Fostering Entrepreneurship in an Unlikely Place: ETIC, Japan (1993-2023)
Japan may not be known as one of the most entrepreneurial countries in the world. In 2022, theSwiss-based Institute for Management Development’s World Competitiveness Index ranked
Japan 34th out of 64 countries when it analyzed and ranked countries according to how they
managed their competencies to achieve long-term business value creation. As for businessefficiency, Japan ranked 51st, moving down the ladder from ranking 36th back in 2018.
However, there is one organization that has been steadfastly cultivating entrepreneurship for thelast thirty years in Tokyo. ETIC, which stands for Entrepreneurial Training for Innovative
Communities, has a solid reputation as an organization that supports entrepreneurship. As oftoday, ETIC has nearly 50 full-time employees and about 100 part-time employees with anannual budget of close to 10 million dollars. In the last 30 years, they successfully supported
more than 2,000 entrepreneurs and launched over 100 entrepreneurial projects all over Japan.
This is their story.
The Torchbearers: Haruo, Atsuko and Koji
When Haruo Miyagi entered Waseda University in 1991, Japan was in the midst of an
unprecedented economic boom, the so-called bubble era. During his first year of college, anolder student unexpectedly introduced Haruo to Tokyo-based entrepreneurs, who were starting
their own companies. Haruo didn’t know any entrepreneurs in those days and was entranced
when he found out about the way they lead their lives. They were pioneers in achieving their
dreams and were a different caliber of people, pursuing non-traditional paths. Haruo was notinterested in joining his peers who donned a navy suit and sought work at major corporations
where lifetime employment and income security were promised upon graduation. He wanted apath different from the dream of many parents whose children studied at Waseda, an elite
university in Tokyo. “I thought it was important to share the stories of the entrepreneurs with mypeers. I wanted to show what it means to own your destiny,” he said.

ETIC in the early 1990s1

In 1993, Haruo started to organize a series of study groups, inviting young entrepreneurs to comeand speak about their work and vision to the students. The following year, he decided to scale out
his activities and organized the first Student Entrepreneur Coordination Conference (Gakusei
Antorepurena Renraku Kaigi) to gather student entrepreneurs from Tokyo and the surrounding
prefectures to learn and network. Over the course of a year, they organized more than 100
conferences, their activities were featured in Japanese newspapers and their work drew theattention of ordinary people. Soon after, these efforts led to a collaboration with the thenMinistry of International Trade and Industry (MITI) to co-organize entrepreneurial events
targeting college students from all over Japan. In four years, these events exposed more than
5,000 students to the potential of entrepreneurship.
Originally from Hiroshima, Atsuko Suzuki moved to Tokyo in 1991 to enroll in Waseda
University where she planned to pursue her interest in philosophy. Although she was in the sameclass as Haruo, she had not interacted with him. A classmate, knowing that Atsuko already had
three years of work experience and that she was eager to start her own business – an unusual
move for a woman in those days – introduced her to Haruo. She still remembers the day she firstmet him. “I thought he was different because he was wearing a suit at school,” she said. Later it
became clear that he was taking on jobs outside of the university, working for a television stationand teaching at a cram school, which required him to dress formally. Not long after thisencounter Atusko began organizing Hauro’s student events while simultaneously working on her
own business plan.
Koji Yamaguchi grew up playing baseball and was hoping to pursue a career in the sport when
he entered Waseda University in 1994. Upon discovering that his baseball path was no longer an
option, he gave up his dream and joined AIESEC, a global student organization that promoted
entrepreneurship and internship. There, he hoped to leave behind his only vague ideas about
what he wanted to do in college and find a new goal. AIESEC provided Koji with manyeye-opening experiences such as dispelling his preconceived image of entrepreneurs as simply
the nouveau riche and learning that entrepreneurs are people with vision who pioneer their own
path. At AIESEC, Koji ran the internship program and saw with his own eyes how the three tosix-month internships provided life-changing experiences for the students by giving them
pathways for charting their own lives. Around the same time, the Japanese government started topromote internship programs within Japanese companies, placements which initially lasted only
a couple of weeks. Since Koji knew Haruo through co-organizing AIESEC programs, later in his
junior year, Koji consulted with Haruo, whose strong network of Japanese startups needed
student interns. Together they worked to expand the internship program. Reflecting on thisperiod, Koji said, “I did go to the university but was spending a lot of time at the AIESEC office.
I was wearing a suit as I needed to go out and meet with people at corporations about theinternship program.”

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Koji leading the Matching Fair for the Entrepreneurial Internship Program in 2000

Looking back, Haruo said, “By holding study groups or asking corporations to offer internships,
we connected people and created an impact all around, which led to engendering new values. We
didn’t have money, power and authority, but the government asked us to work with them. That
made me realize that as long as we were neutral and were not looking for profits, our passion andtrustworthiness can be leveraged to make a difference or move things forward. And, it’ssomething that couldn’t have been done on my own. I learned so much from this experience.”
After five years of attending college while simultaneously creating study groups, organizing
conferences, developing internships, and holding down various part-time jobs, he wanted tocontinue his deeply satisfying work of nurturing entrepreneurship and offering internships after
his graduation. This was challenging because he hadn’t figured out a way to turn his projects intoa business. One thing that was clear to him; the entity he was going to create would be a
nonprofit. Unfortunately, it was hard to incorporate nonprofits in the mid-90s due to a lot of red
tape and the requirement to have nearly a million dollars as starting capital.
The incorporation climate became favorable in 1998 after the passage of the NPO law (Act on
Promotion of Specified Non-profit Activities) in Japan. This new law made it easier toincorporate nonprofits which Haruo, Atsuko and Koji saw as a timely opportunity to apply forthis new status. After submitting the application in 1999, ETIC was formally incorporated a year
later, as a nonprofit organization in March 2000. Atsuko became one of the executive directors,
where her role was to lead all operational matters including accounting and human resource
management while Koji and Haruo in their executive roles focused on creating andimplementing the business projects. But it was as a unified team with a shared vision that they
met people at corporations and organizations to pitch their ideas.

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Co-founders of ETIC (L to R): Koji, Haruo, Atsuko in 2014

Driving Change through Social EntrepreneurshipAs new co-founders of a fully incorporated nonprofit, Haruo, Atsuko and Koji shifted their focus
to social entrepreneurship wherein individuals could apply their entrepreneurial ideas and skills
to solve social issues in Japan. In 2001, only a year after being incorporated as a nonprofit, theETIC team launched “STYLE,” a pitch contest designed to attract people interested in launchingbusinesses to solve social challenges. The pitch contest provided young entrepreneurs withmentorship from experienced entrepreneurs, a program that greatly increased the likelihood of
their success. In 2002, NEC collaborated with ETIC to launch Japan’s first program to supportsocial entrepreneurs which grew into the NEC Social Entrepreneurship School and ran until
2009. Finally, after multiple corporate collaborators joined ETIC to nurture entrepreneurs, in
2010, ETIC created the Social Entrepreneurship School Initiatives, a program which continues
today and supports on average eight social entrepreneurs annually. It has evolved into one of
ETIC’s main programs over the years. Haruo remembers how venture capitalists were astonishedby ETIC’s idea of nurturing entrepreneurs who would tackle social issues.

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“STYLE” - The pitch contest for social entrepreneurs in the early 2000s

ETIC grew organically by developing new programs to fill new social needs such as low birthrate and aging population in rural areas all over Japan which led to the development of regional
revitalization programs. ETIC collaborated with the Ministry of Economy, Trade, and Industry(METI) to serve as an intermediary organization that connected students and young people tolocal governments, businesses and colleges. Their mission to support startups in regional areas
and to establish internships in local companies would help both parties change their destiny.
“Challenge Community Project” started with only five regions in 2004 and expanded to morethan 300 regions by 2020.
One of the common characteristics of ETIC’s programs is the mutual change and development
experienced by all participants; learning is omni-directional. Not only are students transformedby their immersion in local businesses, the business owners are also changed by their adoption ofyouthful ideas, skills and experiments. Haruo recalls an encounter with the president of a
medium-sized company in Niigata supplying school meals who initially appeared rigid,
introverted and struggled to communicate key aspects of his business. However, after taking on a
student intern, the young person's passion ignited a spark within the president that helped totransform him. When Haruo revisited him about a year later, he noticed a significant change inthe president's demeanor. The once hesitant and reserved individual now exuded confidence andspoke eloquently about his business projects during public speaking events.
Haruo and Atsuko are both in agreement that, although each ETIC project may have different
features, they are fundamentally grounded in the same goal, which is to nurture ecosystems whileproviding the educational and social connective tissue between students, companies andgovernment agencies. It’s a web of connections that nurtures each persons’ mental, emotionaland spiritual transformation and enables their entrepreneurial efforts to flourish. As Haruo
describes it, “The growth of an entrepreneur cannot be predicted. It is important to value theautonomy of entrepreneurs and not try to control them. They should not try to fit themselves intoa certain mold. ETIC serves as the catalyst to realize their full potential.”5

By 2010, ten years after it was incorporated, ETIC’s small office in Shibuya was brimming withstaff: they had 24 full-time employees with an annual budget of approximately 10 million
dollars. Their hallmark internship program Entrepreneurs Internship Program (EIP) started in2017 was on track to achieve 1,200 companies accepting interns with 2,800 students
participating by 2013. Some of the startups that accepted interns also became very successful.
Mixi, the social networking site founded by Kenji Kasahara in 1999, became a publicly traded
company in 2004. DeNa founded by Tomoko Namaba, a startup which offers mobile and online
services, had an IPO in 2005.
The Great East Japan Earthquake
On March 11, 2011, Tohoku, in Northeastern Japan, was struck by a major earthquake andtsunami, a disaster which led to the meltdown at the Fukushima nuclear power plants. This
catastrophic event resulted in the death and injuries of more than 21,000 people, and forced morethan 300,000 people to evacuate their homes. The direct financial damage from the disaster was
estimated as close to 200 billion dollars which included over 400,000 homes which werecompletely or partially destroyed. Three days after the disaster, ETIC launched a project tosupport the survivors of the disaster with their day-to-day living and efforts to rebuild the region.
During the emergency relief phase, ETIC focused first on the most vulnerable people, who werethe elderly and children, among the survivors.
Over the course of the relief phase, ETIC’s support slowly evolved into the “Right-Arm Fellows
Program”. When many young and competent urbanites expressed their interest in helping out therecovery of Tohoku, ETIC saw an opportunity to meet the needs on the ground by becoming thematchmaker that identified, verified and sent the appropriate skilled person to assist heads of
local nonprofits and owners of small-to-midsize businesses. Using grant money to carry out the
program, ETIC sent 262 right-arm fellows to work on 154 projects in Fukushima, Miyagi and
Iwate prefectures over a six-year period. Here too, mutual transformation was realized as morethan 70% of the fellows ended up staying in Tohoku after the completion of their fellowship, andsome started their social ventures in their new homes.

Koji explaining the Right-Arm Fellows Program in 20116

The Tohoku disaster also created new challenges for Koji who played a pivotal role in therecovery efforts. His deep commitment and concern inspired him to co-organize a three-year
leadership exchange program in collaboration with Japan Society, a nonprofit based in New
York. This unique exchange brought leaders from Tohoku to meet with and learn from,like-minded and resilient leaders in the United States, who lived through the aftermath of theirown local natural disasters and economic crises. The exchange took Tohoku leaders to several
cities, including New Orleans, Detroit, Wilmington (Ohio), and New York City. And theprogram's impact inspired one leader from Tohoku to initiate the Onagawa Data Project based on
the work of The Data Center in New Orleans, a fully independent, neutral nonprofit whichempowers civil society leaders to make informed decisions based on reliable data.

Reconstruction of widespread destruction in Tohoku

While the leadership exchange program was satisfying, Koji realized that he could not only focus
on nurturing entrepreneurs to create major change in society, but also needed to involve
mainstream organizations and engage them as stakeholders in order to accelerate the socialchange that ETIC envisioned. With these insights in mind, Koji started to involve big
corporations and local governments in the recovery work in Tohoku.
In 2016, with lessons from the Tohoku recovery effort still fresh in everyone’s mind, ETIC
established the “Local Venture Council” to foster startups in regional areas that will create new
economic activities. The Council does this by engaging with local governments all over Japan toshare and learn from each other’s challenges and to solve common issues that they face. From2016 to 2021, the Council helped create 274 new businesses, generated more than 4 million
dollars as revenues combined and matched 400 people to new jobs.

7Local Venture Council gathering in 2019

To nurture deeper engagements with corporations, ETIC launched “and Beyond Company” in
2018, a coalition with more than 10 corporations to work on projects for social good. The
coalition’s goal was to come up with projects that were not constrained by the businesses that themember companies were involved with. The coalition typically met in the members’ offices(moved online since 2020) once a month to discuss new business ideas and projects in acongenial space where everyone supported each other and felt safe about discussing free-flowing
ideas regardless of which company they worked for. The meetings foster creativity and an
entrepreneurial mindset and as of 2023, have 17 corporations actively involved in starting newsocial good projects.

The “and Beyond Company” meeting in 2023

In 2013, just two years after the Tohoku Earthquake, Tokyo had been selected to host the
Olympics Games scheduled to begin in May 2020. The last time Japan hosted The Games was in1964. With 2020 approaching, the Tokyo Metropolitan Government was deep into preparations
for the Olympics, while the memory of the devastating Tohoku disaster was still fresh in people's
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minds. Fusing the lessons of Tohoku with ETIC’s successes in corporate and government
partnerships, Haruo saw the opportunity to leverage the Olympics as a platform for social change
where ETIC could showcase the reconstruction and recovery of Tohoku to the world. However,plans didn’t pan out as expected. In March 2020, the Covid-19 pandemic created havoc aroundthe world prompting the Tokyo Metropolitan Government to postpone the Olympics until 2021.
And as if pushed forward by unseen tectonic shifts, ETIC announced the complete
transformation of the organization. Change was in the air.
The New Beginning
From humble beginnings of a college study group focused on entrepreneurship, ETIC grew into
an impassioned nonprofit adorned with a diverse portfolio of projects and a solid track record ofbringing together students, companies, government agencies, and skilled mentors from all overJapan to support the growth of entrepreneurs and social entrepreneurs. As ETIC’s expertise andreach grew, so did its operational challenges, a classic sign of growing pains. Larger projects andballooning headcount pressed Haruo, Koji and Atsuko into stretches of relentless work. With
little deviation from their original roles, Haruo and Koji continued to focus on project
management, while Atsuko led human resources, and administered all financial matters. As thethree co-founders steered the nonprofit to address more social needs, they devoted themselves toan unsustainable workload. By 2016 they were supervising more than 40 business projects, their
50 staff members became overworked, organizational silos emerged and ETIC itself became
hierarchical. These by-products of rapid growth were in direct opposition to ETIC’s ultimate goal
to unleash each individual’s entrepreneurial mindset in order to bring about social change andmutual transformation. Clearly ETIC could not continue on its current path.
When a staff retreat was organized in 2016, the leadership team heard an outburst of complaints
about the state of the organization. ETIC collectively recognized the need for a better way tomanage their organization. Haruo agreed with this direction because he understood that ETIC
could not become a better organization if the organization itself did not practice what it preachedand provided to others; to own your destiny, unleash each person’s entrepreneurial capacity, andfind ikigai in your work. Collectively, they were at a breaking point and needed to change how
ETIC carried out its important work. Their deliberate soul searching for the right path, theirintrospective period to look for a new way as an organization started.
In 2017, Haruo took the first steps toward exploring ways to change their organizational behavior
by looking for a new framework or model. One model that appealed to him was the Tealorganization, a concept outlined by Frederic Laloux in his book Reinventing Organizations: A
Guide to Creating Organizations Inspired by the Next Stage of Human Consciousness. When theJapanese translation came out in January 2018, Haruo read it and recognized its potential for
re-framing ETIC. He purchased copies of the book for the entire staff and in April 2018 hestarted a new study group to discuss leveraging Teal concepts for the evolution of ETIC as anorganization. Laloux, a former consultant with McKinsey, described organizations as livingorganisms that are capable of self-management. In a self-managing organization, each employee
would make their own decisions without being told directly by their superiors what to do or
having to go through an approval process. Instead, if employees need help with decision-making,9they can seek out advice from other colleagues and they hold themselves accountable for any
promised deliverables and outcomes.
Reading the book prompted them to dig deeper into the current layers and future aspirations of
ETIC. Starting in 2018, they took exploratory steps to reinvent the organization and began by
first organizing an internal training program on “listening.” These sessions provided space foreach staff member to talk about any topic they wanted to discuss with the agreement thateveryone listened to each other without judgment, criticism or interruption. The objective of the
training was to nurture a culture that supported each individual and that encouraged everyone toexpress their negative feelings including anxieties, anger and concerns. An important feature of
Teal organizations is that employees acquire the skill to understand that negative feelings are
created due to the gaps between their future self that they have in mind versus their current
reality. The important thing is to listen to these feelings and nurture a culture that is adept at
problem-solving to close those gaps and to reach the desired future state.
These new practices lead to gradual change in ETIC’s organizational culture. Formerly, the staff
tended to ask their managers to solve problems that they faced, but after learning to listen,
express their honest feelings and identify their gaps, staff started to resolve challenges on theirown. A big organizational shift was underway.
The next step toward organizational reinvention involved building on the new problem-solving
ability by encouraging self-management among staff. This required transforming ETIC frombeing an inadvertently hierarchical organization to becoming an intentionally self-managed
organization. They had been working on an organizational change since 2018, and on May 31,
2021 a public announcement was made that ETIC would become a self-management
organization. Haruo stepped down and Koji and Atsuko gave up their management positions, but
remained within ETIC with new job titles as Co-Founders/Senior Coordinators. To Western ears,
the title “Coordinator” may sound like an entry level position. However, in ETIC’s context, thisjob title reflects their approach to work and the pride they feel in calling themselves“Coordinators.” In this key role, “Coordinators” are the ones who identify the unmet needs of theentrepreneurs, they provide the necessary resources and connections for entrepreneurs to thrive,and they accompany entrepreneurs on their journey.

10Haruo (right on the front row) with staff and program participants in 2016.

In Japan, ETIC is one of the few widely respected organizations that decided to adopt the Tealorganization model. When ETIC announced its organizational change, there were, naturally,voices of support as well as skepticism. Similar to an experiment taking place in real-time, no
one knows how this change is going to unfold for ETIC or how it will impact its survival as oneof the leading incubators and accelerators for entrepreneurs in Japan. Their organizationaltransformation was a bold move; one that entrusted the current projects and future developmentof the organization into the hands of each staff member. In a way, the change was a heartfelt giftfrom Haruo, showing his confidence and trust in the entrepreneurial potential and power of thestaff and the extensive ecosystems that ETIC had built over the years. Reiterating his unwaveringcommitment to omni-directional transformation, Haruo noted that the process of organizationalchange itself was social innovation.
Atsuko maintains a reality-based, open-minded attitude about working in a transformed ETIC.
“We are still undergoing the trial and error process after we made the decision to become aself-managed organization. We are taking on the challenge of running the organization together
without relying on hierarchies. The most significant change is that each individual in theorganization has a higher sense of responsibility, and at the same time, more discretion. This shift
has increased the joy factor in each individual’s work.”
The Quiet Radicals
When asked how she would compare ETIC to a movie, Atsuko sees similarities between theorganization and the Star Wars movie series. “There were no wars or fighting but I feel that wewere always exploring. There are so many kinds of life forms and planets unfolding over many
generations, many layers in many locations.”

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As ETIC continues to explore its own “life form” and how it can impact the growth of other“planets,” one clear outcome is that entrepreneurship has certainly emerged as a viable careerand lifestyle choice in Japan over the past three decades. Haruo is pleased to witness the changes
in individuals, companies, governments, and even regions. He said, “I think the Japanese society
is more receptive in accepting new values and pursuits. While ETIC’s mission to nurture
entrepreneurship was considered unique in the past, I believe ETIC has reached a criticaljuncture to step up to assume a more significant role. From a counter-culture existence, I think
we need to become a driving force for positive change in society.”

ETIC staff retreat in 2023

Despite their admirable, wide-ranging progress, Koji acknowledges that they are still in the midstof a steadfast journey, and therefore defining success can be a challenge. However, he is certainthat the network ETIC has built over the years, including entrepreneurs and program alumni, is avaluable asset that will continue to nurture new growth in uncharted directions. He is satisfied
that the ETIC community has expanded, and they have established mutual trust among its
diverse members; students, regional leaders, rural communities, the national government, andcompanies. Quite a few company founders remain close to ETIC and continue their engagement
to support entrepreneurship while bringing about social impact.
In 2020, Kenji Kasahara, the founder of Mixi, started The Mitene Fund with his own money tosupport organizations that work with families and children on issues related to poverty, neglect,abuse, and health. ETIC provides organizational support for the fund which has supported 91
nonprofits with a combined value of 12 million dollars.
Shintaro Yamada, the founder of the popular online marketplace Mercari, used to organize
student conferences with Haruo during their college days. He now supports the Makers
University U-18, a program that is designed to nurture next generation innovators andentrepreneurs under 18. He started the D&I Foundation with 30 million dollars in 2021 to give
scholarships to female high school students interested in STEM. Over the two year period, 1,100
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scholarships have been awarded by the foundation under the leadership of a long-time ETIC staff
member with management expertise, who has taken on the role of Executive Director.

The Mitene Fund in 2023

It has been nearly two years since Haruo stepped down from his role as ETIC’s CEO, but he has
been busy pursuing new questions and learning about the history and wisdom of Indigenous
peoples and cultures all over the world. He said, “During the Jomon period in Japan, whichlasted for thousands of years, there were no wars. It was a society that respected mutual aid anddid not admire those who held power or wealth. This is the opposite of the capitalist world, and it
should have more presence in the world today. I hope that Japan's traditions and lessons from thepast can be shared proudly with the world and serve as a catalyst for co-evolution. For example,
ETIC's projects for young people are funded by donations from program alumni. It is a system ofmutual aid where everyone contributes their own resources to make things happen. It was
something that happened organically outside the measurement of capitalist values. I believe that
it would be great for others to embrace these ways of doing things.”
As the person who used to oversee the financial health of ETIC, Atsuko also voiced her interest
in finding ways beyond the economic rationality that dictates the way we live and work today.
She said, “Pursuing economic rationality alone is not enough to move forward. It's okay to havepeople who pursue economic rationality to the fullest, but I think that if we create ways of living
and doing business that are not based solely on profit and efficiency, the world can become morelivable and workable for all.”ETIC seemed to have weathered a dominant social condition: gender inequality. One of the many
unique aspects of ETIC is their ability to attract and retain competent female staff. According to
the 2023 World Economic Forum Gender Gap report, Japan is notorious for its overall genderinequality ranking 125 out of 146 nations. Today within ETIC, the gender ratio of the full-time
staff is 1 and 4 between male and female. Over the years, Atsuko said that she had never felt any
discomfort or sense of disadvantage as a woman within ETIC. The only time that she needed totake some time off was after she gave birth to her two children. Being the oldest female staff
member with children, Atsuko added that she made sure that there were programs that provided
support to working mothers with young children within the organization. Nowadays, her concern
is how to lead the way as the oldest female staff member. Currently, there are hardly any role13

models for her and she wonders how she can transition into being one of the eldest women atwork in the organization.

“Social Impact Initiatives for 2020 and Beyond” Conference in 2016

What is the implicit significance of ETIC’s transformation, which effectively dismantled its
internal hierarchy while continuing to pursue a unique path as a nonprofit organization? Even in
Japan, the often-celebrated narrative of entrepreneurship is associated with the so-called “Hero’s
Journey,” a Western concept, where a solo individual, often male, builds an organization from theground up by overcoming a variety of competitors in order to emerge “successful”, “wealthy” orhaving acquired more freedom at the end of the journey.
In contrast, ETIC is writing a different narrative and is trying to unlock a different kind of future.
Haruo said, “What we did may look like a new challenge. However, we are just respecting theentrepreneurial capacities of each staff member. The point is not to control anything and trust theautonomy of the ecosystems. We want to draw out the potential of each person. There are infinite
and diverse possibilities just like the way we say there are eight million deities in Japan. Thatmeans there are many gods and each of them has its own value. And each of them is wonderful.
Maybe these are notions that are unique in Japan and something that we can share with the restof the world.”
When asked to describe the spirit of ETIC, Koji paused for several minutes and recited a quote
by Saicho, the monk who started the Tendai sect of Buddhism in the 8th century; “By lighting up
your own corner of the world, you light up the whole world.”

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ETIC staff gathering in 2020

Co-authored by Fumiko Miyamoto and Ajay Revels

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