Every year the Asian Development Bank holds its Meeting of the Board of Governors in a member country and this year's 40th Annual Meeting was hosted by Kyoto last May 4-7, 2007. The objective of these annual meetings is to allow the governors of ADB (finance ministers and central bank governors of member countries) to interact with representatives of observer countries, scholars, ADB staff, the private sector, international organizations, non-government organizations (NGOs), and the media. It was a great pleasure to attend the seminars where experts on finance, trade, public and fiscal as well as environmental fields gave very stimulating presentations. Moreover, it was a privilege to participate in the Kyoto Day presentation and an honor to be invited together with highly-respected industrialists, academic and skilled practitioners as a panel discussant on “Kyoto Sense -Applying Kyoto Tradition and Innovation to the World”, a seminar held instead of the Host Country Day event usually held in previous annual meetings.
The objective of our seminar is to explore the reasons why tradition coexists with innovation in Kyoto and to identify the factors that enabled innovation.
My talk was entitled “Kyoto: A Sense of Pride and Place” and I talked about topophilia easily observed in the Kyoto people's pithy sense of pride in being a resident of Japan's ancient capital. I stressed in my talk the need for creativity-enhancing education that would allow individuals and communities to apply their imagination, knowledge of science and practical experience on creating products and services utilizing resources that they can get locally or from nearby sources.
The vital implications for Asian Development that I noted were that communities or regions with strong information networks that allow a certain degree of openness will have the capacity to sustain innovation and economic development. The key points that need to be identified by policy makers and development stakeholders are: 1) To be able to identify and take advantage of the opportunities for innovations based on a region's own local resources; and 2) To seek local expertise as well as sound objective advice from technical experts in universities or from outside their communities and 3) To enable the creative potential of members of the community through education and interactive activities. To implement these three points, communities and enterprises need to focus on designing open collaboration systems that will enable innovation through the modular approach practiced by Kyoto companies. From the way I understand it, modular innovative strategies build on core technologies by efficiently combining new methods and techniques with existing productive processes organized in modules. The efficiency of combining and applying new technologies is made possible by designing various interfaces that either reduce transaction costs or further enhance economies of scale.
Kyoto-style innovation is enabled mainly through investments in enhancing local knowledge and capital by persistent and forward-looking individuals or firms. It is worth noting that these individuals and firms with their center of gravity emanating from their sense of pride and place have been around for quite some time and have evolved into stakeholders in Kyoto's development. In this respect, there is the added implication for other Asian countries to enhance the roles of local policies and non-government organization activities in strengthening information-sharing networks at the community level that encourage communication and interaction. Through these initiatives, people's awareness is increased and they can relate their individual activities to those organized at the local economy level. Stop-gap policies can by no means achieve this—the process of turning the ordinary man or woman into stakeholders of local growth is a highly long-term and evolutionary process.
When people are connected in such a way that one realizes that the other's welfare is connected to one's own, they are more receptive to undertaking collaborative efforts especially in communities or any other group enterprise. In this way, clusters of individuals or industries promote the entrepreneurial initiative. In Kyoto's case, the skilled human resources (both the shokunin-san or craftsmen and sha-cho-san or CEO/managers) with cumulative experience in a traditional industry draw on local knowledge and together team up with young engineers and entrepreneurs (usually from outside of Kyoto) to build on the existing local tried-and-tested technology by continuous re-invention and refinement. Kyoto people is known for a strong sense of building reputation and need to be recognized among peers – this also further strengthens this cycle of monozukuri based on professionalism that capitalize on the value of local knowledge.
This brings us to the inevitable question: “Why do people tend to innovate in Kyoto?” I can only venture on an answer based on economic geography concepts. Innovation together with its impact on economic development is viewed as a highly evolutionary and increasing returns process such that the cost of creating new knowledge is lower the more knowledge already exists. In economic geography, there is a term called lock-in effect which can explain this phenomenon. Through the seemingly independent but correlated decisions of entrepreneurs, craftsmen, consumers and other stakeholders—all converge to reinforce growth and development of local industries and resources. Further collaborative efforts to build on so-called first-nature advantages and create new knowledge result in positive feedbacks or network externalities producing crucial value added and increasing returns. This lock-in effect embodies the incentives to further innovate in the place where these specialized industries and local resources exist.
As was implied in the presentations of other panelists in the seminar, Kyoto's established traditional industries tend to lock in and through the years evolve into high-tech industries. Saijo Inx current CEO and former CEO of Kyoto Shisaku Net, Mr. Saburo Suzuki mentioned a few examples: “…from yuzen kimono dying to pattern printing for printed circuit boards, from Buddhist altars and ritual articles to a process for plating connector spare parts, from Kiyomizu-yaki pottery to semiconductor technology using ceramics, from textiles to sheet materials for automobiles, etc.
The healthy topophilia that Kyoto has nurtured through the years thrives in an overwhelming sense of tradition and History. And at the forefront is the modern Kyoto-jin who bears the responsibility to carry on with their rich traditions and customs. And in a way, Kyoto people constantly struggle to constantly think of and create new ways to renew affinity with Kyoto's history and culture. I believe this process of redefining a people's identity is an urgent need for all other Asian societies to enable future growth in communities. Through the centuries, Kyoto continually struggles to ascertain their center of gravity and this enables them to balance the old with the new and cope with the rapidly changing needs of society. This is one of Kyoto's special qualities that may be a factor in its innovativeness that other Asian cities, communities or enterprises can consider in formulating management and innovation adjustment strategies.
After our session was finished, we were invited to the evening reception for more than the 3,000 delegates and guests. Upon entering the main hall fronting the garden of the International Conference Center, each of the guests were received by our hosts for that evening, the ADB President and Mrs. Kuroda. Amidst a flood of flashbulbs, I had the chance to personally thank our gracious hosts for their invitation and the chance to participate in the proceedings. It was one of those once-in-a-lifetime moments that I'm sure I won't forget in a long time.
On the whole, I had an enlightening experience attending the ADB Annual Meeting and am most grateful to all the people who made it all happen. The four-day event was organized well in advance through the collaboration of staff members from the Kyoto Prefectural and City public offices as well as the Chamber of Commerce and Industry. They all managed a fleet of volunteers who manned the booths and were stationed in various points of the Kyoto International Conference Center and the Grand Prince Hotel where the seminars took place.
I had the chance to talk with several ADB personnel in between sessions and they were at awe with the detailed preparations of the Kyoto organizers. They also took note about the keen efforts of next year's host—Madrid which lost no time in putting the wheels of preparation into action. Madrid actually set up a booth in the KICC and the contingent was keenly observing this year's proceedings in Kyoto. I am quite sure that Madrid is well-aware that Kyoto is a very tough act to follow.