In the United States, these developments dominate business discussions. Software professionals are promoted into positions of power and influence. In August 2016, GE named two of its top IT executives as company officers. Chief Information Officers (CIOs) have increasing access to top executives and are increasingly focused on creating new products, services and business models, not simply on cost reduction as in the past. Those establishing successful software firms are hailed as visionary leaders. This draws the best and brightest university students to IT careers. None are these U.S. developments are common in Japan.
The U.S. is advantaged, Andreessen argues because of its great research universities, a pro-risk business culture, deep pools of innovation-seeking equity and reliable business and contract law. When Andreessen wrote his article, its thesis was considered by some to be arguable; now just five years later, it is widely recognized as having been predictive.
In Japanese firms, the highest ranking software professional is often in charge of outsourcing IT. Software strategy and purchase decisions were outsourced to Japanese IT vendors in the 90s to reduce cost, decisions enabled by a failure to see that software was on the way to becoming a core competency. These decisions meant that parent firms had only modest in-house capabilities to evaluate what is really in the best interest of the parent firm.
In global rankings of IT university departments, Japanese universities fail to even dominate Asian country rankings. Even in industries like auto where Japan continues to be globally competitive, the growing role of software leads firms like Toyota to collaborate with major American universities like, MIT, Stanford and the University of Michigan to tap into cutting edge IT and AI research. Finally unlike in Korea, Japanese top executives seldom, if ever, speak out about the criticality of software for the future survival of their firms.
Are IT employees deployed in ways that contribute to software innovation? The Information Technology Promotion Agency (IPA), a subsidiary of METI, reports that some 75% of Japan’s IT technical employees are located in IT service sector firms (large system integrators and their tiered subcontract firms, often characterized as software factories). At most of these firms, the opportunities for creating innovative software products for sale, to a large horizontal customer base, is very limited.