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Devil River, Valley of Death and Darwinian Sea - How to Overcome Barriers of Management of Technology

Devil River, Valley of Death and Darwinian Sea

We have recently heard remarks that “tech companies” will become a thing of the past. Needless to say, this means that the word “tech company” will vanish because every company in all sectors will become a “tech company”. In other words, incorporating technology at the center of a company will become a perfectly normal thing in the future.

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Masayuki Chatani

Partner, CEO of KPMG Ignition Tokyo Inc.

KPMG in Japan

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In recent years, university-launched startups that are conducting leading-edge research have been attracting great attention, as the development of new products and services often fails without advanced technology. Many of them are attempting to develop businesses based on the outcomes of research carried out at universities and are attracting great expectations from all quarters as a catalyst that will trigger the resuscitation of the Japanese economy.

Three Barriers of “Management of Technology”

“Management of Technology”, which is a management method that aims to build businesses and industries based on science and technology, has also started to draw attention. In the theory of “management of technology”, three barriers—the “Devil River”, the “Valley of Death” and the “Darwinian Sea”—are often emphasized.

The first, the “Devil River”, is an assessment of the transformation from basic research to product development. In other words, it is a barrier that will be faced when moving to the product development phase. The next, the “Valley of Death”, is a barrier for measures that have advanced to the product development phase to move on to the commercialization phase. And the last, the “Darwinian Sea”, is a barrier for measures that have passed the barriers of the “Devil River” and the “Valley of Death” to receive recognition by customers in the market and continue existing without being eliminated.

On the other hand, if every company becomes a “tech company” and when products and services in many sectors are composed of software based on technology, these companies will steer towards “agile development” that will enable them to respond more promptly to the needs of customers. In addition, the approach to evolve through repetition of “planning, designing, implementing and testing” will become the mainstream.

The borderlines between the “Devil River”, the “Valley of Death” and the “Darwinian Sea”, which had been emphasized in “management of technology”, will then become vague and companies will end up simultaneously encountering three barriers: to deliver products and services to customers, to receive evaluation, and to continue existing thereafter. Consequently, I believe that a new perspective for “management of technology” will become necessary.

Pitfalls when Jumping to Business

Let's think about the theory of “management of technology” from a different perspective while considering the current situation where businesses are digital-oriented and driven by AI and data science.

I believe that, for existing “tech companies” and for all companies in the future, the important elements for establishing business are science and engineering. But there seem to be many cases where business cannot be established with science alone.

I often see and hear the misunderstanding that if scientific rationality can be proven, it will immediately lead to business.

Science, in a way, is a situation where an equation is built on certain limited conditions. Research papers are generally considered to be one of the outcomes of science.

In the field of theoretical science, these papers provide scientific evidence and logical relationships that had not been proven before. However, many of them seem to prove facts and logicalities established under certain conditions rather than providing evidence as general solutions. This means that the correctness of this evidence cannot be guaranteed when the conditions are eased or when a broader situation is assumed.

For instance, this is like creating a business case by limiting the profiles of customers that visit online shops to a greater extent than is actually the case in reality. It is very likely that this business case will not adapt perfectly to the actual world and it entails the risks of diverse and important elements that are not included in the profiles that decide the purchasing behavior of customers.

Business is an activity carried out with customers who are people. This means that, in the world of mathematics, not just rational numbers that are easy to handle but also complex and abstruse numbers such as irrational numbers and imaginary numbers must be handled as well.

In the real world, there will be cases where there is no number to be entered. The establishment of a system that does not collapse in such cases is required in business. These are areas that are usually not handled in research papers and become the pitfalls when jumping from science to business.

To Succeed in Crossing the Sea of Engineering

As a matter of fact, there lies a vast sea called engineering between science and business. We cannot attain business from science unless we can cross this vast and sometimes stormy sea of engineering.

Engineering maintains safety and ensures performance by assuming various cases. In a way, engineering plays the role of providing business with tolerance towards the diversity of the real world.

In engineering, we have to realize safe performance with not only normal operations but also with abnormal operations that entail errors. This is where people involved in engineering can demonstrate their skills. In the field of automation, which has been drawing increasing attention in recent years, the real worth of engineering is put to the test when pursuing safety such as avoiding fatal accidents even under unexpected circumstances.

Crossing this vast sea of engineering may be one of the weak points of startups that originated from science.

The support of experts in various technical fields will be necessary to cross the sea of engineering. As it is not easy for startups that have just started up to go through these processes with their limited management resources, collaboration with partner companies that have many experts will be essential.

It will also be important for startups to respect engineering, which will guide the company from science to business, and actively seek human resources that will play a crucial role in realizing this.

I have the impression that there has traditionally not been much mobility among engineers at Japanese companies, especially at major firms. As this is changing considerably, I expect that engineers in various fields will become involved in and contribute to developing new businesses and industries.

I am also looking forward to the outcomes of accelerating collaboration between major firms and startups in addition to the increasing mobility of engineers. As mentioned before, startups need the support of major firms in order for them to cross the sea of engineering. At the same time, major companies appreciate the exceptional progressiveness of startups that boast advanced scientific technology.

In the age of disappearing “tech companies”, I believe that the “mobility of engineers” and “collaboration between startups and big firms” will serve as crucial elements in Japan’s future development and also for Japanese companies to compete in the world.

Transformation to a new structure that firmly connects science, engineering and business is advancing. I truly hope that by further accelerating this transformation, Japan’s outstanding science will be able to reach the shore of business as much as possible.

 

※This article was published in "Forbes JAPAN posted on May 12th, 2020". This article has been licensed by Forbes Japan. Copying or reprinting without permission is prohibited.

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KPMG Ignition Tokyo
President and CEO
Masayuki Chatani

© 2020 KPMG AZSA LLC, a limited liability audit corporation incorporated under the Japanese Certified Public Accountants Law and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. © 2020 KPMG Tax Corporation, a tax corporation incorporated under the Japanese CPTA Law and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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