PEP Talk "Innovation Implemented by Public-private Co-creation" is now available.
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Umada
This is Umada, the director of PEP. PEP Talk is a video and podcast for policy entrepreneurs conducted by the Policy Entrepreneur's Platform, abbreviated as PEP. This time, we spoke with Mr. Nakahara and Ms. Ikeda, the co-authors of "Innovation Implemented by Public-private Co-creation: Challenges of the regulatory sandbox and beyond," published in March 2024. Startups and new businesses often engage in very new initiatives. Because of this, they often clash with existing regulations. In such situations, rather than the public and private sectors opposing each other, they should face the same direction to truly drive innovation. Regulatory sandboxes were introduced in Japan in the 2010s as a mechanism for collaboration to achieve this, and have led to the realization of many innovations. We spoke with the two of you who have been in charge of these efforts on the government side. Please have a listen.
Umada
Thank you for joining us today. Today we are joined by Mr. Nakahara and Ms. Ikeda, the two authors of "Innovation Implemented by Public-private Co-creation." Thank you for being here.
Nakahara
Thank you, pleasure to be here.
Ikeda
Thank you, pleasure to be here.
Umada
Yes, this is the first time we've had guests appearing together like this on PEP Talk, but I hope it goes well. Thank you again. Some of you may have already read this book, but for those who don't know much about you two, could you briefly introduce yourselves and tell us about the activities you've been involved in so far, starting with Mr. Nakahara?
Nakahara
Yes, my name is Nakahara, nice to meet you. I myself have been involved in creating regulatory reform implementation plans and government growth strategies, as well as work related to those growth strategies. I've also worked on revisions to laws like the Companies Act, Trust Act, Unfair Competition Prevention Act and other intellectual property-related laws, as well as the Act on Strengthening Industrial Competitiveness, which has the creation of regulatory sandboxes as a pillar. My activities have focused on how to enable things that currently cannot be done, and how to connect that to improving the welfare of business operators and the public through rulemaking. Thank you.
Umada
Thank you. Ms. Ikeda, please go ahead as well.
Ikeda
Yes, my name is Yoko Ikeda. Nice to meet you. I myself am from the Ministry of Economy, Trade and Industry and have built my career around the axes of innovation policy, rulemaking, and global matters. Since 2022, I have been seconded to the Cabinet Secretariat, where I oversee the government's overall startup policies. In addition to that, as part of my life's work, there is an organization called RIETI, the Research Institute of Economy, Trade and Industry, which is the think tank of the Ministry of Economy, Trade and Industry, where I also work as a consulting fellow. There, I conduct research on rules and innovation, and while it may not be my most representative work, I have published a paper in Technovation on the global rule-forming strategies of the University of Tsukuba-originated startup CYBERDYNE. Coincidentally, the CYBERDYNE paper was also featured in your book "Implementing the Future," so thank you for that. That concludes my self-introduction.
Umada
Thank you. Based on your backgrounds, there are many individual things I'd really like to ask about, but today I'd like to focus on regulatory sandboxes, which seem to be at the heart of
Innovation Implemented by Public-private Co-creation.
Umada
First off, for those who haven't read "Innovation Implemented by Public-private Co-creation" yet, could you briefly give an overview of it?
Nakahara
First of all, a sandbox means a sandbox, and in a sandbox, children can create, destroy, and engage in trial and error with various vehicles and structures on the spot. In other words, they can take on new challenges. However, as long as parents are supervising their children in the sandbox, they will not cause trouble for others. In other words, it is a system that allows for new trial and error without causing trouble for others, while working to lead to regulatory reform. First, we explain the background of the system that enables regulatory sandboxes, an overview of the system, and what implications it has for future rule formation beyond sandboxes. Then, in order to understand these things, we discuss the significance and role of startups, which are unavoidable, and what kind of role formation, division of roles, collaboration, and co-creation there is between the government and startups in the phase of disruptive innovation. Thirdly, we have presented some characteristic individual cases among the sandboxes so far, which have been worked on by about 30 projects and about 150 companies, and introduced case studies from the perspective of the administrative officials in charge of each case. Next, we have presented a roundtable discussion with the members of the New Technologies Evaluation Committee, who have made efforts to create sandboxes and are still making efforts, as well as interviews with startups and local governments who are working on new rulemaking to enrich the lives of local residents using innovation, in the form of voices of the changemakers of the times. Finally, we also discuss the ideal way of the corporate legal function, which is the key to the development of innovation. Of course, there is a defensive function as a guardian, but we also discuss how to create it more creatively from the legal perspective, and the new development of the legal function.
Umada
Thank you. Just listening to it, it sounds like a very comprehensive book, and I thought it must have been quite a labor of love when I actually read it. Not only the regulations themselves, which I'm sure you struggled with, but also the background explanations, case studies, discussions, and future trends, including the legal functions, that come up. With that said, I think I remember Ms. Ikeda saying somewhere else about this book that "it's the first rulemaking book by bureaucrats," but I think it's quite rare to have a book written by bureaucrats that includes such vivid case studies and other content. Could you tell us about the background and reasons why you decided to put this book together?
Ikeda
First, let me briefly talk about the background of the publication, and then Mr. Nakahara will also say a few words. The background of this publication goes back to 2020, when I organized a seminar at RIETI, the Research Institute of Economy, Trade and Industry, which I mentioned earlier. The theme was "Thinking about Rules and Innovation from 'Sapiens: A Brief History of Humankind'", and unexpectedly, we received a lot of feedback and were approached about turning it into a book. The main topic of the seminar was the creation of the regulatory sandbox system, which was prompted by the CYBERDYNE paper I mentioned earlier, and Counselor Nakahara gave a talk about it. At that time, rather than just giving an objective overview of the system, he delivered a very forward-looking message that encouraged people to take on challenges no matter where they are, whether in the public or private sector, which I think resonated strongly with people. After that, while we each devoted ourselves to our main jobs, DX progressed at a pace that probably exceeded our imagination during the COVID-19 pandemic, and in 2022, the Kishida administration launched the first year of startup creation, and the base of startups as players also expanded rapidly. Last year, 2023, marked the 5th anniversary of the creation of the regulatory sandbox system in 2018, so while I can feel the growing social momentum in my bones, this publication has a rather long story behind it, but as a result, I think it was published at the best possible timing.
Nakahara
As Ms. Ikeda just mentioned, it took some time, but we managed to get it published. As you mentioned, Mr. Umada, we wrote about how the people in charge of administration, including the specific details, feel about it, but that's because the changes in new rules and rule formation are generally noticed by the public in terms of what the changed rules are. In addition, of course, there will be discussions about the content of the rules themselves. However, in the process of this rule formation, there are people involved such as the private business operators who proposed such things, or people who have made thorough discussions to make such things sustainable, and even, if I may say so myself, my colleagues and government officials who have struggled in the midst of this. This is something that is created through various discussions among these people, and I thought that by looking at this process, we might be able to contribute to the future way of creating new rules. In other words, by looking at the process of how everyone specifically works together to create it, I thought it could contribute to constructive rule formation in the future.
Umada
I see. Usually, only the clean results or grand announcements of success are made public, but this book contains vivid stories including, in a sense, failure stories in the process, and I felt that this is the real flow of what is happening in rule formation. Among them, the book is packed with background explanations, case studies, discussions, and more, but if there are any parts that you are particularly fond of or have a special attachment to, could you please tell us about them respectively?
Nakahara
First of all, the contents of Chapters 1 through 5 are very diverse, so it's a bit difficult to single out just one, but let me tell you what I personally feel. First of all, regarding the sandbox, in the individual case studies, we have included quite different fields such as mobility, healthcare, finance, real estate, and so on. In a sense, I think it would be very beneficial for those who are interested in each field to look at that particular field, but for example, it might also be helpful for those who are thinking about the medical field to see what is happening in other fields, and to see if they can apply the wisdom or ways of getting through in other fields to this field. So, in terms of the cases, I hope you will take a look not only at your own areas of interest, but also to learn about other fields. And as Mr. Umada just mentioned, the people in charge are quite frank about "this didn't work well" or "this worked well," so I think those points will also be very useful to keep in mind. Then, in the first chapter, I explain the background of the creation of the sandbox policy, an overview of the system, and so on, and I also wrote about what the government considers when creating laws. And in terms of what we expect for future rule formation, for example, I argue that the habit of explaining things in terms of precedents, legal syllogisms, or easy-to-understand stories may be closing off the possibility of innovation, so we should face reality and connect that frustration in ambiguous areas to new policy formation. I wrote some things that might anger some legal scholars a bit, but I hope you will take a look at that as well. Then, in the interviews and the voices of the changemakers of the times, people from local governments and those who have newly used the sandbox are making statements that are likely to be new buds, so I think it would be good to take a look at that. And when I was interviewing or having roundtable discussions, there were quite a few times when I thought, "This is what I wrote," even though the wording was different. The wording is different, but they are writing quite similar things, or rather, I believe they are, so I felt that when looking at a certain fact, people's perspectives can be so different in terminology. So I hope you will look at those parts as well and understand innovation through your skin. I'm sorry, this is just my hope, but I hope you will do so. And in the legal function section, I have stated with a forward-looking attitude that I would like the legal professionals to make a significant contribution in terms of taking risks, with the navigation function and creation function, so I hope you will take a look at that as well.
Umada
It's almost like you covered everything, in the sense that you cut it down to this size. But as you said, it's a book where you can look at rule innovation from various case studies and angles, and listening to you, I personally thought I would like to read it again from that perspective.
Umada
Ms. Ikeda, if there are any parts that you particularly enjoyed or have fond memories of, could you please let us know?
Ikeda
There are so many episodes in this book that was made possible with the cooperation of so many people, and as Mr. Nakahara just mentioned, there are endless stories when you open it up. But if I may dare to say, in accordance with the saying that appearance is the innermost of the interior, I would like to emphasize the contributions of Professor Yutaka Matsuo of the University of Tokyo on the book band, which says "But laws can be changed," and the cover illustration drawn by Taihei Shii, the president of Startbahn, which is also a startup from the University of Tokyo. I am happy that both of them really sympathized with the message of this book and embodied it completely in their own ways, and I felt that the process of making this book itself was truly an example of public-private co-creative innovation. So it left a strong impression on me. I would like to express my heartfelt respect to both of them, and we have included the full text of Professor Matsuo's recommendation and an explanation of the cover artwork on the very first page of the book, so I hope you will read it.
Umada
Wow, I didn't expect the cover to come up. Yes, when I actually opened it, there is a recommendation and an explanation of the cover illustration on the very first page. I'm sorry, I may have skimmed over it. But getting comments from the authors like this, I feel like I might have new insights if I read this book again. Thank you.
Umada
By the way, as you mentioned in the earlier conversation and also written in the book, this book focuses on the regulatory sandbox, and I think you said there are about 150 actual cases. I think some of those cases are included in this book, but are there any cases of the regulatory sandbox that you have actually done that you are particularly fond of from a specific perspective?
Nakahara
I am attached to all of them, so it's a bit difficult to single out just one, but I think there are some cases that deserve attention from the perspective of innovation, even among the cases that we did not include in this book this time. So, not only the individual cases this time, but also in the voices of the changemakers of the times, I would like readers to see, if possible, that when thinking about innovation, the initial idea that becomes an innovation may not necessarily be something that everyone would think is great if exposed to the public, and even when you give a presentation with a beautiful picture saying "this kind of world can be created," the key points may not always be clear. However, there may be a bottleneck there, and unless it is resolved, things may not move forward significantly. I think it is very important to find such bottlenecks and figure out how to resolve them. Rather, I think it is important to find the essence of things, rather than being deceived by appearances, so to speak. The actual entrepreneurs, startups, and if I may say so myself, my fellow government officials, make efforts to resolve such bottlenecks, saying "We can resolve this," or local governments, etc., may not necessarily know where the bottleneck is, but through the process of consideration, they realize where the bottleneck is, resolve it, and decide on it. I would be very happy if you could feel such a flavor throughout the book.
Umada
I would like to read the case studies again from that perspective. Ms. Ikeda, do you have anything to add?
Ikeda
I myself have not been involved in the formation of regulatory sandbox projects, but if I were to mention one, it would be the case of Caulis, which provides anti-money laundering services for financial institutions, and Kansai Electric Power Company. Coincidentally, just around the time this book was published, the news came in that Caulis was going to be listed, and we were all surprised at the coincidence. Moreover, they opened up a hole using the regulatory sandbox to create a new market, and then went public. I think President Shimazu also explains it that way externally, so it's really wonderful in that sense, and I truly hope that more startups will follow in their footsteps. This story about Caulis is a case of collaboration with Kansai Electric Power Company, but I think it is also a very interesting case of successful open innovation between large companies and startups, so I hope you will read the case analysis in Chapter 3 carefully.
Umada
The timing is really perfect, isn't it? I was really surprised. In this book, I think there was a mention that only one company has gone public so far, but in fact, by the time it comes out, the second company had already emerged. I thought it was amazing when I thought about it again. Well then, I would like to get into the content a little bit right away, but the regulatory sandbox seems to be a quite central theme this time, and I think the book also introduces the process of promoting it. To my understanding, the process includes the development of the project first, followed by the certification by the competent minister, the consent of the participants, and so on. In the future, as more and more startups continue to apply for and start the regulatory sandbox, which parts are particularly difficult and which parts do you want them to be careful about? I would like to ask you about this as well.
Nakahara
The certification of the sandbox project is obtained from the competent minister, and then the consent of the participants is obtained. The key point here depends largely on the individual project, but I think the most important thing to consider, and if you consult with the contact point where I used to be the team leader, we will think together with you to some extent and accompany you, is how to specifically create the project in order to propose improvements or reforms within the sandbox if there are legal issues, for example, in the development of the project. These projects are often conducted in the real market or in an environment close to the real market, and that is usually the main target. How to develop that is a very important point that requires a lot of thought. However, rather than coming to the sandbox consultation window after the idea is fully formed and aligned, it would be beneficial to knock on the door when you have a certain level of idea, and let us think together. The government's sandbox consultation window is appealing for people to come even when their ideas are not yet solidified, and through discussions, the ideas may become clearer. This is what we have stated. On the other hand, in the actual process of discussing the sandbox, there may be cases where you think you can do it as it is, and start a new business as it is, so I think the most important point is to develop the project in terms of how you specifically want to appeal your business model or service to customers.
Umada
So developing the project is important, but there is no need for the startup to do it alone, and it is quite important to go and consult at an early stage, right?
Nakahara
I think you are right. We can also make various proposals through that, and if the site doesn't work that way, we can think about it again.
Umada
By the way, with about 150 companies already using it, I think there must be even more consultations coming in, but do you feel like you didn't expect this many to come to the regulatory sandbox, or do you want even more to come?
Nakahara
About 150 companies have used it in about 30 projects, but personally, I would like even more to come. As I wrote a little in this book, there are really a lot of people who have interesting ideas. So I hope we can also do something to bring them to the market in a good way. This is my personal opinion, but I would like more to come.
Umada
I would also like to convey to startups that it is okay to go even more.
Umada
Then, let me ask the next question. The regulatory sandbox this time can be said to be a kind of proof of concept for the system or a POC for deregulation. On the other hand, there is also something called POC hell, where you just do it, do a demonstration experiment, but it ends there. In that sense, in order for the regulatory sandbox to not end after going through the sandbox once, what kind of mindset is necessary to take the next step forward, or is there anything you want people to think about when they come to consult? If you have any, please let us know.
Nakahara
As you pointed out, in general, there is a point that POCs often end there. On the other hand, I think it is common for companies to try things out virtually, in a really experimental setting, or on computers in the case of IoT. However, as I mentioned earlier, the regulatory sandbox this time is about conducting implementable demonstrations, so to speak, in an environment close to the real market. So rather, for those who have been suffering in POC hell, where no matter how many times they do POCs, they can't get out, we have prepared a place where they can do implementable demonstrations in the market, so please come here instead. That's how I think it should be understood. After the demonstration is over, the Act on Strengthening Industrial Competitiveness, which created the regulatory sandbox this time, also has a provision that the government must make efforts to advance regulatory reform based on the results, so I think the ministries and agencies in charge of the business and regulations will also make sincere efforts.
Umada
It's quite different from a typical POC, it's a demonstration that is quite close to implementation, so going to the next step is something that happens quite normally and is actually happening, right?
Nakahara
I think you are right.
Umada
In fact, even after the regulatory sandbox is over, are there more cases where it has actually led to regulatory reform?
Nakahara
Among the ones introduced here, my impression is that there are many that have actually moved.
Umada
That's why it seems good to consult about the regulatory sandbox. It doesn't seem to end with just a demonstration.
Nakahara
In that sense, I think the government as a whole needs to make efforts, though.
Umada
In the beginning of this book, I think it was in Mr. Nakahara's chapter, it was written that this regulatory sandbox was created with reference to the efforts in the UK and Singapore. On the other hand, I think there have been cases of bringing new initiatives from such overseas to Japan, but I think Japan's sandbox system is quite advanced even compared to those two countries. Have there been any later cases in other countries that have referred to Japan's sandbox system?
Nakahara
We certainly studied the sandboxes in the UK and Singapore, but the difference between Japan and them is that the UK and Singapore initially limited it to FinTech. However, it is difficult to define what FinTech is. It can generally be said to be finance and technology, but to some extent, all finance is like that, so personally, I had the impression that it was quite difficult to limit the scope when creating a system in Japan. Also, in the case of the UK and Singapore, when exercising administrative rights, it seems to be used in the sense that specifying demonstrative things and exercising them as a way of exercising discretionary power does not constitute an abuse of discretionary power. Rather, understanding it in a greatly developed way to the point of using it as legislative facts or facts for system revision is a major point in Japan. After this, although I don't know if they learned from our system, South Korea is operating it vigorously without limiting the fields. If I'm not mistaken, I think Germany has also created a sandbox in a similar way.
Umada
I see. Japan is often said to be a little behind in policy, but in fact, Japan is advanced and it is being exported, so hearing that makes me feel a little encouraged. I think everyone has worked really hard to implement this and create real success stories, which other countries have used as a reference. So I hope Japan can take the lead in terms of innovation of this system as well.
Umada
Then, let me ask the next question. In this book, it was pointed out that the government exists as a partner for open innovation with startups, whereas traditionally, when it comes to open innovation, it was about collaboration between companies, startups and large companies. The fact that the government exists as a partner for open innovation is tied to the title of the book, "Innovation Implemented by Public-private Co-creation." In supporting startups, I realized again that the government can also be a partner for open innovation. Do you actually feel that the recognition that there is such a form of open innovation between startups or private companies in general and the government is increasing?
Ikeda
I think it would be better to first confirm the definition of open innovation. I think the concept of open innovation was advocated by Professor Henry Chesbrough of UC Berkeley. According to his concept, open innovation refers to a framework in which startups seek and utilize resources they lack from outside. I think the resources here include people, money, or future markets and customers for the products provided by startups. So, as you just said, when people think of open innovation, they certainly have a strong image of collaboration cases between large companies and startups, especially in Japan. But the government should definitely come out as a provider of those resources, and I think that is the case in terms of money, such as government procurement, or in the scene of rulemaking, which we are discussing this time, the role played by the government is extremely large. In fact, I happen to be involved in startup policy, but when the Kishida administration put together the 5-year plan for nurturing startups in 2022, I actually interacted with all ministries and agencies except the Imperial Household Agency. So I don't think there is any ministry or agency that is not working on startup policy now. So, while policy trends inevitably exist at any given time, startups have taken root without ending up as a temporary fashion, and I feel that they are a very symbolic presence in this era of transformation, starting with DX.
Umada
I see. The government is always ready to accept them, right?
Ikeda
The government really needs to work harder and harder.
Umada
On the other hand, if startups have more of that awareness, I think the collaboration between the government and the private sector, or between the government and startups, will really progress. Do startups realize that? I feel like the people around me don't quite realize it yet.
Ikeda
Is that so? I have the impression that the people around me are very aware of it, but the world is big, so I think there are various degrees of awareness among those who are aware and those who are not. So I would like to continue to carefully build up the dissemination of startup policies and communication with startups.
Umada
I think startups also need to make more efforts to deal with the government more casually, including the consultation I mentioned earlier, or to make it easier for innovation to occur in relation to the regulatory sandbox or regulations.
Umada
Then, may I ask a question that is a little off topic from the book? I think the regulatory sandbox was quite a focus this time, but if there are any other institutional innovations that you are paying attention to, please let the readers and listeners know.
Nakahara
From the perspective of institutional innovation, it may be a bit abstract, but through the sandbox, we are aiming for various institutional reforms. However, as new technologies and things emerge in the future, as some people advocate agile governance, there will be an increasing need for the entire system to evolve rules technologically through dialogic things in the so-called market between private business operators and consumers. Then, I think it will be necessary to create rules functionally, if it is appropriate to say performance-based rulemaking. However, if that is the case, it will be necessary to create a world where such things must be resolved through technological efforts in private-private relationships or, in some cases, through judicial procedures. So I think an era is coming where various transaction rules as well as administrative licensing and permission must be appropriately exercised within such things. So I am also paying close attention to agile governance-like efforts to change the entire legal system into such a form. Also, with blockchain and such, trust can be secured in places where transactions have not been established before, and there are various new ways of creating credit creation, and AI has also been discussed in various ways recently, but I think it is important to keep human creativity at the core and drive it in the world from now on, so I am focusing on how that will be driven.
Umada
Agile governance initiatives, really making the entire legal system more agile, and making governance as a whole more agile, and I think there was talk of new governance using technology.
Umada
Ms. Ikeda, if there is anything you are paying attention to, could you please let us know?
Ikeda
Rather than the system itself, I feel there is a lot of room for innovation in the way policies are formed, in terms of incorporating cutting-edge academic knowledge into the administrative side. I myself have been involved in attending the American Economic Association and Academy of Management meetings in the US last year and this year in my current position at the Cabinet Secretariat, reading various recent overseas papers, extracting knowledge from them, and applying it to policy discussions, which I find very rewarding. In an era where precedent and pre-established harmony are no longer the norm, I think policies themselves are required to have a great deal of creativity. So as one direction for a solution, I think it is becoming important to ride on the shoulders of intellectual giants, to keep an antenna out for academic knowledge and incorporate it.
Umada
I see. It's been a long time since EBPM and such have been talked about, but I think listening to you, it's certainly possible to make more effective policies by utilizing academic knowledge even more in the future. I hope everyone is looking forward to the possibility that Mr. Nakahara and Ms. Ikeda might write a book on that topic in the future. I'm looking forward to it as a topic for your next book.
Umada
Going back to the book, as I mentioned at the beginning, I felt that this book is a very frank book, and you explained the reasons for its composition earlier, but if there are any reasons or background for why you chose this composition, could you please tell us again?
Nakahara
As a book on rulemaking, everyone has been saying that, but I think that while rules have a logical aspect, it is necessary to understand them in a tangible, right-brain, sensory way. When I ask people who are often called experts for their opinions, they say to look at the rules first, and the answer will be deduced from there, but when I listen to them, I sometimes think, "You are thinking from the conclusion," and that in itself is not so unusual, and I think it is important to understand things in a right-brain, sensory, tactile way and connect that to rulemaking. I myself am not able to do that, but I think we should create a world where the business operators themselves who conduct business through rules think about this as their own problem, and from the perspective of contributing to that even a little, I tried to write as frankly as possible, and I believe the administrative officials in charge also wrote in that way.
Umada
Some people may just want to be told the conclusion, but conversely, the process is what's important in this book, and I personally think that if the intention of wanting readers to feel that is conveyed to those who will read it from now on, the way of reading will be completely different.
Nakahara
As you pointed out, there are certainly people who say, "Just tell me the conclusion." They want to know only the question and the conclusion, but at the point of creating the question, they are abstracting a certain phenomenon quite a bit, so if you don't know what you are abstracting when a similar problem occurs, you may give up saying, "This won't work," with a stereotypical answer, and then the space where there may be new seeds in that abstracted space disappears, so I think we need to make an effort to pick up on such things.
Umada
Ms. Ikeda, please go ahead if you have anything to add.
Ikeda
From my perspective, I would like to talk about a new way of communication for the government. This book is about promoting public-private co-creation, but in order to promote public-private co-creation, mutual understanding is important, and for that, appropriate self-disclosure is necessary. For that reason, this book delves into the passionate thoughts and thought processes of government officials, which are usually not openly shared, as Mr. Nakahara mentioned earlier. So, many readers have expressed a kind of surprise or emotion at the reality of it, but in fact, there are days of trial and error because of this great challenge, and even government officials sometimes spend sleepless nights, or how to overcome unprecedented legal issues, which I think is a selling point of this book. On the other hand, it's not just government officials, but in the voices of the changemakers of the times, we have also recorded the direct voices of startups, local governments, and evaluation committee members who are active on the front lines through interviews. This time, we tried something new in terms of the way the government communicates, so I am happy that you, Mr. Umada, were able to read into that.
Umada
It's really a rare book, personally, I had the impression that when government officials write, it's more rigid and stiff, but this time it's really raw, and I felt the human side of the government officials, that they are human beings.
Umada
Well, we are getting to the last questions, but I would love to hear from both of you about the future of public-private co-creative innovation, or the future of open innovation between the government and startups. Please feel free to give your personal opinions.
Ikeda
To answer first in connection with the previous question, the environment is now rapidly improving through the 5-year plan for nurturing startups established in 2022. Then, when the startups nurtured there grow rapidly and cause disruptive innovation in society, I think it will be important for the government to lead the creation of new markets through appropriate rulemaking and public procurement, as I mentioned earlier. I myself have a strong desire to personally contribute to that. So, the words "rule formation" and "rulemaking" were not yet widely accepted 10 years ago when I started making rules and innovation my life's work, but now I think they have truly gained citizenship, and in a society where the momentum for change is growing, I hope this book will help startups to flourish even more.
Nakahara
Traditionally, what has been considered a social issue may not necessarily be easy to solve through business, so the basic approach has been to solve it with some kind of national financial expenditure, but with the development of various new technologies and the accumulation of wisdom in the private sector, it is now possible to view the existence of social issues as business opportunities. I also have hope that by constructively incorporating the government into the efforts of startups to solve these issues with new technologies and wisdom, new added value, or rather, new markets and overcoming social issues can be achieved, and if that can reach places that were previously out of reach, I think it would be truly wonderful, and I think the government must also work hard on this.
Umada
Listening to both of you, I feel hopeful that public-private co-creation innovation and open innovation between the government and startups will continue to occur in new forms in the future, so I would like to think about it together with you and support startups while considering new forms of open innovation.
Umada
Finally, could I ask both of you to give a message to the listeners before we end?
Nakahara
I am convinced that there are many people who have very interesting ideas that lead to the future, whether they are in the government or in companies. However, sometimes those ideas may not be realized immediately, but when such proposals are received, I think those in leadership positions should pay as much attention as possible to noticing those hidden scenes and figuring out how to bring them to implementation. And those who make such proposals should not give up after proposing once and being rejected, but should keep an eye out for the next opportunity to implement it, stock up on what they need to do to be accepted, and bring it out with a bang when the time comes. Also, for society as a whole, including myself, I think it is inevitable that failures will increase when innovating, but I think we should accept them as assets for the future, and instead of looking at them coldly based on envy or jealousy, we should look at them warmly and nurture them together as a society. I would be very happy if you could take a look at this book as a first step toward that.
Ikeda
Thanks to publishing this book, I have been able to meet people for the first time. Even if we are in different fields or regardless of the hierarchy of the organizations we belong to, publishing this book has led to some invaluable encounters where we can really sympathize and resonate with each other, which has been a personal inspiration for me recently. What I realized, and this is related to what Mr. Nakahara just said, is that there are challengers everywhere in this society, and I feel that such people are becoming more visible in this era of change. This has made me realize once again that I myself want to continue to work in public service with passion every day from the standpoint of the government.
Umada
Thank you for your passionate final messages. I hope that this book will lead to further progress in public-private co-creation, and I hope that the listeners who heard this conversation will be able to read the book in a more multidimensional way, take on new challenges without fear of failure, and keep moving forward. Thank you both very much for joining us on PEP Talk today. I look forward to continuing to work with you.