Superior core technologies at the cutting edge of industries such as ICT, energy, cars, electronics, semiconductors, biotechnology, pharmaceuticals, and material science are dispersed among companies, organizations, and even individuals throughout the world. Innovation using these superior core technologies is a wellspring of new products and services. A strategic goal for hi-tech companies has been the development of products through ongoing innovation in individual technologies. However, a host of demands have been placed on manufacturing industry, including: demands for high-function, high-performance products; offers on low-priced products; extensive product lines; and short product development cycles (e.g., Kodama 2007c). At the same time, diversified customer requirements and values have created user needs arising from new product values such as “disruptive technology ” (Christensen 1997).

In world markets, where demand from emerging countries is growing, new marketing and creative product strategies have become an urgent issue for global companies. Moreover, when developing new products and services, global hi-tech companies need to differentiate them based on the “convergence” of different technologies. This stems from the evidence of the cases where the integration of technology in one field with that of another has resulted in successful new products and services based on novel ideas. Therefore, there is a growing need for business strategies that provide for convergence, that is, the integration and consolidation of different technologies, the development of products and services that intersect different industries, and the construction of new business models.

Furthermore, the evolution of ICT has brought about temporal and spatial contractions in business processes and supply chains in all industries. In addition to enhancing management efficiency and accelerating decision-making, ICT has spawned new business models that crisscross and integrate wide range of industries, such as e-businesses, and new content (particularly for smartphones and tablet PCs, an area Google and Apple have dominated the world of ICT), and that have brought about business innovation in technical areas, such as the development of ICT and the creation of new markets through the integration of knowledge sourced from diverse players.

In addition, NTT DOCOMO’s i-mode (the world’s first mobile phone-internet business model, developed in Japan ) (Kodama 2002), Sony’s and Nintendo’s game devices (PlayStation/DS/Wii and Pokemon Go using smart devices )(Kodama 2007c) and rapidly growing social networking services (SNS ), such as Facebook and Twitter, and various kinds of social games, have brought about innovations in product development technology and service innovations through new marketing in newly created markets (for content, applications, game software). Moreover, these product and service innovations have facilitated co-creation and co-evolution across the ICT industry through the formation of dynamic “business ecosystems” as new value chains. Internet businesses, SNS , social games, and so on using mobile telephones and smartphones start out through the dynamic construction of business ecosystems developed through co-creation and co-evolution (e.g., Kodama 2001, 2007a, 2009b, 2012, 2014, 2015, 2017b).

The convergence of such different technologies and industries is progressing at a rapid pace in a wide range of hi-tech areas, including smartphones, radio-frequency identification (RFID), smart grids, solar cells, automotive computerization, environmental vehicles, semiconductors, biotechnology, and life sciences. Furthermore, the sophistication and diversity of these technologies, and the dramatic developments in ICT are forcing companies to come up with more complex business models.

In today’s rapidly changing business environment—with its high-speed technological innovations and short product life cycles, mature markets in developed countries and expanding markets in emerging countries, progress in ICT and the search for new business models—it is essential for companies to explore the development of new technologies to construct new business models. Companies must also pursue business innovation to offer new value to customers through the integration of different technologies and the creation of ICT businesses across various industries. This requires more than just the integration and consolidation of different kinds of specialist knowledge within each company—a vital element is the integration of different kinds of knowledge from other companies.

For example, in Japan, where the mobile phone market has already reached saturation, mobile phone carriers such as NTT DOCOMO and SoftBank have been forced to search for new business. Therefore, these companies need strategies that enable them to transition from saturated markets like the mobile phone market to new business models.

Market saturation is due to a number of issues common to developed countries: (1) the number of mobile phone subscribers is close to that of the population; (2) cut-throat competition among carriers over user charges; (3) increases in handset prices (due to increased development costs); (4) penetration of number portability (lowering of the barrier to switching carriers); (5) entry of new operators (mobile virtual network operators); and (6) increase in communications traffic (increase in content accompanying the increased use of smartphones).

Therefore, mobile phone carriers have to develop new value for customers. For example, in response to changes in the business environment, NTT DOCOMO is aggressively developing new mobile phone businesses in the ICT industry as well as social support services that cross different industries. To achieve this, it is constructing a technology platform to enhance the efficiency of information circulation via mobile devices, including smartphones and tablets, in areas such as ecology, safety and security, and healthcare; while Softbank is pursuing the acquisition of US companies to gain domination in world markets as it strives to make the transition into new service businesses.

The question then is: What kind of organizational strategies and actions should a company adopt to generate new products, services and business models through “convergence,” that is, the creation of ICT businesses that integrate different technologies and span industries? In addition, what kind of leadership and management is required to achieve this? There are many issues for hi-tech and global corporations to consider in this regard.

While the detailed strategies of individual industries and companies vary, the key concept behind corporate activities for adapting to convergence lies in “asset orchestration” (or knowledge creation) through the demonstration of dynamic capabilities (DC) (Teece 2007, 2014). Furthermore, the corporate and organizational platforms that support this asset orchestration process are the formation of business communities which originate in the Japanese concept of ba, or place (Nonaka and Takeuchi 1995; Nonaka and Konno 1998; Kodama 2005) and those unique , inherent capabilities of their practitioners (leaders and managers) and organizations, which are difficult to replicate (see Fig. 1.1).