Knowledge Management Research & Practice (2003) 1, 77–85 & 2003 Palgrave Macmillan Ltd. All rights reserved 1477–8238/03 $25.00 www.palgrave-journals.com/kmrp
Knowledge creation through the synthesizing capability of networked strategic communities: case study on new product development in Japan Mitsuru Kodama1 1
Department of Management, College of Commerce, Nihon University, Tokyo, Japan Correspondence: Mitsuru Kodama, Department of Management, College of Commerce, Nihon University, 5-2-1 Kinuta Setagaya-ku, Tokyo 157-8570, Japan. Tel: þ 81 3749 6819; E-mail:
[email protected]
Abstract This paper provides a new point of view regarding the knowledge management of new product development (NPD), a high-tech field requiring the merging and integration of different technologies. As a case study, we examine the dynamism of the knowledge creation process in NPD at Nippon Telegraph and Telephone Corporation (hereafter referred to as NTT), a traditional Japanese telecommunication company, as it merges and integrates the different elements of broadband network technology, network operation technology, and multimedia processing technology etc., and we analyze the NPD processes of NTT. In a short period of time, a strategic team at NTT, consisting mainly of informal cross-functional middle managers transcending NTT’s business divisions, formed strategic communities inside and outside the company, and then formed a network that transcended the strategic communities’ boundaries. The synthesizing capability of the leadership-based strategic communities comprising community leaders inside the networked strategic communities enabled NTT to build new business models aimed at customers and achieve successful NPD ahead of other competitors. Knowledge Management Research & Practice (2003) 1, 77–85. doi:10.1057/ palgrave.kmrp.8500012 Keywords: communities of practice; innovation; strategic community; ba; networks; ICT
Networks of strategic communities
Received: 24 June 2003 Revised: 17 September 2003 Accepted: 26 September 2003
It is a truism that large, established companies must continually evolve by engaging in various forms of innovation. Particularly in light of the advent of the knowledge society, businesses are faced with a large transition from focusing solely on developing new products and services, to also strategically innovating to improve their business processes and performance. In particular, for various large, leading-edge businesses whose core competencies are in the software, information and communication technologies that form the foundation of multimedia and broadband networks, as well as for numerous venture companies, the past several years have brought increasingly intense competition to leverage strategic community (SC) through deep partnership-based inter-organizational collaboration for the purpose of developing strategic enterprises, expanding the market shares of their products and services, and creating new businesses.
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SC is based on the concept of ‘ba’ as a shared space for emerging relationships that serves as a foundation for knowledge creation (Nonaka et al., 2000). Participating in a ‘ba’ means transcending one’s own limited perspective or boundary and contributing to a dynamic process of knowledge creation. In an SC, members including customers who possess different values and knowledge consciously and strategically create a ‘ba’ in a shared context that is always changing. They continually create new knowledge and competencies as a new ‘ba’ by merging and integrating a single ‘ba’ or multiple numbers of ‘ba’ both organically and from multiple points of view. From the practical aspect, we see the SC as an informal strategic organization possessing qualities with both a resource-based (or knowledge-based) view (Mintzberg et al., 1998) and a strategic view (Porter, 1980). The resource-based view is an emergent, learning view of the community in a shared context, while the strategic view is a planning view that aims to establish a desired position in the target market. In this paper, we define SC as both emergent and strategic, a collaborative, inter-organizational relationship that is negotiated and associated with creative yet strategic thinking and action in an ongoing communicative and collaborative process, in the case of several arrangements (e.g. strategic alliances, joint ventures, consortia, associations, and roundtables), and which depends on neither market nor hierarchical mechanisms of control (Heide, 1994; Lawrence et al., 1999). SC is applied, for instance, in cases where enterprises are in a management environment beset by numerous uncertainties, where predictions are difficult, and management is searching for valid strategies. The task of SC is to emergently and strategically form and implement concrete business concepts and ideas. Trial and error such as incubation is necessary, however, and SC takes the stance that a strategy will emerge from among the collaborative actions. For the most part, middle management is at the center of the SC. They form informal and virtual teams both inside and outside the company, including customers, and actively generate emergent, entrepreneurial strategies and create new knowledge. They then produce new demand that did not exist before, which in turn results in the emergence of a new market (Kodama, 2002a). However, one crucial issue with respect to creation of SC should be pointed out hear. Communities of any sort will have very little strategic effect or relevance unless the creation of communities is endorsed and championed by some executives at least but preferably the entire executive management team. They will just become general and conventional communities not strategic communities. The recent research also showed that the key success of creation of strategic communities is the leadership and full support provided by the top management team (Kodama, 2003). Knowledge creation is an extremely important issue that sees knowledge as a property of communities of
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practice (Brown & Duguid, 1991), ‘ba’ (Nonaka & Konno, 1998), communities of creation (Sawhney & Prandelli, 2000), SC (Kodama, 1999; Storck & Patricia, 2000), and networks of collaborating organizations (Powell & Brantley, 1992). When the knowledge base of an industry is both complex and expending, and the sources of expertise are broadly dispersed, the locus of innovation will be found in networks of inter-organizational learning (Powell et al., 1996). So in such case, the connection through the networks of SCs based on the interorganizational collaborative relationships is an important issue of knowledge creation, and new knowledge grows out of the sort of ongoing social interaction that occurs in ongoing collaboration between SCs. In this paper, we describe the new product development process that occurred over the past 1 year at NTT, a traditional Japanese telecommunication company, which developed a product capable of seamless interactive multimedia communication over wired and wireless networks using technology that resulted from the merging and integration of broadband Internet technology and third-generation mobile phone technology. The network of SCs inside and outside NTT, made it possible for this development process to occur at a speed not yet known in the world. In this case study, our analysis of knowledge creation focuses on the degree and process to which the networks of the SCs created new knowledge based on new technologies and practices that were diffused beyond the boundaries of the SCs. Example of new product development (NPD) at Nippon Telegraph and Telephone Corporation (NTT) is then analyzed from three angles described below. The first angle analyzes the characteristics of SCs inside the firm, with partners, from the three elements of their involvement in collaboration (DiMaggio & Powell, 1983), resonance of values (Kodama, 2001), and the speed at which the SCs were formed. From the same three elements, the second angle analyzes the SC networks that became the trigger causing the merging and integration of knowledge diffused from the boundaries of individual SCs that were distributed. The third angle discusses the synthesizing capability (Nonaka & Toyama, 2002) that the leadership-based strategic community comprising community leaders within networked SCs uses to synthesize dialectically the different knowledge of SCs that is distributed in the new knowledge creation process in NPD. Finally, this paper touches on the managerial implications as firms make use of their synthesizing capability and innovations in their efforts to achieve strategic innovation.
Research method and NPD case Owing to the exploratory nature of this research and interest in identifying the main people, events, activities and influences that affect the progress of innovation, in the methodological approach chosen for this study, we adopted a qualitative, in-depth case study research, so we can collect rich data that could facilitate the generation
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DoCoMo); strategic partner RADVISION Inc. These firms played important roles in forming the networks of SCs, enabling access to a total of 34 senior executives, senior managers, associate managers, development staffs and sales staffs for interviews lasting one to two hours, and materials from both inside and outside NTT, NTT-BB, DoCoMo and RADVISION. The NTT’s headquarter, Broadband Promotion Division (hereafter referred to as BPD), have adopted the ‘Vision for a new optical generation- Broadband leading to the world of resonant communication,’ announced November 2002, as the NTT group’s common concept. NTT has been committed to making a resonant communication network environment with superior usability a reality, and to creating a broad variety of new and sophisticated services and business models. One of the most important target of new product development (NPD) was to develop a video communication platform conforming to international standards for the first time in the world (See Figure 1). The platform enables real-time bi-directional video communication between personal computers at home or in the office connected to a broadband network environment and 3G mobile phones provided by DoCoMo, and also between personal computers. As the number of broadband access users, utilizing FTTH (Fiber to the home), ADSL, etc., increases rapidly, there are growing demands for mobile video communication, high-quality audio and video, and end-to-end communications backed by the presence function. The newly developed platform enables bi-directional
of theoretical categories that we could not derive satisfactorily from existing theory. This type of research attempts to develop a theory using case studies, which means the researcher initiates the study as close as possible to the ideal of no theory under consideration and no hypotheses to test. Various scholars (Eisenhardt, 1989; Pettgrew, 1990; Yin, 1994) have discussed the validity of case studies. Case studies make it possible to explain the relevance and cause-and-effect relationships of a variety of observations through deep and detailed insights with consideration given to qualitative information and subjectivity resulting from the peculiarities of individual cases and the difficulties of general analyses. Case studies not only compensate for the weaknesses of generalities but are also indispensable in new, creative theorization. This research is based on the results of field work undertaken by the author during about two and a half years (December 2000–March 2003) at NTT DoCoMo, where he served as project leader for a video business planning and development project utilizing third-generation mobile telephone technology. In particular, the author conducted objective analyses and examinations of relationships with the strategic partners of each firm observed from within the organization of partners and NTT DoCoMo and collected detailed chronological data from the viewpoint of knowledge created through the formation of SCs. Our primary contact during the data collection process was the managers and staffs of NTT, NTT Broadband Initiative Inc.(hereafter referred to as NTT-BB) and NTT DoCoMo Inc. (hereafter referred to as
Subjects for NPD
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Server Software and Network Operation
i mode connection
PC
SIP Connection IP Network Instant Messenger Software
3G Mobile
(Internet) PC
3G-324M H.323 Connection
3G Mobile Phone
PC
Video
Conversion
Gateway
IP: Internet Protocol i-mode: Mobile Internet access services in Japan H.323: International Standard for Audio and Visual Communication Protocol over the Internet 3G-324M: International Standard for Audio and Visual Communication Protocol over the 3G mobile Network SIP: International Standard for Audio and Visual Communication Protocol over the next generation Internet
[1] NTT Group to Run Trail Videophone Service Linking PCs with FOMA Mobile Phones; See Web site, http://www.mobiletechnews.com/info/2003/02/02/230609.html [2] FOMA (Freedom of Moblie Multimedia Access) is the service brand name for DoCoMo's thrid-generation mobile communication system (IMT-2000). The FOMA market began to experience rapid growth from December 2002, reaching 800,000 subscribers as of September 2003.
Figure 1
NPD targets.
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communication between IP networks and the 3G mobile network. This form of communication had been difficult to achieve because of the differences in the bearer service and protocols used by these networks. In addition, this platform makes it possible to improve the quality of the communication between personal computers. It can dramatically expand the range of mobile phones with which communication is possible, and provides an environment for ubiquitous communication with anyone, anytime and anywhere. The new environment for ubiquitous communication will allow the creation of new business opportunities,
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such as active and efficient collaboration within a corporation through face-to-face video communications, consulting services using connections between a personal computer and 3G mobile phones, and mobile electronic commerce. For individuals and the general community, the ability to use a 3G mobile phone for these communications will make their communication simpler and more convenient. This NPD, however, required the merging and integration of basically several different technologies: broadband wired and wireless network technology, network operation technology and know-how, and multimedia
NTT-BB Cyber Space Laboratories
-NPD Team -Sales Division
SC-a SC-b NTT DoCoMo
SC-c
RADVISION
SC-a: Strategic Community comprising Broadband Promotion Division, Cyber Space Laboratories in NTT and NTT-BB(NPD team, Sales Division) SC-b: Strategic Community with NTT, NTT-BB and NTT DoCoMo SC-c: Strategic Community with NTT DoCoMo and RADVISION
*NTT DoCoMo chooses RADVISION; See Web site, http://www.radvision.com/NR/rdonlyres/216561EC-C9B5-4905-B73C-E6EBOB564EF/298/DocMoChoosesRADVISION3GVideoGatewayfinal.pdf
Figure 2
Strategic community creation at NTT.
Phase 1 (Jan. 02~)
Phase 2
Phase 3
(Apr. 02~)
(Sep. 02~)
SC-a
SC-a
SC-a SC-b
SC-b
SC-c
Phase 1: Creating Strategic Community with Broadband Promotion Division, Cyber Space Laboratories in NTT and NTT-BB (NPD team, Sales Division) Phase 2: Networking Strategic Communities with the NTT, NTT-BB and NTT DoCoMo Phase 3: Networking Strategic Communities with the NTT, NTT-BB, NTT DoCoMo and RADVISION
[Role of each company in the NPD] -NTT Cyber Space Laboratories have developed the Instant Messenger, which enables real-time, high-quality, end-to-end video communication between a personal computer connected to an IP network and a 3G mobile phone and also between personal computers. -NTT DoCoMo and RADVISION has jointly developed bearer-service and protocol conversion functions between an IP network and the 3G mobile network. This conversion function achieves seamless, bi-directional communication between a personal computer and a 3G mobile phone by making the communication pass through switching network. -NTT-BB will build a trial service system by implementing NTT Cyber Space Laboratories' Instant Messenger and NTT DoCoMo's IP network-3G mobile network conversion function on top of its platform that is used to provide a full-blown broadband service (BROBA), and by adding security and other functions.
Figure 3
Networking strategic communities at NTT.
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processing conversion technology. Such NPD was not at all possible with systems within BPD and NTT’s Laboratories in NTT. The NPD team at NTT Cyber Space Laboratories therefore needed to create knowledge in the form of new, compound knowledge by merging and integrating elements of technology in the possession of NPD teams in their own and other company, in developing a server software, network operation system and messenger software in Figure 1, namely the wired broadband network technology and multimedia processing technology of their own Laboratories and network operation technology of NTT-BB. To this end, a crossfunctional team (Figure 2, SC-a) that transcended the boundaries of the business divisions and companies was quickly formed in between NTT and NTT-BB. The Sales Division in NTT-BB with marketing and sales capabilities joined to participate in SC-a, and while engaging in close collaboration with the other divisions and companies aimed at developing the target product, they also started marketing activities aimed at all types of customers such as ASP/ISP and corporate customers. (Figure 3, Phase 1). The NPD teams of NTT and NTT-BB in particular formed an SC with the video business planning and development at DoCoMo, from an early phase of NPD (Figure 2, SC-b). These teams communicated and collaborated closely in order to study the technical aspects of interface conditions required for building a 3G mobile communications network and achieving inter-operability for multimedia communications with 3G mobile phones. They also actively collected data on the mobile phone customer’s needs for use in the NPD. Links between the SCs and SC-a and SC-b were established as well (Figure 3, Phase 2). In the process of pursuing technical investigations in greater detail and solve a number of technical issues, DoCoMo formed collaborative relationships with best partners around the world. Specifically, in developing a video conversion gateway system in Figure 1, the NPD team of DoCoMo formed a strategic alliance with RADVISION in Israel to promote joint development (Figure 2, SC-c). SC networks linking SC-a through SC-c were formed in this phase (Figure 3, Phase 3), and various
SC Characteristics SC-a
SC-b
-Involvement High
-Involvement High
SC -c -Involvement High
technical discussions were conducted within the networked SCs. Accordingly, a variety of technical issues (quality of audio and video communications, new technologies to be developed such as multimedia video conversion processing and communications protocols) related to end-to-end (PC-to-3G mobile phone) transmission of interactive video communication were thoroughly discussed. By January 2003, the NPD in Figure 1 was completed through the phases described above. The NPD in Figure 1 became the world’s first example in which knowledge was created by merging and integrating knowledge from around the world (Japan and Israel).
A framework for knowledge creation through networked strategic communities at NTT In the new knowledge creation process, which captures corporate activities in networked strategic communities, I have used a case study to shed some light on the topic of what the core capabilities of leading companies in a competitive high-tech field are. One of the keys to success is how a corporation can obtain synthesizing capability, which are the core capabilities it needs to link organically and innovatively the diverse knowledge created from the formation of a wide variety of networked strategic communities inside and outside the corporation and then produce new knowledge. In this section, I discuss the synthesizing capability that the leadership-based strategic community comprising community leaders within networked SCs uses to synthesize dialectically the different knowledge of SCs that is distributed in the new knowledge creation process in NPD. For the analysis, I will use this case to consider what sort of impact the SC characteristics, SC networks, and the synthesizing capability of the leadership-based strategic community had on new knowledge creation (See Figure 4).
SC characteristics There were three fundamental characteristics identified: (i) collaboration, (ii) resonance of value, (iii) SC formation speed. One important element in the formation of SCs is
Characteristics of networked SC -Involvement High
-Resonance of value -Resonance of value -Resonance of value -Resonance of value High High High High -SC formation speed -SC formation speed -SC formation speed -SC formation speed High High High High
Figure 4
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Synthesizing Knowledge capability creation
High
High
-Presence of solid LSC
-NPD completed -Business model established
Evaluation of knowledge creation in the case.
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improvization, an especially important concept when developing innovative products and services in an environment where market needs are uncertain due to ongoing rapid changes and technology is also changing (Brown & Eisenhardt, 1998). Speed and flexibility are particularly essential when making organizational decisions in tie-ups with external strategic partners. From the viewpoint of strategic logic, companies need to jump into the confusion, keep moving, and seize opportunities quickly as they pursue opportunities in unpredictable, rapidly changing, ambiguous markets (very characteristic of the broadband IP communications and 3G mobile phone markets in this case study) (Eisenhardt & Sull, 2001). NTT needed to ride along with this flow (the speedy pattern of forming SCs).
collaboration (DiMaggio & Powell, 1983). The presence of deep interaction among community members, the presence of a strategic partnership among organizations that form SCs, and interactive information sharing within SCs are not the only conditions required for deep collaboration as defined by DiMaggio and Powell, as high levels of involvement in the collaborative process (i.e. the development of a strong mutual awareness that SC members are involved in a common enterprise) are also essential. The high levels of involvement were observed in the all SCs in Figure 2. The second important element in the formation of SCs is the resonance of values in the community. This is the process whereby all community members, in their effort to fulfill the SC’s mission and goals, share and resonate values aimed at achieving the business (Kodama, 2001). This idea of the resonance of values is also the same as the hidden value, espoused by O’Reilley and Pfeffer, that enables the shared values within the formal organization or community to produce new knowledge or competencies (O’Reilly III & Pfeffer, 2000). The resonance of values in SCs with partners inside and outside the company and in SCs with partners (Kodama, 2002b) leads to dialectical ideas and strength to act among community members and turns into a capability for generating community competencies, knowledge that forms the new core for the SC (Kodama, 2001). High levels of resonance value were observed in the all SCs in Figure 2. The third important element is the SC formation of speed. This element of speed in the formation of networks was not discussed in any depth in research on inter-organizational networks. This element must be considered, however, by businesses in industries undergoing rapid change or whose technologies are rapidly advancing. In this case, a major feature of NTT’s success is the fact that they formed all their SCs very quickly. The decisive factor behind this rapid formation of SCs is
Networking SCs Information and knowledge within communities is both sticky and leaky. It is important, however, that the networking of SCs makes the leaky aspect of knowledge in communities work in a positive manner and that community leaders of all SCs promote the sharing and inspiration of knowledge beyond the SCs’ boundaries. The act of transcending boundaries stimulates deep, meaningful learning, which in turn opens possibilities for the generation of new knowledge and creativity. Radically new insights and developments, such as the NPD in this case, often arise at the boundaries between SCs. In particular, the dilemma faced by firms is the need to reconcile rapid access and integration of relevant new knowledge, with the long time frames needed for knowledge creation and integration. Networking SCs based on deep inter-firm collaboration can offer a possible solution (Grant, 1996). The need for businesses to transcend the boundaries of SCs has been increasing in recent years as markets in their industry become more uncertain and technology changes more rapidly. One
: Community leaders in each SC SC-a .
Synthesizing Capability .
SC-b
.
SC-c
Leadership-based Strategic Community Comprising community leaders from all the SCs, the new leadership-based strategic community networks SCs and generates synthesizing capability.
Figure 5
Leadership-based strategic community.
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practical experience and the knowledge of a single organization need not to be embraced in order to solve the complex sort of problem of merging and integrating technology that is shown in this case. The community leaders of organizations need to build SCs inside and outside the company actively, including with customers, and then to transcend the boundaries of the SCs and network them in a speedy manner. To achieve this, community members including community leaders need to build a platform for resonating values and creating relationships of mutual trust, while also engaging in ongoing mutual exchanges, deep collaboration, and high involvement at the boundaries of multiple, different SCs. An evaluation of networked SCs can be found in the representative pattern of NTT, which have quickly networked their SCs and realized high involvement and high resonance value within these SCs.
Synthesizing capability of leadership-based strategic communities Struggles and conflicts are a common occurrence among networked SCs. These elements are harmful factors in the effort to merge and integrate the knowledge possessed by the SCs. This integration is thus promoted by the leadership strategic community (LSC) which we describe below. The role of the LSC is to merge and integrate the knowledge of all SCs on the network that were formed by community leaders (made up of personnel from various levels of participating firms: top management, middle management, etc.) and to generate synthesizing capability, the combined network power of all SCs (see Figure 5). The LSC needs to balance the various paradoxical elements and issues within SCs on the network in order to realize this synthesizing capability. The LSC also needs to enable community leaders to conduct dialectical management consciously and engage in constructive dialog to solve the various differences and issues that result from learning among the community leaders. As a result, the LSC actively analyzes problems and resolves issues, forms an arena for the resonance of new values, and creates a higher level of knowledge. Dialectical management is based on the Hegelian approach, which is a practical method of resolving conflict within an organization (Benson, 1977; Peng & Nisbett, 1999; Seo & Douglas Creed, 2002). The balancing of paradoxical elements and issues involves the synthesis of mutually divergent views among organization members coming from different corporate cultures on the one hand, and the synthesis of a variety of divergent business issues (such as the procedures of different management, technologies, or business models). In this case, for example, syntheses were required in three areas: (1) the values of many employees possessing a broad diversity of viewpoints and knowledge shaped by the different corporate cultures to which they belong, (2) the different elements of technology acquired by engineers from different organizations
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who aim to merge and integrate system technology elements diffused among the various SCs, and (3) balancing wired broadband business and wireless business models. The LSC plays a central role in synthesizing the paradoxical elements and issues in the specific areas of human resources, technology elements, and business. The new ideas and approaches of the community leaders who have adopted the methods of dialectical management in their efforts to synthesize paradoxical elements and issues make new knowledge creation and innovation possible. The LSC promotes active dialog and discussion among community leaders in order to cultivate a thorough understanding of problems and issues. By communicating and collaborating with each other, community leaders become aware of the roles and values of each other’s work. As a result, community leaders are able to transform the various conflicts that have arisen among them into constructive conflicts (Robbins, 1974). This process requires community leaders to follow a pattern of thought and action in which they ask themselves what sorts of actions they themselves would take, what sorts of strategies or tactics they would adopt, and what they could contribute toward achieving the NPD and the innovation of a new business. And in achieving this innovation, the LSC promotes the sympathy and resonance of the community leaders’ values, and the combined synergy and dialectical management of leadership among the community leaders have resulted in the high levels of synthesizing capability that has enabled NTT to realize NPD and form new business models. In another sense, it can be seen that NTT have used the resonance of values among community leaders in their SCs and their leadership synergy to form the LSC and high levels of synthesizing capability, which in turn generated a solid network of SCs. In the remarkably short period of about a year, NTT succeeded in the NPD of a large-scale system and created new knowledge at high levels that led to the establishment of business models with communications carriers and sales SI vendors. As seen above, this case study demonstrates that essential conditions for the creation of knowledge of the highest quality are the high involvement of SCs, high resonance value, and the high speed of SC formation, while at the same time merging and integrating knowledge possessed by the SCs diffused on the network, and forming an LSC that generates high levels of synthesizing capability, the network power of all SCs combined (see Figure 4).
Conclusions and managerial implications Through this case study, we would like to emphasize that innovative companies in the 21st century need to be strategic community-based firms. In other words, we believe that it is important for innovative companies to create ongoing innovation through business activities that involve the formation of SCs based on creative knowledge assets and the networking of these SCs.
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Knowledge, or management resources, aimed at strategic innovation is created from SCs, a wide range of knowledge both inside and outside the company, including customers and strategic partners, is merged and integrated via the network, and new knowledge that never existed before is created to become a new source of competitive advantage. To that end, it is important for community leaders who form the LSC to find a new value aimed at innovation with customers and leaders of strategic partners inside and outside the company as the company endeavors to achieve its desired vision and mission. The newly created value is then shared, sympathized, and resonated by all community members through constructive dialog and discussion within the LSC. The philosophy of an interactive learning-based strategic community, where members teach each other and learn from each other, is an important part of this process. This approach promotes further dialectical consideration and becomes the driving force for producing high levels of synthesizing capability. The community leaders in the LSC use synthesizing capability through dialectical management to create innovative, creative NPD, business concepts, and reforms in business processes. These leaders do not only exhibit their ‘innovative leadership’ as instructors, coaches, or mentors, but rather become listeners and recipients, enhancing intrinsic motivation (Osterlof & Frey, 2000) among community members in their knowledge creation activities. Their role as supporters and followers providing ongoing support for the community so that it can pursue dreams and a sense of accomplishment for the business and its vision requires the element of ‘servant leadership’ (Greanleaf, 1979; Spears, 1995). In this way, community members are themselves able to participate in decision-making in the SC and to enhance mutual understanding and strengthen links within the SC. This image of leadership at strategic community-based firms is not the old type that was buttressed by a rigid hierarchy but a new model of leadership aimed at achieving innovation. This new type of leadership is oriented toward the growth of not only individuals but of groups or organizations in the form of SCs and networked SCs at the same time. From the viewpoint of leadership and organizational development, the key issue for companies of the 21st century aiming to achieve innovation is how to nurture and produce many community leaders who possess the dialectical concepts of being creative and strategic, and the ability to act. And the formation of SCs that can continuously generate innovation via the capabilities of individual community leaders, the number of community leaders from each level of management, and the abilities of these leaders to exercise their skills, along with the networking of these SCs, determine whether or not a company is able to build synthesizing capabilities. ‘How can corporations achieve innovation in a speedy yet reliable manner?’ This is the greatest issue that innovative companies are facing in the 21st century.
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For example, on one side of this double-faceted issue is the speed in introducing innovative new products and services to market ahead of the competition, while on the other side is the expansion of the market for these products and services. To attain success, it is important for innovative companies to balance the various paradoxes in the SCs networked inside and outside the organization, including customers, and to exhibit practical abilities. Through this case study, we presented one view on the proposition of what the capabilities of leading companies in the knowledge-based society are for strategic community-based firms that form dynamic innovative processes in SCs and network these SCs. In other words, one of the keys to producing innovation in a knowledge-based society is how companies can organically and innovatively network different knowledge created from the formation of a variety of SCs inside and outside the company, and acquire the synthesizing capability they need to generate new knowledge. As community leaders, managers in the company who play important roles in producing synthesizing capability for the company use dialectical thinking and power to act to synthesize knowledge of good quality that was unevenly distributed inside and outside the company. To this end, it is important for community leaders to promote the speedy formation of quality SCs networked inside and outside the company, including customers, and to form an LSC made up of community leaders as soon as possible. Superior core technology in the leading-edge high-tech fields of IT and e-commerce continues to spread throughout the world and undergo dramatic changes. Innovative companies that need to establish competitive advantage in the network economy must not retain full control over innovative processes under the conditions of conventional hierarchical mechanisms and closed autonomous systems. In other words, companies will from now on probably increasingly require a management that can, from a multiple variety of viewpoints, use networked SCs to synthesize superior knowledge that is open and spread out both inside and outside the organization, including customers.
Acknowledgements I express appreciations to Professor John S. Edwards, Editor of KMRP and anonymous reviewers for their valuable comments. I also express my deep appreciation to the senior executives, senior managers, and development staffs of all companies concerned for the long interviews and their permission to access materials inside and outside the company in the process of conducting this research. As reflective practitioners, they embraced their own beliefs and thoughts and in their fieldwork devoted all their energies to NPD and the establishment of a business model. Without this contact with them, I would never have been able to experience to this extent the reality of dynamism in innovation.
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About the author Mitsuru Kodama is a Professor of Information and Management in the College of Commerce at Nihon University. He received the B.S., M.S. and Ph.D. degrees in electrical engineering from Waseda University, Tokyo, Japan. His research interests concern innovation, organizational learning, knowledge management,
organizational structure and e-business. He is now a Japan Editor of International Journal of Electronic Business and International Journal of Mobile Communication. He has published over 50 refereed papers in the area of management, information systems, electronics and telecommunications.
Knowledge Management Research & Practice
