Japanese Innovation Outposts Are King in Silicon Valley

It’s our practice to regularly study the changing trends of the so-called “corporate innovation outposts”. As an advisory firm in Innovation, we have been witnessing important changes in the last few years of how the most innovative corporates are implementing their strategy of “Open Innovation”, in an effort to be as effective as possible in ingestion of Innovation from the outside in.
The tendency to rely on outposts of innovation (often with no more than a handful of employees) has become common practise. And a fast growing one. The outposts are far from the HQs of the company, notoriously not the ideal environment to unleash disruptive innovation, and immersed in ecosystems where creativity and innovation are at the core of the local economy. Silicon Valley, Israel and China are today some of the most common destinations. The shapes and forms of such outposts have been changing over the years. From a structure that reminded a mere extension of central R&D departments, companies have been shifting to a leaner presence able to function as innovation
antennas for their corporate headquarters. Sometimes (that’s particularly true for Japanese companies) this presence takes the form of capital deployment, directly (through a Corporate Venture Capital) or indirectly (through investments as Limited Partners (LP) in 3rd party funds.).

While reviewing the presence of corporate innovation outposts of the largest companies in the world in Silicon Valley in 2019, two major insights became clear:

  • Japan is the country that has by far the largest presence of corporations in the Bay Area
  • Japan is the country where a significant chunk of capital deployed in Silicon Valley is originated

Understanding better the dynamics of these 2 trends has been the main driving force for this report. While the fluidity of the market might make the collection of some of the data less than perfect, we believe we were able to paint a pretty detailed picture of this current two-way migration of talent, ideas and capital.

by Marco Marinucci, CEO, Mind the Bridge

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