Journal of International Association of P2M Vol.12 No.1, pp.126-141, 2017 Special Proceeding † Faculty of Social Systems Science, Chiba Institute of Technology 126 Innovation Follows Strategy – Aiming to realize Super Smart Society – Hiroshi KUBO † Companies need to select a strategic approach that suits them and realize innovation that is consistent with them. In this paper, based on the case studies in the apparel industry, the author has revealed that the following combinations are consistent: resource approach and linear model, positioning approach and Kline model, gaming approach and hypothesis testing model, and learning approach and interactive model. Based on the results, to realize the construction of Super Smart Society in the near future, the author suggested innovation models that are consistent with the four aforementioned strategic approaches for each of the six industrial sectors. Furthermore, among these innovation models, it was suggested that the conventional plan-driven project is suitable for linear model and Kline model, and agile type project is effective for interactive model. In addition, hybrid type project with intermediate features between them are considered to be effective for hypothesis testing type model. Additionally, depending on the case, hybrid type project is considered to be effective for Kline model and interactive model. Keywords: Innovation model, Strategic approach, Super Smart Society, Resource approach, Positioning approach, Gaming approach, Learning approach, Linear model, Kline model, Hypothesis testing model, Interactive model, Waterfall project, Agile project, Hybrid project. I. INTRODUCTION In this paper, the author first briefly introduces the purpose and activities of our research activities, which pertains to studying the application of Project & Program Management for conducting research and development (R&D) activities. Subsequently, the author discusses “Innovation that follows strategy” that the current top management is most interested in, and shows its application to Society 5.0 or Super Smart Society (Cabinet Office, Government of Japan, 2016). Finally, as a future research topic, project styles consistent with strategy and innovation are suggested.
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Journal of International Association of P2M Vol.12 No.1, pp.126-141, 2017 Special Proceeding
† Faculty of Social Systems Science, Chiba Institute of Technology 126
Innovation Follows Strategy – Aiming to realize Super Smart Society –
Hiroshi KUBO†
Companies need to select a strategic approach that suits them and realize innovation that is
consistent with them. In this paper, based on the case studies in the apparel industry, the author has
revealed that the following combinations are consistent: resource approach and linear model, positioning
approach and Kline model, gaming approach and hypothesis testing model, and learning approach and
interactive model. Based on the results, to realize the construction of Super Smart Society in the near
future, the author suggested innovation models that are consistent with the four aforementioned strategic
approaches for each of the six industrial sectors. Furthermore, among these innovation models, it was
suggested that the conventional plan-driven project is suitable for linear model and Kline model, and agile
type project is effective for interactive model. In addition, hybrid type project with intermediate features
between them are considered to be effective for hypothesis testing type model. Additionally, depending
on the case, hybrid type project is considered to be effective for Kline model and interactive model.
In this paper, the author first briefly introduces the purpose and activities of our research activities,
which pertains to studying the application of Project & Program Management for conducting research
and development (R&D) activities. Subsequently, the author discusses “Innovation that follows strategy”
that the current top management is most interested in, and shows its application to Society 5.0 or Super
Smart Society (Cabinet Office, Government of Japan, 2016). Finally, as a future research topic, project
styles consistent with strategy and innovation are suggested.
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A. Aim and activities of the R&D PM study group
The knowledge system for efficiently achieving a project’s original purpose within the target period
is summarized in the Project Management Body of Knowledge (PMBOK), and is widely propagated.
However, the flow of value creation in the enterprise presented in Fig. 1 (Stanford University & Terada,
2013) (modified by the author) shows that the potential value of products and services will be decided at
an earlier stage than the planning of business plan to which PMBOK is applied. In other words, the
concept planning stage to create value does not require much human resources or a large budget.
Therefore, this stage is extremely important for creating customer value and establishing competitive
advantage. Prior to this stage, various methods for environmental analysis, such as Product Portfolio
Management (PPM) and five forces analysis (Porter, 1980), are established. Following the establishment
of these methods, Discount Cash Flow (DCF) and PMBOK are established at the stage of business
planning
and development; Supply Chain Management (SCM) and six sigma are established at the production
stage; Product, Price, Place, Promotion (4P ) and Customer Relationship Management (CRM) are
established at the sales and support stage . However, a powerful knowledge system is yet to be established
at the concept planning stage.
Therefore, volunteers from industry, government, and academia interested in this problem gathered,
and in 2012 the “R&D PM study group” (represented by Hiroshi Kubo) was established.
Fig.1 Relationship between value chain based on corporate innovation and potential profit/resource
(Stanford Univ. ME317 & Terada, 2013) (modified by the author)
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The goal of this group is the “establishment of R&D PM Body of Knowledge.” Currently, there are
approximately 70 members in the group. The results of this group have been published to a total of 56 in
academic societies such as the International Association of Project & Program Management (IAP2M)
(Proceedings of the 4th R&D PM Symposium in 2017, February). These manuscripts comprise 15 full
reviewed papers, 14 international conference proceedings, and 27 domestic conference presentations.
Fig. 2 is a conceptual diagram of R&D PM evolution, based on my personal opinion. If “R&D PM
1.0” is applied to improve productivity by applying Project Management to R&D, strategy planning by
application of Program Management is “R&D PM 2.0,” improvement of consistency with business
strategy by adopting portfolio is “R&D PM 3.0” can be said. And the next era of co-creation is the image
“R&D PM 4.0.”
Fig.2 Conceptual diagram of R&D PM evolution.
II. INNOVATION FOLLOWS STRATEGY
Schumpeter (1926) said, “Innovation is not caused only by technical discoveries or inventions.”
However, there is no doubt that R&D is the source of innovation. Meanwhile, the top concern of the
current top management is said to be "innovation that follows the strategy" (KPMG International
Cooperative, 2013). Therefore, the author surveyed the past literature on strategy and innovation and
clarified the combinations which both are consistent based on the case study. The results of the research
are described below.
A. Four strategic approaches
Until date, various management strategy theories have been advocated. According to Aoshima and
Kato (2012), these strategic theories are classified into four approaches by a combination of “source of
profit” and “focus of strategy.”. The former is the point of asking whether “the source of profits” is to be
found in the relationship with the outside of the company itself or inside the company. The latter is a
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viewpoint of whether the “focus of strategy” is to be applied to factors or processes. The four strategic
approaches based on the aforementioned combination are shown in Figure 3.
P (Positioning approach) : Focuses on external factors (Porter, 1980, 1985)
R (Resource approach) : Focuses on internal factors (Barney, 2010)
G (Gaming approach) : Focuses on external processes (Nalebuff & Brandenburger,1997)
L (Learning approach) : Focuses on internal processes (Hamel & Prahalad, 1991)
In general, companies do not select a single combination, but combine these approaches to form
their own strategy. However, an emphasis on any combination makes a company’s strategy clear and
effective.
.
Fig. 3 Four strategic approaches. (Aoshima and Kato, 2012)
B. Evolution of innovation model
The innovation model has also undergone evolution, as shown in Fig. 4 below (Kameoka, 2003).
Fig.4 Evolution of innovation model. (Kameoka, 2003)
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Generation 1 Linear model
“Linear model” is an early model of innovation that progresses in a sequence from research and
development, through production to marketing. This model has been successful in many manufacturing
industries and is still considered the mainstream system.
Generation 2 Kline model
Kline (1992) argued that the linear model may provide inaccurate suggestions. Thus, he proposed a
non-linear innovation model, known as the “Kline model” or “chain-linked model,” which corresponds
to Generation-2 (Gen-2). This model’s objective is to make a careful observation of customers and the
market to discover their needs; in this model, the innovation evolves from these observations. Feedback
from the market, accumulation of knowledge, and creation through research are continually incorporated
into the processes from marketing to planning, research, development, evaluation, manufacturing, and
sales. The “linear model” is a “product out” model, whereas the “Kline model” is a “market in” model.
Generation 3 Hypothesis testing model
“Hypothesis testing model” is a Gen-3 model (Study group of management strategy, 2008) that
emphasizes “experiments in the market.” This model is believed to be promising. It is characterized by
innovation that is based on information and expertise acquired through actual experiments that are
conducted within the market, on the premise that true needs cannot be discovered simply through market
observation. This thought process is similar to the “exploratory marketing” advocated by Hamel and
Prahalad (1991).
Generation 4 Interactive model
The latest Gen-4 interactive models (Study group of management strategy, 2008) have been attracting
attention as next generation innovation models. This co-creation process of users and companies is vague,
so communication between them is important. However, by using this model, users and companies can
collaborate, find potential needs that were unidentified by users earlier, and can create products and
services.
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C. A case study on the consistency between strategy and innovation in the apparel industry
The optimal relationship between strategic approach and innovation model described above is clarified
through case studies in the apparel industry. The apparel industry is an industry with an old history, but
it is expected that demand will increase more and more as the population increases. With various emerging
business models and innovations, it is an industrial field suitable for this analysis.
a) Resource approach and linear model
The first case that is considered is “Gore-Tex,” manufactured by W. L. Gore & Associates (Homepage,
2017) (Fig. 5). This company manufactures durable weather protection gear. Additionally, the company
uses ingenious technologies and has excellent research and development capabilities. The company
believes that if it can develop fibers that have excellent waterproofing and breathability, then there
would be clarity concerning the commercialization of extreme cold-weather protection gear. Utilizing its
core competence in specialty fiber research and development and employing the linear model, the
company achieved Gore-Tex's research and development and commercialization objectives.
b) Positioning approach and Kline model
The second case is about UNIQLO’s thin and warm underwear “Heat Tech” (Saito, 2014) (Fig. 6).
Fig.5 Case of GORE-TEX's resource approach and linear model.
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Fig.6 Case of UNIQLO Heat Tech’s positioning approach and Kline model.
c) Gaming approach and hypothesis testing model
The third case is on ZARA’s Fast Fashion (Saito, 2014). This company prioritized “experiments in the
market,” and created advantageous innovations based on knowledge and expertise gained from these
experiments. This innovation model is closely related to the gaming approach, in which a company
quickly creates and improves products and changes sales methods while observing the market and
competitors’ reactions. ZARA’s information on stores’ sales conditions is fed back to production, and
products that are selling well can be produced in large quantities within two weeks (Saito, 2014).
Therefore, the Gen-3 hypothesis testing model is consistent with the gaming approach.
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Fig.7 Case of ZARA’s gaming approach and hypothesis testing model.
d) Learning approach and interactive model
Fig.8 Case of GUNZE and NEC’s learning approach and interactive model.
The fourth case is on a wearable underwear that measures and communicates biological information; it is
jointly developed by the apparel company GUNZE and the Internet of Things (IoT) company NEC
(GUNZE, 2016). In addition to being a joint development, this case is also an example of the co-creation
model. These companies are collaborating with a transport company that wishes to use this product for
the health management of long-distance truck drivers. Potential needs are discovered, and products
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created from the co-creation between users and companies. In this process, differentiation would be
possible not only when both the parties learn and acquire new knowledge but also when they effectively
utilize this knowledge. The Gen-4 interactive model is consistent with the learning approach.
e) Summary of case studies on the apparel industry
Table 1 summarizes the four cases of the innovation model that are consistent with the aforementioned
strategic approaches in the apparel industry. It is considered that the consistency relationship on the
combination of the strategic approach and the innovation model in this apparel industry can be generalized
to other industrial fields for the reason of Table 2.
Table 1. The four cases of the innovation model that are consistent
with the strategic approach in the apparel industry.
Case Company Product Feature Strategicapproach
Innovation Model
1W.L. Gore &
AssociatesGore-Tex Breathable
waterproof fiberR
Resource
Gen-1Linear
2Fast Retailing
(UNIQLO)Heat Tech Thin and warm
underwearP
Positioning
Gen-2Kline
3 ZARA Fast FashionVery short cycle
from production toshop front
GGaming
Gen-3Hypothesis-
Testing
4 GUNZE & NECWearable &
biologicalunderwear
Underwearwith biological
information
LLearning
Gen-4Interactive
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Table 2. Reasons behind the consistent combination
between the four pairs of strategic approaches and innovation models.
III. INNOVATION REQUIRED IN SUPER SMART SOCIETY
The innovation model that is consistent with each strategic approach was revealed in the previous
chapter. Based on this result, I will describe the strategic approach, the innovation model, and the project
style suitable for them in various industrial fields of the Super Smart Society (SSS) to be constructed in
the near future.
A. Necessity of innovation for constructing Society 5.0
Fig. 9 presents the evolution process of human society. As conceived by the Japanese government,
Society 1.0, Society 2.0, Society 3.0, Society 4.0, and Society 5.0 depict the hunting society, agricultural
society, industrial society, information society, and near future SSS, respectively.
Fig. 10 shows a system image of service platform for SSS. This figure indicates that SSS consists of
a hierarchical structure in which real space and cyberspace are both connected by the Internet. Various
sensors and actuators are arranged in the lowest level of the physical system in real space. This real space
connects to cyberspace via the Internet and data move in both directions. A substantial amount of big data
accumulates in this system and evolves in various ways from artificial intelligence’s (AI’s) learning
function. This affects a wide range of industries, and these effects are enormous. In order to realize such
a complex society, various innovation models are required; this is because the huge hybrid space is an
online space that human beings have not previously experienced, and it has accumulated an enormous
amount of information and knowledge. Moreover, this is a space that incorporates the AI’s autonomy.
CaseStrategicapproach
InnovationModel
Reason for the Relationship
1 RResource
Gen-1Linear
If the product’s market and needs are clear, the requirements for the necessary technologies will also be clear. Therefore, acompany can effectively utilize its core competencies. The main stage for this will be research and development.
2 PPositioning
Gen-2Kline
This is a “chain-linked” innovation model starting from the point of “market discovery.” The analysis is conducted byobserving customers and markets at each of the planning, design, manufacturing, and sales stages; this enables a company todiscover an advantageous position in the market.
3 GGaming
Gen-3Hypothesis-
Testing
This prioritizes “experiments in the market,” and a company creates advantageous innovations based on the knowledge andexpertise gained from these experiments. This is highly affiliated with the gaming approach, as a company quickly createsand improves products and changes sales methods while observing the reactions of the market and competitors.
4 LLearning
Gen-4Interactive
Potential needs are discovered and products created from the co-creation between users and companies. Differentiation ispossible in this process from both parties learning, acquiring, and effectively utilizing new knowledge.
Note: The relationship between the innovation model and strategy is not determined definitively. It is necessary to be aware that different shades will exist from thecombination of strategies.
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Fig. 9 The evolution process of human society (Government of Japan, 2016).
Fig. 10 System image of service platform for Super Smart Society
(Government of Japan, 2016) (modified by the author).
B. Combination of strategic approach and innovation model in various industries
The previous section mentioned that SSS is a complex system spreading from real space to cyber space.
This suggests that in various industrial fields that make up SSS, each company must realize an innovation
model that matches its strategy. Therefore, we looked at six industrial fields that seem to be important in
SSS, and compiled examples of innovation models that are consistent with strategic approaches, as shown
in Table 3. This table suggests that the relationship of innovation models that are consistent with each of
the four strategic approaches does not change in SSS.
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Table 3. Examples of combinations of strategic approaches and innovation models in SSS