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Although usually few outside Japan
will have heard of them, in some
cases they can have as much as 50-
60 per cent global market share,
often in fast-growing segments.
Take robotics. Some of the world’s
largest robot makers are from Japan,
where they face heavy international
competition. Further down the
supply chain, many small niche
companies make the mission-critical
components.
Today’s competitive disruptors are
not always online companies, nor
are they necessarily start-ups.
Noritsu Koki, in business
since the 1950s, is a company
that has rediscovered its earlier
entrepreneurial spirit. It was
a global leader in paper-based
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[ BAILLIE GIFFORD ]
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photo processing equipment. Its
traditionalist founder, Kanichi
Nishimoto, ignored the fundamental
shift towards digital photography
and it became a victim of disruption.
Following his death in 2005, his
young and dynamic son-in-law
Hirotsugu Nishimoto took over the
firm. He sold every vestige of the
legacy operations and re-invested
the proceeds in a portfolio of exciting
healthcare-related businesses.
Incredibly, and despite such
dramatic change, the market retains
an outdated view of Noritsu Koki
and has struggled to appreciate a
winning combination of ‘soft’ factors
such as dynamic management, an
adaptable business model and early
investment in emerging healthcare
technology companies. In 2015, for
example, its Neos + Care system
became the first patient-monitoring
robot to be certified by the Japanese
government.
Some companies can be successful
over long periods without being as
aggressively innovative as Noritsu.
IRISO Electronics is an example.
It makes connectors used to link
electronic components within cars.
There’s nothing especially sexy
about connectors and many
companies operate in this space.
But despite this, IRISO has built an
impressive long-term record from
intense focus on its core business as
well as management’s ability to move
towards new growth areas.
IRISO used to generate most of
its sales from makers of in-car
entertainment equipment, but it
seized the opportunity offered by
autonomous cars. Now the company
Assessing the cut-through
potential of a competitive
position is especially tricky
in young companies with no
track record
is developing connectors for robots,
another new growth area.
Assessing the cut-through potential
of a competitive position is especially
tricky in young companies with no track
record. An extreme example is biotech
companies that make little or no profit
for years and where the probability of
long-term success is small.
One company, Healios, has
assembled the building blocks of
future competitive edge. One of
Japan’s leading biotech companies,
it uses ‘induced pluripotent stem
cells’ (iPSC) to develop a cure for
blindness in later life. There are few
experts in iPSC globally and Healios
is an advanced player in an area with
a large target patient population but
no cure. Unlike, say, oncology, the
field isn’t crowded with competing
medical solutions.
Its young founder, Dr Hardy
Kagimoto, an ophthalmologist, has
already commercialised successful
medical innovations, such as ILM
Blue, a dye used in eye surgery to
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