Innovation Platform-based Silver Market
Development in Japan
Yonoshin Mori
Director, Arthur D. Little (Japan) Inc.

DISCLAIMER
No portion of these materials is to be
used or disseminated byany method without the expressed
written consent of the presenter(s)and the German Institute for JapaneseStudies (DIJ).

Arthur D. Little (Japan) Inc.
Toranomon 37 Mori Bldg. 13F
3-5-1, Toranomon, Minato-ku,
Tokyo 105-0001 Japan

Contents

Today's Agenda

12

Case Studies
1.1

Case1) Yamaha ; Instrument-Related Business for the Baby Boomer Generation

1.2

Case2) Calpis ; Creation of the Beverage/Food Business for the Silver Market

Innovation Platform and the Silver Market
2.1

Concept of Innovation Platform

2.2

Innovation Platform of Yamaha and Calpis1Transformation of the Baby Boomer Generation

So-called “baby-boomers” are shifting to the “silver generation”, and it is expectedthat the retirement of a large number of “baby-boomers” will have a significant
impact on corporate society.
Age pyramid of population as of Oct. 2004

The 1st baby boom

MenWomen
The 2nd baby boom

※Ｔｈｅ population is omitted at the age or more of 90 because the population by age cannot be understood.

Source: Ministry of Internal Affairs and Communications21.1Case1) Yamaha ; Instrument-Related Business for the Baby Boomer Generation“Music lessons for 50 year-olds or older” as a service business is earning additional
revenue along with selling instruments as a manufacturer. These two businessmodels are creating a virtuous cycle.
What isBackground?

Retirement of a large number of “baby-boomers”, loved pop music when they were young- They have a relatively large amount of money and free time, and are the “Beatles Generation”

A general instrument manufacturer covering everything, managing music schools withapproximately 700,000 students around the world at the same time
- Yamaha music schools started in 1954 and 5 mil. children have taken the courses in the past 50 years

Who isYAMAHA?

Yamaha’s Competencies• Capability to operate music classes oriented to students of different ages
• A broad ability to develop musical instruments, from grand pianos and wind
instruments to digital electronic instruments

Opened a music course; “Music lessons for 50 year-olds or older”, designed for the senior
who have not played any instruments and are beginners
What they
Achieved?

- You can take lessons without owning an instrument, not being so intensive and inexpensive

Beginning to Create a new market for the silver generation− 30 to 40% of the students have purchased their instruments, in particular, from the area ofproducts where a high profit can be expected31.1Case1) Yamaha ; Instrument-Related Business for the Baby Boomer Generation

The requirements for innovation in the silver market
learned from YAMAHA

 Consider the silver market as a “Revival market”
 A technological breakthrough is not necessarily needed to create
innovation
 Comprehensively utilize the unique management resources andskills of the company
 Establish product/service quality and a brand that satisfies thesilver generation’s “desire to have real things”

41.2

Case2) Calpis ; Creation of the Beverage/Food Business for the Silver Market

The market for Preventing Lifestyle- Related Diseases was created by innovative
products and grew drastically past several years.
Trends in the Market for Preventing Lifestyle- Related Diseases(Million yen)
300,000

250,000

200,000

150,000

100,000“Calpis CulturedMilk/Ameal S” wasreleased by Calpis

50,0000Source: H･B Foods Marketing Report 2005 by Fuji Keizai51.2Case2) Calpis ; Creation of the Beverage/Food Business for the Silver Market

With their corporate philosophy to serve the world with “delicious and healthy” food,Calpis has innovated a functional drink market for silver generation.
What isBackground?

Growing of the consciousness of silver generation’s “Nutrition Intake”- It’s from their “positive” desire to maintain the QOL (Quality of Life) as much as possible

A pioneer in the current functional beverage/food boom who has been devoted to developing
and supplying “delicious and healthy” products- Started the business developing “Calpis”, a lactic acid beverage inspired by horse milk wine

Who isCalpis?

Calpis’s Technology Platform• Starting with “Calpis Cultured Milk,” development technologies in beverages/foodproducts, as well as technologies in using fermentation and enzymes, technologies
in utilizing microorganisms, and technologies in evaluating nutrition & functionality

Released the world’s first lactic acid drink suitable for people with high blood pressure,applying the effect of Lacto-Tri-Peptide (LTP)
What they
Achieved?

- It received the “The Food Ingredient Research Award” which is given to an innovative technology/
concept by the Food Ingredients Europe (FIE)

Has maintained a certain level in the food-related drink market that isseeking to mitigate adult diseases− They released a lower-calorie version of AMEAL S, and “Interbalance L-92” for various sinus
conditions including hay fever, or so61.2

Case2) Calpis ; Creation of the Beverage/Food Business for the Silver Market

The requirements for innovation in the silver market
learned from CALPIS Apply the technologies that were cultivated over the years to thesilver market
 Re-appeal for a brand that the silver generation used to like (inthe past) Appeal for needs specific to the growing silver generation

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Contents

Today's Agenda

12

Case Studies
1.1

Case1) Yamaha ; Instrument-Related Business for the Baby Boomer Generation

1.2

Case2) Calpis ; Creation of the Beverage/Food Business for the Silver Market

Innovation Platform and the Silver Market
2.1

Concept of Innovation Platform

2.2

Innovation Platform of Yamaha and Calpis

82.1

Innovation Platform and the Silver Market : Concept of Innovation Platform

We identified a new corporate management model for innovation by carefully looking
into the “Origin of the Innovation”, i.e., Innovation Platform.
• Products• Components• Services• Business Models

Realized Layer(Created Innovation)
Strengths Brought tothe Surface

Technology Platform
Capability
Layer

Innovation
Platform

Capability that create
value using resourcesin which the company
has a strength

Resource
Layer

ValueLayer

Resources ofStrengths

Exists in the basic
component of theorganization• Technical development• Organizational management
capabilitycapability• Organizational learning capability • Product integration
development capability• Intellectual creativity• Production capability• Ability to integrate external
competencies• Leadership capability• Human resources• Relational resources- Customer base- Supplier networks- Channels- Brands• Corporate culture• Founder’s philosophy• Shared values• Facility and site resources• Intellectual assets- Technological, expertise• Intellectual property- Patents• Organizational
behavior & guidelines

92.2

Innovation Platform of Yamaha and Calpis

RealizedLayer

Capability
Layer

Music schools, pianos, windinstruments, string
instruments, percussion
instruments, and electronic
musical instruments• Capability to operate music classes oriented tostudents of different ages
• A broad ability to develop musical instruments, from
grand pianos and wind instruments to digital electronic
instruments

Ameal S, Interbalanceand others• Starting with “Calpis Cultured Milk,” development
technologies in beverages and food products, as wellas technologies in using fermentation and enzymes,technologies in utilizing microorganisms, andtechnologies in evaluating nutrition and functionality• Ability to foresee trends in the times and to continue tolaunch products onto the market• Music schools that are far more ubiquitous than others,in their number of classrooms and teachers, withapproximately 700,000 students worldwide

ResourceLayer

ValueLayer• Technology and skill in designing and manufacturing
pianos, wind instruments, string instruments andpercussion instruments accumulated over a history of
100 years• The Yamaha brand in popular music, which is
supported by the Beetles generation• A corporate philosophy of creating a touchinginspiration and culture through the technology andsensitivity that it has accumulated in the world of audioand music• A corporate culture of refining unique skills within anagile organization for each musical instrument product• Knowledge in connection with probiotics and biogenics• The Calpis brand which evokes a feeling of nostalgia in
the first postwar baby boom generation (with theslogan “The Taste of First Love,” which has become
familiar over several generations)• A corporate philosophy of providing to society
beverages and food products that are good tasting and“good for you.”• A pioneer in lactobacillus research and technology inmicroorganism fermentation

Source: Various Public Documents

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