world’s economic activity. The locomotive force of the Japanese economy is clear. It is technology. Many attempts to understand the basis of Japan’s success, however, are marked by misconceptions. Some commentators say Japan has merely followed in the path of Western Europe and the United States or imitated ideas from developed nations and in this way moved ahead in manufacturing and other technologies. Some of these statements may be true, but my experience in the Japanese manufacturing sector since World War II has provided an insight into two key factors of Japan’s success. The first factor is the way Japanese manufacturers develop new products through innovative technology. The second factor is the way the Japanese cope with and overcome problems that occur on the manufacturing shop floor.

In October 1985, I attended a conference in Toulouse, France, on advanced technology. During the conference, I wondered whether many Western Europeans understood the real meaning of advanced technology. When new technologies appear in the world, Western Europeans tend to apply them in complicated ways such as in space technology or missiles. Since these are difficult fields they seldom apply the advanced technologies in immediately practical ways. On the other hand, the Japanese make use of new technologies in whatever form seems to be easily applicable at the time.

Consider carbon fiber, for example. It is a highly innovative new material, lighter than aluminum and stronger than steel. Japanese manufacturers first used it for the shaft of golf clubs. Next they used it for fishing rods. And because they were using these new materials for simple products, even if some minor defects occurred, serious problems were avoided. After they perfected these production techniques for carbon fiber, Japanese companies used carbon fiber in more complex applications.

A more recent example is that of shape-memory alloy. In Japan, manufacturers started using this alloy in every possible field and explored many different product areas—such as air conditioners, eyeglass frames, and coffee makers. Consequently, Japan produces more of this alloy than any other country, 90 percent of the world total.

The most important strategy for using innovative technology is discovering and developing a new, profitable market. Technology should not stay at the idea stage; it should be converted into marketable products. Japanese firms are successful at commercializing new technologies because they select technologies with ready applications and move quickly in developing and manufacturing the product. A driving force in maintaining this commercialization strategy is severe competition among Japanese firms.

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