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Competing through ICT Capability
Innovation in Image Communication
M. Kodama
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eBook - ePub
Competing through ICT Capability
Innovation in Image Communication
M. Kodama
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About This Book
Proposes that video communications tools are a form of infrastructure that enhance the creation of new knowledge which transcends space and time in business activities. Illustrates that the dynamic relationship of four elements of ICT capability promote the formation of business networks and the development of knowledge communities.
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1
ICT and Boundary Innovation
1.1 The advance of ICT innovation
The advancements in recent years of communication functions available over broadband networks typical of ICT (information and communication technology) have spawned a range of new businesses. ICT not only provides the high-performance computer-based information processing of conventional IT (information technology), but also enables interactive networking among people all over the world, and is a technological platform that lets people publish, share and create a diverse range of valuable information, data and knowledge.
Both wired and wireless broadband networks now feature bandwidths that have enabled ‘always-on’ connections to become much more common and thus dramatically improved user convenience. In particular, these developments offer high operational response speed across the board, shorter download time, widespread permanently online connection capability, and a diverse range of services and functions, including cloud computing and SNS (social networking sites—Twitter, Facebook, etc.) platforms that enable the formation of online communities and act as effective corporate marketing tools. As well as this diverse range of web applications, bidirectional video communications have made it into the mainstream with the advent of video posting sites such as YouTube, and video mail, video chat, video phone, video conferencing and movie streaming functions. Broadband-based video and web conferencing systems, and videophone applications aimed at consumers such as Skype or Apple’s FaceTime have emerged as a result of the remarkable technological advances of recent years. These ICT tools have not only brought more efficiency to business management, but have also revolutionized existing supply chains ahead of consumer adoption.
ICT, with its huge leaps in computer-processing performance and communications technologies, has made a massive contribution toward more efficient business processes within companies, between companies and with their customers (e.g. Venkatraman, 1990, 1994, 1997; Hammer and Champy, 1993; Ross, Beath and Goodfue, 1996). For example, product development that focuses on customer needs is promoted by concurrent engineering and frontloading (e.g. Khurana and Rosenthal, 1998) and through project management (e.g. Kodama, 2007c) in the development and manufacturing process. Leading corporations all over the world are proactive in their use of a wide range of computer-aided design (CAD) and simulation applications integrated with ICT tools, which streamline and optimize everything across the supply chain from design, development, manufacturing techniques and assembly, through to distribution, marketing, sales and after-sales service (e.g. Kodama, 2007c). The growth of ICT has not only brought with it much greater efficiency in business processes and supply chain management for individual businesses operating in specific business areas, but has also contributed toward the creation of new types of businesses across a diverse range of business fields.
In addition to all the applications for music, e-book, game and video distribution for instance, the advanced developments of tablet PCs and smartphone technologies found in devices such as iPhone, iPad and Android have greatly expanded the number of usage patterns and contents in wide-ranging areas like remote health care and e-learning. Thus, the consumer market of today is an environment that offers not only entertainment but also education, health services and a variety of consulting services that can be accessed virtually. Moreover, the spread of mobile phones, including smartphones, in major countries around the world has already reached 90%.
As these new mobile-based consumer services and businesses continue to expand, most notably in Japan and Korea, these kinds of mobile applications have become infused into almost every aspect of people’s daily lives, including their business activities. Smartphones and mobile phones are no longer just communication tools. While these devices enable users to perform web searches and access content services for games and music and video and so on, just like using a PC connected to broadband, they also give users access to the rapidly expanding mobile e-commerce electronic money market, and ubiquitous services that use IC tags (RF tags). There is also an expanding range of mobile phone applications that use infrared communications, QR codes and so forth.
Figure 1.1 Advancements of mobile communications networks
As the gateways to broadband, the development of mobile communication networks has seen the 3G systems (W-CDMA → HSDPA → HSPA) evolve through countries in Europe and Asia, including Japan where the 3.9G systems (LTE: Long Term Evolution) commenced service in December 2010. Moreover, global communications carriers have been developing the 4G mobile communication systems that promise to deliver fiber-optic speeds from 2015 (see Figure 1.1).
This broadband-based service infrastructure, designed to support a diverse range of communications with Web 2.0 and SNS, and the variety of terminals including mobile phones, smartphones and tablet PCs coupled with the high-speed, high-capacity cloud computing information systems and so forth, are accelerating the expansion of business opportunities and speeding up the pace of business transformation while significantly impacting both corporate activity and individual lifestyles, and are thus becoming core platforms for a socio-economic movement.
ICT brings efficiencies to corporate business activities, enables strengthened competitiveness in expanding global markets and even addresses environmental issues by reducing the amount that people have to physically commute by encouraging “smart work” (e.g. working at home), thereby revolutionizing traditional work styles.
On the other hand, corporations need to give increasingly serious consideration to creating new business models and reforms as they incorporate these ICT innovations into their corporate strategy. For example, the most influential products in the global ICT industry—Apple’s iPod, iPhone and iPad, and Google’s Android—bring with them new markets for a diverse range of new information devices all the way from smartphones and tablet PCs through to smart TVs and software, and at the same time are giving birth to new business models for music, e-book and movie distribution all over the world. As well is that, SNS sites like Twitter and Facebook are becoming powerful tools for new marketing and product development through the formation of customer communities. For these reasons, innovation through ICT is not just a simple matter of dealing with technical aspects (product innovation), but also requires development of service innovations through a new kind of marketing that even involves the creation of markets themselves.
However, the corporate capabilities that are needed to bring forth these new business models and transformations through the use of ICT are also highly dependent on the knowledge that exists in individuals and in groups, and not only on the technical functioning of the hardware and software used with ICT.
In other words for many companies, ICT by itself is not the most important tool used to sustain competitiveness, for it is also the ideas, know-how and skills required to develop new ICT and combine ICT— high levels of condensed intelligence that are otherwise known as “knowledge.”
Knowledge is a fundamental organizational capability that provides for continual creativity and dynamic innovation (Nonaka and Takeuchi, 1995; Kodama, 2009b), while ICT itself is a means to acquire new knowledge and achieve innovation.
As described later, the capability of individuals and organizations to maximize ICT use and bring forth new knowledge through ICT interactions is the driving force behind new business innovation and reform. This book defines “the capability of individuals and organizations to bring forth new knowledge through interaction with ICT” as “ICT capabilities”.
The aim of this book is to analyze and consider the organizational systems and dynamism in corporations needed to acquire these ICT capabilities, as well as the actual processes adopted by the individuals and groups involved.
The following section describes the ICT business innovation developments behind the paradigm shifts of the changing markets and economies of recent years, the responses to these changes by business organizations, and the way business strategies ought to be.
1.2 Paradigm shifts in business management
As mentioned earlier, a wide variety of twenty-first-century industries have been influenced by innovations made through ICT, which have radically transformed the anatomy of business in these industries. Nowadays, the best core technologies of leading businesses are developed and dispersed in various places around the globe. Individual cutting-edge technologies in top companies in ICT, e-business, green energy, digital contents, and the automotive, electronics and biotech industries are spread out across the world and continually developed in their separate business areas. In addition, there is a great deal of crossing over between industries at the global level, and the resulting convergence between different technologies and services has seen the arrival of a variety of new products, services and business models. Examples of this can be seen with the new products, services and business models that have arisen out of the transcendence of the corporate boundaries between varied and different industries, and the convergence and integration of different knowledge in industries such as the smartphone, tablet PC, game, digital appliance, eco-car and environmental technology industries.1 Modern innovation is now achieved upon these new strategic technological platforms.
Put simply, we can say that the era of globalized convergence has arrived in earnest (Kodama, 2011b). This means that it is no longer possible for many companies to gain as much control of their innovations as they might like, which stands in contrast to the traditional hierarchies and closed independent systems of the twentieth-century-style mass-production business model.
Under the paradigm of mass production and sales, twentieth-century businesses pursued economics of scale and scope by concentrating their business resources on the company’s core competences to offer off-the-shelf products and services. Corporations were also closed organizations with fixed hierarchies, which were able to enact their corporate strategies with a fair degree of predictability in the gently changing business environments of the time. However, the shifts brought about by the multiplicities of technological innovations typical of ICT have been massive.
Nowadays, ICT is built into the core of company strategy in every kind of industry and business, not only for effecting innovation in individual corporations but also because corporations are operating in an era where the ability to delivery speedily in networked businesses make or break a company (successful companies provide customer value by taking advantage of ICT to cross and merge conventional product and service boundaries). In short, appropriately converged and executed real and network business has become a key business model for a great many companies.
Figure 1.2 Paradigm shifts in corporate management
Furthermore, all kinds of companies need ICT to develop individualization and mass-customization businesses so that they can offer personalized and diverse business solutions that meet customer demands and expectations of the future. Put a different way, all companies will become ICT companies operating in an environment characterized by concurrent demands for speed and customer value coupled with even more pressure to achieve innovation and forge ahead of competitors (see Figure 1.2).
For companies to produce a competitive advantage in this economy of speed and customer value, management that can integrate dispersed and multifaceted knowledge though the formation of diverse and open knowledge networks (Kodama, 2007a, 2007b) both company-wide and intercompany, and include customers, will become more and more important. In other words, in addition to the increased sophistication and diversity of knowledge, aggregation and knowledge convergence across different industries is also a major consideration. Now and into the future, the high-quality knowledge needed to achieve innovation will be dispersed in knowledge networks (Kodama, 2005, 2009b) and spread across businesses and industries, which will mean that for many companies the knowledge-integration process that conquers and transcends the boundaries between companies, and between companies and their customers, will become a crucial element of business activity (Kodama, 2009b, 2011a). This means that we are entering an era in which “co-evolution management”—the capability to coordinate and collaborate with external partners and customers—will become more and more of an issue for many companies.2
Leading businesses, while continuing to pursue profit from their existing businesses, seriously consider the risks that accompany these new and uncertain circumstances, and forge a dynamic view of strategy that enables the company to intentionally and unceasingly form new markets (i.e. products, services and business models) through the merging of different knowledge, by transcending the company’s own organizational capabilities (see Chakravarty, 1997; Markides, 1997, 1999; Eisenhardt and Sull, 2001; Kodama, 2007a, 2007b).
This dynamic view of strategy operates to further encourage the formation of cross-boundary partnering through coordination and collaboration with external partners and customers. Therefore, companies need to learn the open innovation processes that are explicitly reliant on external knowledge in order to acquire the speed and applied capabilities needed to respond to disruptive technologies (e.g. Christensen, 1997) and emerging markets. For these reasons, both the advancement of core competencies in traditional closed innovation, and the new knowledge-integration processes used with open innovation are required (see Figure 1.2). In other words, this means management that can hybridize the closed and open innovation processes (also called “hybrid innovation”). For example, P&G having enjoyed success with a well-operated knowledge-integration process as part of its “Connect & Development” strategy is a case in point (e.g. Sakkab, 2002).
Companies that want to propel their businesses through the rest of the twenty-first century will need to foster these closed and open “hybrid innovation” processes through cross-boundary partnering networks in the market economy of global convergence. At the core of this approach lies the formation of knowledge communities for co-evolution management through coordination and collaboration with partners all over the world. In particular, the formation of knowledge communities across a range of different businesses raises the potential to trigger the emergence of new business ecosystems.3 Since ICT use is the key to the formation of these knowledge communities, its inclusion as the centerpiece of business strategy to absorb the best knowledge from around the world into the company is also a major consideration.
For companies to demonstrate the leadership required to achieve new business innovation by conquering and transcending diverse boundaries with ICT to reinvigorate business, and moreover respond to convergence between different technologies and industries, business people need the ICT capabilities (as they are called in this book) to gain new insights from complex and diverse boundaries and put these to work. The following section describes the importance of the concept of ICT capabilities.
1.3 ICT capabilities
Through extensive business experience and field research,4 th...