Special Issue

Collaborations for New Business Creation

Initiatives to Create New Businesses
in Collaboration With Startups
Takeshi Namegaya*1, Noriyuki Yokouchi* 2, Kouki Sato* 3, Takeshi Akutsu* 4

OUR
COLLABORATIONWITHTHE
1.1.OUR
COLLABORATIONWITH
THE STARTUPS
STARTUPS
For approximately 100 years since Schumpeter1) defined“Innovation”, various organizations and institutes havebeen working on the innovation and there are various
views including its definitions and problems. The innovation can be expressed as “It is the concept which was
created by combining various technologies, products andservices in order to satisfy market needs, and which has
been accepted by customers economically and socially.”.
It is also classified as the sustaining innovation, thebreaking-through innovation and the disruptive innovation. Furukawa Electric, as well as many other large enterprises, has been stating its policy to create new businesses as one of the most important policies for managing its business and been strengthening its activities in
the promotion of innovation. In general, Japanese enterprises are good at the sustaining innovation. We surmisedthat it was because Japanese enterprises have shown
their accomplishment of a high growth in their businesses
under the soaring economic growth for a long period. On
the other hand, it is pointed out that their past success
may prevent the large enterprises from their further innovation. It has become more difficult than before for themto make a new concept by themselves separately fromsuch a business model, a way of business, and a tradition, as was experienced in their past success and to
take actions from the concept to the reformation 2), 3).
Now a days, exemplified by GAFA (four major IT enterprises composed of Google, Amazon, Facebook andApple), many present enterprises are shaken by such disruptive innovations as a fresh firm appears with a new
business model at its hand and constructs its platform. A
present supply chain is suddenly destroyed, and a newmarket appears where any current business model is not
accepted. The startup is the first on the list of potential
New Business Development Department,
Global Marketing Sales Division*2
Silicon Valley Innovation Laboratories, Furukawa Electric*3
Planning Department, R&D Division*4
Market Relationship Management Department,
Marketing Initiatives & Business Development Department,
Global Marketing Sales Division*1

small firms which generate such a disruptive innovation.
The startup challenges to create a new market and a new
business model from nothing with its original ideas andtechnologies as its core competence and is growing up at
a tremendous speed. It is their common intention for thestartups to create a new value with their brand-new innovation to make it useful for the world and the life style ofpeople. Further, the behavior of people and society has
been changing along with the highly advanced infrastructure of information such as the reduced cost of computing, and such a disruptive innovation as to respond to thechange will possibly appear more than before.
Furukawa Electric has been not only intending to develop the technological innovation by itself but also creating
its brand-new businesses in collaboration with either
domestic or overseas leading enterprises since its establishment. Furukawa Electric, now celebrating its 135th
year since its establishment, has started to challenge thecreation of the open innovation together with the startups
by joining their community where they are taking a lead inorder to innovate itself. We are not only working together
with the startups to understand their own conditions andshare the vision jointly in order to nurture the seed of a
new innovation but also making our best efforts in adopting the way of the startups and acting in an agile mannerin order to change our present way of business.
In this paper, we are going to introduce to you partiallyan example of our activities to aim at creating a brandnew innovation together with the startups.

OUR
ACTIVITIESSILICONVALLEY
VALLEYTO
2.2.OUR
ACTIVITIESININSILICONTO CREATEINNOVATIONSCREATEINNOVATIONS
2.1 Background
Furukawa Electric established Silicon Valley Innovation
Laboratories, Furukawa Electric (SVIL, hereinafter) in San
Jose, California, USA in August 2018. (Shown in Figure 1
below)
Silicon Valley is a popular name for the south part of
the San Francisco Bay Area, California, where giant IT
enterprises, from Apple and Google on down, have theirsites. And, recently it has become the world most active
area to promote the innovation, where the innumerable
startups based on their technologies are in fierce compeFurukawa Electric Review, No. 51 20202

Initiatives to Create New Businesses in Collaboration With Startups

Figure 1 The office building where SVIL is located.

tition with each other with their own technologies andideas at their hands as their arms aiming to become oneof the unicorn enterprises in the next generation, each ofwhich is the privately owned startup valued at over $1 billion. Especially, talented personnel produced from
Stanford University, U.C. Berkeley and others havebecome a great force to drive the innovation ecosystem
in Silicon Valley. And, as many as 913 Japanese enterprises, which was the largest number in the past at theend of 2017 were doing their business based on the Bay
Area, according to “On-Site Survey of JapaneseCompanies in the Bay Area, North California - surveyed in2018 -” published Japan External Trade Organization(JETRO) San Francisco in August 2018.
SVIL was established aiming at accelerating our open
innovation and gaining the most advanced technologies
in the broader fields by entering the above-mentioned
innovation ecosystem in Silicon Valley.
2.2 Features of Silicon Valley
We would like to state the features of Silicon Valley leading to the creation of innovations, in which we were
impressed through our one-year activities at SVIL.
They say that there are several reasons why Silicon
Valley has continued to create the innovations. One ofthem is the diversity. There is a very wide range in thediversity not only in the races and the nationalities but
also in each of the way of growth, the environment, theideology, the way of thinking and the taste, and further,
there is such a culture as to accept all of them. As mentioned above, this, quite rare in the world, so wide adiversity is the ground to create the innovations. And
recently, we recognize that we ourselves have been incorporated in as a part of the diversity.
Their amazing speed in driving the business and inchanging the way has attracted us as well. The gap in the
speed between the large enterprise and the startup is wellknown. And we have been amazed by its agile responsewhen having actual contact with the startup. Further,
especially in the field of software technology, the spending time until the social implementation is so short that it

is not a rare case for the startup to launch its official service in half a year from its start of the business. Although
we are sure that the number of vanishing technologies
may be much larger than that of successful technologies,
the function as the site to test the most advanced technologies may also attract the hardware technology whendeveloping it to the launch in a short period.
It is the mind and the energy of each individual entrepreneur, investor, engineer and partner that strengthen
the power of driving the innovation ecosystem. The startups are not always necessarily headed by young entrepreneurs. We feel their strong intention that their teamshould be always positive to realize their own vision andaccomplish something, regardless of their age or experience. This kind of mind is affecting people around and wehave been already influenced considerably as well.
2.3 Our activity at SVIL
Based on Furukawa Electric Group, Vision 2030 4) aiming
to create solutions for the new generation of global infrastructure combining information, energy and mobility, we
think we should make our first step to create new businesses by implementing the digital technology aggressively, which is being produced in Silicon Valley and its
surroundings in addition to our core technologies, such as
in metals, polymers, photonics and high-frequency.
As a foothold to enter the innovation ecosystem, wecame to a partnership agreement in February 2019, with
one of the largest-scale accelerators in Silicon Valley. It
gives us such an opportunity through various events
sponsored by the accelerator to search digital technologies required by us and to bridge contact points with thestartups. And we have been aggressively participating in
the events related to the startups as well, which were notsponsored by the accelerator under the agreement with
us to raise our presence in the community of the startups.
In March and November of 2019, we participated in theevent sponsored by JETRO Toronto to introduce ouractivities at SVIL to develop the open innovation to thestartups in Canada. Through these activities, we havealready started Proof-of-Concept experiments with several of these startups
2.4 Toward Future Activities
We would like to tell you what is required to carry out the
open innovation based on our site in Silicon Valley andcreate new businesses and innovations from now on.
Those who have succeeded at a large enterprise in theco-creation with the startup and those who have beenpromoting the matching between a large enterprise andthe startup at a venture capital or an accelerator declarethat the resolve of the executive and the understanding of
the middle management are essential to succeed in the
open innovation. On the other hand, we hear that there
are not few cases where a difference in the consciousness generated between a team located in Silicon Valley
and that in Japan makes it difficult to advance their progress. It may be necessary for the executive, the middle
management and the young people who will be the pillars
Furukawa Electric Review, No. 51 20203

Initiatives to Create New Businesses in Collaboration With Startupsof the next generation to visit Silicon Valley actually andfeel its energy as the system to share more of the knowledge learnt and experienced in Silicon Valley. We thinkthat if we behave as mentioned above, the problems
which actually we want to solve will become clearer andmore concrete instead of those which we can solve. And
such a concrete measure is required as to adjust the difference in the sense of speed between a large enterpriseand the startup as mentioned above. We cannot accelerate the speed of our way in the present business as fast
as to catch up the speed of the startup. After understanding it, can we build such a system as to fit the co-creation
with the startup?
One year has passed since we started our activities at
SVIL. And we feel that Silicon Valley is asking us whether
we are serious in the developing the open innovation.
Raising our level of the experience not only as SVIL but
also as all Furukawa Electric, we are intending to be afrontrunner to create a new social infrastructure.

IMPLEMENTATION
3.3.IMPLEMENTATION
OFOF
THE ACCELERATHEPROGRAMACCELERATOR PROGRAM
TOR
Furukawa Electric, in collaboration with Creww Co., Ltd.
carried out the program “Furukawa Electric Accelerator
2018” 5) for approximately half a year since May 2018,
through which we intended to co-create new businesses
with the startups.
In this program, we opened our exclusive web site in
the home page of Creww and we accepted the proposals
for collaboration from the startups which had originalideas and unique know-how on condition that our management resources should be used, and the startups
could find out the synergy to create the business model
for a collaboration with us in a speedy manner.

We have determined three major initiatives, “Strengthen
and transform the businesses”, “Expand sales in the
global market” and “Accelerate the creation of new businesses” in our mid-term management plan “Furukawa G
Plan 2020, Delivering sustained profitable growth”, therefore we have established “Fun Lab” in Yokohama corresponding to the initiatives. In this program, “Take a Great
Leap out of MONOZUKURI (manufacturing) in the 134th
Year Since Our Establishment” is our theme. We intend to
generate the innovation in the life infrastructure which will
support our society in the future with the creation ofbrand-new businesses together with the startups freefrom our present infrastructure businesses which havebeen our main ones. And we are aiming at creating the
new value not only to make our local community more
prosperous but also to solve the problems of our wholesociety.
The promoting team consists of members mainly fromour Planning Dept. of R&D Div., New Business Development Dept. (at the time) of Strategy Div., and Market
Relationship Management Dept. of Global Marketing
Sales (GSM) Div. and supporting members will join to theteam from our related departments if necessary.
Figure 2 shows an image of the web site opened exclusively for Furukawa Electric Accelerator Program.
As shown in Figure 2, setting two sub-themes as 1) The
life base to support the society in the future and 2) The
conceptual image of a new vehicle, we have accepted
the proposals for collaboration given by the startups. And
at that moment, we gave the following six items as the
management resources provided by Furukawa Electric,
which the startups can make use of.
(1) Open innovation facilities: Fun Lab
We have established “Fun Lab” as a venue for the

Figure 2 Images of the web site exclusive to our Furukawa Electric Accelerator Program.
(Japanese web site)

Furukawa Electric Review, No. 51 2020

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Initiatives to Create New Businesses in Collaboration With Startups

open innovation in our Yokohama Works to further
accelerate our technical innovation. Here, we candevelop a product from its planning up to making its
prototype within our one-stop service and make gooduse of our technologies cultivated in our long history.
(2) Capacity for technological innovations
We have seven R&D sites in total, four in Japan andthree overseas. Provided with the broad technicalbase including the technologies cultivated at thesesites, we can either solve technical problems or develop new businesses.
(3) Broad base with our customers
In twenty-one countries all over the world, from ninesites for our sales and seven sites for our productionin Japan on down, we are producing and selling our
optical fiber, power cables, automotive products andothers. We can make good use of our broad links to
the telecommunication carriers, the power companies
and the automotive manufactures located all over theworld.
(4) Links to local governments
We have links to many domestic and overseas government agencies and local governments as well,because we are producing various products to support the social infrastructure. Furthermore, we havebeen taking care of the link to the local community
through our Corporate Social Responsibility (CSR)
activity to make it possible to contribute to the vitalization of local economies.
(5) Global networks
We have a global network system consisting of morethan 120 companies all over the world. We can makegood use of this network system of Furukawa ElectricGroup all through the creation of a new business.
(6) Sports & culture
We have been supporting the activity for the events ofsports and traditional culture, from “JEF United
Ichihara-Chiba” affiliated to Japan Professional
Football League on down, to achieve a further prosperous society. We can make good use of such ascene where many people get together such as in asoccer game and in a motor sports event.
We have received proposals for collaboration from forty-five startups in total during two weeks from the application. With them, we have checked their consistency
against our themes, interviewed directly with the founderand had internal discussion on the possibility to create a
new business.
Finally, at the secondary selection in last August after
approximately three months since the start of receiving
the proposals, we have selected three firms and determined to carry out our demonstration tests so-called the
PoC (Proof of Concept) with them to examine the hypothesis required to assess on our commercialization. (SeeFigure 3)

Application: 45 startups
Document screening: 37 startups
Brush up: 17 startups
Primary selection: 7 startups
Secondary selection: 3 startups
Figure 3 Process of selection.

Now, we have learnt a lot such as the sense of time for
their decision-making, their enthusiasm for solution ofsocial problems and the sense of crisis on their business
continuity through implementing the accelerator programthat lasted for 3 months with the startups. On the other
hand, we have some problems left even with our best
effort to create a new business such as involving very few
of our departments especially our business units related
to the new business.
We are going to make full use of what we have learnt inthis program to examine the collaboration with the startups at the scene provided by Innovation Leaders Summit(ILS) or WeWork, which we are going to introduce in thefollowing chapters. For example, at the ILS Power
Matching Event, General Manager of R&D Div. has been
taking the lead in carrying out our activities.

POWER
MATCHING
EVENT
4.4.ILSILS
POWER
MATCHING
EVENT
In Chapter 3, we have introduced our collaboration activities with the startups carried out in the way of the accelerator program to accelerate the commercialization ofunique ideas of the startups by making good use of the
management resource of Furukawa Electric. In this chapter, we are going to introduce our collaboration activities
with the startups, which is known as “Matching” in which
we made good use of technologies of the startups tocover the so-called “missing piece” of Furukawa Electric.
The 7 th Innovation Leaders Summit (ILS) Power
Matching 6) was held for 3 days from October 28 to 30 at
Toranomon Hills, which was advertised as one of the largest matching events in Japan with the startups. It was alarge-scale matching event with actual participants consisting of 115 large enterprises, 582 startups in total
including 177 enterprises from overseas and a total of
10,856 people present. Our joint team of R&D Div. and
GMS (Global Marketing Sales Div.) participated in it for
the first time for Furukawa Electric. We had meetings with27 startups including those recommended by the secretariat of ILS in total.
Targeting at achieving of Furukawa Electric Group,
Vision 2030 4), R&D Div. selected such startups that possessed the storage battery technology, the wirelessFurukawa Electric Review, No. 51 2020

5

Initiatives to Create New Businesses in Collaboration With Startups

power transmission technology and the drone technology
as mobility and on the other hand, GMS selected such
startups that possessed the technologies of MaaS
(Mobility As A Service), sensing, healthcare and Artificial
Intelligence (AI) which were recognized as necessary in
our marketing activities. And we had as short as a
20-minute meeting with each of them to find out the possibility of the collaboration.
A feature of ILS Matching is such as a scheme isadopted as to let a decision-making executive of thelarge enterprise to participate in the meeting with thestartup. This time, General Manager of R&D Div. participated and took the lead in the interview and the discussion with the startups. (See Figure 4)

such as power cables, optical fibers and automotive
products, our business is mostly centered on the B-toB-model. However, it has been getting more important todevelop our products and services matching to the market demands by collecting VoC (Voice of Customer) fromend-users and B-to-C companies which stay closer tothem.
By utilizing the community of WeWork, where many
enterprises in various industries are using, we are not
only collecting the marketing information essential fordeveloping a new business but also searching partners tocollaborate with. Many local governments such as
Kanagawa Prefecture, Nagoya City, Kobe City and
Shizuoka City are also using WeWork. And we are developing collaboration and cooperation with them, which willcontribute to solving social problems in their local communities.

Figure 5 WeWork members of Furukawa Electric.

REFERENCE

Figure 4 The Furukawa Electric team participating in ILS Power
Matching (at the top) and a view of the interview (atthe bottom).

OPEN
INNOVATIONACTIVITYAT
5.5.THETHEOPEN
INNOVATIONACTIVITYAT WeWork
WeWork
WeWork has been developing the business to provide theco-working spaces to its members in 111 cities of 29
countries. More than 520,000 people are using the coworking spaces worldwide. In Japan, they operate 26
offices in 5 cities including Tokyo, Osaka and Fukuoka,
and more than 15,000 people are using them (as of
September 2019). We, Furukawa Electric has started touse their office in Yokohama since May 2019 as one of
our open innovation bases. (See Figure 5.)
Since the speed of technological innovation has been
drastically accelerated, we believe that it is essential tograsp changes in the market rapidly to explore and develop new businesses. As we are a manufactureing company which is producing mainly material-based products

1) Schumpeter: Theor y of Economic Development (Theorie derWir tschaftlichen Entwicklung) (1912) translated by Yuichi
Shionoya et al., Iwanami Bunko (1912), (in Japanese).
2) Clayton M. Christensen: The Innovator's Dilemma, When New
Technologies Cause Great Firms to Fail (in Japanese) supervised
by Shunpeita Tamada and translated by Yumi Izuhara, 1997,
SHOEISHA.
		 The English book in the original is as follows;		 Clayton M. Christensen: The Innovator's Dilemma: When New
Technologies Cause Great Firms to Fail (Management of
Innovation and Change), Harvard Business Review Press
3) GLOBIS Insights > Career Success > GLOBIS Graduate School ofManagement >The Reasons Why Japanese Companies Are Not
Good at Starting a New Business (Referred on Jan. 22 2020)		 https://globis.jp/article/7001 (in Japanese)
4) Furukawa Electric HP > For Investors > IR Library > Mid-termManagement Plan Briefing > Progress of Mid-term Management
Plan “Furukawa G Plan 2020”- issued on May 28, 2019 (Referredon Jan. 22, 2020)
		https://www.fur ukawa.co.jp/en/ir/librar y/finalrepor t/pdf/
2019/20190528_pre01_en.pdf
5) Furukawa Electric HP > News Release > “Furukawa Electric
Accelerator 2018,” an Open Innovation Program by Furukawa
Electric and Creww, Starts May 14 (Referred on Jan. 22, 2020)
		https://www.furukawa.co.jp/en/release/2018/kenkai_180507.
html6) Innovation Leaders Summit 2019 Power Matching HP (Referredon Jan. 22, 2020)
		https://ils.tokyo/

Furukawa Electric Review, No. 51 20206