The Idea of “Smart Community”
in Restoration of Communities in the Tohoku Region
Associate Professor, Tohoku University

Yutaka FURUYA

2015.03.16

Regional Innovation Research Center supports the Third UN World Conference on Disaster Risk Reduction.

1. Smart Community
1.1 Basic Guidelines for theReconstruction
On 24th June 2011, Basic Act onReconstruction in Response to the Great East
Japan Earthquake came into force.
And based on this act, Basic Guidelines for theReconstruction in Response to the Great East
Japan Earthquake was agreed on 29th July
2011.

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It was indicated in the Basic Guidelinesthat the Japanese government will
promote “Smart Communities” toafflicted areas.
⑩ Promotion of use of renewableenergy and improvement of energy
efficiency(i) […](ii) […] Introduce “Smart community”
and “smart village” which improveenergy efficiency as pioneer case indisaster-affected regions. These
measures are taken to stabilize energy
demand and supply and create leadingcases of future smart system. In
addition, promote concentration ofindustries related to renewable energy
system in disaster-afflicted regions.

3

1.2 “Smart Community”

Japanese government’s
definition of “Smart Community”(as of 2011).

“Hereafter we need to build a community which makes most use of renewable energy
such as solar and wind; and at the same time reduces energy consumption.
This can be achieved by a next-generation social-system which connects houses,buildings, and traffic system by IT network and uses the energy effectively.
Hence the Smart Community.”(http://www.meti.go.jp/policy/energy_environment/smart_community/about/fallback.html)
4

1.2 “Smart Community”
Thus the two pillars of “SmartCommunity” are:
-Use of renewable energy
Use of energy management
system (EMS)(Image on the right from METI Journal,Oct./Nov. 2011)(Today we see a more refined definition of
Smart Community in Japanese
government’s Basic Energy Plan of April
2014, page 64.)5

1.3 Feed-in Tariff
On 1st July 2012 Feed-in Tariff
scheme for renewable energy
was launched.

(Images from METI Feed-in Tariff Scheme in Japan, Jul. 2012)6

1.4 “FutureCity” Initiative
In December 2011
Japanese government
selected eleven proposals
as environment-friendly“FutureCity” Initiative of
which six were proposals
from cities/communities inafflicted areas.

(http://www.japanfs.org/en/projects/future_city/index.html)
7(http://www.reconstruction.go.jp/englis
h/topics/2013/03/smart-communityand-future-city-initiatives.html)

8

(Image on the right from PlanEnergi, Samsø - a Renewable
Energy Island 10 years of Development and Evaluation, 2007)

2. Problems of the Present Policy on Smart
Community
From 2012 to 2014 we conducted research on examples of communities
and cities both inside Japan and outside Japan which were likely tosupply a model for Tohoku region.
Contrary to our expectations, our research showed that there were someserious issues concerning the present policy on Smart Community.

Samsø. Photo by Yutaka Furuya.
910

2.1 Local Economy (Jobs/Population)
Close study on each cases showed that introducing Smart Community to rural
areas in Tohoku is not likely to increase local jobs and population.

(Jobs and population inSamsø. From 『東日本大震災復興研究Ⅱ』 p. 306)

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2.2 Absurdly Expensive Renewables
The tariff introduced in July 2012 was high and was sure to cast hefty burden on thenation. We were very explicit to point out, in November 2012, that this scheme is notsustainable and that this scheme will provoke photovoltaic bubble/burst in the nearfuture.

(Installation price ofphotovoltaic, less than 10
kW. From 『東日本大震災復興研究Ⅱ』 p. 316)12

2.3 Wrong Incentive
Lavish subsidy on renewables makes itvery hard to transmit the development ofrenewable energy
from subsidy based growth
to market based growth.
It also gives Smart Communities andFutureCities wrong incentives. The overallplan of Smart Communities/FutureCities
tends to get grand; and the renewableenergy devices they plan to install tends tobe very expensive.

Photo by Yutaka Furuya.
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3. Concluding Remarks
3.1 Two Ticking Bombs: Public Finance and Population Decline
National Debt, Gross, % of GDP. IMF.

Population Projection in Afflicted Area. IPSS.

300

100.0

100.0
100.0

Japan,
250

245.051

90.0
80.0

200
70.0
150

Greece,60.0

174.247
50.0

100

51.6

40.0
2010年

5002000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

2015年

2020年

2025年

51.9

2030年

2035年

宮古

大船渡

陸前高田

釜石

住田

大槌山田

石巻

気仙沼

女川

67.8
61.3
60.4
58.4
58.0
56.2
54.5
54.3
2040年14

3.2 Facing the Reality
The critical issue of restoring communities in the Tohoku region, in our opinion, isnot the lack of support.
It is not the support that is wanting. Rather, it is the courage to face the crude
future forecast on population and public finance; it is the will to make a plan toreconstruct the community in much smaller scale.

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Acknowledgement••••

Professor Yanai Masaya, Tohoku Gakuin University. All the research above has been
carried on with him.
Professor Nakagawa Shuichi, Meiji University.
Mr. Shoji Nobutoshi.
Mr. Chiba Masataka, Miyagi Prefecture.

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地域発イノベーション事例調査研究報告東北大学大学院経済学研究科教授 教授

福嶋 路

201503.16

東北大学大学院経済学研究科地域イノベーション研究センターは第３回国連防災世界会議を支援しています。

Report on Innovation Case Research Project
Regional Innovation Research Center
Michi Fukushima

2015.03.16

Regional Innovation Research Center supports the Third UN World Conference on Disaster Risk Reduction.

Outline of Report onInnovation Case Research Project• Collaborative research has been conducted by Tohoku
Kasseika Research Center and Regional Innovation
Research Center, graduate school od Economics andmanagement, Tohoku University since 2011.
• The purpose of the research is to uncover innovative andpromising entrepreneurs’ activities in Tohoku area andintroduce their stories, philosophy, and way of life toreaders.
• We write eleven cases and publish a book including themevery year.

Theme of each volume
2011 〈Volume 1. 〉Challenges from Tohoku
2012 〈Volume 2. 〉Resource exploitation, development, and growth ofenterprises in Tohoku
2013 〈Volume 3. 〉Restoration from the disaster: fundamental strength of Tohoku
2014 〈Volume 4.〉 Challenges for common sense.

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Features of case companies
Industries

Location (by prefectures)
Miyagithe primary industry

Iwate
Fukushima

the secondaryindustyYamagata
Niigata

the third industry

AomoriAkita

the sextiary industy

5case category
1. New model for the agriculture & fishery
2. Industry revitalization with unique businessmodel
3. Revival of traditional crafts industries
4. Pursuing technological excellency
5. Utilizing regional advantage
6. Living with regional society61. New models of agriculture & fishery• Apple firm
– Agriculture hiring handicapped persons'
employment• Momoura Oyster production Association– private companies entering into the fisheryindustry• Apple factory Japan• colorfast apples sold in vending machines• GRA• high‐value‐added‐strawberry through R&D andbranding
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2.Industry revitalization with unique business model• Butai firm (providing precut vegetable)• Seigetsu‐ki(new concept for funeral business)• Don Don up(second hand clothing store withinnovative pricing)• Yamani‐syouyu (New way of selling soy sauce)• Big Mama
(mending service for urban busy people)
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3.Revival of traditional crafts industries• Iwachu (internationalization of Nanbu‐tekki)• Nanbu‐Bijin(internationalization of Japanese Sake)• Wired beans (introducing IT technology to connect
traditional craft and consumers)

9

4. Pursuing technological excellency• Toyo system (battery inspection equipment)• Spiber Inc.(manufacturing artificial spiderfiber)• NEC personal computer, Yonezawa branch(the lightest note PC in the world)• Fumin (innovative glass coating technology)• Yushin (new type of pouch in dispenser)
105.Creative Utilization of regional resources• Mobby Dick Inc. (innovation of sweat suits)• Mr. Shu Kakuta(producer of Aomori snow drifting tour)• Aizu‐Fuji Kako (lettuce production in former
semiconductors manufacturing facility)• Habataku Co. (exploitation of rural resource)

116. Live harmony with community• Izunuma‐Nosan (community‐ based agriculture)• Ujie‐super (community‐ based supermarket)• Hashimoto Doro (innovative way of clearing rabbles)• Takada Driving School(providing infrastructure to the region)

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Case: Ono Foods Co., Ltd.
• This company belong to seafood processing
business, Kamaishi in Iwate prefecture.
• Before the earthquake, their products are
sold through a wholesaler accounted forabout 65% of sales figures, and sales toindividual customers accounted for 35% ofsales figures.

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Total amount of sufferingin three damaged prefecture (billion yen)
Iwate

Miyagi

Fukushima

Fishery
harborAquaculture
facilities

285.9

424.2

62

13

48.7

0.2

Fish Processing
facilities

39

108.1

6.8

Other
facilities

51.2

45.7

13.9

Damage of Ono food Co.Ltd. (1)• When the disaster occurred, there were twoplant buildings on either side of the head officebuilding at Kamaishi, as well as another plant in
Otsuchi which had just been built at a cost of 270
million yen and began operating on February 25,2011.
• Otsuchi Plant had been completely washed away,
and the two plants at Kamaishi that were sufferedheavy damages (total 450 million yen loss).
15

Otsuchi plant: before and after
March 11 in 2011

Feb.25 in 2011

After

Ono’s seafood distribution center destroyed just 15 days after its grand opening
16Damages Ono food Co.Ltd. (2)• Of their 102 employees12, two died. All
employees were laid off with the exception of
six workers needed to continue business
operations.
• Customers of the industry sales business hadswitched over to other suppliers. In addition,
there were dealers who switched to overseas
suppliers due to yen appreciation.
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Revival (1)• After the disaster, a huge number of e‐mails from theusers of the mail‐order services of his company
reached him immediately after the earthquake,
expressing their support for his operations.
• This support made him determined to rebuild thebusiness of his company and served as the main
motivation to achieve an early resumption ofoperations.
• After the disaster, Ono Foods changed their businessstructure; focused on and expanded its mail‐orderbusiness of frozen boiled and grilled fish.
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Revival (2)• Applying Government‐Subsidized Project for
the Restoration and Building of Small‐and‐Medium Sized Enterprises’ Group Facilities
and raising fund.
• Being helped by YAMATO TRANSPORT CO.,LTD., picking works were outsourced.
– Later it turned out that outsourcing was goodstrategy. Outsourcing made it possible for Ono
foods to respond flexibly to rapid order growth.
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Revival (3)• Specialists were dispatched to the company• A Toyota retiree was dispatched to teach qualitycontrol.
• Specialist of finance and marketing were sent
introduced by Organization for Small and Medium
Enterprises and Regional Innovation.

• New Customer Information Control System
was introduced with the help of subsidy.
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Proportion of sales by business
100%
90%

industrial catring

80%
70%

Mail order

60%
50%

School Catering

40%

other30%
20%

Mail order(outsourcing)

10%0%Feb. 2011 July 2011 Oct. 2011 Sep. 2012 Feb. 2013
Before 3.11

After 3.11

21

Ono Foods Co., Ltd. Online shopping

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Observation• Restored to its former states ≠ Revival• Leveraging management resources that flow inthe regions after the disaster.
• Revival ability has been nurtured for a long time.
– Only instant force is not enough to adjust to suchturmoil. Continuous management efforts are needed.

• Having large & extended human network would
be helpful.
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Conclusion and further challengeof our project• There are many hidden innovative companies
in Tohoku area. Tohoku is not a “barren areafor entrepreneurs”.
• It is our continuous tasks to uncover firms
with high potentials, introduce to public, andencourage entrepreneurship in Tohoku area.
24Regional Innovation Producer School (RIPS)KWEON Ki‐ChulRegional Innovation Research Center
Graduate School of Economics and Management
Tohoku University
2015. 03. 16

東北大学大学院経済学研究科地域イノベーション研究センターは第３回国連防災世界会議を支援しています。

Contents

1. Regional Industries Restoration Support Project
2. Purpose of RIPS
3. Brief History of RIPS
4. Overview of RIPS
5. Curriculum of RIPS
6. Supporting Activities after Graduation
7. Learning Activities after Graduation

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1. Regional Industries Restoration Support Project
To provide continuous supports to the restoration of industries/communities
Investigating the progress of reconstruction and publishing policy proposals and information
Providing training programs designed for next‐generation of business persons in order todevelop their abilities of making innovation happen

Systematically coordinated collaboration among organizations
supporting projects engaged in the reconstruction of regional industries(Regional universities, regional economic organizations, government agencies, municipalities, etc.)

Regional Industries
Restoration Research Project
Long‐period of surveys and research,and proposals of policies andstrategies for restoring regional
industries

SupportBusiness projects

Projectmaking

Regional Innovation Producer School
How to develop and refine theirnew ideas, to make their businessfeasible, and to manage novel
business creation

Innovation
project

Innovation
project

Innovation
project

Innovation
project

Innovation
project

Innovation
project

Innovation
project

Innovation
project3

2. Purpose of RIPS

Cultivate theinnovation
producers‐ Innovation‐ New BusinessSupport theofrealization
ofbusiness plans

Make the novel
business plans‐ Industrial
Development‐ Employment‐ Regional
Industries
Restoration

43. Brief History of RIPSThe Great East
Japan Earthquake

2013
Opening of RIPS

2012
Trial run on RIPS
2011
Study on RIPS Curriculum(6 months)

2010
A field research on cultivation ofmanagement personnel in Japan5

4. Overview of RIPS

6 months
6Campus and Two Branches

Hanamaki
IWATESendai(Main Campus)
MIYAGI
Aizuwakamatsu
FUKUSHIMA

The Attributes of Students
AREA

POSITION
AGE

SEX
31 students in 20148

5. Curriculum of RIPS

PolicyTo improve the business planin the last four months

Refined idea

Completed business planat graduation

Valuecreation

to make a leap forward
to make innovative businessin the first two months
new business idea
before entering RIPS

Feasibility of business plan
9Curriculum of RIPS
Study of the basic knowledge about abusiness design and management (basedon a basic lecture curriculum)
A lecture, discussion, case study

Instruction and improvement in capabilityof the production of a business planBasic
lecturePractice
seminarTraining
Skills for leadership, problem solving, etc.
Developing an innovative mind
Training of role‐playing, an action learning

Instruction by the specialist of businessdevelopment

SpeciallectureStudy of the knowledge about the theme
set up specially (a case study, an oversea
market, intellectual property, etc.)
A lecture, a seminar
10Business Plan Presentation

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6. Supporting Activities after Graduation
applyRIPS Graduates

Prudential Supportprogram
Select3‐5 companies
each year

Select3‐5 companies
each year

Intensivesupports‐ Innovation‐ New Business

RIPS’sFollow‐up Seminar‐ Regular follow‐up seminars‐ Irregular assistanceson demand‐ For three years

12The Prudential Support Program
Prudential Foundation provides up to$1M USD in total to support the program
for three years from 2014 .
‐ Funds for Businesses:$300,000 each year
（as the grants to realize new businessplans)‐ Funds for RIPS (RIRC):$17,000 each year
(Expense for supporting and reportingactivities)
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7. Learning activities after graduation
RIPS alumni association

RIRC

Collaboration

EDS

Experience
DesignStudy

BPS

BusinessPractice
Study

RIPS

Innovators’network to promote
the industry and the innovation activities
in TOHOKU region
14Thank you