Winning Through Boundaries Innovation

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Preface

From the perspective of strategies and organizations, this book discusses “boundaries knowledge” and “convergence knowledge” creation processes that companies need to create boundaries innovation through their strategic management activities based on the innovation processes in companies (incremental and radical).

Many modern companies see knowledge as the most important source of their enduring competitiveness. The practice of the knowledge conversion process – both within and outside companies and by individuals, groups and organizations – is a fundamental capability required for dynamic innovation activities to perpetually bring about new boundaries knowledge and convergence knowledge. The process of strategically acquiring new boundaries knowledge and convergence knowledge to achieve boundaries innovation is an important element of the capability needed for a company to speedily establish a market position in new markets or with new technologies. A knowledge model for promoting creative and productive abrasion, uncovering diverse core boundaries knowledge both inside and outside of themselves, and integrating their boundaries knowledge to create convergence knowledge as new products, services and business models is called “knowledge convergence model”. Companies that use this model are called “knowledge convergence firms”.

This book is the result of substantive observations made over a long period of time by the author as a practitioner in the business workplace, and the analysis of those observations. The author has experienced the exciting business of company-internal ventures and the development of new products and services in the rapidly changing ICT field; from these experiences the author found that the roots of boundaries innovation in companies lie in the “boundaries vision” insight that people and diverse communities have, knowledge that transcends diverse boundaries, the leadership of top and middle management, and the practice of actually doing business (practical process).

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As these people, their communities, boundaries vision, knowledge (boundaries knowledge and convergence knowledge), leadership and practical process interact with each other, companies achieve boundaries innovation through the dynamic setting down and execution of strategies.

An especially important perspective of knowledge and organizational boundaries, knowledge networks and knowledge of boundaries and convergence, and as practitioners consciously execute dynamic network thinking at the micro level of their existence, boundaries innovation comes about through new knowledge convergence. Boundaries innovation lies at the heart of the practical processes enacted by people, while the knowledge convergence process is born through diverse communities both inside and outside of companies, as teamwork or, conversely, group competitiveness. This book refers to these diverse and informal pragmatic communities that achieve boundaries innovation as “communities of boundaries”.

Kaplan and Norton (2007) indicate that strategic and operational breakdowns are the cause of stagnating corporate results. While it is vital to have in place a strategic management system that includes a manual of explicit knowledge to reinforce workplace activities and forge strong links between specific aims, as well as tools to support practical corporate activities, it is not the essence of strategy. The key focus is not only on strategy planning but on a comprehensive view that includes the “human system” – operations, technologies, and the actions and leadership of practitioners (including customers who are closely connected with the organization), both inside and outside the corporation. If the human system is neglected, a management system cannot be expected to achieve much. Strategy is like a living organism, and is very much a human process.

Jack Welch, one of the world’s leading business practitioners, wrote in his book (Jack Welch with Suzy Welch 2005):

I know that strategy is a living, breathing, totally dynamic game … In real life, strategy is actually very straightforward. You pick a general direction and implement like hell. If you want to win, when it comes to strategy, ponder less and do more … Obviously, everyone cares about strategy. You have to. But most managers I know see strategy as I do – an approximate course of action that you frequently revisit and redefine, according to shifting market conditions. It is an iterative process and not nearly as theoretical or life-and-death as some would have you believe.

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In sum, strategy is a dynamic practice process that involves practitioners recognizing and managing the dynamic relationships among people through daily practice, producing concepts and ideas to build new values while developing corporate visions and strategy aims through trial and error, and then reliably implementing them. Then the new value creation activities arising out of this practice process deliver superior products and services while returning general satisfaction to the community. Amid the time-axis flow running from past to future, the essence of boundaries innovation lies in dynamic “knowledge convergence process” that continuously pursues new strategic positioning with the aims of adapting to changes in the external environment (or creating environmental change oneself), realizing the ideal shape of the company and creating new value.

Structure of this book

This book describes how corporate organizational strategy can achieve future growth strategies, and development of current main businesses in unpredictable and rapidly changing times. With the recent developments in ICT, the necessity to develop products and services and create business models with knowledge convergence across different industries and by merging different technologies has become more urgent. In the past, technological innovations have been brought about through development that was primarily reliant on specialized knowledge. However, with new and unconventional ideas and product developments, there are now many cases where new products have been born through convergence between technologies in differing fields.

For these reasons, companies have to bring together and organize people with diverse capabilities. They must have awareness and the ability to inspire wide-ranging knowledge held by people dispersed both within and outside of the company, and must enable access to dispersed external knowledge and knowledge sharing while promoting the knowledge convergence process. For companies to demonstrate competitiveness in ← ix | x → the knowledge economy, it is becoming increasingly important that they understand knowledge from many different viewpoints, and converge the best knowledge dispersed both inside and outside of their organizations, including their customers, by pragmatically organizing (forming communities of boundaries) and networking personnel.

In uncertain and rapidly changing circumstances, companies can no longer just focus on strengthening their main businesses by developing and accumulating core competencies, but must also continually and proactively venture into new domains (new products, services and business models) that transcend their existing core businesses. To do this, managers and business persons have to dynamically engage in strategic ideas and action.

Leading companies continually create new boundaries innovation with the dynamic configuration of pragmatic networked organizations (communities of boundaries) to integrate project teams and multi-functional teams with the aim of converging new knowledge. Notably, knowledge convergence starts out in communities of boundaries pragmatically formed among wide-ranging personnel. Communities of boundaries raise the level of synergy of capabilities required to converge new knowledge, and promote the sharing of values and solidarity among their members, and thus raise the output of entire communities.

In reality, business activities carried out as various forms of project and mixed teams are in fact “communities of boundaries”. These communities of boundaries can be either formal or informal, operate continuously or temporarily, can be authorized within the company or form autonomously, can be teams formed across management hierarchies (e.g. working groups, task forces), or be diverse communities of boundaries that are formed between companies and include certain customers.

The reason for publishing this book is to uncover, from a micro perspective on strategy and organizations, the dynamic communities of boundaries creation mechanisms and the processes that trigger boundaries innovation from knowledge convergence processes.

This book presents a number of theoretical and practical insights gained from the theoretical frameworks and case studies on strategies for boundaries innovation that creates new knowledge (for example, new products, services and business model developments), from dynamic ← x | xi → convergence of wide-ranging knowledge in communities of boundaries formed across various boundaries, and is based on business research¹ carried out over five years on a number of Western and Asian companies (67 companies including Apple, Microsoft, Cisco Systems, GE, P&G, Qualcomm, Dell, Virgin, Samsun, LG, TSMC, Huawei, Li & Fung, Dyson, Yamato Transport, SoftBank and NTT DOCOMO).

Part 1 of the book deals with the theoretical. Chapter 1 discusses dynamic management of firm boundaries for making use of both incremental and radical innovation. Regarding the business factors that determine firm boundaries, this section describes new boundaries conception perspectives recursively extracted from field investigations and boundaries innovation concepts with the knowledge convergence model.

Chapter 2 describes theoretical concepts related to the creation of the boundaries knowledge and convergence knowledge in an organization needed to drive incremental and radical innovation. The book also coins the phrase “communities of boundaries” to describe the dynamic and organic formation of informal organizations within and outside of companies that take in company circumstances, and describes the characteristics of communities of boundaries formed across and between organization, specialization, company and industry boundaries from the perspective of processes that generate “Ba” (shared contexts-in-motion).