April 10, 2018
Open Innovation sheds new light on agriculture
Planning and making decisions in steps
Society changes, and a variety of needs and social issues inevitably arise around the world. This is a story of how OMRON utilizes open innovation to turn ideas into reality to fulfill necessities and create solutions.
Innovative Agricultural Technologies
New innovation focusing on social issues give birth to new venture businesses. Naoshi Ozawa, Manager of New Business Development Department, and also the Chief Executive Officer of OMRON VENTURES CO., LTD. creates new businesses and collaborates with startup companies with the mission of resolving social issues. Ozawa talks about his future vision of OMRON as follows:
"OMRON primarily engages in four types of business - Factory Automation "FA", Health Care, Mobility, and Energy Management. We will keep doing what we have always done, utilizing the technologies and knowledge which we have already acquired. However, while our team discussed arising social issues as a whole, we came to the conclusion that OMRON will pave the way to new innovation in any given field. So, we decided to focus on agriculture."
Agriculture has a lot of outstanding issues such as 1)Surging demand for food with rising population, 2)the aging agricultural society, 3)climate change and other risk variables, and 4)food safety.
Currently, increase in world population is driving food demand upward. Thus, there is a desperate need to stabilize the agricultural workforce and food productivity.
Also, conventional cultivation is becoming unprofitable and affecting the environment negatively. There has to be changes made in production, sales, and distribution to keep up with growing needs for profitable produce with high added value. Other business sectors entering the agricultural business would allow for improvements in agricultural industrialization and reduction of labor.
In order to fulfill such needs, OMRON plans to utilize its core technologies like "Sensing and Control + Think", a strong advantage in the agricultural control market. It also plans to utilize its sensors and AI technologies for data collection and analysis. Further, providing feedback services on analytical data is one of its unique features.
Realizing the given opportunity, OMRON invested in Plant Life Systems Co.,Ltd. (PLS), and Organic Nico Co.,Ltd, allowing for rapid agricultural development. OMRON also invested in Vegetalia, Inc. which provides mature and smart agricultural solutions. OMRON views its collaboration with other companies as being more cooperative than just a simple external partnership.
"We have to expand our business worldwide to solve social issues. This is partly because there are so many competitors worldwide. We can't be competitive if we only focus on Japan. This is the reason why open innovation is a valuable tool in starting a new business."
Ozawa envisions improved safety, security, and physical health in future agriculture. Instead of relying solely on human intuition and experience, AI and machines will join the agricultural workforce to enable organic production. In the future, the soil and environment will not be contaminated by agricultural chemicals and fertilizers. As industrialization continues to progress, we will also be able to improve the quality, control production volume and timing of harvest.
In order to materialize this vision, OMRON developed exclusive sensors based on its Sensing technology to replace human intuition and experience. In addition, AI is now learning about the changes in climate and soil to establish a fully-optimized cultivation management system.
Ozawa's dream is to build an agricultural industry where everyone can work and be involved.
Creating a prosperous relationship
OMRON VENTURES CO., LTD thinks differently about investment-return, compared to many venture capital companies. Ozawa mentioned, "We invest in cooperative companies. We do not seek capital gains, because we want to develop long-term relations." The two abovementioned companies are startups aiming to solve existing social issues.
PLS is working on hydroponic culture, and Organic Nico Co.,Ltd is working on soil-based organic cultivation. Collaborating with them individually allowed the OMRON team to experience various cultivation methods at once. The sensors at the farms were able to gain a lot of information, which will then be analyzed through AI and compiled to be used in Big Data Analytics in the following year. The goal of this business model is to deliver safe farm-grown produce to customers via supply chain.
The seed stage, (the startup phase) was a really exciting phase in cooperative partnership. Ozawa mentioned, "We gain knowledge through our trial and error, but making a profit is part of the challenge. That is why we invested in Vegetalia, Inc. to gain techniques and knowledge to make our operation feasible."
Acquiring proven techniques externally
Vegetalia, Inc. has an advantage in smart agricultural solutions. It specializes in collecting and analyzing important climate and agricultural cultivation management data. The company also has the ability to gather insight on diseases and pests. Ozawa stated, "We simultaneously gained three kinds of knowledges - agriculture and production, OMRON's Sensing and AI technology, and delivery via supply chain. In addition to knowledge, we gained new data analysis technologies of analyzing that are specific to agriculture."
The OMRON team decided not to work with research institutions while collaborating with the two seed companies with solid techniques. This was because research institutions are focused solely on perfecting the technique, removing themselves from the role of practical application.
Beneficial relations create cooperation
Presently, the OMRON team is planning to collaborate with a new seed and nursery company. An algorithm basis has already been created to control and optimize cultivation, ready to be applied to a variety of produce. Ozawa stated, "If we collaborate with the seed and nursery company, we can develop algorithms to learn the characteristics of each seed. Then, we will be able to apply the data to the algorithm and produce information that is useful in developing new seed varieties for testing."
Ozawa continued, "We will expand our business very rapidly and collaborate with foreign venture companies in the future to gain various technologies contributing to agricultural innovation such as automation, sensing, AI, and robotics technology. Finally, we will incorporate a supply chain system. Our goal is to establish a business models where OMRON reaches out externally to become a specialist in areas where we are not.
Bridging technology and business ideas
Ozawa was originally a researcher. After graduating from university, he was engaged in developing materials before working as an assistant professor. There, he decided that he would rather apply his research to help society. This led him to join OMRON, a company focused on solving social issues with technology.
Ozawa finally mentioned, "I would like to solve current and future social issues by bridging the gap between business ideas, technological issues, and solutions. While looking at many venture businesses, I noticed that ventures with better management have eager workers. I believe enthusiasm is the key to fulfilling OMRON's vision."