No.3   May 1, 2000   The Challenge of Creating "Petaloid Industries":In Search of New Sources of Added Value   Tatsuru TAMADA        The debate about the future of Japanese industry has recently been resumed. However, simply drawing up a list of possible growth markets will not in itself lead to the creation of new industries. Such days have gone. Whereas markets in the past tended to have a certain depth, those that can be expected to grow in the 21st century are likely to be disk-shaped (i.e., relatively shallow). This means that attempts to develop them vertically, especially by companies all too familiar with the business protocols developed for the industrialized society of the 20th century, are likely to end in failure.    The only way to create industries from such markets is to try to approach them from the side and develop new business protocols. The formation of clusters of companies from different sectors around the edge of the "disk" can be compared to the petals that grow around the calyx of a flower. If such "petaloid industries" are to develop, a new type of business know-how (namely, that of integrating companies from different sectors) will have to be acquired--not unlike the know-how that companies which assemble components from diverse suppliers have acquired. The sooner this is done, the better. At the same time, companies will have to adopt a very different approach to management. For example, instead of trying to do everything in-house and to improve margins simply by achieving cost efficiencies, they will have to form wide horizontal networks that can also enhance profitability.    One of the main challenges that will face companies trying to acquire integration skills is that faced by the many companies that have already set about trying to apply the principles of supply chain management (SCM) to their businesses. If petaloid industries are to be created around disk-shaped markets like this, not only will industrial standards have to be adopted and companies offered incentives to enter such markets, but managements will also have to adopt a different approach. Contents I Disk-Shaped Markets and Petaloid Industries 1 Growth Markets of the 21st Century 2 Disk-Shaped Markets 3 Growth of Petaloid Industries II The Integration Business--the Key to Petaloid Industries 1 Why Have Disk-Shaped Markets Failed to Produce Any Industries? 2 New Sources of Added Value 3 Developing an Integration Industry III Challenges Posed by Petaloid Industries 1 New Paradigm of Corporate Management 2 Supply Chain Management as a Practical Example of Integration 3 Building a Platform for Petaloid Industries GO to PDF