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Customer value creation through community-based information networks
International Journal of Information Management 19 (1999) 495}508
Customer value creation through community-based information networks Mitsuru Kodama* Community Laboratory, 6-2-21 Schin Machi, Hoya Shi, Tokyo 202, Japan
Abstract This paper points out that utilizing fully the community-based information networks based on multimedia digital networking Information Technology (IT) makes it possible to formulate a new customer value creation business model. Aggressive IT investment by top management to build community-based information networks, a support tool for this future network strategy, will permit business innovation based on strengthened competitiveness and enhanced customer service. ( 1999 Elsevier Science Ltd. All rights reserved. Keywords: Information technology; Information networks; Community-based networks; Business innovation
1. The need for strategic community creation Business organizations and activities continue to evolve in tandem with recent changes in the business environment and the evolution of networks, beginning with the Internet. The future will bring greater reliance on business strategies not limited to resources within the traditional corporate structure, that is, strategies that incorporate outside resources such as personnel and knowledge. Among theses new approaches will be strategic outside tie-ups, virtual companies, mergers and acquisitions, and outsourcing. Over the past few years, to expand their market shares in products and services, and create new businesses, many venture "rms, and a variety of large, leading-edge companies with core competencies such as multimedia- and computer network-based software, semiconductors, and networking technology, have been employing a variety of business styles to develop strategic enterprises.
* Tel.: #81-3-3277-8674. E-mail address: [email protected] (M. Kodama) 0268-4012/99/$ - see front matter ( 1999 Elsevier Science Ltd. All rights reserved. PII: S 0 2 6 8 - 4 0 1 2 ( 9 9 ) 0 0 0 4 5 - 6
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In the area of marketing, it will become increasingly essential to develop strategies that go beyond the traditional use of information systems to apply customer data. The growing use of marketing approaches grounded in new ideas, such as o!ering products and services tailored for a speci"c customer, customer participation-type marketing, and `softa relationship building (rapport, security, and trust), will continue. The important issue in promoting this kind of business innovation is not how to carry out strategic business operations using company resources (knowledge, personnel, etc.), but rather, how to develop innovative businesses by creating communities of various organizational forms through collaboration (including virtual collaboration via IT networks) with resources outside the organization. To continually revitalize a company and nurture its e!orts to create new businesses over the long term, it will be important to develop businesses through strategic community creation (including virtual community creation via IT) in response to changes in the business environment.1 In this kind of business development, an important theme is the need for community leaders to exercise innovative leadership in creating strategic communities. A particularly important element in innovative leadership lies in psychological qualities of the community leader. In order to make the community members' thoughts, ideas, beliefs, work attitudes, and other values resonate with his or her behavior and ideas, the leader must have the ability to produce, be skilled in conceptualization and interpersonal relationships, and possess political sense and leadership ability both within and outside of the company. The basis of innovative leadership is the ability to think and act strategically, and in accord with the community's core competencies of information, knowledge, expertise, and conceptualization (hereafter referred to as community competencies). Community competence consists of the various resources in the community that make up, `information, knowledge, expertise, and conceptualizationa, and the competencies possessed by individuals correspond to the competencies possessed by the community, i.e. its member groups and the overall organization. Speci"cally, community competence is the core competencies possessed by the overall community for the purpose of incorporating resources within and outside the organization, in order to vigorously move forward with a variety of businesses as part of a creative new enterprise development e!ort with its roots in business reform by the middle- and lower-level employees who are the constituent members of the community. An important point is that the knowledge, expertise, and ideas of the individuals, groups, and the overall organization be shared, and then continually created and innovated. In this paper, business innovation through strategic community creation will be referred to as community management (Kodama, 1998). With recent, rapid technological innovation in multimedia digital networking IT, it is now possible for communities within and outside a company's structure to develop businesses in a new customer value creation model, make use of the latest IT to bolster community management, and promote management characterized by speed and excellence.
1 See Bechard, Goldsmith and Fesselbein (1996) for information on the need for community creation and for information on the need for network-based virtual communities, see Lipnack and Stamps (1997).
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2. A grand design for organizational management and the spread of information networking Amid dizzying changes in the business environment, in order to make future management more strategic, continually increase the productivity of individual employees, and endeavor to raise the level of management for the overall company organization, aggressive application of IT is essential. Representative examples include recent cyberbusinesses that use the Internet, and companies that have brought e$ciency to their business operations through the active use of intranets and extranets. Next, using Fig. 1, this paper describes a grand design for the future of organizational management in the corporate structure, and on the spread of information networks, which is likely to in#uence it signi"cantly.
Fig. 1. A grand design for organization management and the spread of information networking.
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2.1. The Hop process In the era that preceded the development of international digital networks such as the Internet, the majority of companies accomplished their daily business operations using telephones and facsimile machines for communications both internal (among departments) and external (with business connections and customers). The various types of business processing performed by computers consisted mainly of centralized, "xed processes, typi"ed by accounting, and performed on general-purpose, mainframe host computers. On a time axis, this process is de"ned as the Hop stage. This Hop stage, described from an info-com technology perspective, was a world based on analog networks and low-speed transmission digital networks, in which voice communications and data transmission played a central role. The organizational form was hierarchical, managementbased, administrative, and pyramid-shaped. Operations were carried out vertically, through lines of command. Within a company, information #owed from high-to-low-organizational rank. 2.2. The step process Trends of decentralization and integration through the large-scale downsizing of computer systems mark the next stage, known as Step. At the same time, backdropped against the development of Internet and intranet network technology, companies moving forward with the con"guration of both intra-company and extra-company networks that make free use of digital technology have in recent years continued to increase. With the Step process, there exists an environment in which communication and collaboration, through electronic mail and groupware that fully utilize digital networks, play a central role, progress in improving organizational work #ow is a step above the Hop stage, and external communication and collaboration #ourish. Due to a loosely hierarchical organization in which #attening proceeds more smoothly than in the Hop stage, the Step stage better facilitates rapid decision making and delegation. Regarding the form of organizational management, the organizational climate of the Step stage better lends itself to promotion of the so-called knowledge management based on knowledge creation, and more individual and organizational activation can be anticipated. Many companies are currently moving from the Hop process to the Step process, and cases of companies actively adopting e-mail or various types of groupware to facilitate inter-organizational communication and information sharing are common. Many companies are using methods like these with the goal of promoting company innovation, and thus taking knowledge management to the next level. Meanwhile, another truth about the Step stage is that for companies that have already carried out cultural reform by adopting new tools like e-mail and groupware, it is becoming apparent that these alone do not allow them to su$ciently strengthen communication or expedite decision making, whether inside or outside their organizations (case studies of video conferences, 1998). In short, problems related to the one-directional, non-real-time nature of contact and consultation by e-mail are being raised as the largest obstacle to making important judgments and decisions quickly. The reason is that the most important element in organizational communication is the empathy and solidarity between individuals that come to face-to-face communication.
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Accordingly, the next process, known as Jump, will require complete eradication of the sti#ing feeling experienced when using e-mail or groupware that one cannot adequately convey his thoughts or intentions. It will also demand the ultimate communication tools to lead company organizational reform. 2.3. The jump process For future business forms such as those mentioned, business development by communities inside and outside the company organization that have openly incorporated external resources, including customers, is a pattern expected to be increasingly seen. Compared with Step, this process will demonstrate #atter and more #exible organizational composition, and more open management. In the Jump process, community leaders must exercise innovative leadership and leverage community management to dynamically promote business strategies within and among communities. Furthermore, network strategy support tools to back up this new management will be essential. Speci"cally, these tool will comprise a system that supports community leaders, and the sharing, creation, and innovation of community competencies. In concrete terms, it will be a new, multimedia image-based information network system that emphasizes the high-quality collaboration needed for decision making by community leaders, and interaction among individuals (in this paper, it will be referred to as a community-based information network, hereafter, community net). In this step, to further the Jump process transition (that is already underway throughout the world), dynamic reform of individual cultures and overall organizational climates, and the active adoption of multimedia, digital networking, IT-based community nets, will be important. It will also be important to promote dynamic businesses by making management and organizations transparent throughout the various communities both inside and outside the organization.
3. The community net concept The community net is networking that takes the one-to-one, text-based communication and collaboration represented by e-mail and groupware to a new level to allow interactive communication and collaboration that fuses the three multimedia elements of images, voice and text. It uses technologies represented by the Internet and ISDN (Integrated Services Digital Network)2 that are continuously being realized through network development and technological innovations in various network devices. As for applications, there exist both interactive real-time models and storage-type, non-real-time models.
2 A digital network service (Integrated Services Digital Network) established by the telecommunications standardization sector of the International Telecommunications Union (ITU-T). Additional information on ISDN is available at Shttp://www.alumni.caltech.edu/&dank/isdnT, and ITU-T recommendations are also available at Shttp://www. itu.ch/itudoc/itu-t/rec/i.htmlT.
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Fig. 2. The community-based information network concept.
3.1. Use of community nets in the interactive real-time model The "rst application, as shown in Fig. 2, is an interactive real-time model system that allows simultaneous exchange of information from di!erent locations. Typical systems are desktop personal video conferencing systems (DTC: Desktop Video Conference) and video terminals such as video phones, which are more personal, easier to use, and more suited to the general user than single-use room system-type video conferencing systems.3 This system not only allows interactive, real-time transmission of images and voice, but also supports the sharing of textual information; for example, two-way collaboration on a data sheet. Video terminals overcome the e-mail and groupware disadvantages of not being real time and not facilitating easy communication of thoughts and intentions, and allowing content-rich debate and rapid decision making. This makes possible support of decision making by community leaders and contributions to the reform and creation of community competencies in information, knowledge, expertise, and conceptualization, both within and among communities. Furthermore, the use of video communication with business contacts and customers makes possible a new customer-creation model business style. 3.2. Use of community nets in the non-real-time model (storage) The second application is storing community competencies such as information, knowledge, and expertise, which are not real time in nature, in storage systems, from which they can be searched
3 Video terminals based on videoconferencing systems and/or video phones standardized by the ITU-T, see, for example, Rosen (1996) and Trowt-Bayard and Wilcox (1997).
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Fig. 3. Positioning of community-based information network.
and extracted on demand. A typical system is the video-on-demand system (VOD).4 VOD systems allow the accessing and searching of databases of images (as well as voice and textual information) using the video terminals of devices such as video conferencing systems and video phones. VOD allows knowledge and expertise (community competencies) gained from organizational learning, which does not lend itself to text-based communication, to be stored in visual form, and then shared within or among communities. R&D, design, manufacturing, and personnel training applications will be particularly useful.
4. The community net as a network strategy support tool Mainframe host computers are a type of information system that have changed little over time. These numeric processing-based machines are positioned as management control systems for routine operation-type work. However, with the arrival of e-mail and groupware, many companies are clearly supporting decision making by community leaders and using collaboration within and between communities to promote knowledge management over older models. But our survey results show that, in the light of the trend towards the management innovation model and the customer value creation model, community nets are a stronger strategic network support tool than e-mail and groupware (see Fig. 3).
4 The system sends stored video data when a request is sent from a remote location. It is generally used for delivering entertainment such as movies and television programs to homes, but recently is being utilized at universities for distance learning and at companies as a training tool.
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Fig. 4 shows the results of a survey of 50 leading companies in the Europe, US and Japan that are already actively using community nets in individual business processes such as planning, design, development, manufacturing, sales, physical distribution, and support. It summarizes the results of a conventional survey of the project leaders, group leaders, team leaders, and other upper-level managers whose roles correspond to that of community leader, and the results of a hearing-type survey. Using these results, we compared community nets to conventional tools such as e-mail and groupware, and found that in the following ways, community nets are superior for promoting community management in the company setting. First, take the community net's superiority in bringing e$ciency to business processes by expediting the decision making of community leaders in order to promote strategic business, and by fostering the high-quality collaboration within and among communities that is embodied by interaction among individuals; and the community net's superiority for sharing, creating and innovating community competencies such as knowledge and expertise, a process known as management innovation. Second, in the realm of marketing strategy, including service improvements and enhancement of after-sales service, community nets are superior in customer value creation. In other words, it can be said that from the standpoint of innovation in management and customer value creation, community nets can assume the job of supporting community management and expediting innovation in company business. Case studies in Japan demonstrate the value of community nets as a network strategy support tool that bolsters community management in companies.
Fig. 4. The superiority of community-based information networks.
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5. Customer value creation management (Yoshida Original, Inc.)5 5.1. The starting point for customer value creation Japanese high-grade women's leather bag manufacturer Yoshida Original, Inc.,6 which represents Japan at the top of its industry and has been selected as a award winner of the Japan Quality Award in 1998,7 has established a production system that includes every stage in the life of its bags, from careful selection of the leather that goes into making its manufacture, wholesaling, retailing, and after-sales service. By establishing a typical sales channels that bypasses wholesalers and allow it to deal directly with retail outlets, and designing, manufacturing, selling, and repairing its bags, Yoshida Original has developed a highly pro"table management style that has seen a 20% increase in nominal pro"ts over the past "ve years. An unusual feature of the company pointed out by observers is that it manufactures and sells its original design, `warm, all-natural, hand-made bagsa, in various styles and small lots, with a lifetime guarantee. In consideration of company management in the customer value creation model, and to further win over its customers, Yoshida Original o!ers them a variety of substantial after-sale services. Regarding these after-sales services in particular, Yoshida Original, not only o!ers informational services that include sending more than 50,000 direct mailings and copies of IBIZA Magazine to fans of the IBIZA brand each year, but also impresses each customer who purchases a bag by sending her a personal letter of thanks from the company president. This can be called a new kind of business that wins intense loyalty from customers. 5.2. Past issues Making products that utilize nature in its original state is the concept and value behind IBIZA. In practical terms this means using in its original form animal leather that has been a!ected by a variety of changes in the natural environment. Of course, a piece of leather from an animal's
5 Interviews were conducted with Mr. Yoshida and the top management of Yoshida Original, Inc. and with the management of vendors who have been engaged in the design, con"guration and operation of Yoshida Original's community net. 6 The company's product brand name is the name of the Spanish island of Ibiza, and it has earned 780,000 devoted customers throughout Japan. It has earned numerous management awards, prominent among which are the `13th Nikkan Kogyou Shimbun Excellence in Management Awarda, `the Corporate Small Business Research Center Award for the Kanto Districta, and, `the 1995 Saitama Prefectural Sai no kuni Factory Designationa. 7 `Determination of the Japan Quality Award in 1998a, Nikkei Shinbun, 19, Nov., 1998, p. 26.; The Japan Quality Award is an annual award which recognizes excellence of management quality. Award winners are companies which are managed from the viewpoints of customers, the source of business pro"ts, and which have management framework to continuously create new values. The purposes of this award are: to innovate the whole industry; to change economic structures; and to improve the living standard in harmonization with international situations. This award system was established in December 1995. This award has seven central concepts. The evaluation criteria, `Japan Quality Award Criteriaa has eight categories. Applying companies submit their `management quality reportsa. They are evaluated in four stages by the reviewers. They must be "nally quali"ed by Japan Quality Award Committee. See the following Web site for the information on the Japan Quality Award. Shttp://www1a.meshnet.or.jp/jqa/T
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abdomen di!ers greatly from one from its back. That is why despite being a standardized article, each IBIZA product is a little di!erent from the next. The company has been searching through trial and error for a way to communicate with its customers and salespeople about products in a way that is faithful to each individual article. A similar situation exists with repairs. IBIZA products come with a lifetime guarantee. The company used to take repair requests by telephone and fax, but customers were somehow unable to get across the subtle nuances of their requests. So it was important to contrive a way for repair sta! members to communicate with customers located far away as though they were holding the product in question in their hands. As a company based on direct sales that bypass wholesalers, Yoshida Original was pondering a method of direct communication with its customers and dealers that Mr. Yoshida himself could oversee. Under the constraints of time and distance, voice and text-only systems such as telephone, fax, e-mail, and groupware somehow could not solve these problems. The company needed to create a `take a look and you'll see what I meana environment with the feel of television or video. 5.3. IT investment for the customer So the company undertook a project of large-scale IT investment to construct a community net focused mainly on connecting Yoshida Original (its headquarters and factories) with dealers throughout the country using video conferencing systems, video phones, or similar devices. The combination of a company with a slogan like, `warm, all-natural, hand-made bagsa, and multimedia video information distribution may seem paradoxical. From the standpoint of customer value creation and management innovation, however, it suggests an important element in Yoshida Original's unique brand of company management. The company's reason for taking the plunge into IT investment was not simply to bring e$ciency to its business operations using the latest multimedia. It was to innovate, share and develop the concept and value of each individual product (or composition; the company goes so far as to call each individual product a composition) with employees, not to mention customers and dealers, using video information. Mr. Yoshida's customer-oriented ideas and superior leadership were the basis of this investment in, `IT for the customera. 5.4. Community networks supporting customer value creation model businesses At the end of January 1996, Yoshida Original had built a network on its own premises and those of its dealers, and has been using it to send product information, take orders, and for maintenance business. In this way, the community between Yoshida Original and its dealers, and the community between the company and its customers, are put to use. Speci"cally, the community net had two broad objectives. The "rst was winning orders by sending information on newly created products to dealers throughout the country without delay, and the second was taking orders and checking inventory quickly and accurately. In the past, methods for announcing new products were limited to exhibitions, private viewings, and the semiannual publication of a catalog, but by introducing a community net into a portion of the dealers in Japan, Yoshida Original was able to easily o!er those shops detailed information on new products without a moment's delay, and to obtain purchase orders on the spot using
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bi-directional video communication. Using the community net to make product announcement eliminates decorating and traveling expenses incurred in preparing venues for conventional product announcement gatherings. Because each piece of the leather used for making bags looks di!erent, dealers "nd it desirable to inspect products and get detailed inventory information when placing orders. This is another area where the community net is demonstrating its power. This application of the community net in the community of Yoshida Original and its dealers is garnering attention as a new method of marketing through one-on-one interaction. Application of the community net to properly respond to customers' product maintenance needs is another important business process. IBIZA products carry a lifetime warranty. Connecting Yoshida Original factories with dealers by means of a community net allows repair sta! members to directly observe images of the repair locations, check work, and respond to inquiries, permitting an accurate response to all the nuances of customer requests with no misunderstandings. There have also been cases of a product planner or factory supervisor giving a direct product demonstration to a customer at a dealer's shop over the community net, leading to a new order. This can be seen as a new form of community management that includes not only Yoshida Original and dealers, but also customers. It consists of virtual, real-time contact between the Yoshida Original corporate organization and customers over the community net, and is also an example of a business in the customer value creation model eliciting trust and security from a customer. With a community between a company and its dealers like that mentioned, a large asset is the sharing, creation, and innovation of new community competencies, and the ability to earn the sympathy and trust of customers through interaction consisting of communication and collaboration. 5.5. Continual sharing, creation and innovation of community competencies (see Fig. 5) As the "rst step in con"guring a community net, Yoshida Original promoted community management in its community with customers and dealers. As the second step, to enhance the sharing, creation, and innovation of community competencies within the company, it built, on a high-speed, wide-band, "ber-optic ATM network, a cutting edge community net that uses product images to function as an order placement and reception system.8 While promoting communication and collaboration among individuals in the community between its headquarters and factories, Yoshida Original also aims to store community competencies such as new product planning and shop expertise in the form of video information, share them, and also to engage in new competency creation and innovation. 5.5.1. Communication and collaboration using high-quality video information To respond quickly and accurately to rapidly changing market needs and various customer demands, businesses must raise the level of their customer service through such means as shortening the new product development period. For these purposes as they relate to development, there
8 `Product Information Sending and Receiving System Con"guration (Yoshida Original)a, Nikkei Sangyo Shimbun, 18, February 1998, p. 3 (the text of this article also appeared in Nikkan Kogyo Shimbun and Nihon Kogyo Shimbun).
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Fig. 5. The community net at Yoshida Original, Inc.
is a need to carry out design, development, and manufacturing-related interaction more quickly, accurately, and frequently. High-quality video information used over a community net o!ers an environment that gives the impression of holding a consultation in the same location, even when the headquarters and factories are separate. Yoshida Original is aggressively carrying out communication and collaboration in the community between its design, development, and manufacturing departments. 5.5.2. On-demand searches of shop and new product information In the past, there was a problem with product planners at headquarters being unable to accurately convey their intentions to the sales department. As a result, products often went to market without clear explanations of the ideas behind them. The new product information stored in the VOD system contains images of the products from all angles, as well as and the developer's comments and concept. A user can gain a clear understanding of information such as the new product's features and the ideas behind its development by merely pointing and clicking on a personal computer screen. This form of the community net permits the spectrum of information, knowledge, expertise and ideas that make up community competency to be stored in the form of video information, and then developed through further creation and innovation. Salespeople used to make the rounds of their assigned shops, and then include in their daily sales reports detailed written information on product displays and the situations in stores. But these reports were somehow unable to convey an image of the customers and bags in the shops, and when personnel changes brought a new salesperson, background information that cannot be found in "gures and written reports, such as scenes of communications with customers, would disappear
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with the old salesperson. Today, with the newly con"gured VOD system, a user can take in with a glance scenes such as a store's layout, manager, and product display, and the system has been con"gured to allow headquarters to give stores detailed guidance on matters such as product display changes. This mechanism is an application of the community net that makes possible constant contribution of novel, front-line sales styles that are in harmony with the new strategies of Yoshida Original's sales department. The goal is to further enhance customer service related to on-site sales.
6. Community net trends As indicated with case studies of community net applications in Yoshida Original, Inc., videoconferencing system and videophone-based community nets continue to draw attention in various "elds. The following three points relating to technological innovation, competitive strategy, and marketing trends, explain the background behind this growing attention. First, in the area of technological innovation, is the standardization of videoconferencing systems and videophone terminals. Video terminals produced by several di!erent vendors have become interconnectable using an Integrated Services Digital Network (ISDN)-compatible communications system, as laid down by the International Telecommunications Union's telecommunications standardization branch (ITU-T). This fact is being cited as one cause of community nets' growing prominence. Moreover, the ITU-T has decided to standardize video terminals connected to the Internet and intranets, and this decision is beginning to make it possible to achieve interactive video communication in the environment of a corporate intranet or extranet. This possibility is stimulating continued increases in the use of such networks as intra- and inter-community management support tools. Second, is the di!erentiation of video terminals by price and function. Various venders throughout the world, using the ITU-T standardized platform, are engaging in "erce price competition. Therefore, future di!erentiation as various vendors pursue a strategy of creating low-cost, highquality products, is likely to raise to a new level the vitality of the world video terminal market. Third, the market for one-to-many, multi-directional communication, as opposed to one-on-one, interactive communication, is growing. Multi-directional communication is overcoming spatial limitations to allow the achievement of bene"ts such as expedited decision making among various communities or various community leaders, and the sharing, creation, and creative development of community competencies. Speci"c examples of one-to-many, multi-directional communication applications include management meetings, meetings among project leaders, nationwide branch meetings, seminars for top management, nationwide concentrated relay management seminars, nationwide employee training, and intra-corporate broadcasts to all employees. Moreover, video network services that link geographically disparate video terminals produced by di!erent vendors are being rolled out by telecommunications carriers in Europe and North America. What's more, in Japan, a venture company that o!ers a service linking multiple, geographically disparate video terminals, at a much lower price than is o!ered in Europe and North America, has come onto the scene. Using this multiple-location video link service eliminates the need for companies to install expensive multi-point connection video servers, and is expected to help reduce corporate information system expenditures.
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7. Conclusion As the era of full-#edged networking approaches, to succeed with strategies that actively incorporate increasingly common new business styles, such as tie-ups, outsourcing, and virtual corporations, companies will require from community leaders superior leadership that results in the continuous creation, innovation, and promotion of community competencies. To achieve this, it is important for companies to work toward the Jump stage (which, as seen from the company case studies, is already on the ascendant,) by, beginning with top management, dynamically reforming the individual and organizational cultures of community leaders and members through full application of the digital, multimedia networking environment of a community net. The goal of applying community nets as a tool to support future network strategies is not just the staid idea of trimming travel budgets. The true bene"t of these networks lies in areas such as gains in time and value through rapid decision making by "rst-rate community leaders, who are no longer bound by time or distance. It includes the promotion of e$cient business operations by employees that occurs when communities collaborate internally and externally; and the constant creation and innovation of community competencies. These advantages relate directly to the realization of managerial speed and excellence, a customer value creation business model, and progress in community management. As community nets expand, not only in business, but also in education, medical welfare, entertainment, and various other business "elds, they will become an important multimedia communication platform for new, multimedia business creation. In the future, community nets can be expected to create a complex mixture of three key ideas: technological innovation, competitive strategy, and marketing. Furthermore, combined with the further development of the Internet, intranets, and ISDN, community nets can be expected to contribute not only to managerial innovation in companies, but also to supporting the activation of various regional and home-based communities.
References Bechard, R., Goldsmith, M., & Fesselbein, F., (1996). The leader of the future (pp. 3}9, 25}39, 121}124). California: Jossey-Bass Inc. Case Studies of Video Conferences(terebi-kaigi-sisutemu saizennsen) (1998). Nikkei Information Strategy, 69, 68}76. Kodama, M. (1998). Change of "nance business through community-based information network (komyunityi gata jyouhou netowa-ku niyoru kinyuu bijinesu no henkaku). Kindai Sales, 814, 44}49. Lipnack, J., & Stamps, J. (1997). Virtual teams. New York: Wiley. Rosen, E. (1996). In Personal videoconferencing (pp. 132}134). Greenwich: Manning Publications Co. Trowt-Bayard, T., & Wilcox, J. R. (1997). Videoconferencing & interactive multimedia: the whole picture. New York: Flatriron Publishing Inc. Mitsuru Kodama received the B.S., M.S. and Ph.D. degrees in electrical engineering, from Waseda University, Tokyo, Japan, in 1983, 1985, and 1994, respectively. In 1997, he joined the Community Laboratory. He is engaged in research on strategic management and information systems. At present, he is the Executive Director of Community Laboratory a non-pro"t making management consultancy organisation based in Tokyo.
Customer value creation through community-based information networks Mitsuru Kodama* Community Laboratory, 6-2-21 Schin Machi, Hoya Shi, Tokyo 202, Japan
Abstract This paper points out that utilizing fully the community-based information networks based on multimedia digital networking Information Technology (IT) makes it possible to formulate a new customer value creation business model. Aggressive IT investment by top management to build community-based information networks, a support tool for this future network strategy, will permit business innovation based on strengthened competitiveness and enhanced customer service. ( 1999 Elsevier Science Ltd. All rights reserved. Keywords: Information technology; Information networks; Community-based networks; Business innovation
1. The need for strategic community creation Business organizations and activities continue to evolve in tandem with recent changes in the business environment and the evolution of networks, beginning with the Internet. The future will bring greater reliance on business strategies not limited to resources within the traditional corporate structure, that is, strategies that incorporate outside resources such as personnel and knowledge. Among theses new approaches will be strategic outside tie-ups, virtual companies, mergers and acquisitions, and outsourcing. Over the past few years, to expand their market shares in products and services, and create new businesses, many venture "rms, and a variety of large, leading-edge companies with core competencies such as multimedia- and computer network-based software, semiconductors, and networking technology, have been employing a variety of business styles to develop strategic enterprises.
* Tel.: #81-3-3277-8674. E-mail address: [email protected] (M. Kodama) 0268-4012/99/$ - see front matter ( 1999 Elsevier Science Ltd. All rights reserved. PII: S 0 2 6 8 - 4 0 1 2 ( 9 9 ) 0 0 0 4 5 - 6
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In the area of marketing, it will become increasingly essential to develop strategies that go beyond the traditional use of information systems to apply customer data. The growing use of marketing approaches grounded in new ideas, such as o!ering products and services tailored for a speci"c customer, customer participation-type marketing, and `softa relationship building (rapport, security, and trust), will continue. The important issue in promoting this kind of business innovation is not how to carry out strategic business operations using company resources (knowledge, personnel, etc.), but rather, how to develop innovative businesses by creating communities of various organizational forms through collaboration (including virtual collaboration via IT networks) with resources outside the organization. To continually revitalize a company and nurture its e!orts to create new businesses over the long term, it will be important to develop businesses through strategic community creation (including virtual community creation via IT) in response to changes in the business environment.1 In this kind of business development, an important theme is the need for community leaders to exercise innovative leadership in creating strategic communities. A particularly important element in innovative leadership lies in psychological qualities of the community leader. In order to make the community members' thoughts, ideas, beliefs, work attitudes, and other values resonate with his or her behavior and ideas, the leader must have the ability to produce, be skilled in conceptualization and interpersonal relationships, and possess political sense and leadership ability both within and outside of the company. The basis of innovative leadership is the ability to think and act strategically, and in accord with the community's core competencies of information, knowledge, expertise, and conceptualization (hereafter referred to as community competencies). Community competence consists of the various resources in the community that make up, `information, knowledge, expertise, and conceptualizationa, and the competencies possessed by individuals correspond to the competencies possessed by the community, i.e. its member groups and the overall organization. Speci"cally, community competence is the core competencies possessed by the overall community for the purpose of incorporating resources within and outside the organization, in order to vigorously move forward with a variety of businesses as part of a creative new enterprise development e!ort with its roots in business reform by the middle- and lower-level employees who are the constituent members of the community. An important point is that the knowledge, expertise, and ideas of the individuals, groups, and the overall organization be shared, and then continually created and innovated. In this paper, business innovation through strategic community creation will be referred to as community management (Kodama, 1998). With recent, rapid technological innovation in multimedia digital networking IT, it is now possible for communities within and outside a company's structure to develop businesses in a new customer value creation model, make use of the latest IT to bolster community management, and promote management characterized by speed and excellence.
1 See Bechard, Goldsmith and Fesselbein (1996) for information on the need for community creation and for information on the need for network-based virtual communities, see Lipnack and Stamps (1997).
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2. A grand design for organizational management and the spread of information networking Amid dizzying changes in the business environment, in order to make future management more strategic, continually increase the productivity of individual employees, and endeavor to raise the level of management for the overall company organization, aggressive application of IT is essential. Representative examples include recent cyberbusinesses that use the Internet, and companies that have brought e$ciency to their business operations through the active use of intranets and extranets. Next, using Fig. 1, this paper describes a grand design for the future of organizational management in the corporate structure, and on the spread of information networks, which is likely to in#uence it signi"cantly.
Fig. 1. A grand design for organization management and the spread of information networking.
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2.1. The Hop process In the era that preceded the development of international digital networks such as the Internet, the majority of companies accomplished their daily business operations using telephones and facsimile machines for communications both internal (among departments) and external (with business connections and customers). The various types of business processing performed by computers consisted mainly of centralized, "xed processes, typi"ed by accounting, and performed on general-purpose, mainframe host computers. On a time axis, this process is de"ned as the Hop stage. This Hop stage, described from an info-com technology perspective, was a world based on analog networks and low-speed transmission digital networks, in which voice communications and data transmission played a central role. The organizational form was hierarchical, managementbased, administrative, and pyramid-shaped. Operations were carried out vertically, through lines of command. Within a company, information #owed from high-to-low-organizational rank. 2.2. The step process Trends of decentralization and integration through the large-scale downsizing of computer systems mark the next stage, known as Step. At the same time, backdropped against the development of Internet and intranet network technology, companies moving forward with the con"guration of both intra-company and extra-company networks that make free use of digital technology have in recent years continued to increase. With the Step process, there exists an environment in which communication and collaboration, through electronic mail and groupware that fully utilize digital networks, play a central role, progress in improving organizational work #ow is a step above the Hop stage, and external communication and collaboration #ourish. Due to a loosely hierarchical organization in which #attening proceeds more smoothly than in the Hop stage, the Step stage better facilitates rapid decision making and delegation. Regarding the form of organizational management, the organizational climate of the Step stage better lends itself to promotion of the so-called knowledge management based on knowledge creation, and more individual and organizational activation can be anticipated. Many companies are currently moving from the Hop process to the Step process, and cases of companies actively adopting e-mail or various types of groupware to facilitate inter-organizational communication and information sharing are common. Many companies are using methods like these with the goal of promoting company innovation, and thus taking knowledge management to the next level. Meanwhile, another truth about the Step stage is that for companies that have already carried out cultural reform by adopting new tools like e-mail and groupware, it is becoming apparent that these alone do not allow them to su$ciently strengthen communication or expedite decision making, whether inside or outside their organizations (case studies of video conferences, 1998). In short, problems related to the one-directional, non-real-time nature of contact and consultation by e-mail are being raised as the largest obstacle to making important judgments and decisions quickly. The reason is that the most important element in organizational communication is the empathy and solidarity between individuals that come to face-to-face communication.
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Accordingly, the next process, known as Jump, will require complete eradication of the sti#ing feeling experienced when using e-mail or groupware that one cannot adequately convey his thoughts or intentions. It will also demand the ultimate communication tools to lead company organizational reform. 2.3. The jump process For future business forms such as those mentioned, business development by communities inside and outside the company organization that have openly incorporated external resources, including customers, is a pattern expected to be increasingly seen. Compared with Step, this process will demonstrate #atter and more #exible organizational composition, and more open management. In the Jump process, community leaders must exercise innovative leadership and leverage community management to dynamically promote business strategies within and among communities. Furthermore, network strategy support tools to back up this new management will be essential. Speci"cally, these tool will comprise a system that supports community leaders, and the sharing, creation, and innovation of community competencies. In concrete terms, it will be a new, multimedia image-based information network system that emphasizes the high-quality collaboration needed for decision making by community leaders, and interaction among individuals (in this paper, it will be referred to as a community-based information network, hereafter, community net). In this step, to further the Jump process transition (that is already underway throughout the world), dynamic reform of individual cultures and overall organizational climates, and the active adoption of multimedia, digital networking, IT-based community nets, will be important. It will also be important to promote dynamic businesses by making management and organizations transparent throughout the various communities both inside and outside the organization.
3. The community net concept The community net is networking that takes the one-to-one, text-based communication and collaboration represented by e-mail and groupware to a new level to allow interactive communication and collaboration that fuses the three multimedia elements of images, voice and text. It uses technologies represented by the Internet and ISDN (Integrated Services Digital Network)2 that are continuously being realized through network development and technological innovations in various network devices. As for applications, there exist both interactive real-time models and storage-type, non-real-time models.
2 A digital network service (Integrated Services Digital Network) established by the telecommunications standardization sector of the International Telecommunications Union (ITU-T). Additional information on ISDN is available at Shttp://www.alumni.caltech.edu/&dank/isdnT, and ITU-T recommendations are also available at Shttp://www. itu.ch/itudoc/itu-t/rec/i.htmlT.
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Fig. 2. The community-based information network concept.
3.1. Use of community nets in the interactive real-time model The "rst application, as shown in Fig. 2, is an interactive real-time model system that allows simultaneous exchange of information from di!erent locations. Typical systems are desktop personal video conferencing systems (DTC: Desktop Video Conference) and video terminals such as video phones, which are more personal, easier to use, and more suited to the general user than single-use room system-type video conferencing systems.3 This system not only allows interactive, real-time transmission of images and voice, but also supports the sharing of textual information; for example, two-way collaboration on a data sheet. Video terminals overcome the e-mail and groupware disadvantages of not being real time and not facilitating easy communication of thoughts and intentions, and allowing content-rich debate and rapid decision making. This makes possible support of decision making by community leaders and contributions to the reform and creation of community competencies in information, knowledge, expertise, and conceptualization, both within and among communities. Furthermore, the use of video communication with business contacts and customers makes possible a new customer-creation model business style. 3.2. Use of community nets in the non-real-time model (storage) The second application is storing community competencies such as information, knowledge, and expertise, which are not real time in nature, in storage systems, from which they can be searched
3 Video terminals based on videoconferencing systems and/or video phones standardized by the ITU-T, see, for example, Rosen (1996) and Trowt-Bayard and Wilcox (1997).
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Fig. 3. Positioning of community-based information network.
and extracted on demand. A typical system is the video-on-demand system (VOD).4 VOD systems allow the accessing and searching of databases of images (as well as voice and textual information) using the video terminals of devices such as video conferencing systems and video phones. VOD allows knowledge and expertise (community competencies) gained from organizational learning, which does not lend itself to text-based communication, to be stored in visual form, and then shared within or among communities. R&D, design, manufacturing, and personnel training applications will be particularly useful.
4. The community net as a network strategy support tool Mainframe host computers are a type of information system that have changed little over time. These numeric processing-based machines are positioned as management control systems for routine operation-type work. However, with the arrival of e-mail and groupware, many companies are clearly supporting decision making by community leaders and using collaboration within and between communities to promote knowledge management over older models. But our survey results show that, in the light of the trend towards the management innovation model and the customer value creation model, community nets are a stronger strategic network support tool than e-mail and groupware (see Fig. 3).
4 The system sends stored video data when a request is sent from a remote location. It is generally used for delivering entertainment such as movies and television programs to homes, but recently is being utilized at universities for distance learning and at companies as a training tool.
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Fig. 4 shows the results of a survey of 50 leading companies in the Europe, US and Japan that are already actively using community nets in individual business processes such as planning, design, development, manufacturing, sales, physical distribution, and support. It summarizes the results of a conventional survey of the project leaders, group leaders, team leaders, and other upper-level managers whose roles correspond to that of community leader, and the results of a hearing-type survey. Using these results, we compared community nets to conventional tools such as e-mail and groupware, and found that in the following ways, community nets are superior for promoting community management in the company setting. First, take the community net's superiority in bringing e$ciency to business processes by expediting the decision making of community leaders in order to promote strategic business, and by fostering the high-quality collaboration within and among communities that is embodied by interaction among individuals; and the community net's superiority for sharing, creating and innovating community competencies such as knowledge and expertise, a process known as management innovation. Second, in the realm of marketing strategy, including service improvements and enhancement of after-sales service, community nets are superior in customer value creation. In other words, it can be said that from the standpoint of innovation in management and customer value creation, community nets can assume the job of supporting community management and expediting innovation in company business. Case studies in Japan demonstrate the value of community nets as a network strategy support tool that bolsters community management in companies.
Fig. 4. The superiority of community-based information networks.
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5. Customer value creation management (Yoshida Original, Inc.)5 5.1. The starting point for customer value creation Japanese high-grade women's leather bag manufacturer Yoshida Original, Inc.,6 which represents Japan at the top of its industry and has been selected as a award winner of the Japan Quality Award in 1998,7 has established a production system that includes every stage in the life of its bags, from careful selection of the leather that goes into making its manufacture, wholesaling, retailing, and after-sales service. By establishing a typical sales channels that bypasses wholesalers and allow it to deal directly with retail outlets, and designing, manufacturing, selling, and repairing its bags, Yoshida Original has developed a highly pro"table management style that has seen a 20% increase in nominal pro"ts over the past "ve years. An unusual feature of the company pointed out by observers is that it manufactures and sells its original design, `warm, all-natural, hand-made bagsa, in various styles and small lots, with a lifetime guarantee. In consideration of company management in the customer value creation model, and to further win over its customers, Yoshida Original o!ers them a variety of substantial after-sale services. Regarding these after-sales services in particular, Yoshida Original, not only o!ers informational services that include sending more than 50,000 direct mailings and copies of IBIZA Magazine to fans of the IBIZA brand each year, but also impresses each customer who purchases a bag by sending her a personal letter of thanks from the company president. This can be called a new kind of business that wins intense loyalty from customers. 5.2. Past issues Making products that utilize nature in its original state is the concept and value behind IBIZA. In practical terms this means using in its original form animal leather that has been a!ected by a variety of changes in the natural environment. Of course, a piece of leather from an animal's
5 Interviews were conducted with Mr. Yoshida and the top management of Yoshida Original, Inc. and with the management of vendors who have been engaged in the design, con"guration and operation of Yoshida Original's community net. 6 The company's product brand name is the name of the Spanish island of Ibiza, and it has earned 780,000 devoted customers throughout Japan. It has earned numerous management awards, prominent among which are the `13th Nikkan Kogyou Shimbun Excellence in Management Awarda, `the Corporate Small Business Research Center Award for the Kanto Districta, and, `the 1995 Saitama Prefectural Sai no kuni Factory Designationa. 7 `Determination of the Japan Quality Award in 1998a, Nikkei Shinbun, 19, Nov., 1998, p. 26.; The Japan Quality Award is an annual award which recognizes excellence of management quality. Award winners are companies which are managed from the viewpoints of customers, the source of business pro"ts, and which have management framework to continuously create new values. The purposes of this award are: to innovate the whole industry; to change economic structures; and to improve the living standard in harmonization with international situations. This award system was established in December 1995. This award has seven central concepts. The evaluation criteria, `Japan Quality Award Criteriaa has eight categories. Applying companies submit their `management quality reportsa. They are evaluated in four stages by the reviewers. They must be "nally quali"ed by Japan Quality Award Committee. See the following Web site for the information on the Japan Quality Award. Shttp://www1a.meshnet.or.jp/jqa/T
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abdomen di!ers greatly from one from its back. That is why despite being a standardized article, each IBIZA product is a little di!erent from the next. The company has been searching through trial and error for a way to communicate with its customers and salespeople about products in a way that is faithful to each individual article. A similar situation exists with repairs. IBIZA products come with a lifetime guarantee. The company used to take repair requests by telephone and fax, but customers were somehow unable to get across the subtle nuances of their requests. So it was important to contrive a way for repair sta! members to communicate with customers located far away as though they were holding the product in question in their hands. As a company based on direct sales that bypass wholesalers, Yoshida Original was pondering a method of direct communication with its customers and dealers that Mr. Yoshida himself could oversee. Under the constraints of time and distance, voice and text-only systems such as telephone, fax, e-mail, and groupware somehow could not solve these problems. The company needed to create a `take a look and you'll see what I meana environment with the feel of television or video. 5.3. IT investment for the customer So the company undertook a project of large-scale IT investment to construct a community net focused mainly on connecting Yoshida Original (its headquarters and factories) with dealers throughout the country using video conferencing systems, video phones, or similar devices. The combination of a company with a slogan like, `warm, all-natural, hand-made bagsa, and multimedia video information distribution may seem paradoxical. From the standpoint of customer value creation and management innovation, however, it suggests an important element in Yoshida Original's unique brand of company management. The company's reason for taking the plunge into IT investment was not simply to bring e$ciency to its business operations using the latest multimedia. It was to innovate, share and develop the concept and value of each individual product (or composition; the company goes so far as to call each individual product a composition) with employees, not to mention customers and dealers, using video information. Mr. Yoshida's customer-oriented ideas and superior leadership were the basis of this investment in, `IT for the customera. 5.4. Community networks supporting customer value creation model businesses At the end of January 1996, Yoshida Original had built a network on its own premises and those of its dealers, and has been using it to send product information, take orders, and for maintenance business. In this way, the community between Yoshida Original and its dealers, and the community between the company and its customers, are put to use. Speci"cally, the community net had two broad objectives. The "rst was winning orders by sending information on newly created products to dealers throughout the country without delay, and the second was taking orders and checking inventory quickly and accurately. In the past, methods for announcing new products were limited to exhibitions, private viewings, and the semiannual publication of a catalog, but by introducing a community net into a portion of the dealers in Japan, Yoshida Original was able to easily o!er those shops detailed information on new products without a moment's delay, and to obtain purchase orders on the spot using
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bi-directional video communication. Using the community net to make product announcement eliminates decorating and traveling expenses incurred in preparing venues for conventional product announcement gatherings. Because each piece of the leather used for making bags looks di!erent, dealers "nd it desirable to inspect products and get detailed inventory information when placing orders. This is another area where the community net is demonstrating its power. This application of the community net in the community of Yoshida Original and its dealers is garnering attention as a new method of marketing through one-on-one interaction. Application of the community net to properly respond to customers' product maintenance needs is another important business process. IBIZA products carry a lifetime warranty. Connecting Yoshida Original factories with dealers by means of a community net allows repair sta! members to directly observe images of the repair locations, check work, and respond to inquiries, permitting an accurate response to all the nuances of customer requests with no misunderstandings. There have also been cases of a product planner or factory supervisor giving a direct product demonstration to a customer at a dealer's shop over the community net, leading to a new order. This can be seen as a new form of community management that includes not only Yoshida Original and dealers, but also customers. It consists of virtual, real-time contact between the Yoshida Original corporate organization and customers over the community net, and is also an example of a business in the customer value creation model eliciting trust and security from a customer. With a community between a company and its dealers like that mentioned, a large asset is the sharing, creation, and innovation of new community competencies, and the ability to earn the sympathy and trust of customers through interaction consisting of communication and collaboration. 5.5. Continual sharing, creation and innovation of community competencies (see Fig. 5) As the "rst step in con"guring a community net, Yoshida Original promoted community management in its community with customers and dealers. As the second step, to enhance the sharing, creation, and innovation of community competencies within the company, it built, on a high-speed, wide-band, "ber-optic ATM network, a cutting edge community net that uses product images to function as an order placement and reception system.8 While promoting communication and collaboration among individuals in the community between its headquarters and factories, Yoshida Original also aims to store community competencies such as new product planning and shop expertise in the form of video information, share them, and also to engage in new competency creation and innovation. 5.5.1. Communication and collaboration using high-quality video information To respond quickly and accurately to rapidly changing market needs and various customer demands, businesses must raise the level of their customer service through such means as shortening the new product development period. For these purposes as they relate to development, there
8 `Product Information Sending and Receiving System Con"guration (Yoshida Original)a, Nikkei Sangyo Shimbun, 18, February 1998, p. 3 (the text of this article also appeared in Nikkan Kogyo Shimbun and Nihon Kogyo Shimbun).
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Fig. 5. The community net at Yoshida Original, Inc.
is a need to carry out design, development, and manufacturing-related interaction more quickly, accurately, and frequently. High-quality video information used over a community net o!ers an environment that gives the impression of holding a consultation in the same location, even when the headquarters and factories are separate. Yoshida Original is aggressively carrying out communication and collaboration in the community between its design, development, and manufacturing departments. 5.5.2. On-demand searches of shop and new product information In the past, there was a problem with product planners at headquarters being unable to accurately convey their intentions to the sales department. As a result, products often went to market without clear explanations of the ideas behind them. The new product information stored in the VOD system contains images of the products from all angles, as well as and the developer's comments and concept. A user can gain a clear understanding of information such as the new product's features and the ideas behind its development by merely pointing and clicking on a personal computer screen. This form of the community net permits the spectrum of information, knowledge, expertise and ideas that make up community competency to be stored in the form of video information, and then developed through further creation and innovation. Salespeople used to make the rounds of their assigned shops, and then include in their daily sales reports detailed written information on product displays and the situations in stores. But these reports were somehow unable to convey an image of the customers and bags in the shops, and when personnel changes brought a new salesperson, background information that cannot be found in "gures and written reports, such as scenes of communications with customers, would disappear
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with the old salesperson. Today, with the newly con"gured VOD system, a user can take in with a glance scenes such as a store's layout, manager, and product display, and the system has been con"gured to allow headquarters to give stores detailed guidance on matters such as product display changes. This mechanism is an application of the community net that makes possible constant contribution of novel, front-line sales styles that are in harmony with the new strategies of Yoshida Original's sales department. The goal is to further enhance customer service related to on-site sales.
6. Community net trends As indicated with case studies of community net applications in Yoshida Original, Inc., videoconferencing system and videophone-based community nets continue to draw attention in various "elds. The following three points relating to technological innovation, competitive strategy, and marketing trends, explain the background behind this growing attention. First, in the area of technological innovation, is the standardization of videoconferencing systems and videophone terminals. Video terminals produced by several di!erent vendors have become interconnectable using an Integrated Services Digital Network (ISDN)-compatible communications system, as laid down by the International Telecommunications Union's telecommunications standardization branch (ITU-T). This fact is being cited as one cause of community nets' growing prominence. Moreover, the ITU-T has decided to standardize video terminals connected to the Internet and intranets, and this decision is beginning to make it possible to achieve interactive video communication in the environment of a corporate intranet or extranet. This possibility is stimulating continued increases in the use of such networks as intra- and inter-community management support tools. Second, is the di!erentiation of video terminals by price and function. Various venders throughout the world, using the ITU-T standardized platform, are engaging in "erce price competition. Therefore, future di!erentiation as various vendors pursue a strategy of creating low-cost, highquality products, is likely to raise to a new level the vitality of the world video terminal market. Third, the market for one-to-many, multi-directional communication, as opposed to one-on-one, interactive communication, is growing. Multi-directional communication is overcoming spatial limitations to allow the achievement of bene"ts such as expedited decision making among various communities or various community leaders, and the sharing, creation, and creative development of community competencies. Speci"c examples of one-to-many, multi-directional communication applications include management meetings, meetings among project leaders, nationwide branch meetings, seminars for top management, nationwide concentrated relay management seminars, nationwide employee training, and intra-corporate broadcasts to all employees. Moreover, video network services that link geographically disparate video terminals produced by di!erent vendors are being rolled out by telecommunications carriers in Europe and North America. What's more, in Japan, a venture company that o!ers a service linking multiple, geographically disparate video terminals, at a much lower price than is o!ered in Europe and North America, has come onto the scene. Using this multiple-location video link service eliminates the need for companies to install expensive multi-point connection video servers, and is expected to help reduce corporate information system expenditures.
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7. Conclusion As the era of full-#edged networking approaches, to succeed with strategies that actively incorporate increasingly common new business styles, such as tie-ups, outsourcing, and virtual corporations, companies will require from community leaders superior leadership that results in the continuous creation, innovation, and promotion of community competencies. To achieve this, it is important for companies to work toward the Jump stage (which, as seen from the company case studies, is already on the ascendant,) by, beginning with top management, dynamically reforming the individual and organizational cultures of community leaders and members through full application of the digital, multimedia networking environment of a community net. The goal of applying community nets as a tool to support future network strategies is not just the staid idea of trimming travel budgets. The true bene"t of these networks lies in areas such as gains in time and value through rapid decision making by "rst-rate community leaders, who are no longer bound by time or distance. It includes the promotion of e$cient business operations by employees that occurs when communities collaborate internally and externally; and the constant creation and innovation of community competencies. These advantages relate directly to the realization of managerial speed and excellence, a customer value creation business model, and progress in community management. As community nets expand, not only in business, but also in education, medical welfare, entertainment, and various other business "elds, they will become an important multimedia communication platform for new, multimedia business creation. In the future, community nets can be expected to create a complex mixture of three key ideas: technological innovation, competitive strategy, and marketing. Furthermore, combined with the further development of the Internet, intranets, and ISDN, community nets can be expected to contribute not only to managerial innovation in companies, but also to supporting the activation of various regional and home-based communities.
References Bechard, R., Goldsmith, M., & Fesselbein, F., (1996). The leader of the future (pp. 3}9, 25}39, 121}124). California: Jossey-Bass Inc. Case Studies of Video Conferences(terebi-kaigi-sisutemu saizennsen) (1998). Nikkei Information Strategy, 69, 68}76. Kodama, M. (1998). Change of "nance business through community-based information network (komyunityi gata jyouhou netowa-ku niyoru kinyuu bijinesu no henkaku). Kindai Sales, 814, 44}49. Lipnack, J., & Stamps, J. (1997). Virtual teams. New York: Wiley. Rosen, E. (1996). In Personal videoconferencing (pp. 132}134). Greenwich: Manning Publications Co. Trowt-Bayard, T., & Wilcox, J. R. (1997). Videoconferencing & interactive multimedia: the whole picture. New York: Flatriron Publishing Inc. Mitsuru Kodama received the B.S., M.S. and Ph.D. degrees in electrical engineering, from Waseda University, Tokyo, Japan, in 1983, 1985, and 1994, respectively. In 1997, he joined the Community Laboratory. He is engaged in research on strategic management and information systems. At present, he is the Executive Director of Community Laboratory a non-pro"t making management consultancy organisation based in Tokyo.