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Technological innovation through networked strategic communities: a study on a high-tech company in Japan.

Introduction

Technological innovation and changes in market structures are extremely swift in high-tech fields such as IT, multimedia, and biotechnology. The question of what sort of strategies or organization corporations should adopt in this rapidly changing environment is a major topic of research and practical study. This research is not an analysis of static strategic relationships or networks between companies on the macro level in growing or maturing markets. Rather, it is a micro analysis of a dynamic, time-oriented management process of new product and service development (NPSD) against a background of unknown markets in an uncertain environment. The effort is to explore individual cases that point to basic guidelines for practitioners in leading-edge fields who need to create new markets. Toward this end, the author collected a variety of data related to the NPSD process in which he participated as a leader in a high-tech corporation as it endeavored to create new markets.

Networks of Strategic Communities

It is a truism that large, established companies must continually evolve by engaging in various forms of innovation. The advent of the knowledge society means that businesses are faced with major transitions from focusing solely on developing new products and services to strategically innovating to improve their processes and performance. In particular, for various large, leading-edge businesses like ICT (Information and Communication Technology), recent years have brought increasingly intense pressure to leverage the strategic community (SC) through 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 (Kodama, 2000, 2001).

Strategic communities are based on the two concepts of Ba (Nonaka, Toyama and Konno, 2000) and community of practice (Wenger, 2000). The concept of Ba is a shared space for emerging relationships that serves as a foundation for knowledge creation. Ba is a place offering a shared context, and knowledge needs a context to be created. The context defines the participants and nature of the participation. The context is social, cultural, and even historical, providing a basis for interpreting information, thus creating meaning and knowledge. Ba is not necessarily just a physical space or even a geographical location or virtual space through ICT but a time-space nexus or shared mental space. Any form of new knowledge can be created regardless of the business structure, as Ba transcends formal business structures. Participating in a Ba means transcending one's own limited perspective and contributing to a dynamic process of knowledge creation. Members of a SC, including customers with 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 many points of view.

The second feature of the strategic community concerns community of practice (Wenger, 2000). This promotes mutual learning within the community by providing an understanding of mutual contexts and values among members (Kodama, 2001) and generating new knowledge. In the strategic community, membership and the leader are gradually established. These people produce the context in which they work toward fulfilling the community's mission, which involves the development of new products and services. Community members create new knowledge by learning from one another and sharing.

The definition of "knowledge" depends on the academic field in which it is used. In this paper, "knowledge" is defined as a process that enables people (their skills and know-how) to create new products, services, and business models in a variety of contexts. Accordingly, "knowledge" in this paper is positioned as an "intangible asset" (Ulrich and Smallwood, 2003).

We define SC as both emergent and strategic, a collaborative, inter-organizational relationship that is associated with creative yet strategic thinking and action in an ongoing process, as in arrangements such as strategic alliances, joint ventures, consortia, associations, and roundtables, and which depends on neither market nor hierarchical controls (Heide, 1994; Lawrence, Phillips and Hardy, 1999).

SC for instance, is applied in cases where enterprises are in an environment beset by uncertainties, where predictions are difficult, and management is searching for valid strategies. The task of SC is to form and implement business concepts and ideas. Trial and error, such as incubation, is necessary, however, and SC takes the stance that a strategy will emerge from the collaborative actions. For the most part, middle management is at the center of the SC, forming informal and virtual teams inside and outside the company, including customers, and generating entrepreneurial strategies and new knowledge. The managers produce demand that did not exist before, which, in turn, results in a new market (Kodama, 2000, 2001).

The acquisition of resources and transfer of knowledge between strategic partners is different from creating knowledge. Knowledge creation occurs in the context of a community that is fluid and evolving rather than tightly bound or static. The formal organization, with its bureaucratic rigidities, is a poor vehicle for learning. Sources of innovation do not reside exclusively inside firms but between them.

Accordingly, knowledge creation is an extremely important issue, with knowledge viewed as a property of communities of practice (Brown and Duguid, 1991), "ba" (Nonaka and Konno, 1998), communities of creation (Sawhney and Prandelli, 2000), SC (Kodama, 2000, 2001; Storck and Patricia, 2000), and networks of collaborating organizations (Powell and Brantley, 1992), rather than as a resource generated by individuals. When the knowledge-base of an industry is complex and expanding and the sources of expertise are broadly dispersed, the locus of innovation will be found in networks of inter-organizational learning rather than in individual firms (Powell, Koput and Smith-Doerr, 1996). Connection through the networks of SC based on inter-organizational collaborative relationships is thus an important origin of knowledge creation. New knowledge grows out of the ongoing social interaction that occurs in collaboration between SCs.

In this paper, the author describes the NPSD process that occurred over the past two years at NTT DoCoMo, a traditional Japanese mobile telecommunication company that developed a product capable of multipoint mobile videoconferencing. This product used technology arising from the integration of the Internet, telecommunication technology, computer technology and third-generation mobile phone technology. The network of SCs outside DoCoMo made it possible for this development process to occur at a speed previously unseen. In this study, the analysis of knowledge creation focuses on the synthesizing capability (Nonaka and Toyama, 2002) that the leadership-based strategic community (comprising community leaders within networked SCs) uses to integrate various kinds of knowledge to generate NPSD. Finally, this paper touches on managerial implications as firms make use of their synthesizing capability to achieve strategic innovation.

Research Methodology

This study uses a qualitative research design due to the need for rich data that could facilitate the generation of theoretical categories the author could not derive satisfactorily from existing theory. In particular, because of the exploratory nature of this research and our interest in identifying the main people, events, activities, and influences that affect the progress of innovation, the author selected the grounded theory style of data interpretation (Glaser and Strauss, 1967). This was blended with the case study design and with ethnographic approaches (Locke, 2001; Pettgrew, 1990; Eisenhardt, 1989; Yin, 1994).

This research is based on the field work undertaken by the author at NTT DoCoMo, where he was a project leader for a video business planning and development project utilizing third-generation mobile telephone technology (December 2000 through March 2003). The research data and insight were gained alongside--or on the back of--the action research interventions. In particular, the author analyzed relationships among the strategic partners of each firm observed from within the manufacturer (Mitsubishi), the telecom system vender (DoCoMo systems), and various corporate customers. He also collected detailed chronological data relating to the formation of strategic communities. These firms, including customers, provided access to 83 senior executives, senior managers, associate managers, development staff, sales staff, and corporate customers for interviews lasting one to two hours, and also furnished materials from both inside and outside the firms.

As a result of the grounder theory style of the data interpretation, the author identified seven aggregate broader concepts. These seven concepts are a conceptual framework that determine the structure of this article: involvement (DiMaggio and Powell, 1983), embeddedness (Granovetter, 1985; Dacin et al, 1999), resonance of value (kodama, 2001), rapid formation of networked SCs, leadership-based strategic community, and dialectical leadership and synthesizing capability (Nonaka and Toyama, 2002), which are described in a discussion section.

At this point, the seven concepts need to be explained briefly. The first, involvement, refers to the level of understanding and sharing of existing knowledge and the level required for generating new knowledge through interaction among organization members (SCs and networked SCs). The second concept, embeddedness, describes the degree to which collaboration between organizations (SCs and networked SCs) is enmeshed in inter-organizational relationships. The third concept, resonance of value, refers to unifying the views and desires of organization members through a deep understanding and sympathy for the visions and missions of the diverse members. The fourth concept, rapid formation of networked SCs, refers to the speed at which networked SCs are formed. The fifth concept, leadership-based strategic community, refers to the SC formed by leaders within a networked SC. The sixth concept, dialectical leadership, refers to the leadership that develops dialectically through a process of thesis, antithesis, and synthesis, as it resolves the issues and problems facing SC members. The seventh concept, synthesizing capability, refers to the ability to innovatively synthesize diverse and contradictory propositions and knowledge and create new knowledge.

Findings and Discussion

* Project activities

Until recently, the main function of second-generation (2G) mobile phones was for voice communications and to access text-based Web information on the mobile Internet such as i-mode, which has been enjoying explosive growth in Japan and Europe (Business Week, 2000). Now, however, technological breakthroughs in such areas as semiconductors, low power consumption, networking, and video compression have enabled promising video applications with mobile videophones that are completely new and different from videoconferencing systems and conventional videophones that used fixed communications networks, such as ISDN or Internet (Kodama, 1999).

In Japan, third-generation (3G) mobile communications service started in October 2001 [1], making video communication via mobile phone possible, provided by DoCoMo. Since video communications will be possible anywhere at any time once a video delivery system to mobile phones becomes operational, this technology holds great potential to revolutionize the lives of individuals.

DoCoMo promoted the popularization of 3G mobile phone, the most typical application. At the DoCoMo of that time, establishing a new business in mobile videoconferencing platform and its video-based applications, which were almost unheard of in the world market, was a major challenge.

At first, six employees, including a team leader, set to work drafting a plan for establishing a market for 3G-based mobile videoconferencing applications. Their vision was the construction in Japan of a new, video communication based-video culture, a break from the country's telephone-and-text-based mobile communication of the past. They were presented with innumerable business problems, a sampling of which follows:

* Deciding how to develop mobile videoconferencing platform capable of making visual conference calls using mobile phones.

* Deciding what sort of video applications (in particular, in business-to-business field) would be required for customers.

* Deciding what sort of business formation would facilitate sales, maintenance, and after-sales service.

Moving forward with these issues was a nearly impossible task for just six employees. But the motivating force behind these video-based businesses turned out to be network-based community thinking and action based on the creation of SCs outside the company, including customers, that related to each individual business process, including NPSD, marketing, customer services, maintenance, and after-sales service.

A team leader in DoCoMo's NPSD team demonstrated innovative leadership in utilizing the relationship of empathy and resonance he had built with other leaders (including customers) outside the company to create various SCs (see Figure 1). He managed these SCs simultaneously, then created networked SCs and worked to promote a mobile videoconferencing business following the next three steps.

[FIGURE 1 OMITTED]

As a first step (startup phase), in December 2000, DoCoMo agreed to form a strategic partnership with Mitsubishi Electric Corporation (Mitsubishi), which had a capability in the core multimedia technology of videoconferencing. The partnership's purpose was the joint development of a mobile videoconferencing multipoint system. So the SC between DoCoMo and Mitsubishi was created immediately (SC-a). For DoCoMo, the objective of this SC was to ignite the Japanese mobile videoconferencing market in a single stroke, and, at the same time, launch the new wireless videoconferencing service to promote a 3G mobile market. Further, the mobile videoconferencing multipoint system for engineering, operation, and customer support was accomplished through the creation of SC with DoCoMo Systems Inc. (SC-b).

In March 2002, along with developing the mobile videoconferencing multipoint platform (see Figure 2), as SCs with customers (SC-c), DoCoMo set up the multipoint connection experimental consortium with the assistance and participation of companies in a variety of industries [1]. The main aims of the consortium were to 1) verify the experimental platform for multipoint videoconferencing, 2) use empirical tests to evaluate marketability, and 3) work toward the development of applications that supported services. Through the creation of networked SCs (SC-a to SC-c), in May 2002 DoCoMo also started conducting field tests of mobile videoconferencing experiments to 3G mobile phones within corporations or at specific consumers (See Figure 3). Through the consortium, DoCoMo studied and verified the applications by each company based on actual usage. DoCoMo conducted interviews and surveys concerning additional functions aimed at improving convenience and practical usage time.

[FIGURE 2 OMITTED]

As a second step (growth phase), through the creation of networked SCs, DoCoMo launched a multipoint mobile videoconferencing commercial service called "M-Stage Visual Net" beginning October 2002 [2]. "M-stage Visual Net" provides a communications platform that enables numerous people to participate simultaneously in mobile videoconferencing via 3G video-enabled phones. Three different videoconferencing methods are possible. First, if a videoconference involves four people or less, the phone screen can be split into four windows to show each person simultaneously. Second, the phone can be set for full-screen display of each person (up to eight participants) as they speak. Third, all participants (up to seven) receive the same image from a single videophone.

As a third step (development phase), DoCoMo expanded its "M-stage Visual Net" service to include a Personal Handyphone System (PHS) and wired videophones using ISDN networks that had videoconferencing capabilities, starting March 24 [4] 2003. With the service expansion, users of PHS video handsets and wired ISDN-based videophones could also be able to participate in mobile videoconferences. The enhanced service also allows users to register up to five videoconferences at once. Previously, users could only register one videoconference. Moreover, a short comment on meeting agenda and details, for example, could be included in the registration confirmation email sent to participants together with log-in details citing the specific time of the conference and the designated access number. As part of the development phase, a new 3G phone terminal (FOMA mobile videophone; see Figure 1) was launched, which enhanced the marketability of "M-Stage Visual Net."

* Characteristics of networked SCs

In this section, the seven concepts derived from the research method are used to consider what impact the SC networks and the dialectical leadership of the community leaders had on new knowledge creation and the output of networked SCs. First, the author analyzes the characteristics of SC networks that became the trigger for the synthesis of knowledge diffused from the individual SCs, demonstrating the four concepts of collaboration, embeddedness in collaboration, resonance of values, and speed at which the networked SCs were formed. Second, the author discusses the synthesizing capability of dialectical leadership that enables the knowledge of SCs to be distributed and create new knowledge.

Information and knowledge within communities is both sticky and leaky. It is important, however, that networked SCs make the leaky aspect of knowledge work in a positive manner and that community leaders of all SCs promote the sharing of knowledge beyond the SC's boundaries. Transcending boundaries stimulates, meaningful learning, which, in turn, opens possibilities for the generation of new knowledge and creativity. Radical new insights and developments, such as the big project in this case, often occur at the boundaries between SCs (Grant and Baden-Fuller, 1995; Grant, 1996). The dilemma faced by organizations is the need to reconcile the rapid access to and synthesis of relevant new knowledge with the long time frames needed for knowledge creation and synthesis. Networked SCs based on deep inter-organization collaboration can offer a possible solution. The need for businesses and society to transcend the boundaries of SCs has been increasing in recent years as markets become more uncertain and technology and customers' needs change rapidly.

One important element in the formation of networked SCs is collaboration. Extensive interaction among community members, strategic partnerships among organizations that form networked SCs, and information sharing within networked SCs are not the only conditions required for deep collaboration, as defined by DiMaggio and Powell (1983). A high level of involvement in the collaborative process (i.e., a strong mutual awareness that SC members are in a common enterprise) is also essential.

In SC-a, collaboration produced the core technology resulting from the integration of network technology and software operation technology between DoCoMo and Mitsubishi. In SC-b, collaboration built an organization including manuals, training, and technical skills for the operation and support of new services within the DoCoMo Group. SC-c accumulated specific needs from the viewpoint of customers, such as improvements in functions and ease of use of prototype systems. Needs were identified through trial consortiums with progressive corporate users (approximately 30) utilizing DoCoMo and mobile solutions. This is equivalent to the accumulation of knowledge known as "customer competence" (Prahalad and Ramaswamy, 2000).

The development results and know-how created by the various SCs were shared through extensive dialog and collaboration within the networked SCs, and the condition of high involvement was confirmed by numerous interviews and other sources. A DoCoMo manager, for example, stated: "While product development that ultimately results from technological expertise is important, this is not enough to satisfy customers' needs. We therefore need to receive a variety of feedback concerning trial services through various experiments with progressive customers before we offer the services commercially, and to incorporate this feedback into the development of the products and services we eventually offer. To achieve this, we need to engage in deep sharing and collaboration of knowledge with partners including customers." (Low involvement, on the other hand, goes no further than the simple sharing of information among customers and partners; this situation does not assume any deep sharing or collaboration of knowledge.) Figure 4 shows the evaluation results of the networked SCs of DoCoMo with weight given to the factor of high involvement.

[FIGURE 4 OMITTED]

The second important element in the formation of networked SCs, embeddedness, describes the degree to which collaboration between SCs is enmeshed in interorganizational relationships. This element highlights the connection between the collaboration and the broader interorganizational network. The high embeddedness refers to the situation in which knowledge created by the SCs transcends individual SCs and is deeply shared among all the SCs, and the networked SCs integrate this knowledge to generate new knowledge. It is characteristic of networked SC to integrate their individual core technologies and know-how to create specific knowledge resulting from new development.

The third important element in the formation of networked SCs is the resonance process of values in the community. This is the process whereby all community members, in their effort to fulfill the networked SCs mission and goals, share and resonate values. The resonance of values is the same as the hidden value, espoused by O'Reilley and Pfeffer that enables shared values within the formal organization or community to produce new knowledge or competencies (O'Reilly III and Pfeffer, 2000). The resonance of values in networked SCs with partners inside and outside the organization (Kodama, 2001 a) leads to dialectical ideas and strength to act among community leaders and facilitates the generation of new knowledge that forms a new core for the networked SCs. High levels of resonance value were observed in the networked SCs of DoCoMo that had succeeded in the large project (see Figure 4).

High resonance of value was confirmed by a considerable volume of data in the form of many interviews between the author and community members. A DoCoMo community leader, for instance, stated: "It is important for us to deeply understand core technologies and customer needs, and to deeply share and sympathize with partner members including customers a uniform value, such as approaches to how we should develop the system and achieve their goal." (Low resonance of value, on the other hand, assumes a situation in which approaches to product development among customers and partners and the viewpoints of users do not sufficiently converge.)

The forth important element in the formation of networked SCs is speed. This element has not been discussed in any depth in research on inter-organizational networks. It must be considered, however, by businesses in industries undergoing rapid change or whose technologies are rapidly advancing. In this case, a major feature of DoCoMo's success was their speed in forming networked SCs.

Networked SCs among customers and partners should be formed in around 10 days. A DoCoMo manager states that the rapid formation of networked SCs involves improvisation: "We need to brainstorm together with partners and customers in order to develop our product or service faster than anyone else in the world" (If networked SCs are formed slowly, the ultimate goal of development will fall far behind schedule). Improvisation is especially important when developing innovative products and services in an environment where market needs are uncertain and technology is also changing (Brown and Eisenhardt, 1998). Speed and flexibility are particularly essential when making organizational decisions with external strategic partners. From the viewpoint of strategic logic, companies need to jump into the confusion, keep moving, and seize opportunities quickly in ambiguous markets (like the 3G mobile phone market in this case study) (Eisenhardt and Sull, 2001). DoCoMo needed to ride along with this flow (see Figure 4).

* Conceptual framework

Synthesizing capability through dialectical leadership of community leaders. For this analysis, community members and leaders need to build a platform for resonating values and creating relationships of mutual trust while also engaging in mutual exchanges, deep collaboration, high involvement, and high embeddness at the boundaries of multiple SCs. Doing this successfully can establish the leadership-based strategic community (LSC) between community leaders and produce the synthesizing capability of their dialectical leadership (See Figure 4).

Dialectical leadership is required of community leaders that make up the LSC. The LSC is an informal SC composed of community leaders from the various SCs, positioned above the layer of networked SCs (Figure 5). The LSC strengthens the cross-functional or inter-corporate integration characteristics of the SCs and networked SCs. The LSC's role is to boost knowledge sharing and integration, and to do so, the leaders in the LSC need the element of dialectical leadership. As mentioned, the community leaders must balance the various paradoxes in the areas of human resources, technology, and business models in order to successfully integrate the knowledge of these SCs.

[FIGURE 5 OMITTED]

A solid LSC and the dialectical leadership of community leaders give birth to high synthesizing capability, and this can give birth to NPSD, a service platform of new business models. If synthesizing capability is low, however, and even if there are networked SCs, the knowledge (the eventual NPSD) that emerges from it is not only of low quality, but also difficult or impossible to release to the market on a timely basis.

New knowledge creation through dialectical thought. Struggles and conflicts are common among networked SCs and are harmful in the effort to synthesize the SCs' knowledge. This synthesis, is therefore, promoted by the LSC.

As mentioned, LSC synthesizes the knowledge of all SCs in the network that were formed by community leaders (made up of personnel from various levels of participating organizations: top management, middle management, etc.) and generates synthesizing capability through dialectical leadership (see Figure 6). 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 and Nisbett, 1999; Seo and Creed, 2002).

[FIGURE 6 OMITTED]

To explain dialectics in a simpler way consider cases in which new ideas emerge from dialogs with organization members who have contrary ideas. While allowing one person to think one way while another person disagrees people engaged in face-to-face opposition attempt as far as possible to produce a new viewpoint built on the strengths of each other's ideas and search for a truth that results in propositions of a higher dimension. This sort of constructive, productive dialog is dialectical dialog. It is the process of synthesizing a certain thesis and the antithesis to give birth to a new proposition approaching a higher truth. In this way, diverse and contradicting knowledge (equivalent to the various SCs in our case) is synthesized to create new knowledge.

In this case study, for example, syntheses were required in four areas: 1) the values of many employees with diverse viewpoints and knowledge shaped by the different corporate cultures, 2) the different elements of technology acquired by engineers from different organizations, 3) balancing wired videoconferencing business and wireless videoconferencing business models, and 4) balancing customers' and company needs. The LSC plays a central role here. The dialectical leadership with the new ideas and approaches make new knowledge creation and innovation possible.

The LSC promotes dialectical dialogue and discussion among community leaders to cultivate a thorough understanding of problems and issues. By communicating and collaborating with each other, community leaders become aware of each other's roles and values. As a result, community leaders can transform the various conflicts among them into constructive conflicts (Robbins, 1974). This process requires community leaders to follow a pattern of dialectical thought in which they ask themselves what sorts of actions they would take, what sorts of strategies or tactics they would adopt, and what they could contribute toward achieving the large project and new knowledge creation. The combined synergy and dialectical leadership among the community leaders resulted in the high levels of synthesizing capability, enabling DoCoMo to realize this NPSD and form new business models. In the remarkably short period of about two years, DoCoMo succeeded in the NPSD of a large-scale system and created new knowledge at high levels that led to the establishment of business models with various content providers and corporate users.

Managerial Implications: Toward the Realization of Strategic Community-based Firms

Based on the analysis of case study, the author would like to emphasize that innovative organizations in the 21st century need to be strategic community-based organizations. In other words, it is important for organizations to create ongoing innovation through business as well as nonprofit activities that involve the formation of SCs and networked SCs. Knowledge aimed at innovation is created from SCs, and new knowledge becomes a source of competitive advantage. To that end, it is important for leaders who form the LSC to find a new value aimed at innovation among customers and leaders of strategic partners inside and outside the organization as the latter pursues its vision and mission. The newly created value is then shared, sympathized, and resonated by all community members through dialectical dialogue 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.

As a first important element regarding the dialectical leadership that synthesizes the different leadership behaviors, the community leaders in the LSC not only exhibit their "strategic leadership" that provides strategy, focuses on big picture, and promotes efficiency, but also exhibit their "creative leadership" based on autonomous, decentralized leadership that can produce creative thinking and behaviors of community members. As a second important element, community leaders not only exhibit their "forceful leadership" as directors who can take charge and control community members, but also become listeners, recipients, and collaborators based on collaborative leadership (Chrislip and Larson, 1994; Bryson and Crosby, 1992). This empowers community members by enabling leadership and enhancing intrinsic motivation (Osterlof and Frey, 2000) in their knowledge-creation activities. Their role as supporters and followers providing ongoing collaboration and support for the community so that it can pursue dreams and a sense of accomplishment (Greanleaf, 1979; Spears, 1995).

In this way, community members are able to participate in decision-making in the SC and to enhance mutual understanding and strengthen links within it. As a result of synthesizing capability through dialectical leadership, SC leaders and members can create big projects, business concepts and reforms in business processes (See Figure 7). This image of leadership is not the old type buttressed by a rigid hierarchy but a new model aimed at achieving innovation. This dialectical leadership is oriented toward the growth of not only individuals but also of groups or organizations in the form of SCs and networked SCs.

[FIGURE 7 OMITTED]

How, therefore, do corporate managers form SCs and networked SCs to create new knowledge? Project leaders and managers in charge of the company's future are bound by existing business frameworks and paradigms of thought. It is important for them to be constantly sensitive to the potential needs of the market and to give free rein to their curiosity and power of imagination (Kanter, 2001).

They must also be actively involved in various unofficial communities, including spontaneous communities for solving daily problems or improving work procedures and they must not fail to access information from key persons in other companies or industries. These practices will suggest new products or business models that integrate new business ideas and various technologies.

When community leaders sense new ideas, they must not miss the chance to develop the unofficial communities into a strategic one. It is important for the community leaders themselves to link a number of strategic communities and to launch the process of knowledge sharing and integration aimed at creating new knowledge. As the community leaders link the various SCs, they will no doubt face cross-cultural issues, contract negotiations, and challenges related to technology.

The important point is for the various partners in a networked SC to form a common vision and goals and for all community members to commit to common values. If the networked SCs' vision is too vague at the start, nothing will go well. It is also important for community leaders to have constructive discussions on the various issues within the networked SC and to use a productive, dialectical thought process to solve them. This dialectical leadership gives life to the possibility of synthesis. To internalize this dialectical leadership, community leaders need tolerance, patience, and understanding of the values of diverse partners and customers. Dialectical leadership also requires mutual understanding on an equal level with subordinates, irrespective of authority.

A more important point is the need for top management to actively support the activities of the community leaders, to establish a firm position for the SCs and networked SCs in the strategic business of the company, and to assign sufficient resources. If top management does not provide sufficient understanding and support, the "strategic" part of the community will not exist, and it will be a mere community.

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 dialectical leadership that is creative and strategic and able to act. A parallel issue is how to nurture the formation of SCs. The creation of innovative SCs, 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 through dialectical leadership.

Limitations of this Research and Issues for the Future

Using a case of networked SCs creating new markets in a rapidly changing environment, this paper identified concepts and frameworks required for knowledge creation. One issue for the future is to gauge whether the framework of this research can also be applied to other technologies, service fields, or a variety of external environments, such as start-up markets or growing markets. More cases are needed and the appropriateness of this framework needs to be studied further. Another issue for the future involves the impact cultural and leadership context (ex. U.S. and Japanese leadership styles) might have on the formation of networked SCs and on knowledge creation. Leadership style involves trust and power and is an important factor in the formation of networked SCs. While it was not possible to obtain detailed data in these field studies this time, the author believes that more detailed interviews with key people and other research methods such as ethnography will lead to a deeper, more exhaustive qualitative study.

Conclusion

"How can corporations achieve innovation in a speedy yet reliable manner?" This is the greatest issue that innovative companies face in the 21st century. For example, on one side of this issue is speed in introducing innovative products and services ahead of the competition, while on the other side is expansion of the market for these products and services. To attain success, innovative companies must balance the various paradoxes in the SCs networked outside the organization, including customers, and to exhibit practical abilities.

Through an in-depth case study, the author presented one view of the capabilities of companies in the knowledge-based society that form dynamic innovative processes in SCs and network these SCs. In other words, a key to producing innovation in a knowledge-based society is to know how companies can organically and innovatively network their knowledge created from a variety of SCs inside and outside the company. Such companies must also acquire the synthesizing capability through dialectical leadership needed to generate new knowledge.

As community leaders, managers who play important roles in producing leadership for the company use dialectical thinking 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 seek a competitive advantage must not retain full control over innovative processes using conventional hierarchical mechanisms and closed autonomous systems. From now on, companies will increasingly require a management that can, from a variety of viewpoints, use networked SCs to synthesize superior knowledge available inside and outside the company, including from customers.
Figure 3. Applications for Mobile Videoconferencing

Industry Applications

Construction * Meetings between staffs at construction sites,
 construction officers, and company branches,
 confirmation of execution status, and execution
 assistance
 * Accelerate reports and confirm tasks between workers
 at construction sites and technical support personnel
 * Provide video for safety control and technical
 support related to crucial and dangerous tasks
 associated with base station work that is currently
 conducted by phone (voice)
 * Use as communication tool to links staffs at the
 site of building or apartment administration system,
 control center, and maintenance service providers

Medical * Use it as a place for introducing products and
 providing information among salespersons,
 hospitals and patients
 * A tool that enhances communication between
 staffs at nursing homes, etc.

Broadcast * A means for TV program staffs to contact each other
 when simultaneously sending live feeds from multiple
 locations
 * Use it in programs (especially audience
 participation programs)

Events * Means of communication in quiz events with many
 participants
 * Orienteering

University * A conference and communication tool for eight
 laboratories at seven universities that can be used
 internally as well as with other laboratories


NOTES

[1] NTT DoCoMo to Conduct Trial of Multi-point Video Conferencing with FOMA. See Web site; http:// bizns.nikkeibp.co.jp/cgi-bin/asia/frame-asia.p;?NSH KIJIID=187570& NSH CHTML=asiabiztech.html

[2] NTT DoCoMo to extent its video services to FOMA. See Web site; http://www.japancorp.net/ Article.Asp?Art_ID=3917 The platform for the "M-Stage Visual Net" service was selected on the 2003 R&D 100 Awards program (R&D Magazine in U.S.) as one of the 100 most technologically significant products introduced into the marketplace over the past year; See Web site; (http://www.rdmag.com/scripts/ awards.asp). The full list of winners in 2003 was published on September 2003 issue of R&D Magazine. The details of "M-Stage Visual Net" regarding the technologies and service are described in Kodama et al (2002) and Ohira et al (2003).

REFERENCES

Anwar, S. (2002, January-Ferbruary). NTT DoCoMo and m-commerce: A case study in market expansion and global strategy. Thunderbird International Business Review, 56(1), 139-164.

Business Week. (2000, January 17). Feature article of i-mode.

Benson, J. (1977). Organization: A dialectical view. Administrative Science Quarterly, 22, 221-42.

Bryson, J., and Crosby, B. C. (1992). Leadership for the common good: Tackling public problems in a shared-power world. San Francisco: Jossey-Bass.

Brown, S., and Eisenhardt, K. (1998). Competing on the edge. Boston, MA: Harvard Business School.

Brown, J., and Duguid, P. (1991). Organizational learning and communities-of-practice: Toward a unified view of working, learning, and innovation. Organization Science, 2, 40-57.

Chrislip, D., and Larson, C. (1994). Collaborating leadership: How citizens and civic leaders can make a difference. San Francisco, Jossey-Bass.

Dacin, M. T., Ventresca, M. J., and Beal, B. D. (1999). The embeddedness of organizations: Dialogure and directions. Journal of Management, 25, 317-356.

Davenport, T. H., Ge Long, D. W., and Beers, M. C. (1998, Winter). Successful knowledge management project. Sloan Management Review, 43-57.

DiMaggio, P., and Powell, W. (1983). The iron cage revisited: Institutional isomorphism and collective rationality in institutional fields. American Sociological Review, 48, 147-60.

Eisenhardt, K. (1989). Building theories from case study research. Academy of Management Review, 14, 532-50.

Eisenhard, K., and Sull, D. (2001). Strategy as simple rules. Harvard Business Review, 79, 106-16.

Granovetter, M. (1985). Economic action and social structure: The problem of embeddedness. American Journal of Sociology, 91, 481-510.

Grant, R. (1996). Prospering in dynamically competitive environments: Organizational capability as knowledge integration. Organization Science, 7, 375-78.

Grant, R., and Baden-Fuller, C. (1995). A knowledge-based theory of inter-firm collaboration. Academy of Management Best Paper Proceedings, 38, 17-21.

Glaser, B., and Strauss, A. (1967). The discovery of grounded theory: Strategies for qualitative research. Chicago: Aldine.

Greanleaf, R. (1979). Servant leadership. New York, Paulist Press.

Heide, J. (1994). Inter-organizational governance in marketing channels. Journal of Marketing, 50, 40-51.

Kanter, R. M. (2001). Evolve-succeeding in the digital culture of tomorrow. MA, Boston: Harvard Business School Press.

Kodama, M. (1999). Strategic business applications and new virtual knowledge-based business through community-based information network. Information Management & Computer Security, 7(4) 186-199.

Kodama, M. (2000). Innovation through strategic community management--a case study involving regional electric networking promotion in Japan. Creativity and Innovation Management, 9, 2.

Kodama, M. (2001). New business through strategic community management: Case study of multimedia business field. International Journal of Human Resource Management, 11(1), 62-84.

Kodama, M., and Tsunoji, T., and Motegi, N. (2002). FOMA Videophone Multipoint Platform. NTT DoCoMo Technical Journal, 4(3), 6-11.

Lawrence, T., Phillips, N., and Hardy, N. (1999). Watching whale-watching: A relational theory of organizational collaboration. Journal of Applied Behavioral Science, 35, 479-502.

Leonard-Barton, D. (1995). Wellsprings of knowledge. Boston, MA: Harvard Business School Press.

Lipnack, J. and Stamps, J. (1997). Virtual teams. New York: John Wiley & Sons, Inc.

Locke, K. (2001). Grounded theory in management research. Thousand Oaks, CA, Sage.

Nonaka, I., and Takeuchi, H. (1995). The knowledge creating company. Oxford University Press.

Nonaka, I., and Konno, N. (1998). The concept of 'Ba': Building a foundation for knowledge creation. California Management Review, 40, 40-54.

Nonaka, I., and Toyama, R. (2002). A firm as a dialectical being: Towards a dynamic theory of a firm. Industrial and Corporate Change, 11, 995-1009.

O'Reilly III, C., and Pfeffer, J. (2000). Hidden value: How great companies achieve extraordinary results with ordinary people. Boston: MA, Harvard Business School.

Osterlof, M., and Frey, B. (2000). Motivation, knowledge transfer, and organizational forms. Organization Science, 11, 538-50.

Ohira, H. Kodama, M., and Yoshimoto, M. (2003). A world first development of a multipoint videophone system over 3G-324M protocol. International Journal of Mobile Communications, 1(3), 264-272.

Powell, W., and Brantley, P. (1992). Competitive cooperation in biotechnology: Learning through networks? In N. Noria and R. G. Eccles (Eds). Network and Organizations: Structure, Form and Action. Boston: MA, Harvard Business School, 366-94. Powell, W., Koput, K., and Smith-Doerr, L. (1996). Inter-organizational collaboration and the locus of innovation: Networks of learning in biotechnology. Administrative Science Quarterly, 41, 116-46.

Peng, K., and Nisbett, R. (1999). Culture dialectics, and reasoning about contradiction. American Psychologist, 54, 741-54.

Prahalad, C. K., and Ramaswamy, V. (2000). Co-opting customer competence. Harvard Business Review, 78(1), 79-87.

Quinn, J. B., Anderson, P., and Finkelstein, S. (1996, March-April). Managing professional intellect: Making the most of the best. Harvard Business Review, 71-80.

Robbins, S. (1974). Managing organizational conflict: A non-traditional approach. Englewood Cliffs, New Jersey: Prentice Hall.

Sawhney, M., and Prandelli, E. (2000). Communities of creation: Managing distributed innovation in turbulent markets. California Management Review, 42, 24-54.

Storck, J., and Patricia, A. (2000). Knowledge diffusion through strategic communities. Sloan Management Review, 41, 63-74.

Seo, M., and Douglas Creed, W. (2002). Institutional contradictions, praxis, and institutional change: A dialectical perspective. Academy of Management Review, 27, 222-47.

Spears, L. (1995). Reflections on leadership. New York: Wiley.

Ulrich, D., and Smallwood, N. (2003). Why the bottom line isn't!: How to build value through people and organization. New York: Wiley.

Wenger, E. C. (2000). Communities of practice: The organizational frontier. Harvard Business Review, 78, 139-145.

Mitsuru Kodama, a professor of Information and Management, focuses his research interests on innovation, organizational learning, knowledge management, and organizational structure. He has published over 70 papers in the areas of management, information systems, electronics, and telecommunications.

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 seek a competitive advantage must not retain full control over innovative processes using conventional hierarchical mechanisms and closed autonomous systems. From now on, companies will increasingly require a management that can, from a variety of viewpoints, use networked SCs to synthesize superior knowledge available inside and outside the company, including from customers.

NOTES

[1] NTT DoCoMo to Conduct Trial of Multi-point Video Conferencing with FOMA. See Web site; http:// bizns.nikkeibp.co.jp/cgi-bin/asia/frame-asia.p;?NSH KIJIID=187570& NSH CHTML=asiabiztech.html

[2] NTT DoCoMo to extent its video services to FOMA. See Web site; http://www.japancorp.net/ Article.Asp?Art_ID=3917 The platform for the "M-Stage Visual Net" service was selected on the 2003 R&D 100 Awards program (R&D Magazine in U.S.) as one of the 100 most technologically significant products introduced into the marketplace over the past year; See Web site; (http://www.rdmag.com/scripts/ awards.asp). The full list of winners in 2003 was published on September 2003 issue of R&D Magazine. The details of "M-Stage Visual Net" regarding the technologies and service are described in Kodama et al (2002) and Ohira et al (2003).

REFERENCES

Anwar, S. (2002, January-Ferbruary). NTT DoCoMo and m-commerce: A case study in market expansion and global strategy. Thunderbird International Business Review, 56(1), 139-164.

Business Week. (2000, January 17). Feature article of i-mode.

Benson, J. (1977). Organization: A dialectical view. Administrative Science Quarterly, 22, 221-42.

Bryson, J., and Crosby, B. C. (1992). Leadership for the common good: Tackling public problems in a shared-power world. San Francisco: Jossey-Bass.

Brown, S., and Eisenhardt, K. (1998). Competing on the edge. Boston, MA: Harvard Business School.

Brown, J., and Duguid, P. (1991). Organizational learning and communities-of-practice: Toward a unified view of working, learning, and innovation. Organization Science, 2, 40-57.

Chrislip, D., and Larson, C. (1994). Collaborating leadership: How citizens and civic leaders can make a difference. San Francisco, Jossey-Bass.

Dacin, M. T., Ventresca, M. J., and Beal, B. D. (1999). The embeddedness of organizations: Dialogure and directions. Journal of Management, 25, 317-356.

Davenport, T. H., Ge Long, D. W., and Beers, M. C. (1998, Winter). Successful knowledge management project. Sloan Management Review, 43-57.

DiMaggio, P., and Powell, W. (1983). The iron cage revisited: Institutional isomorphism and collective rationality in institutional fields. American Sociological Review, 48, 147-60.

Eisenhardt, K. (1989). Building theories from case study research. Academy of Management Review, 14, 532-50.

Eisenhard, K., and Sull, D. (2001). Strategy as simple rules. Harvard Business Review, 79, 106-16.

Granovetter, M. (1985). Economic action and social structure: The problem of embeddedness. American Journal of Sociology, 91, 481-510.

Grant, R. (1996). Prospering in dynamically competitive environments: Organizational capability as knowledge integration. Organization Science, 7, 375-78.

Grant, R., and Baden-Fuller, C. (1995). A knowledge-based theory of inter-firm collaboration. Academy of Management Best Paper Proceedings, 38, 17-21.

Glaser, B., and Strauss, A. (1967). The discovery of grounded theory: Strategies for qualitative research. Chicago: Aldine.

Greanleaf, R. (1979). Servant leadership. New York, Paulist Press.

Heide, J. (1994). Inter-organizational governance in marketing channels. Journal of Marketing, 50, 40-51.

Kanter, R. M. (2001). Evolve-succeeding in the digital culture of tomorrow. MA, Boston: Harvard Business School Press.

Kodama, M. (1999). Strategic business applications and new virtual knowledge-based business through community-based information network. Information Management & Computer Security, 7(4) 186-199.

Kodama, M. (2000). Innovation through strategic community management--a case study involving regional electric networking promotion in Japan. Creativity and Innovation Management, 9, 2.

Kodama, M. (2001). New business through strategic community management: Case study of multimedia business field. International Journal of Human Resource Management, 11(1), 62-84.

Kodama, M., and Tsunoji, T., and Motegi, N. (2002). FOMA Videophone Multipoint Platform. NTT DoCoMo Technical Journal, 4(3), 6-11.

Lawrence, T., Phillips, N., and Hardy, N. (1999). Watching whale-watching: A relational theory of organizational collaboration. Journal of Applied Behavioral Science, 35, 479-502.

Leonard-Barton, D. (1995). Wellsprings of knowledge. Boston, MA: Harvard Business School Press.

Lipnack, J. and Stamps, J. (1997). Virtual teams. New York: John Wiley & Sons, Inc.

Locke, K. (2001). Grounded theory in management research. Thousand Oaks, CA, Sage.

Nonaka, I., and Takeuchi, H. (1995). The knowledge creating company. Oxford University Press.

Nonaka, I., and Konno, N. (1998). The concept of 'Ba': Building a foundation for knowledge creation. California Management Review, 40, 40-54.

Nonaka, I., and Toyama, R. (2002). A firm as a dialectical being: Towards a dynamic theory of a firm. Industrial and Corporate Change, 11, 995-1009.

O'Reilly III, C., and Pfeffer, J. (2000). Hidden value: How great companies achieve extraordinary results with ordinary people. Boston: MA, Harvard Business School.

Osterlof, M., and Frey, B. (2000). Motivation, knowledge transfer, and organizational forms. Organization Science, 11, 538-50.

Ohira, H. Kodama, M., and Yoshimoto, M. (2003). A world first development of a multipoint videophone system over 3G-324M protocol. International Journal of Mobile Communications, 1(3), 264-272.

Powell, W., and Brantley, P. (1992). Competitive cooperation in biotechnology: Learning through networks? In N. Noria and R. G. Eccles (Eds). Network and Organizations: Structure, Form and Action. Boston: MA, Harvard Business School, 366-94. Powell, W., Koput, K., and Smith-Doerr, L. (1996). Inter-organizational collaboration and the locus of innovation: Networks of learning in biotechnology. Administrative Science Quarterly, 41, 116-46.

Peng, K., and Nisbett, R. (1999). Culture dialectics, and reasoning about contradiction. American Psychologist, 54, 741-54.

Prahalad, C. K., and Ramaswamy, V. (2000). Co-opting customer competence. Harvard Business Review, 78(1), 79-87.

Quinn, J. B., Anderson, P., and Finkelstein, S. (1996, March-April). Managing professional intellect: Making the most of the best. Harvard Business Review, 71-80.

Robbins, S. (1974). Managing organizational conflict: A non-traditional approach. Englewood Cliffs, New Jersey: Prentice Hall.

Sawhney, M., and Prandelli, E. (2000). Communities of creation: Managing distributed innovation in turbulent markets. California Management Review, 42, 24-54.

Storck, J., and Patricia, A. (2000). Knowledge diffusion through strategic communities. Sloan Management Review, 41, 63-74.

Seo, M., and Douglas Creed, W. (2002). Institutional contradictions, praxis, and institutional change: A dialectical perspective. Academy of Management Review, 27, 222-47.

Spears, L. (1995). Reflections on leadership. New York: Wiley.

Ulrich, D., and Smallwood, N. (2003). Why the bottom line isn't!: How to build value through people and organization. New York: Wiley.

Wenger, E. C. (2000). Communities of practice: The organizational frontier. Harvard Business Review, 78, 139-145.

Mitsuru Kodama, a professor of Information and Management, focuses his research interests on innovation, organizational learning, knowledge management, and organizational structure. He has published over 70 papers in the areas of management, information systems, electronics, and telecommunications.

Mitsuru Kodama, Nihon University, Tokyo, Japan
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