Introduction
In recent years, there has been a growing trend amongst major Japanese corporations to introduce ‘in-house entrepreneurship schemes’. Were you aware that traditional Japanese companies such as Mitsubishi Capital and Daiwa House Industry are bringing about groundbreaking changes?
In this article, we provide a clear explanation of why intrapreneurship is currently attracting so much attention, the key factors behind successful cases, and practical advice on how to avoid failure. The content is compiled to serve as a useful reference for both salaried employees and business executives.
Why the ‘internal entrepreneurship’ boom has taken hold in large corporations – the era of moving away from JTC has arrived
Why are traditional Japanese large corporations (commonly known as ‘JTCs’) now beginning to introduce ‘in-house entrepreneurship schemes’? Behind this trend lie significant changes in the business environment and a sense of crisis.
① Changes in the competitive environment:
Whereas previously only other companies in the same industry were considered rivals, competitors now include start-ups and overseas firms. There is a growing realisation that ‘we cannot survive by simply developing new businesses using traditional methods’.
② The issue of staff retention:
Talented young professionals are increasingly drawn not only to large corporations but also to start-ups. By introducing an ‘in-house entrepreneurship scheme’, companies aim to enhance employee fulfilment and broaden career paths, thereby attracting talent.
③ Silo mentality within the organisation:
Traditional Japanese companies tend to have particularly high barriers between departments. This makes it difficult for innovation to flourish. The concept of ‘internal entrepreneurship’ is being increasingly adopted with the aim of connecting different departments and stimulating creativity.
Mitsubishi HC Capital’s ‘ZeroGra’ – Here’s the key to success!
Among the companies that have introduced internal entrepreneurship schemes, Mitsubishi HC Capital, a major leasing company, is a particularly useful case study. Following a merger, the company launched an internal entrepreneurship scheme called ‘ZeroGla’ as part of a reform programme designed with the next ten years in mind.
In fact, Mitsubishi U·Hitores and Hitachi Capital both had similar schemes in place prior to the merger, but neither of them worked effectively. The key was to conduct a thorough analysis of ‘why they had failed’.
Key to Success 1: Commitment from senior management
The reasons why management involvement is essential are:
- Continue to regularly communicate messages from senior management
- To deepen company-wide understanding of the scheme, we aim to boost enthusiasm on the shop floor
- Rapidly building up a series of small successes
Key to Success 2: Strengthening the support system
- Utilising external resources: Bringing in external consultants and mentors to provide guidance to participants
- Feedback for unsuccessful candidates: Demonstrating a commitment to ‘putting this to good use in the next assessment’, we create an environment where everyone can approach the challenge with a positive attitude
- Utilising influencers: Developing ‘influencers’ to promote awareness of the scheme within the company
Key to Success 3: Linking to the organisation’s performance appraisal system
- A system has been introduced whereby organisations whose proposers have reached the final stage of the selection process can receive bonus points in their performance appraisals
- This initiative proved successful, and the enthusiasm within the company from the second year onwards was ‘beyond our wildest expectations’.
At the final judging session held in Tokyo, colleagues of the participant from the Chūbu region rushed to the venue to cheer them on, bringing handmade fans. Including online viewers, it is reported that around 300 people took part in real time. The atmosphere of support from those around you has a significant impact on boosting one’s motivation to take on challenges.
Points to Note: How to Avoid Mistakes – Beware of the ‘Second-Year Hump’
It is not uncommon for companies to introduce internal entrepreneurship schemes without achieving the expected results. Particular attention must be paid to the ‘second-year hurdle’.
This refers to the phenomenon whereby the number of applications falls in the year following the launch of a scheme. This issue tends to arise due to psychological factors such as ‘habituation’ or ‘the initial enthusiasm waning’. To overcome this, Mitsubishi HC Capital is committed to maintaining internal momentum into the third year and beyond, whilst continuing to publicise the scheme’s achievements both internally and externally.
Lessons from Success Stories: Daiwa House Industry and Kansai Mirai Bank
Other companies are also moving forward with the introduction of internal entrepreneurship schemes.
- Daiwa House Industry: To launch an internal start-up scheme open to all employees in June 2024, with an investment budget of up to 300 billion yen
- Kansai Mirai Bank (a subsidiary of Resona Holdings): The bank will begin accepting ideas from January 2025. It is reported that 100 people attended a seminar on new business ventures, and interest amongst staff is already running high.
Let’s compare the pros and cons of the internal start-up scheme.
・The ability to discover the ‘bluebird’ within the company without having to seek external resources
・The ability to break down silos and foster innovation across the entire organisation
・The potential to broaden employees’ career paths and improve staff retention rates
・There is a risk of the initiative becoming a mere formality (e.g. the ‘second-year slump’)
・It is difficult to strike a balance with day-to-day operations
・The commitment of senior management is crucial (consistency in communicating the message)
Summary
As outlined above, the introduction of internal entrepreneurship schemes within traditional Japanese large corporations is driven by significant environmental changes and a determination to move away from the JTC model. Based on examples such as Mitsubishi HC Capital’s ‘ZeroGRA’ and the initiatives undertaken by Daiwa House Industry, the keys to success can be summarised in the following three points.
Firstly, the commitment of senior management:
Rather than merely introducing a scheme in name only, it is essential to continuously convey messages from top management. It is precisely because of the management’s involvement that a supportive atmosphere spreads amongst staff.
Secondly, enhancing support for accompanying carers:
It is important not only to solicit ideas, but also to provide thorough mentoring to successful entrants and feedback to those who are not selected. By rapidly building up a series of small successes, it is possible to maintain participants’ motivation.
Thirdly, the link to organisational evaluation:
We will introduce a system whereby organisations that produce proposers who reach the final round of judging are awarded extra points in their performance appraisals, thereby encouraging internal participation. This will enable us to maintain a high level of enthusiasm within the organisation from the second year onwards.
An internal entrepreneurship scheme is not merely an employee benefit; it is a strategic tool designed to stimulate creativity across the entire organisation and sow the seeds of innovation. Whilst it may be possible to discover the ‘bluebird’ within the company without having to seek external resources, this requires a genuine commitment to the initiative.
The future of Japanese companies seems to lie in these initiatives. In this era of rapid change, a willingness to pioneer new businesses through innovative approaches—rather than simply continuing along the same path as before—has become essential. Just as the Asahi Shimbun’s ‘Tensei Jingo’ column leaves a lasting impression, I encourage you to understand the essence of internal entrepreneurship schemes and adopt a perspective that will enable you to apply this to your own career.
The fact that traditional large corporations are actively promoting internal start-ups reflects the changing business environment in Japan. I look forward to seeing more success stories emerge from a wider range of companies in the future.
