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EDITORIAL 81 Editorial I dea generation, the manner in which ideas are chosen and the organisational and social envi...

Author: Tudor Rickards and Susan Moger (Editors)

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EDITORIAL

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Editorial

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dea generation, the manner in which ideas are chosen and the organisational and social environments in which these processes take place are major areas of concern for those working in the field of creativity and innovation. In this issue factors supporting and contributing to these areas are considered. In their article von Krogh, Erat and Macus examine the concept of dominant logic held by senior managers and how it might affect a company's performance. Their study of two electronics firms suggests that differences in dominant logic lead to differing strategic reactions to developments within the industry, ultimately leading to differences in performance. Differing reactions to managerial support systems are the subject of Goran Ekvall's article. He examines the responses of engineers in differing company functions (production and Research and Development) and Lean Production, Kaizen and Computer Aided Design in terms of their stimulus or inhibition of creativity. Interestingly, responses varied from each group and Ekvall's result may have important implications for work design in the future. Mark Davies continues the theme of managing professional creativity by exploring the potential contribution of an analytic hierarchy process to the enhancement of the creative brief within advertising. Use of such a system may enhance dialogue between advertiser and client and permit additional reflection and revision of major idea focused decisions.

# Blackwell Publishers Ltd 2000. 108 Cowley Road, Oxford OX4 1JF and 350 Main St, Malden, MA 02148, USA.

The need for the balance between flexibility and openness and an analytical approach to business situations is emphasised by Harry Nystrom in his article about the integration of post-modern and modern approaches to management. He argues that we need to switch constructively between both schools of thought if we are to create and realise the future. In his article, Mitsuru Kadama argues that a crucial role, that of community producer can lead to the creation of a strategic community, in which all types of organisations from the public and private sector can begin to advance the good of a community. His case study of the development of an electronic network in an outlying district of Japan is a fascinating account of the mobilisation of resources from diverse interest groups, around a focal leader. Goldenberg and Mazursky address the issue of focus within the idea generation process in their article examining the role of product templates in product development. They conclude that used appropriately, a more bounded approach can lead to less reliance on random approaches to new product concepts. All of these contributions continue the debate about the most appropriate ways to support the creative process. Our distinguished authors have illustrated the scope of the debate and these themes will no doubt be continued in future issues of the journal. Susan Moger

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CREATIVITY AND INNOVATION MANAGEMENT

Exploring the Link between Dominant Logic and Company Performance Georg von Krogh, Pablo Erat, Mark Macus To revitalize the discussion on dominant logic our paper aims to establish the forgotten link between dominant logic and firm performance. To do so, the concept is enhanced conceptually and operationalized by developing a framework including firms' conceptualization of the business (external environment) and of themselves (internal environment) and performance. The framework is applied to a longitudinal study of two consumer electronics firms. The empirical evidence shows that differences in dominant logic lead to different strategic reactions to developments in the industry, and thus result in performance differences.

Introduction

T

Influence of dominant logic

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he concept of dominant logic (Prahalad and Bettis 1986, Grant 1988, Bettis and Prahalad 1995, von Krogh and Roos 1996), has not received a large amount of attention in the scientific debate about strategic management, even though the original contribution by Prahalad and Bettis (1986) was awarded the Strategic Management Journal Best Paper Prize. Originally designed to provide an explanation for the link between strategic variety of diversified firms' businesses and their performance, the concept was later conceptually extended and modified to account for systemic properties of firms (Bettis and Prahald 1995, von Krogh and Roos 1996). By focusing not on diversification, but rather on changes in firms' core businesses and by extending the concept of dominant logic further, we think that the concept will show more of its theoretical potential. We aim to extend the concept in such a way that it will provide a better understanding of why some firms react faster and more successfully to imminent changes of the environment. However, a conceptual extension of the concept does not suffice to revitalize the discussion on dominant logic, since the concept has not been operationalized as of yet. By operationalizing dominant logic, we will provide a basis for an explicit link between dominant logic (and changes in dominant logic) and firm performance.

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The objective of this contribution is to conceptually extend and to operationalize the concept of dominant logic and show a possible link between the dominant logic and performance. The research question can therefore be formulated as follows: What is the impact of dominant logic on firm performance when a significant change in the core business occurs?

Theoretical Background Our work is primarily based on the contributions relating to the concept of dominant logic (Prahalad and Bettis 1986, Grant 1988, Bettis and Prahalad 1995, von Krogh and Roos 1996). Because of the fundamental impact of Bettis and Prahalad's contributions to the scientific discourse on dominant logic, we will review the key messages introduced by their articles in 1986 and 1995. In 1986, Prahalad and Bettis argued that existing theories fail to explain the relation between diversification and performance. In order to fill this gap the authors introduced the concept of dominant logic as ``the way in which managers conceptualize the business and make critical resource allocation decisions. . .'' (Prahalad and Bettis 1986, 490). Prahalad and Bettis suggested that the way top managers deal with the increasing variety of strategic decisions in a firm, caused by acquisitions or structural changes in the firm's core business, depends on the cognitive # Blackwell Publishers Ltd 2000. 108 Cowley Road, Oxford OX4 1JF and 350 Main St, Malden, MA 02148, USA.

DOMINANT LOGIC AND COMPANY PERFORMANCE

orientation of those top managers. The argument proposed was that diversification strategies frequently fail because top management teams are cognitively rigid, and cannot expand their dominant logic to new business or structural changes in existing core businesses. The authors noted that dominant logic is stored via shared schemas and cognitive maps and was influenced by managers' previous experiences. Based on the notion that the dominant logic was largely unrecognized by management itself, Prahalad and Bettis concluded the article with the argument that management's understanding of its particular dominant logic forms a precondition for successful diversification (Prahalad and Bettis 1986, 495). While the 1986 article discussed some of the problems with dominant logic in firms operating in a single business (or predominant core businesses) facing increasingly complex environments (Prahalad and Bettis 1986, 498), the concept is not detailed enough to provide a basis for the study of such phenomena. Most importantly, the article only suggests that such firms will have to change their dominant logic, but leaves open the specifics of how that change is to come about. Also, the main potential trigger for changing a firms dominant logic is said to be substantial problems or crises, implying a reactive approach to dealing with the environment. The 1986 article resulted in a follow-up article in early 1995 (Bettis and Prahalad 1995). The second article defined dominant logic as a ``filter'' through which management considers relevant data (Bettis and Prahalad 1995, 7). As did the 1986 article, the 1995 article paid attention to cognitive rigidities of top management teams, but shifted the focus from diversification-driven to organizational change in general, especially how firms respond to environmental changes. According to the extended view of dominant logic as an `ìnformation filter'', organizational attention is focused only on data deemed relevant by the dominant logic whereas other data are largely ignored (Bettis and Prahalad 1995, 7). This filtering mechanism is seen to have an impact on strategy development and thereby on the strategic direction of the company. Depending on the perceived success or failure of the implemented strategy the dominant logic is strengthened or questioned. Accordingly the relation between dominant logic and strategic action is seen as a circular causality: the logic influences action and the result of the action shapes the logic through feedback. The feedback process is seen to be an important aspect of organizational learning. The authors argued that dominant logic puts

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constraints on the ability of the organization to learn and is a primary determinant of `òrganizational intelligence'' (Bettis and Prahalad, 1995, 8). In order to capture the tightness of the constraints imposed by a particular dominant logic regarding organizational learning, the authors introduced the heuristic of ``bandwidth''. It was argued that firms have to increase the bandwidth of their filter or tune the filter to a different band in order to successfully cope with an increasingly dynamic environment (Bettis and Prahalad 1995, 8). Accordingly a firm has to quickly adjust its dominant logic (which includes processes of unlearning) to changes in its environment if it is to survive (Bettis and Prahalad 1995, 11; Whetten 1988). The 1995 article extends the concept of 1986 and focuses on the functioning of the dominant logic as a filter for information. However, this conceptualization focuses on information processing with respect to information or data about the past or current environment (i.e. performance data as feedback to past actions), but does not provide an explicit link to decisions about future strategies. It is merely said that ``these `filtered' data are then incorporated into the strategy'' (Bettis and Prahalad 1995, 7). In general, the 1995 article moved toward a generalization of the concept.

Conceptual Extension Using the concept of dominant logic to provide an explanation for the phenomenon that some firms are either able to anticipate fundamental changes in their core business or are able to react to such changes earlier and more successfully than other firms in that industry1 shows the limitations of the concept as described in the previous section. Building on the concept of dominant logic described above, we extend that concept and go into more detail with respect to the information processing function of the dominant logic. We will do so in two steps: First, the concept will be extended to explicitly include a link from top management teams' perceptions of the past to their decisions about future strategies and strategic actions. This is a response to the limitation of the 1995 article of not explicitly linking the information processing of data about the past to decisions about the future. Also, it will be argued that any empirical analysis (and especially the present one) on dominant logic will have to be longitudinal. Second, we will highlight the importance of data categories for the functioning of the dominant logic in the next section. Thus, we

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dwell deeper into the constituent elements of dominant logic, which allows us to provide a richer description of the development of a specific dominant logic over time than the concept from 1986 (Prahalad and Bettis 1986) would have allowed. The categories will furthermore be very useful for the subsequent operationalization of the concept.

Assumptions The concept of dominant logic in short assumes that ``the business world for a manager is neither pregiven, nor predefined. Rather, cognition is the creative part of bringing forth a subjective world. [. . .] There is no `right' world to be represented, only a point of observation for select data.'' (von Krogh and Roos 1996, 732.) The concept of dominant logic by Bettis and Prahalad (1995) apparently assumes this view as well (von Krogh and Roos 1996). The top management team in charge of strategic decision-making is thus viewed as a group constructing their own and unique view of the internal and external environment by choosing a unique set of data. The company is assumed to be an informationally open system towards the environment. However, as a consequence of its dominant logic, it is operationally closed, meaning that the ``data'' streaming into the system ``company'' do not directly determine its strategic actions (von Krogh and Roos 1996).2 The dominant logic influences how top management teams conceive of their environment and what strategic decisions they make.

Dominant Logic as a Lens The notion of dominant logic as an information filter as proposed by Bettis and Prahalad (1995) carries with it the idea that strategic decisions depend upon the dominant logic present in the company. The authors take an incremental improvement approach towards strategy by stating that the ``filtered data are [. . .] incorporated into the strategy'' (Bettis and Prahalad 1995, 7). The implicit idea is that a basic strategy exists, which will be changed or adapted incrementally based on the data perceived through the filter of dominant logic. What is not dealt with is the question what role the dominant logic plays with respect to radically new strategies. Here, the creative and imaginative part of strategy making comes into play (Rumelt et al. 1994, Hamel 1998, Hamel and Prahalad 1993, Hamel and Prahalad 1994). It is the responsibility of the strategic decision-makers to

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formulate these new strategies in the face of uncertainty (Courtney et al. 1997, Lieberman and Montgomery 1988, Kiesler and Sproull 1982, Handy 1997). Thus, the second function of dominant logic becomes relevant: dominant logic as a lens. Dominant logic not only filters data about the environment (which by definition have to base on events in the past), it also contains the data categories and interpretation patterns which enable strategists to make sense of the data3 and guide their imaginations about possible futures (Weick and Bougon 1986, Huff 1990, Barr et al. 1992). If, for example, a totally new business model emerges for the core business of a firm , and this business model cannot be grasped in terms of the data categories and especially the interpretation patterns contained in the dominant logic, it will not seem of relevance to the decision-makers4 (Christensen 1997). They will not be able to make sense of it using the categories contained in the dominant logic. It becomes apparent how a dominant logic containing few and weak data categories5 and very rigid interpretation patterns, over time, leads to a linearity of perceptions of data about the environment and thus to a linearity of viewing possible future developments of the environment and path-dependent strategies. The importance of categories for the concept has to be highlighted. It is the categories of data which managers employ when conceptualizing their environment and which we assume surface when managers make informed statements about their environment (Weick 1995, Weick and Bougon 1986). As argued above, the categories also limit the range of imaginable futures and thus the range of imaginable future strategic actions. The categories conceptually tie the two functions of a dominant logic, the funnel (for perceptions about the environment and the success of past actions) and the lens (for imaginable futures) together, as shown in Figure 1. In order to illustrate this concept of dominant logic, consider the top management team of a company charged with making substantial strategic decisions. This team has developed a dominant logic in the course of its activities. The managers focus their attention on data that offer support for their current dominant logic while other potentially important data may not be recognized (Miller et al. 1998, Sutcliffe and Huber 1998, Amason 1996, Wally and Baum 1994, Kiesler and Sproull 1982, Donaldson and Lorsch 1983). When the top management team decides on which strategies to pursue in the future, the dominant logic functions as a lens



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Figure 1. Snapshot of Dominant Logic as Filter and Lens for viewing that future, thus restricting the range of imaginable options. When deciding upon a strategy, the group's dominant logic allows only for decisions that are conform with it, meaning that the basic rules of the business the company is operating in are not questioned for the future (as a result of the data categories and interpretation patterns used). The group makes its decisions based on the assumption that the underlying logic of the business and the environment will not change fundamentally.

Dynamization of the Concept We argue for a dynamic analysis of dominant logic for three reasons: First, it is argued above that changes in the dynamic of markets require firms to adjust their dominant logic. If market developments are the starting point of the argument (see also the research question above), it is obvious that a longitudinal analysis and thus an analysis of the development of a firm's dominant logic is called for. Second, if dominant logic functions as a lens for viewing the future, and if the performance implications of strategic decisions based on a dominant logic are to be evaluated, the research must be longitudinal. Third, dominant logic itself can be seen as a path


dependent concept (von Krogh and Roos 1996), since, at any point in time, it is the result of past events. One important type of event are past strategic decisions, which have become manifest in strategic actions,6 processes and assets. It is these elements, along with the perceived feedback from the environment, that shape a current dominant logic. If that is so, any dominant logic at a given point in time cannot be understood properly without its historical development, which is why a longitudinal study is required.

Operationalization The shortage of academic discussion about dominant logic may also partly be attributed to the difficulty of operationalizing the concept for empirical research. In this section, we operationalize the concept and lay the foundation for our empirical study. The operationalization of the concept will be done in two steps. First, a category set is developed in order to build a framework for categorizing managers' statements. Second, a numerical measure for dominant logic is proposed. As a starting point for operationalizing the concept of dominant logic, we built on Prahalad and Bettis' (1986) definition of dominant logic as ``the way in which managers conceptualize the business. . .'' (Prahalad and

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Domains and categories

Bettis 1986, 490). It was assumed that the data categories that constitute this conceptualization are reflected in executives' informed statements about their past and future environment. In order to build a framework for categorizing these statements, we propose a category set inductively derived from the secondary data. The category set consists of two domains (internal and external environment) and six categories (people, culture, product and brand, competitor, customers and consumer, and technology). The inductive development of categories allowed us to better link them to the data from which they derived. Figure 2 shows the category set and the causalities between dominant logic, strategic action and performance. Although strategic actions are a vital link in the causal argument shown in Figure 2, they were not included in our empirical analysis. The reason strategic actions were excluded is that the aim of the present research is to establish a direct link of dominant logic to performance. If such a direct link can be established, further investigations into the effects of moderating variables in this link, as are strategic actions, is needed. After having developed a category set of a firm's dominant logic, we proceed to the second step of the operationalization. The limitations the dominant logic imposes on strategic decision making and thus on strategic actions are determined by developing a measure for the ``bandwidth'' of the dominant logic (Bettis and Prahalad 1995). The bandwidth depends on the categories which the dominant logic provides for. It is assumed that if managers' statements score in more of the proposed categories and if their statements score more often in the single cat-

egories, the bandwidth of the dominant logic will be higher. Thus, we propose the following bandwidth measure: 6 X BandwidthMeasure = CS x QSC i TC i1 where

CS=Number of categories scored in TC=Maximum Number of categories (in the present research = 6) QS=Number of scoring statements in one category

Hypothesis Dominant logic must be viewed in close relation to the company's environment. The relation chosen in the present research is the relation between the environment's variety and the bandwidth of the dominant logic.7 The dominant logic is an emergent property of complex organizations seeking to adapt to the environment (Bettis and Prahalad 1995, 11). Dominant logic helps top managers (among others) to cope with the environmental complexity and enables them to filter information in order to sustain the capability to act (Simon 1976, 1955; March and Simon 1958, March 1994). Thus, having a dominant logic is an efficient way of designing programs to deal with the changes in the environment, provided that the environment is relatively stable. However, the focus of our study is the link between dominant logic and firm performance in dynamic environments. The basis of our argument is the assumption that with an increase in the environmental variety, the range of firms' potential strategies will have to increase as well.8 As proposed above, the dominant logic of a firm deter-

Figure 2. Elements of dominant logic and the link to performance

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mines that range. If that is so, an increase in the variety of the environment will be reflected in an increase in the bandwidth of a firm's dominant logic if it is to remain successful. This leads us to the following hypothesis: The higher the bandwidth of a company's dominant logic, the more successful its reaction to substantial increases in the environment's variety will be.

Case In this section we will explore the link between dominant logic and performance in the two telecommunication firms Ericsson and Nokia. We proceed in five steps: first, we develop a methodological foundation by selecting an industry and a sample, a time period for our research, describing our data collection and analysis, and selecting a performance measure. Second, we identify and describe a ``break point'' in the mobile telephone industry. Third, we explore the dominant logic of the two firms during the relevant time period and fourth we review the performance of the two firms in terms of market share for that period. Fifth we review the findings

Research Methodology Sample selection. Starting from the hypothesis: ``the higher the bandwidth of a company's dominant logic, the more successful its reaction to substantial increases in the environment's variety will be'', an industry and a company sample were selected. The mobile phone industry was chosen because of its rapid growth and increased variety (in particular regarding customer preferences and technology) in the last years. In order to reveal the link between the dominant logic and performance, a comparative study of a matched pair of firms had to be conducted. The need for careful matching led to the selection of the two firms Ericsson and Nokia. Both firms set out from a similar starting point regarding tradition, organization as well as geographical setting. Despite these similarities the firms have performed very differently in the increasingly dynamic and growing mobile market, suggesting that their responses to the changing environment may have differed (Barr et al 1992). Within these firms we decided to focus on dominant logic of top management teams. This decision was based on the assumption that the dominant logic of top management teams has an substantial impact on strategic actions and thus on firm performance (Andrews 1987).


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Selection of time period: A point in time has to be identified when the variety of firms' environment has increased. We call this point an `ìndusty breakpoint''. In order to understand why the two firms reacted differently in the face of that industry breakpoint, we try to establish an idea of the development of the dominant logic starting a couple of years before the industry breakpoint. It is thus that the rough development trajectories of the dominant logics can be identified. Data Collection. In order to explore the link between dominant logic and performance, secondary data regarding the dominant logic and performance was collected from both firms for a time interval of three years. The challenge was to find applicable and comparable data for the analysis of the dominant logic. Besides annual reports, the focus was on published material with directly quoted statements of top managers in Nokia and Ericsson (i.e. interviews and speeches). This was done based on the belief that management quotes, from more or less spontaneous interview situations, are less filtered (i.e. by public relations departments) and therefore reflect the underlying logic more accurately than statements in annual reports. Annual Reports were considered an important source of information in order to add to the interview material (Barr et al. 1992). Data Analysis. The data regarding dominant logic were analyzed through content analysis (categorizing and quantifying written statements by coding the material). Subsequently coding rules (e.g. criteria of selection) were developed. It was among other aspects decided, not to focus on single words but on emphasized topics (e.g. a string of words with a subject and a predicate given a certain level of importance). Both the categories and the coding rules were tested and improved through several sequences of trial and error and triangulation. The careful testing of the coding rules was of particular importance for reducing the risk of biased selection. After the rules and categories were fixed, the contents of the managerial statements were assigned to the categories (categorization). Performance Measure: After measuring the bandwidth of a dominant logic over time, we link these findings to company performance, arguing that the success of strategic actions is reflected in the company's market share. Out of the large amount of alternative performance measures, we have chosen market share as the relevant measure in the context of the present research.9

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Break Point in the Mobile Phone industry

Industry `break points'

From time to time many industries undergo sudden and extensive changes (Anderson and Tushman 1990, Christensen and Bower 1996). If the change is so fundamental that it alters the underlying logic of the business and overwhelms the comprehension of seasoned managers, we speak of a ``break point'' (Meyer et al. 1990, Christensen 1997). Typically, the variety of firms' environments increases when such changes occur, as a consequence of the increase in the amount of relevant elements and the possible combinations among the elements.10 Break points for example can be triggered by technological discontinuities, changes in customer preferences, deregulation and global competition (Prahalad and Hamel, 1994). The result is often seen in significant changes in market size and firms' market share. Based on this definition, the mobile phone industry went through a break point in 1998. It was mainly triggered by the formation of new consumer preferences through a radical downward movement in the average age of mobile phone customers. This development was fostered through new products (i.e. low price mobile phones) and services (i.e. pre-paid telephone cards) enabling young people to become mobile phone subscribers. Due to the lower average age of the consumers, product attributes like design were becoming more important than technical finesses. Mobile phones were becoming a lifestyle product with a decreased life cycle period. The resulting break point can be characterized as a shift from an Èngineerial Era' to a

`Marketing Era'. The result of this shift was a strong acceleration of the market growth in terms of global sales in 1998 (as shown in Figure 3).

Dominant Logic In this section we show how the dominant logic at Ericsson and Nokia changed from 1996 to 1998. First, we present the development of the bandwidth measure over time for the two firms. Then we give a short description of the main changes in the dominant logic of each firm. The bandwidth measures for the two firms are presented in Figure 4. Figure 4 shows that the variety of the dominant logic at Nokia was higher during the whole time period. The increase in bandwidth of dominant logic was significantly higher in the time period from 1996 to 1997 than at Ericsson. In 1996, the starting point of our analysis, the bandwidth of Nokia's dominant logic was higher than Ericsson's (52 vs 25). This can to a large extent be explained by managers' strong emphasis on the categories ``people'', ``culture'', and ``consumer'', which remained fairly unrecognized by Ericsson. Ericsson focused more strongly on ``competition'' and ``technology'' whereas Nokia was more occupied with their own organization and developing an understanding of end consumers. Both firms increased the bandwidth of their dominant logic from 1996 to 1997, but Nokias' increase was significantly higher than Ericssons'. The major reason for the increase at Nokia was a stronger emphasis on the

Figure 3. Break Point in the Mobile Phone Industry (Source Dataquest)

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Figure 4. Variety of the dominant logic at Ericsson and Nokia categories ``products and brand'', and ``technology''. Nokia remained stronger focused on ``consumers'' and in particular recognized the different consumer segments' needs. It further started to consider the importance of third generation products which explains the strong increase in the category ``technology''. That importance was also recognized by Ericsson who in addition slightly strengthened its focus on ``consumer''. One can conclude that because of the higher bandwidth of Nokias dominant logic in 1996, it was able to include data about imminent changes in the market which caused it to become even more sensitive for new types of data about their environment. The high incline of the Nokia graph reflects this sensitization. Nokia's subsequent strategies could also have con-

tributed to the appearance of the break point. In the time period 1997 to 1998 the dominant logic of Nokia remained fairly unchanged. The increase in the bandwidth of the dominant logic at Ericsson on the other hand increased strongly. The main reason for this was strengthened emphasis on ``product'' and ``brand'' and ``technology''.

Performance In order to measure the performance of Nokia and Ericsson during the time period of interest (1996±1994), we have chosen relative market share. As argued above this measure was selected for two main reasons (see section on Operationalization). The development of the relative market share is shown in Figure 5.

Figure 5. Development of market share (Source Dataquest) # Blackwell Publishers Ltd 2000

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Figure 6. Bandwidth and Market Share difference When looking at the development of relative market share, two aspects become apparent: (1) Nokia has outperformed Ericsson from 1994 to 1998 and (2) the most significant difference occurred during the break point in 1998.

Findings/Interpretation In order to give an intuition of our data interpretation, a relative bandwidth measure and a relative performance measure in terms of market share are shown. The relative bandwidth measure shows how the difference in bandwidth between the two firms' dominant logic has developed from 1996 to 1998. The relative performance measure is shown by the development in market share difference between the two firms. The empirical data show that Nokia had a higher bandwidth to start with in 1996 (bandwidth difference of ca. 27), and that from 1996 to 1997 the increase in bandwidth was significantly higher than the increase in Ericssons bandwidth (bandwidth difference in 1997: 34.5). We attribute that difference to the effect that Nokias dominant logic in 1996 allowed for them to get sensitized for changing consumer needs and an interest of unserved customer segments in mobile phones. Meanwhile, Ericsson focused much more on technology issues compared to Nokia (see Appendix). Thus, Nokia's strategy started to shift towards an emphasis on marketing in 1996 already. That would be an explanation for the higher market share difference between Nokia and Ericsson in 1997. The bandwidth difference was largest in

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1997 and we interpret our findings in the way that Nokia had become even more sensitized to different data categories as a result of its initial sensitivity in 1996 towards customer preferences and of positive feedbacks they got from their initial actions on the market. The strategies Nokia decided upon in 1997 were thus influenced by a relatively large bandwidth of its dominant logic, which provided for signals that new customer segments would become crucial in the future. Such a strategy paid off in 1998, which is reflected in the high increase in market share difference between 1997 to 1998 (from 6.4% market share difference in 1997 to 10% market share difference in 1998). The development of bandwidth difference from 1997 to 1998 shows Ericsson starting to close the gap to Nokia, which has kept its dominant logic bandwidth relatively stable. It will be interesting to follow the development of the market share difference between Ericsson and Nokia in the future.

Limitations and Conclusions Limitations Some limitations of the present study are worth noting. First the analysis covered a time period of only three years. In order to strengthen the findings, the time horizon covered by the dominant logic analysis should be enlarged. Second the sample consisted only of two firms limiting the possibility to generalize the findings to other firms in the same industry and in particular to firms in



other industries. Third, the category set proposed consisting of six categories is rather rough. In order to explore the specific development of the categories over time, a specification of the categories into further subcategories is recommended. Fourth, the collection of comparable secondary literature is highly difficult, restricting the material available for the research. Finally, it would, in a next step, be of interest to include strategic actions as an intermediate variable into the link between dominant logic and performance in order to include a logical step from decisions about strategies to strategic actions, which then result in performance.

Conclusions Building on the work by Prahalad and Bettis (1986, 1995), the objective of this article was to extend and to operationalize the concept of dominant logic in order to explore the link between dominant logic and performance in dynamic markets. At least three points emerge from our discussion. First, the concept was found to hold great explanatory potential, yet had to be extended in order to explain strategic decision making and performance variation in the core business of firms acting in dynamic environments. The extension of the concept was done by adding a lens function to the filter function of dominant logic as it was proposed by Bettis and Prahalad (1995). It was argued that the dominant logic of top management teams charged with strategic decision making restricts the strategic options these managers are able to identify and thus might lead to rigid strategies when the dynamic of the market increases. Furthermore, as a consequence dynamic research on dominant logic was argued for in order to capture the development trajectories of dominant logic in different firms. Second, it was argued that the shortage of academic discussion on dominant logic can partly be attributed to the difficulty of operationalizing the concept for empirical research. As a starting point for the empirical research the concept was operationalized by developing a category set consisting of two domains and six categories as well as a numerical measure of the bandwidth of the dominant logic. Third, the results of the empirical research on the two telecommunication firms suggest that there might be a positive correlation between the bandwidth of the dominant logic and performance of companies confronted with break points or a strong increase of the dynamic of their environments. Due to the limited sample size and the specific


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character of the telecommunication industry this hypothesis still remains to be tested.

Notes 1. A typical example is the typewriter industry of the 1970s, where few companies recognized the apparent changes in the logic of their business caused by the rapid advances in personal computing. 2. As an observer, we will have to draw the line between the system `firm' and its environment. 3. To make sense of the data selected on the basis of what the current dominant logic qualifies as relevant to strategic decision, managers have to interpret the data (Weick 1995, Ocasio 1997, Ginsberg 1994, Thomas et al. 1993). In order to do so, they need categories in which they can classify the data taken from the environment. 4. In the context of mental maps, this argument has been elaborated on extensively (Cyert and March 1963, Dutton et al. 1983). 5. (as opposed to many and strong categories ± refer to the section on operationalization for the definition of ``many'' or ``strong'') 6. Our assumption here is that strategic decisions are implemented the way they were intended by the decision-makers; insofar, we take a topdown approach towards strategy-making (Ansoff 1965). 7. The bandwidth of the dominant logic will be used tantamount to the variety of a dominant logic. 8. This has generally been stated in Ashby's Law of Requisite Variety (Ashby 1974) 9. We do this for two reasons: first, performance measures are always reflections of a company's stakeholders' interests. For example, while shareholders consider Cash Flows or ``Return on'' profitability measures, environmental agencies might focus more on physical flows of materials or pollution indicators. We assume that customers are the most important stakeholder group (Christensen and Bower 1996). Based on this, it follows that customers express their evaluation of the different mobile phone firms' products in terms of their buying behavior, which in turn results in different revenue numbers and market shares in the mobile phone market. Second, market share lends itself to research of the present type because it makes comparisons possible between firms of differing diversitfication levels. Unfortunately, both Ericsson and Nokia do not issue financial segment information in fine enough detail (i.e. specialized assets and/or investments), however, market share data reflect both firms' success in the mobile phone market and thus enable us to isolate that segement of activity within these diversified firms. 10. Generic examples of elements would be stakeholder subgroups (i.e. new customer segements or new entrants in the industry), new technologies etc.

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References Amason, A. (1996) Distinguishing the Effects of Functional and Dysfunctional Conflict on Strategic Decision Making: Resolving a Paradox for Top Management Teams. Academy of Management Journal, 39 (1), 123±148. Anderson, P. and M. Tushman (1990) Technological Discontinuities and Dominant Designs: A Cyclical Model of Technological Change. Administrative Science Quarterly, 35, 604±633. Andrews, K. (1987) The Concept of Corporate Strategy. 3rd ed. Irwin, Homewood, IL. Ansoff, I. (1965) Corporate Strategy. McGraw-Hill, New York. Ashby, W. (1974) EinfuÈhrung in die Kybernetik. Suhrkamp, Frankfurt. Barr, P., J. Stimpert and A. Huff (1992) `Cognitive Change, Strategic Action, and Organizational Renewal'. Strategic Management Journal, 13, 15±36. Bettis, R. and C. Prahalad (1995) The Dominant Logic: Retrospective and Extension. Strategic Management Journal, 16, 5±14. Christensen, C. (1997) The Innovator's Dilemma. When New Technologies Cause Great Firms to Fail. Harvard Business School Press, Cambridge, MA. Christensen, C. and J. Bower (1996) Customer Power, Strategic Investment and the Failure of Leading Firms. Strategic Managment Journal, 17, 197±218. Courtney, H., J. Kirkland and P. Viguerie (1997) Strategy under Uncertainty. Harvard Business Review, 75 (6), 67±79. Cyert, R. and J. March (1963) A Behavioral Theory of the Firm. Prentice-Hall, Englewood Cliffs, NJ. Donaldson, G. and J. Lorsch (1983) Decision Making at the Top. Basic Books, New York. Dutton, J., L. Fahey and V. Narayanan (1983) Toward Understanding Strategic Issue Diagnosis. Strategic Management Journal, 4, 307±323. Ginsberg, A. (1994) Minding the Competition: from Mapping to Mastery. Strategic Management Journal, 15, 153±174. Grant, R. (1988) On Dominant Logic, Relatedness and the Link between Diversity and Performance, Strategic Management Journal, 9, 639±642. Hamel, G. and C.K. Prahalad (1993) Strategy as Stretch and Leverage. Harvard Business Review, 71 (2), 75±84. Hamel, G. and C.K. Prahalad (1994) Competing for the Future. Harvard Business School Press, Boston, MA. Hamel, G. (1998) Strategy Innovation and the Quest for Value. Sloan Management Review, 40, 7±14. Handy, C. (1997) Finding Sense in Uncertainty. In: Gibson, R. (ed.), Rethinking the Future. Nicholas Brealy Publishing, London. Huff, A.S. (1990) Mapping Strategic Thought. Wiley, Chichester. Huff, A.S. (1982) Industry Influence on Strategy Reformulation. Strategic Management Journal, 3, 119±131. Kiesler, S. and L. Sproull (1982) Managerial Response to Changing Environments: Perspectives on problem sensing from social cognition'. Administrative Science Quarterly, 27, 548±570.

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Lieberman, M. and D. Montgomery (1988) FirstMover Advantages. Strategic Management Journal, 9, 41±58. March, J. (1994) A Primer on Decision Making. Free Press, New York. March, J. and H. Simon (1958). Organizations. Wiley, New York. Miller, C., L. Burke and W. Glick (1998) Cognitive Diversity among Upper-Echelon Executives: Implications for Strategic Decision Processes. Strategic Management Journal, 19, 39±58. Ocasio, W. (1997) Towards an Attention-Based Theory of the Firm. Strategic Management Journal, Summer Special Issue, 18, 187±206. Prahalad, C. and G. Hamel (1994) Strategy as a Field of Study: Why Search for a New Paradigm. Strategic Management Journal, 15, 5±16. Prahalad, C. and R. Bettis (1986) The Dominant Logic: A new linkage between diversity and performance. Strategic Management Journal, 7, 485±501. Rumelt, R., D. Schendel, D. Teece (1994) Fundamental Issues in Strategy. A Research Agenda. Harvard Business School Press, Cambridge, MA. Simon, H. (1955) A Behavioral Model of Rational Choice, Quarterly Journal of Economics, 69, 99±118. Simon, H. (1976) Administrative Behaviour. New York: Free Press. Sutcliffe, K. and G. Huber (1998) Firm and Industry as Determinants of Executive Perceptions of the Environment'. Strategic Management Journal, 19, 793±807. Thomas, J., S. Clark and D. Gioia (1993). `Strategic Sensemaking and Organizational Performance: Linkages among Scanning, Interpretation, Action and Outcomes'. Academy of Management Journal, 36, pp. 239±270. Von Krogh, G. and J. Roos (1996) A Tale of the Unfinished. Research Notes and Communication. Strategic Management Journal, 17, 729±737. Wally, S. and J.R. Baum (1994) Personal and Structural Determinants of the Pace of Strategic Decision Making. Academy of Management Journal, 37, 932±958. Weick, K. and M. Bougon (1986) Organizations as Cognitive Maps: Charting Ways to Success and Failure. In: Sims Jr., H., D. Gioia, and Associates (eds.): The Thinking Organization. Jossey-Bass, San Francisco, CA, 102±135. Weick, K. (1995) Sensemaking in Organizations. Sage, Reading, MA. Whetten, D. (1988) Sources, Responses, and Effects of Organizatioinal Decline. In Cameron, K., R. Sutton and D. Whetten (eds.): Readings in Organizational Decline. Ballinger, Cambridge, MA, 151±174.

Georg von Krogh is Professor of Management and Director of the Institute of Management at the University of St Gallen (HSG) Switzerland. Pablo Erat and Mark Macus are doctoral candidates and research associates at the Institute of Management at the University of St Gallen, (HSG) Switzerland.



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Appendix


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Management and Organizational Philosophies and Practices as Stimulants or Blocks to Creative Behavior: A Study of Engineers GoÈran Ekvall

Influence of management theories

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Introduction

Participants

T

A stratified random sample of 500 was drawn from the alumni catalogue of the Chalmers Institute of Technology in Gothenburg, Sweden. The catalogue of 1997 contains nearly 25 000 former students, approximately 80 per cent males and 20 per cent females. Those who, according to the information in the catalogue, were not in engineering or related work or who were company owners or consultants or were more than 65 years old were excluded from the catalogue population before the random sampling of 400 males and 100 females. Those 500 were employed in companies, private or public owned, as engineers. The questionnaire was sent to the homeaddresses stated in the catalogue. Unfortunately several addresses were obsolete; 25 (6 per cent) from the male sample and 11 (11 per cent) from the female sample were returned by the mail agency. Thus 464 engineers received the questionnaire, and 242 of them filled it in, 52 per cent, 84 per cent of them males and 16 per cent females.

heories and connected practices of the organization and management of work have during the history of industrialism arisen in accordance with, or under pressure of, social, economical, technological, scientific and political conditions. They have flourished for shorter or longer periods and then faded away as the conditions have changed, or have been reshaped and/or disguised in new wrappings. The study presented in this article was intended to investigate if and how current, in vogue theories and connected practices of management and organization influence the engineer's possibility to behave creatively at work. A Swedish anthropological study of engineering culture gave as spin-off information indications that the engineers tended to experience the modern organization practices, pressing for shorter and shorter lead-times, as hampering their creativity (MellstroÈm 1995). The present author has called attention to the fact that handbooks and training in project management follow models that contradict generally accepted knowledge and models of creative problem solving (Ekvall 1993). It has furthermore been argued that quality management, which might be regarded as the domineering management theme of the nineties, implies the recurrence of Taylor's scientific management (Boje & Windsor 1993) and basically is a control system (Drummond 1995). As management philosophies and practices geared to efficiency and standardization work against variation, it becomes a justified attempt to analyze the experiences of people in organizations who have to balance the tension between efficiency and innovation.

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The Questionnaire Nine questions concerning actual, widely applied practices and methods of organization and work were presented in the form. Each question had three sub-items, as in the example below: a. Is ``Lean Production'' a guiding principle of organization in the company? No

To some extent

To a high degree

# Blackwell Publishers Ltd 2000. 108 Cowley Road, Oxford OX4 1JF and 350 Main St, Malden, MA 02148, USA.

MANAGEMENT AND ORGANIZATIONAL PHILOSOPHIES AND PRACTICES

b. Are you affected by it? Not at all

Somewhat

Much

c. How does it influence your possibilities to be creative at work? Mainly negatively

Not at all

Mainly positively

The nine questions covered some more general practices of organizational philosophy-kind and some more specific: 1. ``Lean Production'', 2. ``Just-in-time'', 3. ``Total Quality Management (TQM)'', 4. `ÌSO-9000'', 5. ``Concurrent Engineering'', 6. ``Continuous Improvements (Kaizen)'', 7. ``Project-group-organization of development work'', 8. ``Computer Aided Design (CAD)'', 9. ``Creative problem solving methods'' in group meetings.

Results Table 1 below presents how the engineers, who report that they are affected (``somewhat'' or ``much'') by the practice, experience its influence on their creativity.

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Positive experiences of the different practices outweigh negative for all nine practices. There are however large differences. Project groups and Creative methods are described as stimulating creativity by 88 and 85 per cent of the engineers and only one person reports negative effects on creativity. These two practicies belong to the more specific kind and they are often combined; creative methods are ways of work in project groups. In both cases people meet in groups to solve problems, interactions arise which the engineers obviously experience as stimulating their creativity. Both practices are intended to produce change and development, creative strivings therefore are more or less included in the agenda. Interactions in such settings might trigger creative motivations and ideas for the large part of the participants. The questionnaire answer of a ``mainly positive'' affect on creativity seems adequate to them, even if they may have experienced some other elements of the procedure as somethat restricting. As the least creativity stimulating of the listed practices a group of three stands out: ISO-9000 (41 per cent positive and 20 per cent negative), Just-in-time (44 per cent positive

Table 1. Number and per cent of engineers reporting different experiences of the influence of the practices on their possibilities to be creative at work Influence on possibilities to be creative at work Mainly Not Mainly negatively at all positively

N

``Lean Production''

13 14 %

37 40 %

43 46 %

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``Just-in-time''

13 13 % 8 7%

45 43 % 42 38 %

46 44 % 60 55 %

104

11 7% 34 20 % 1 1%

49 30 % 66 39 % 27 23 %

102 63 % 68 41 % 88 76 %

Project-groups

1 1%

21 11 %

172 88 %

194

CAD

3 3% 0 0%

20 22 % 21 15 %

69 75 % 119 85 %

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TQM ``Concurrent eng.'' ISO-9000 ``Kaizen''

Creative methods


110 162 168 116

140

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and 13 per cent negative) and Lean Production (46 per cent positive and 14 per cent negative). These practices are designed to serve goals such as standardization, costreduction and velocity and contain values, structures and procedures that do not easily accept time-and cost consuming variation. Significance tests were run (Chi-Square) of the frequency differences on the three response options ``mainly negatively'', ``not at all'' and ``mainly positively'' between all the nine practices. In Table 2 the results are presented as symbols of significance levels. In Table 3 below the practices are categorized and presented with reference to the results in Tables 1 and 2, showing the percentage of answers ``mainly positive'' and ``mainly negative'' influences on creativity. In category 1 are those practices that are significantly and positively separated from

five or six of the others, in category 2 those with one to three such significant deviations and in category 3 those who have no positive deviation. Very large majorities of the engineers, who have experiences of the practices in question, rate Project groups, Creative methods, Kaizen and CAD as stimulating their creativity and very few (0±3 per cent) have experienced them as hampering. All these four practices are intended for change and development. ``Project'' means, according to dictionaries, ``something devised or planned''. Work with projects is future oriented. Creative methods aim at releasing creativity by damping down individual and social blocks. Kaizen stands for continuous improvements throughout the organization and in all its operations. CAD, computer aided design, is a tool for engineers in their work with product and process

Table 2. Significance testing of the frequency differences between the practices Chi-Square analyses. Lean production Just-in-time TQM Concurrent eng.* ISO 9000 Kaizen Project groups CAD Creative methods***

± n.s. n.s.

n.s. n.s.* n.s. *** *** *** *** ± n.s.** n.s. *** *** *** *** n.s. ± n.s.** ** *** ** *** ** n.s. ± *** * *** n.s *** n.s. n.s. ** ** ± *** *** *** *** ± n.s. n.s. *** *** ** * *** * ± n.s. *** *** *** *** *** * ** n.s. n.s. ± *** *** ** *** ** * n.s. n.s. * ± *** *** *** ***

* P5.05 ** P5.01 *** P5.001 n.s. P4.05

Table 3. Categories of practices according to influence on creativity Influence on creativity Mainly positive

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Mainly negative

Category 1 Project groups Creative methods Kaizen CAD

88 85 76 75

Category 2 Concurrent engineering TQM

63 % 55 %

7% 7%

Category 3 ISO 9000 Just-in-time Lean production

41 % 44 % 46 %

20 % 13 % 14 %

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% % % %

1 0 1 3

% % % %



development, which is work that demeans creativity. It was demonstrated in an earlier Swedish study that designers felt the CAD work stimulating (Hovmark 1993). At the opposite end we find three practices for which the positive responses are not in majority but still much more frequent than the negative. The neutral responses (no influence on creativity) accordingly are quite common, but there are also several negative responses (especially with ISO 9000, 20 per cent). Besides ISO 9000 this category includes ``Just-in-time'' and ``Lean production''. Those three practices are aimed at stability, standardization, control and efficiency. In between these two categories ``Concurrent engineering'' and TQM appears with quite a few negative responses and a majority of positive. Probably they take middle positions as creativity stimulators for different reasons. TQM is a general system or philosophy of management and organization, which besides the same kind of preoccupation with standardization and efficiency as the practices of category 3 implies, also include ideas and methods of involvement and empowerment of the employees. The balance between the two goals and the real content of TQM probably varies considerably between organizations due to cultural and strategic conditions. Where the empowerment ideas have taken root and become a ``theory in use'' the soil for creative behaviours is much better than when this part of the TQM concept is only an `èspoused theory'' according to Argyris' language (Argyris et al 1985). The inclusion of the empowerment thinking in TQM probably makes its difference from category 3.

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``Concurrent engineering'' is a way to shorten the lead time to market introduction of new products by early co-ordination of involved functions such as design, production engineering, production planning, marketing and sales. The pressure for time savings and efficiency in the goal can be hampering creativity while the co-operation, often in project groups, between experts from quite different fields with differing perspectives might be supporting creativity. The latter aspect outweighs, as the result of 63 per cent positive responses indicates, but the timepressure goal might be somewhat restraining and keeping this practice at lower level of positive experiences than the practices in category 1. The two largest sub-groups in the sample are R&D-engineers and production-engineers, which are the two most pure technological professions represented here. Their engineering duties and professional directions concerning change/development vs. stability however are different. Therefore it becomes of special interest to study how the experiences of these two professional groups may differ regarding the practices as stimulators or hindrances to creativity. The comparison of these two groups of engineers are presented in Table 4 below. A general tendency is that the production engineers have larger percentages of positive responses than the R&D-engineers and the latter have larger frequencies of negative responses. This is especially evident for ``Just-in-time'', TQM and ISO-9000. CAD and Creative methods deviate from the trend. It is however only one significant difference, but a very evident one; that for ISO-9000. A

Creativity stimulators

Table 4. Frequencies for R&D and Production engineers in the ratings of the creativity influence of the different practices. Chi Square tests of the frequency differences. Influence on possibilities to be creative at work Mainly negatively

``Lean Production'' ``Just-in-time'' TQM ``Concurrent eng.'' ISO-9000 ``Kaizen'' Project groups CAD Creative methods


Not at all

Mainly positively

R&D

Prod.

R&D

Prod.

R&D

Prod.

8(21%) 11(28%) 3(7%) 8(9%) 26(33%) 1(2%) 0(0%) 0(0%) 0(0%)

4(15%) 4(17%) 0(0%) 1(3%) 2(6%) 0(0%) 0(0%) 0(0%) 0(0%)

16(42%) 18(45%) 20(46%) 19(22%) 32(41%) 15(29%) 9(9%) 9(15%) 6(9%)

10(38%) 8(33%) 6(35%) 8(28%) 14(42%) 6(23%) 3(8%) 7(37%) 4(19%)

14(37%) 11(28%) 20(46%) 59(67%) 20(26%) 36(69%) 92(91%) 53(85%) 63(91%)

12(46%) 12(50%) 11(65%) 20(69%) 17(52%) 20(77%) 35(92%) 12(63%) 17(81%)

Chi Square .64 n.s. 3.37 n.s. 2.32 n.s. 1.23 n.s 11.51** .86 n.s. .64 n.s. 4.57 n.s. 1.75 n.s.

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majority of the production engineers (52 per cent) experience ISO-9000 as stimulating their creativity while only half of that part (26 per cent) of the R&D engineers have such experiences. One third (33 per cent) of the R&D engineers report that they have found ISO-9000 as a block to their creativity but only few production engineers (6 per cent) have reported this.

Discussion The management practices chosen for the study are far from all that can be found in actual textbooks, journals or daily papers. They however cover the most common ones during the nineties, at least in Sweden. Some of them appear with varying names, like TQM, which sometimes is called Offensive Quality Development (Bergman & KlefsjoÈ 1995). Varieties of this kind were made clear in the form to avoid misunderstandings, but that does not eliminate the bias that the real content and application of the practice differs between companies and even between departments in the same company in spite of a common designation of the practice. The concept of creativity is central in the study. The definition applied in this special case was presented in the introductory part of the form as ``thinking new at work'' and references were made to innovations in products and processes. It is reasonable to assume that engineers when asked to reflect on creativity in their profession associate it with novelty and originality in technology and science. But even if they have the same kind of definition in mind the degree of novelty considered sufficient to be rated ``creative'' differs. Some might accept even rather modest changes in existing products and processes as demonstrations of creativity, while others claim more radical changes for the creativity label to be applied. Both individual and group (sub-professions) variances probably exist. The nine practices differ with respect to what purposes they are supposed to serve. The practices reflect, both in theory and in use, the goals and values covering the strategic thinking and planning and also the tactics thinking, i.e. what methods are regarded as suitable to realize the goals. Some are geared to quality, some to time-and cost reduction, some to improvements, some to innovations. These differences are explanatory in analysing the results of the study. The practices belonging to category 1 (Table 3) have in common the task of problem solving aimed at change and development;

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improved or new products, processes, tools, systems. Creativity is required, if the problem solving attempts will succeed. It is evident that these practices, according to the engineers experiences, support the fulfillment of such tasks by having a creativity stimulating effect on their thinking. The top two, project groups and creative methods, furthermore imply that the problem solving takes place during intense interaction in groups, which triggers ideation. Kaizen can be organized as group activities or as individual programmes (similar to suggestion systems). CAD is basically a single-work tool, but is sometimes used in group settings. The practices of category 3 (ISO 9000, ``Justin-time'' and ``Lean production'') have efficiency, cost- and time reduction, stability and standardization as their main purposes. Introducing systems and routines to establish this kind of organizational philosophy and practices implies problem solving, where creativity is useful, but when in operation the routines might be more of a block to creative behaviours. The somewhat contradictory outcome is probably due to different experiences of introducing the practice and working under its circumstances. The evident difference between R&D and production engineers might be caused by differences in job requirements and in personal preferences. The introduction of an ISO-9000 program results in imperative work routines, often with very detailed prescriptions that does not allow variations and thus restrict the freedom necessary in creative work and may also consume much time on non-productive paper-work. R&D engineers do more of creativity-demanding work than production engineers do and especially of the inventive kind, requiring high level creativity, which is more suffering from strict, detailed regulations than incremental change projects are (Ekvall 1997). This is probably one reason behind the found difference. The other is the possibility of selection effects. It could be that there are more `ìnnovators'' in the R&D sample and more `àdaptors'' according to the distinction made by Kirton (1987) in the production sample. `Ìnnovators'' can be expected to have stronger demands on freedom and be more sensitive to restrictions than `àdaptors''.

Acknowledgement This study was supported by grants from the Ruben Rausing Fund and The Phoenix Programme.



References Argyris, C., Putnam, R. and McLainSmith, D. (1985). Action Science. Jossey-Bass Publishers, San Francisco. Bergman, B. and KlefsjoÈ, B. (1995). Kvalitet, fraÊn behov till anvaÈndning. (Quality, from need to application). Studentlitteratur, Lund. Boje, D.M. and Windsor, R.D. (1993). The Resurrection of Taylorism: Total Quality Management's Hidden Agenda. Journal of Organizational Change Management, 6 (4), 57±70. Drummond, H. (1995). Beyond Quality. Journal of General Management, 20 (4). Ekvall, G. (1993). Creativity in Project Work. Creativity and Innovation Management, 2 (1), 17±26. Ekvall, G. (1997). Organizational Conditions and Levels of Creativity. Creativity and Innovation Management. 6 (4), 195±205.


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Hovmark, S. (1993). Changes in Product Development Processes. Stockholm University, Department of Psychology. Kirton, M.J. (1987). Adaptors and Innovators. Cognitiv Style and Personality. In: Isaksen, S.G. (Ed.) Frontiers of Creativity Research. Bearly Ltd., Buffalo. MellstroÈm, U. (1995). Engineering Lives. Technology, Time and Space in a Male World. University of LinkoÈping.

GoÈran Ekvall PhD is former professor of Organizational Psychology at the University of Lund and a Research Fellow at the FA Institute, Stockholm, Sweden.

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Using an Analytic Hierarchy Process in Advertising Creativity Mark A.P. Davies The potential contribution of an analytic hierarchy process (AHP) for enhancing the creative brief within advertising is discussed. AHP software used as a group decision support system (GDSS) can facilitate the creative process by encouraging the generation of ideas. The structuring stage facilitates the sorting of those ideas in to a coherent decision model that represents all alternatives, providing focus and relevance. Structuring and the evaluation stage encourage the blending of rational and intuitive thought. Finally, additional facilities allow the advertiser to reflect and revise their decisions. Overall, it would appear the technique has much potential for managing creativity.

Introduction

A

Supporting advertising briefing

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ccording to Proudlove (1998), research into creative problem-solving (CPS) techniques has largely focused on the generation of ideas (or divergent processes) over selection and choice, associated with convergent processes. Efforts designed to examine convergent processes include the criterion matrix technique for systematically evaluating criteria; and the more intuitively driven MPIA four-stage process (Rickards, 1997). Due to the practitioner preference for structured convergence, Proudlove (1998) suggests that future research might examine the role of more structured (analytic or rational) approaches for facilitating decision choice and selection. According to Couger et al. (1993), creativity techniques designed for rational, analytic decisions are those that are structured to generate a logical pattern of thought involving a series of steps leading to a decision. In contrast, intuitive techniques encourage the skipping of steps, arriving at solutions by a (cognitive) leap (Miller, 1987). Couger suggests that a wider range of solutions is possible when both analytic and intuitive techniques are combined. This paper examines how a decision support system can be used as a creative technique that combines both analytic and intuitive processes, although emphasising the analytic. In general, decision support systems include a suitable software package and user interface, typically comprising of several decision-making stages:

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. Exploring and structuring a problem . Generating criteria comprising of objec-

tives and alternatives (collectively referred to as elements) . Evaluating or judging these criteria by allocating weights (or priorities) to them . Synthesising the criteria with a suitable algorithm to arrive at a solution (Dyer and Forman, 1991) The role of decision support systems for enhancing creativity has received scant attention in the academic literature (Couger et al., 1993), with few detailed studies (e.g., Couger, 1990, Nunamaker et al., 1987, Proctor, 1993). Previous work has included JAS (Judgemental Analysis System), a weighted additive trade-off model that can measure the consistency of user judgements and operate sensitivity analysis to preference changes (Lockett and Islei, 1989). The analytic hierarchy process or AHP (Saaty, 1980) is also a trade-off model, designed for multi-criteria. Davies (1994a) has previously shown how AHP can assist in the choice of creative messages in advertising based on case studies. The focus of this paper is on conceptualising how AHP can be used as a supportive technique for advertising briefing. It is important to realise the outcome of AHP is not a substitute for developing creativity, but merely a supplement in offering guidance and direction that may facilitate the creative process. First, how advertisers make decisions in presenting a creative brief to their agencies is discussed. Second, the briefing process is shown to be a # Blackwell Publishers Ltd 2000. 108 Cowley Road, Oxford OX4 1JF and 350 Main St, Malden, MA 02148, USA.

ANALYTIC HIERARCHY PROCESS IN ADVERTISING CREATIVITY

multicriteria problem. Third, the stages of the AHP methodology are described alongside compatible tools for assisting in briefing. Fourth, limitations are discussed.

The Creative Briefing Task Traditionally, advertising managers give creative guidance and direction to their agencies that they then seek inspiration from, as a statement or checklist of ideas called a brief. Briefs can be very general or detailed, depending on the client-agency relationship, their trust and organisational culture. Managing the briefing process in advertising is pertinent, since briefing aids creative direction which can dramatically affect the quality of creative output (Bird, 1993). A thorough briefing will be more associated with rational decision-making (based on analysis and logic) than intuition. However, there are several contributory reasons why briefing decisions in guiding advertising creativity are commonly based on intuition, guided by past experience, rather than relying on a more rational, research-based analysis of the problem. First, according to Simon (1977), humans tend to make decisions by choosing a good enough solution rather than the best choice from scanning all possible solutions, shaped by custom, accessibility, personal interest or experience. But Agor (1986) has argued that decision-makers should initially gather and analyse all of the relevant data ascertaining to a problem, before making sense of it intuitively, at the back end of the decision-making sequence, by synthesising or integrating it. Similarly, Kuhn and Kuhn (1991) argue that non-rational decisions can only be justified after decision-makers have clearly understood the rational alternatives. The AHP technique encourages this order, incorporating both decision-making paradigms, encouraging rigour of analysis with discretion in interpretation of results. Second, according to Agor (1991), intuition may be preferred to analytical data where there is a high level of uncertainty existing, when there are several plausible alternatives to choose from, or due to time pressures. Although advertisers should spend more time interacting with agencies to refine the brief, this may be curtailed by time pressures (Bird, 1993). In making creative decisions, a great deal of inputs to the briefing process may be soft and speculative, based on impressions and feelings about people, ideas and choices. There is a danger that a purely intuitive approach may rely on hunches and first impressions rather than using a more


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rigorous approach using more complete data. Third, agencies (who may offer their guidance in interacting with their clients) may be sceptical about the use of research in directing creativity, believing it to contribute towards homogeneous or sterile advertising (Kingman, 1981;Williams, 1986). Instead, they may rely on past experience. But Epstein et al., (1992) suggests that making generalizations drawn from past experiences can be maladaptive and error-prone. For example, advertisers may follow the familiarity of competitive practice when choosing creative approaches that would not provide a fair consideration of their organisational/brand strengths and weaknesses. The three factors above encourage the tendency for many briefs to be ill conceived, sometimes relying on a face-to-face conversation, with little guidance and creative direction provided. Unsurprisingly, Clements (1984) has reported that less than 25 per cent of agencies feel they receive an adequate brief. In the most extreme cases, this involves the agency writing the brief for the client. Poor briefing has been attributed to poor creative solutions because the creatives are less likely to be on the wavelength of their clients, or alternatively clients may be indecisive, causing much unnecessary re-work. Collectively, this shows the need for a more thorough brief that may be assisted by gaining a wider approval for structured techniques such as AHP. How might this approval be achieved? McFadzean (1998) argues that the choice of creative techniques is influenced according to how well the problem can be structured. It is argued that briefing decisions are influenced by decision rules that justify relationships between elements (structure) that rely on logic, not just intuitive thought. (This is expanded on in a later section). Additionally, there should be top management support, supported by staff with the specific skills and investment in training to overcome these barriers (Wierenga et al., 1997). Conveying the success of previous applications can also influence the wider adoption of decision support systems, as can the forthcoming propositions advanced here.

Briefing as a group decision In practice, most briefs will be the outcome of both client and agency, through a series of informal and formal interactions, so the briefing decision can be treated as a group decision that provides the impetus for discussing AHP within a group decision support system (GDSS).

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Adaptive creativity

The advertising manager, in developing a creative brief, is likely to consult colleagues and agency personnel before it is finalised. On the agency side, there will be a mixture of personnel with different levels of expertise. Account executives may characteristically be more driven by sound analytic logic. Creative staff in the agency, in contrast, may be less motivated by a structured approach. However, client management may prefer to use formal analysis that provides tangible evidence as to how the creative decision was reached that helps legitimise their creative decisions to their senior management. Ekvall (1997) has noted this remarkable divergence of orientations between those involved in the creative process. One solution to this divergence is to offer a structure that provides both guidance and direction but also flexibility to support creativity within this. Ekvall (1997) argues that adaptive creativity can be pursued. Adaptive creativity is possible when the needs and orientations of individuals are willing and able to learn from each other. According to De Geuss (1988), teams can be instrumental for speeding up institutional learning that may be the only means of maintaining a competitive advantage. A GDSS setting can encourage learning, since there is an opportunity for facilitating group decisions under uncertainty, and encouraging feedback to the group to reflect on their impact on the decisions with the opportunity for revisions. Due to the mechanics of the process, this illuminates how the decisions of one member can affect others in a way that can be bought into, and more easily accepted than traditional techniques. For example, learning is improved if individuals are encouraged to explore what happens to changes they make at each decision level, with its impact on overall decisions. Under changing environmental conditions, a change in the weights allocated to an objective will have an effect on sub-objectives or alternatives that can be derived from them. This can be examined by using sensitivity analysis, enabling decision-makers to ask ``what if?'' questions. By encouraging re-examination of individual inputs, greater cognitive effort is aroused, which according to Ocker et al., (1996), may lead to divergent thinking and improved creativity. Thus, reflection and revision within a GDSS setting may encourage creativity.

A Multicriteria Problem A range of models exists for considering how to organise thoughts about problems (Flood

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and Jackson, 1991). For example, soft systems methodology (or SSM) treats events and ideas as continuously interacting, with no clear starting or finishing points (and hence no linear progression) based on pre-set goals (Checkland and Scholes, 1990). Whilst this suggests that not all problems need be represented hierarchically, many complex problems are based on an over-riding goal, with a structured progression from higher level categories to lower levels of decisionmaking (Saaty, 1980). Hierarchical structuring is also supported by an associative theory of creative thinking (Mednick, 1962). Hierarchical structures can be treated as multicriteria problems and have shown to be widely applicable for addressing many business problems (Saaty and Foreman, 1993). Here, the complexity of advertising briefing is represented by a hierarchical structure that is a feature of AHP. A typical brief will include making choices from one or more target segments, appeals or motives, from which executional guidelines are then directed. Figure 1 represents how the complexity of this creative task might be structured hierarchically, using a hypothetical situation1. For illustration purposes only, the number of alternative decision choices is simplified to 3 environmental scenarios, 5 appeals or motives, and 6 executional guidelines. At the apex is the top goal (e.g., achieving greatest market share for the overall well-being of the organisation), from which all other criteria, emanating beneath, contribute to its achievement. Below the top goal are the environmental scenarios, and below this the creative elements of advertising that include the segments based on benefits or appeals, from which the advertised product may be positioned, and finally alternative executional guidelines. Executions are the physical forms under which the strategies are presented to the target audience. Executions include mood/slice of life (conveying a story on how a store or its merchandise solves a problem), humour, demonstrator/spokesperson; reason why or evidence, brand familiarity (possibly using repeat assertions or jingles), and incentive offers.2 Assuming only one choice can be made at each level, the number of creative options possible leading from the top goal to the final decisions at level 4, is at least 36566 = 90. The number of creative choices open to the advertiser is far greater than could be easily accommodated by conventional intuition without making cognitive leaps. Under intuition, the process is typically simplified using simultaneous decision-making (Dyer &



Forman, 1991). However, there is a very limited capacity of the working memory or short-term memory (Miller, 1956; Jones 1993). This is consistent with many advertising decisions resting on incomplete data (Cook and Schleede, 1988). In contrast, an AHP encourages a thorough review of all alternatives by restricting the focus of choices to one level at a time, and by judging comparisons of elements pairwise, in terms of how they contribute to goals further up the hierarchy. Without an AHP, the complexity may overload the memory, resorting to ineffective decisions.

Support for AHP and Basic Methodological Stages The tasks of AHP involve ideation, structuring of the model, evaluation, and interpretation. Each task is discussed in how it supports creative problem solving. The first stage is to create an appropriate environment for generating alternatives that are later used for model building. Brainstorming (Osborn, 1953) can be used for the

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ideation stage of generating alternatives, within the AHP software. Important principles of brainstorming include the deferment of judgement, where quantity of ideas is encouraged, and by focusing on a specific problem (Evans, 1996), quality is linked to quantity by the law of numbers. According to Van den Bergh et al. (1983), increased numbers of creative alternatives increase the likelihood of finding the best creative idea. Sometimes the briefing process will be a team approach, involving individuals from different disciplines, and levels of seniority and experience. This adds an additional layer of complexity because each may disagree upon the structure of the problem, or their preferences. How can their views be best captured and accounted for? AHP software such as EC Team (1998) can generate greater expressions of ideas through a group decision support system (GDSS). This allows groups to list issues, objectives or alternatives relating to their overall problem or goal, from which members linked to a network or remote control key pads vote on them anonymously (technically referred to as brainwriting when not conducted orally). These votes are then

Figure 1. A hypothetical hierarchy model of creative elements # Blackwell Publishers Ltd 2000

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averaged to decide which alternatives are recommended for the model building stage. Advantages of a GDSS include a reduction in cognitive uniformity (i.e., restricting reasoning along one main idea) by encouraging less creative members to share in the ideas of more productive members (Couger, 1990). By encouraging anonymity of ideas, the temptation of social inhibition is also reduced (Fellers and Bostrom, 1993). Group members are then more influenced by the content of the creative ideas, rather than the status of others. P1: AHP, used within a GDSS, can lead to an improved quantity and screening of ideas, enabling decision-makers to consider the briefing problem from the perspective of other members. The second stage involves building a hierarchical, multi-criterion decision model (MCDM) to represent the structure of the decision problem, comprising of the potential criteria (or objectives) and alternative creative choices as conceived by the expert informant or decision-making group. Computer packages such as ECPro can assist in determining the number of levels of criteria, and how alternatives are linked to those criteria, by structuring; and clustering; or by probing with personal interview. The purpose of the structuring mode is to allow decision-makers to use their knowledge of the problem to identify and organise the elements of the decision model. The structuring mode of ECPro provides an intuitive interface for building the shape and contents of the model. This interface includes pros and cons, objectives (or criteria), subobjectives (or subcriteria), and alternatives. There are two generic ways of building the hierarchical model. According to Saaty and Forman (ECPro, 1998), a top down approach is better suited to more strategic decisions where the objectives are better understood than the alternatives which derive from them. A bottom up approach is best used when alternatives are better understood than objectives. ECPro offers a facility for clustering objectives into groups and subsequently groups of groups (as subobjectives). In the structuring mode of ECPro, there is a special facility in building the bottom up approach to add pros and cons (advantages and disadvantages) of alternatives that can help focus on objectives. This can also be used in a GDSS setting to decide on a consensus model of the problem. According to Johnson-Laird (1988), a model structure, far from being a constraint upon creativity, can help to establish relevance for the creative task. Model building is only one

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stage of a process that ensures some control over establishing relevance of what is considered. It is recognised that for creativity to be effective there needs to be both novelty and relevance. According to Gardner (1988), creativity is about developing solutions to problems encultured in a domain. Since creative problem solving is encapsulated in a domain, Johnson-Laird (1988) argues that constraints are a necessity for creativity by establishing relevance for a creative task. Michitti (1997) puts the case more strongly, extolling the virtues of the strengths in structure, analysis and rationale; in order to maximise creativity. The structuring mode of AHP provides the foundation for a clear direction, focus and prioritisation of objectives. P2: The structuring process provides discipline and a shared understanding of the elements of the briefing amongst the account team. The third stage involves evaluation. But who should provide the judgements? It is argued that this is contingent upon the sophistication of the client in being sufficiently confident to provide their own briefing. A sophisticated client may prefer to rely on their own judgements without interference from the agency. Conversely, where clients lack experience or need direction from their agency, it is suggested the decision becomes a group one (GDSS). Clients and agencies may make separate evaluations, and these are later compared for revision and reflection, for improving the briefing. Davies (1994b) has suggested how group decisions involving diverse judgements may be reconciled for the good of the group. Two main approaches are a simple comparison of output values and a more formal system of integrating the results amongst individuals. Under evaluation, elements are compared pairwise (i.e., of criteria and alternatives) at each level of the hierarchy, in terms of their relative contribution towards achieving each goal in the immediate level of the hierarchy above. This contribution might relate to importance (if the elements represent objectives), preferences (if elements represent opinions) or likelihood's (if elements represent future events, such as environmental scenarios). The pairwise judgements are based on a ratio scale by Saaty (1977) ranging from 1 to 9, graduating in degrees of importance. These ratio judgmental scores are inputted into suitable software (such as ECPro) that uses an appropriate AHP algorithm3 to determine local and global priority weights for each criterion at each level of the hierarchy. Local priorities measure the relative



contribution of each element in terms of achieving each goal or element on the level immediately above in the hierarchy. Global priorities measure the relative importance of each element in terms of achieving the top hierarchical goal and are therefore based on a weighting or synthesis of all criteria based on previous levels of the hierarchy. For both local and global priorities, the higher the index received, the more important the element. The rigour of the AHP structure highlights the dangers based on intuitive decisions alone, built on limited or incomplete information. The trade-off approach is most appropriate where decision rules exist that call for interdependence between elements. For example, returning to Figure 1, consider the conflicting trade-offs facing the advertiser. The advertiser has to consider not only the relative importance of each alternative executional guideline, in terms of how it might serve to achieve each appeal/position, but also the importance of each appeal under the possibility of each scenario arising. Under an optimistic scenario, a luxury appeal might be most suitable, increasing margins as the propensity to buy premium products increases. However, under a pessimistic scenario, as consumers trade down, the creative approach may best rest on a value or economy appeal. Although suitability of executions will rest partly on rational decision rules above, intuition may also be important. The extent to which judgements rely more (or less) on rational decision rules depends on the alternative choices in question. For example, incentive offers are an obvious choice for positioning a store on value/economy, but may alienate other customers whose primary

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appeal rests on quality merchandise or luxury lines. For making judgments between other alternatives, the fit between scenario and appeal and/or execution may be more loosely coupled, encouraging preferences that are more intuitive. The rubric is that where straightforward decision rules are less familiar or less practical to use, judgements are likely to rely more on intuitive thought. When the decision-maker has a knowledge of decision-rules, (such as those for creative executions shown in Table 1), decision choices more likely to be guided by rational thought, but may still be influenced by intuition. For example, recognising decision-makers as individuals, they can exercise discretion in whether to follow a decision-rule, when intuition suggests otherwise. Decision rules in Table 1 are based on time and money constraints, target audience, and competitive position, widely recognised as key considerations of a brief. A key to applying AHP to creativity is that the intuitive decisions made above may well be appropriate when they are made within an accepted hierarchical framework. If it is accepted that there is interdependence of decision criteria between levels, ineffective decisions made during the initial stages of creative choice (represented by those further up the decision hierarchy) will lead to sub optimal advertising decisions later (represented by alternatives further down the hierarchy). A single mental judgement (associated with intuition) is unlikely to have considered all elements of the problem nor the interdependence within the hierarchy, leading to premature decisions. For example, a purely intuitive choice at level 2 may be to opt for environmental scenario 2 since it is one of three likely

Table 1. Decision rules for rational guidance: (1) Fit between scenarios, appeals and/or executions. Example: pessimistic scenario leading to a value or economy appeal and incentive offer execution. (2) Campaign constraints: time available to complete ad and duration of campaign. Example: A longer campaign can usually justify a more expensive execution, such as celebrities (demonstration). (3) Sophistication of target audience. The less informed, the greater the need to choose a direct message (choosing between demonstration, reason why, or brand familiarity). The more informed, the greater the flexibility in choice that can include softer sell, less direct approaches, such as humour and mood. (4) The higher the competitive position, the less the need to use hard selling messages such as brand familiarity.


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outcomes, and requires no change from current practice. However, this ignores the implications of the other possible scenarios arising, which may result in a suboptimal choice of appeals and executional guidelines. This is because the contribution of appeals at level 3 arising from each scenario 1 and 3 are ignored, and this is subsequently repeated for their alternatives (executional guidelines) contributing to each objective at level 4. The overall decision choice is oversimplified. Unless a scenario will occur with near certainty, it is necessary to re-consider the implications under each scenario. The optimum solution is then is based on a combined assessment that measures the impact of each alternative across all appeals. Additionally, recognition of unequal importance attached to different criteria suggests a weighting method is adopted that can account for the respective levels of importance for each alternative at each level, to arrive at an overall decision representing a true trade-off of all judgements. The AHP encourages the consideration of all possible alternatives representing the decision model, deferring decisions in making the final choice until all creative options have been synthesised (based on a trade-off of their respective weights). AHP conforms to the rubric recommended by Basadur (1995) that convergence should be restrained until the end of the creative process. P3: The synthesis of pairwise judgements of AHP provides a more thorough and complete evaluation, improving choice. Due to the significant lag between the briefing process and subsequent campaign performance, assessing how well the agency manages the briefing process becomes an important factor in the evaluation of agency professionalism. Prioritisation enables the clients to evaluate their agencies more rigorously because expectations concerning objectives (such as executional guidelines) are clarified and conveyed. By improving understanding of the creative requirements shown in the briefing, agencies can concentrate their ideas in a particular direction, improving confidence and motivation in their roles, and stimulating the creatives in the agency. P4: AHP, through a better brief, can foster improved co-ordination of goals, improving trust in the relationship, and so improve creativity indirectly.

Combining techniques

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Jones (1993) has recognised the difficulty in getting new ideas listened to and understood for innovation to take place. In a similar vein, clients will need to legitimise their decisions

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to their peers because advertising is intangibly difficult to evaluate in advance of implementation. Using AHP with a breakdown of weights of importance attached to each element, at each level of a hierarchy, can help to provide credence to advertising decisions made by clients on behalf of senior management. Final decisions can be easily justified quickly and effectively by tracing back to these weights or priorities with the graphics output of the software. P5: The graphics capability of AHP software can help legitimise and therefore gain faster approval time in briefing decisions. The fourth stage is interpretation. The output of AHP provides a series of local and global priorities for each level of the hierarchy which is not a mandate, but a tool from which decisions can be refined or improved. For example, a combination of creative executional guidelines might be adopted rather than simply choosing the one with the highest priority values. The output merely aids understanding of the overall priorities, but the user has final discretion in choice. The value of the process should also be formally interpreted for continuous improvement. Traditionally, the value of GDSS have been assessed on the basis of satisfaction scores of decision-makers (Nunamaker et al. 1987). It is argued here that additional questions be specifically addressed about the role of ideation (whether the number of issues connected to the boundaries of the problem was increased), whether the structuring process improves clarity of thought and affected decisions made beyond a purely intuitive approach, and whether the executional recommendations would be supported. The designer of the GDSS can then identify weaknesses that may be fine-tuned to accommodate the preferences of users.

Obstacles and Limitations Advocates of intuitive creative problem solving techniques would argue they are more suitable for breaking the boundaries of a problem, leading to fresh insight. However, they lack the rigour and discipline of structured techniques that may be more relevant and easier to accept, especially for hard-nosed clients seeking compelling accountability for creative effort. Future research needs to examine how both sets of techniques may be combined under different client-agency contexts to gain maximum benefit. Although AHP software can produce a consistency ratio that indicates how attentive



users are in making their judgements relative to a set of random responses (Saaty, 1980), what if a decision-maker does not hold a sufficiently good understanding about his or her preferences to achieve accurate judgements? If uncertainty is identified in the judgements (perhaps through the inconsistency ratios or by observational inference), the underlying preference structure can still be evaluated by using a range of values as a set of double-sided inequalities characterising upper and lower bounds, and solved as a linear programming problem to preserve the quality of judgements (Arbel, 1989). Salo and Hamalainen (1997) has criticised the narrow range of the 1±9 ratio scale, from which judgements are made, suggesting it is not sensitive enough to accurately describe the true judgements of decision-makers. However, according to Kirkpatrick and Epstein, (1992), when the experiential system is operating, information is encoded in concrete representations. This means that a ratio scale representing a smaller range of numbers is articulated better in memory than one that expands the range.

Conclusion This study explores the potential of AHP as a computerised support system for guiding creative briefing. Advantages of AHP over alternative decision support systems appear to be an elaborate model structuring, the blending of rational and intuitive thought, assessment of judgement consistency, and facilities to encourage learning. AHP can be assessed in terms of the clarity gained in creative direction, the ability to judge more thoroughly, the opportunity for adaptation and reflection, and legitimisation of decisionmaking. Although AHP appears to be a useful supplement to intuitive decision-making that is normally reserved for creative problem solving, the propositions outlined in this paper would need to be empirically tested on a large sample of cases.

Notes 1. Since the AHP relies on a custom-built model, the structure is illustrative rather than prescriptive, with the purpose of demonstrating the process of structuring. For a GDSS involving more than one expert, where conflicts of judgement arise, the hierarchy can be extended to incorporate the judgements of each decisionmaker and solved by an appropriate method (e.g., Aczel and Saaty 1983; Davies, 1994b).


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2. Since the AHP relies on a custom-built model, no definitive appeals or executions can be mandated. Advertisers might borrow taxonomies from previous researchers, such as Moriarty (1991); Simon (1971), to name a couple. Full explanations of executions illustrated can be derived from consulting the relevant advertising literature, beyond the scope of this article. These elements of the model in AHP can be labelled after a careful matching of the choice explanations of the user to the literature, helped by a facilitator. 3. For an in-depth discussion of the technique, refer to Saaty (1980).

References Aczel and Saaty, Thomas L. (1983), Procedures for Synthesizing Ratio Judgments, Journal of Mathematical Psychology, 27 (1), 93±102. Agor, Weston H. (1986), The Logic of Intuition: How Top Executives Make Important Decisions, Organizational Dynamics, 5±18. Agor, Weston, H. (1991) How Intuition Can Be Used To Enhance Creativity in Organizations, The Journal of Creative Behavior, 25 (1), 11±19. Arbel, A. (1989), Approximate Articulation of Preference and Priority Derivation, European Journal of Operational Research, 43, 317±326. Basadur, M.S. (1995), Optimal Ideation-Evaluation Ratios, Creativity Research Journal, 8 (1), 63±75. Bird, Drayton (1993), The Deadly Sins of Poor Briefing, Marketing, July 15th, page 16. Checkland, P.B. and Scholes, J. (1990), Soft Systems Methodology in Action, Wiley, Chichister. Clements, M. (1984), Who is to Blame for the Low Standards in Industrial Advertising? International Journal of Advertising, 3, 239±244. Cook, R.L. and Schleede, J.M., (1988), Application of Expert Systems to Advertising, Journal of Advertising Research, 28 (3), 47±56. Couger, J. D., (1990), Ensuring Creative Approaches in Information System Design, Managerial and Decision Economics, 11 (5), 281±295. Couger, J. D., Higgins, L.F. and McIntyre, S.C. (1993), (Un)Structured Creativity in Information Systems Organizations, MIS Quarterly, December, 375±397. Davies, M.A.P. (1994a), Managing the Complexity of Advertising Strategy Using an Analytic Hierarchy Process, Proceedings of the 23rd Annual Conference of the European Marketing Academy, Maastricht, May, 151±165. Davies, M.A.P. (1994b), A Multicriterion Decision Application Model For Managing Group Decisions, Journal of The Operational Research Society, 27, 1, 45±63. De Geuss, Arie P. (1988), Planning as Learning, Harvard Business Review, March/April, 66 (2), 70±74. Dyer, R.F., and Forman, E.H. (1991), An Analytic Approach to Marketing Decisions, Prentice Hall, Englewood Cliffs, NJ, pp1±368. ECPro and ECTeam (1998), Expert Choice Inc., Pittsburgh, PA.

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Ekvall, GoÈran, (1997), Organizational Conditions and Levels of Creativity, Journal of Creativity and Innovation Management, 6 (4), 195±205. Epstein, S., Lipson, A., Holstein, C., and Huh, E. (1992). Irrational Reactions to Negative Outcomes: Evidence for Two Conceptual Systems. Journal of Personality and Social Psychology, 62, 328±339. Evans, J. R. (1996). Creativity in OR/MS: CreativityEnhancing Strategies, Interfaces, 26, 58±65. Fellers, J.F. and Bostrom R.P. (1993), Application of Group Support Systems to Promote Creativity in Information Systems Organizations, 27th Hawaii Conference on Applications of Group Support Systems, 332±341. Flood, Robert L. and Jackson, Michael C. (1991) Creative Problem Solving-Total Systems Intervention, Wiley, Chichister. Gardner, H. (1988). Creativity Lives, Creativity Works: A Synthetic Scientific Approach. In: R.J. Sternberg (Ed), The Nature of Creativity. New York: Cambridge University Press, 298±325. Johnson-Laird, P.N. (1988) Freedom and constraints in creativity. In R.J. Sternberg (Ed), The Nature of Creativity, Cambridge University Press, New York, 202±219. Jones, L. (1993), Barriers to Creativity and their Relationship To Individual Group and Organizational Behavior. In Nurturing the Developing Creativity: The Emergence of a Discipline, (Eds) S. G. Isaksen, M. C. Murdock, R. L Fiestien and D. J. Treffinger, Ablex, Norwood, NJ, 133±154. Kingman, M. (1981), Who's to Blame for Sameness in Ads? Not Us: Researchers, Advertising Age, (February 2), 41. Kirkpatrick, L.A. and Epstein, S. (1992). CognitiveExperiential Self-Theory and Subjective Probability: Further Evidence for Two Conceptual Systems. Journal of Personality and Social Psychology, 63, 534±544. Kuhn, R. L. and Kuhn L. (1991), Decision Making and Deal Making: How Creativity Helps. In: Creative Management, Jane Henry (Ed), OU Press/Sage, London, 72±99. Lockett, A.G. and Islei, G. (1989), JAS: Judgemental Analysis System (version 1.2), Manchester Business School, Manchester. McFadzean, Elspeth (1998). The Creativity Continuum: Towards a Classification of Creative Problem Solving Techniques, Journal of Creativity and Innovation Management, 7(3), 131±139. Mednick, Sarnoff A. (1962), The Associative Basis of the Creative Process, Psychological Review, 69 (3), 220±232. Michitti, M. (1997), Left-Brained Marketers Can Achieve Creativity, Marketing News, 31st March, 31 (7), 14±? Miller, G.A. (1956), The Magical Number Seven Plus or Minus Two: Some Limits on Our Capacity for Processing Information, Psychological Review, 63 (2), 81±97. Miller, W. (1987). The Creative Edge, AddisonWesley, Reading, MA.

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Moriarty, Sandra E. (1991), Creative Advertising, Prentice-Hall International, Englewood Cliffs, NJ. Nunamaker, J. F., Jr., Applegate, L.M. and Konsynski, B.R. (1987) Facilitating Group Creativity: Experience with a Group Decision Support System, Journal of Management Information Systems, 3 (4), 5±19. Ocker, R., Hiltz, S.R., Turoff, M. and Fjermestad, J. (1996), The Effects of Distributed Group Support and Process Structuring on Software Requirements Development Teams: Results on Creativity and Quality, Journal of Management Information Systems, 12 (3), 127±153. Osborn, A.F. (1953), Applied Imagination, Scribners, New York. Proctor, R.A. (1993), A Creative Decision Support System, Leadership and Organization Development Journal, 14 (2), 13±17. Proudlove, Nathan (1998). `Search Widely, Choose Wisely': A Proposal for Linking Judgemental Decision-making and Creative Problem-Solving Approaches, Creativity and Innovation Management, 7 (2), 73±82. Rickards, Tudor (1997) Creativity in Action: A Summary of the Manchester Approach In: I. Getz, and H. Laroche (eds), Cognition and creativity in organizational settings, Proceedings of the 3rd symposium, Groupe ESCP, Paris, June 10th, 24±34. Saaty, T.L. (1977) A Scaling Method for Priorities in Hierarchical Structures, Journal of Mathematical Psychology, 15, 234±281. Saaty T.L. (1980) The Analytic Hierarchy Process, McGraw Hill, New York. Saaty, T.L. and Forman, Ernest H. (1993), The Hierarchon: A Dictionary of Hierarchies, The Analytic Hierarchy Process Series, Vol V, 1±510. Salo, A.A. and Hamalainen, R.P. (1997), On the Measurement of Preferences in The AHP, Journal of Multi-Criteria Decision Analysis, 6, 309±319. Simon, H.A. (1977) The New Science of Management Decision, Prentice-Hall, Englewood Cliffs, NJ. Simon, J.L. (1971) The Management of Advertising, Prentice-Hall Int., Englewood Cliffs, NJ, 174±183. Van den Bergh, G.B., Reid, L.N. and Scherin, G.A. (1983), How Many Creative Alternatives to Generate. Journal of Advertising, 12 (4), 46±49. Wierenga, Berend, and Ophuis, P.A.M.O. (1997), Marketing Decision Support Systems: Adoption, Use, and Satisfaction, International Journal of Research in Marketing, 14, 275±290. Williams, C.R. (1986), The Ugliest Word in Advertising, Advertising Age, (February 17), 18.

Mark A. P. Davies is a Lecturer in Marketing, Loughborough University Business School, Loughborough, Leicestershire, United Kingdom.


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The Postmodern Challenge ± From Economic to Creative Management Harry NystroÈm This paper discusses economic and creative management, not as two different ways of understanding and managing the world, but as part of an integrated framework. This is done against the background of the creative process, where the early, more open and flexible stages basically reflect the requirements of postmodern theory, while the later, more closed and analytical stages, are similar to the modern world view of economic theory and related approaches to management. In a rapidly changing world, where we need to both develop and apply new knowledge, we should adopt a balanced modern and postmodern approach to theory generation and implementation, to better understand and evaluate both individual, organizational and societal action.

Introduction

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n the literature postmodernism as a term has two meanings, one historical and the other epistemological. First it may be viewed as a development stage where postmodernism follows modernism as a distinct era, involving a new view of the world and a new cultural logic. Instead of emphasizing scientific rigor, formal logic and rationality as a clear basis for understanding and managing society ± as in the modern bureaucratic organization ± postmodernism may be seen as characterized by pluralism, fragmentation, ambiguity and indeterminacy, defying attempts to generalize and extrapolate from past experience. In this view postmodernism marks the end of the modernization process and of modern society. Secondly it may be viewed as a challenge to the traditional view of knowledge, which assumes that there is a clear way to view and understand the world. In this second meaning postmodernism is a timeless phenomenon, a cognitive style, rather then a time-dependent emerging trend in society. In both cases, however, modernism and postmodernism are viewed as separate and distinct phenomenon, following or coexisting, but not creatively interacting over time. Paradoxically enough, postmodernism ± in itself a challenge to a deterministic worldview ± is therefore seen as part of a deterministic change process, both in its historical and in its epistemological sense. The argu# Blackwell Publishers Ltd 2000. 108 Cowley Road, Oxford OX4 1JF and 350 Main St, Malden, MA 02148, USA.

ment would seem to be that both society and our way of viewing the world are changing in a postmodern direction, and that this is an inevitable consequence of development itself. In contrast to this view of modernism and postmodernism I would like to offer a somewhat different interpretation, which views them as part of the creative process, both on the individual and on the societal level. Instead of regarding these terms as deterministic, time-dependent development factors, I will view them as global terms for what characterizes the early, versus the later stages of the creative process. This means that they are determinants, rather than consequences of change, describing mechanisms and processes, rather than outcomes. It also implies a management perspective (Boje, Gephart and Thatchenkery, 1996, Cova, 1996), viewing modernism and postmodernism from the point of how we can manage society and organizations, and not only observe what happens in an historical perspective. Instead of viewing society or knowledge as more or less modern or postmodern, this approach implies that it is the management of society and knowledge that is more or less modern or postmodern.

Determinants of change

The Perspectives of Modernism and Postmodernism In the historical sense modernism implies the rationalization and differentiation of social

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Assumptions of postmodernism

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and economic activities, which accompanies capitalism and industrialization in the transformation from traditional to modern society. (Hollinger, 1994). This is a periodizing view of development where, as in Marx's and Weber's writings, modernization is seen as the socio-economic outcome of a process of change. The main thrust of the argument is that modernism is different from what precedes it, which, depending on our point of view, may be seen as beneficial or detrimental to society or its constituents. As a philosophical concept the key issue of modernism is the nature of knowledge and the methodological requirements for determining truth and meaning, developed by the philosophers of the enlightenment. Logical thinking leads to objective truth in this worldview and science is the way to achieve a just and stable society. An objective account of the world must be guided by objective rules, that is by method. Predictability is needed as a basis for rational decision-making and both leads to and is made possible by stable conditions. It is primarily this meaning of the term that is of interest in the present discussion and it is the assumptions inherent in this view that are most strongly questioned by postmodern critics of modernism. The term postmodernism literally means after modernism and may be seen as implying that in some way postmodern conditions have supplanted modern ones. In the historical sense, depending on our frame of reference and what variables we focus on, postmodernism may be viewed as either a radical break with or continuation of modernism (Cummings, 1996). This, however, basically depends on whether we focus on differences or similarities and since one of the main ideas in postmodern approaches is to stress differences (Staten, 1984, p. 23), the result is that postmodern theory, by its own assumptions, emphasizes its break with modernism. To understand postmodernism we need to look not at reality as such, which modernism claims to do, but to the way in which we construct reality, that is to language as a basis for thought and understanding. Language games, discourses and narratives become the basis for postmodern knowledge and method (Lyotard, 1986) and meaning is not given but socially constructed. This leads to a diversity of ideas and plurality of postmodern perspectives and positions. (Best and Kellner, 1991). Boundaries between academic disciplines and between theory and practice dissolve and fragments from different sources are combined into idiosyncratic maps of society. The distinction between what is real and what is unreal tends to disappear in the most extreme

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versions of postmodernism, where images replace substances in what is called hyperreality. (Baudrillard, 1983)

The Creative Process and Postmodern Theory In this section we will compare the assumptions of postmodern theory with some of the basic ideas presented in the creativity literature (Isaksen, 1987, Sternberg, 1988). The similarities between these two ways of looking at the world are striking, but surprisingly enough, this has been seldom noted by writers in the different traditions. Writers on creativity, with the exception of Rickards (1999), seem to have paid little attention to postmodernism as a term or philosophical movement and postmodern writers seldom use the word creativity, or make any references to the vast literature directly dealing with this phenomenon.This is all the more notable since writers in both these areas often stress the need for interdisciplinary approaches in scientific work, for instance Lyotard in his influential essay ``The Postmodern Condition'' (1986, p. 52). Or Koestler in his pioneering book ``The Act of Creation'' (1964 p. 164). How then may we understand creativity? Bruner's term ``going beyond the information given'' (1974) is an interesting aspect, particularly today in our computer society and information age, as is his term `èffective surprise'' (1974, p. 18 ff.). Another interesting phrase is ``making the strange familiar and the familiar strange'' (Lincoln 1962). Koestler (1970, p. 35) speaks of creativity as the bisociation of different matrices which certainly captures an important aspect, the linking together of previously unrelated elements of knowledge. From a psychoanalytical perspective Arieti defines creativity as the magic synthesis of conscious and unconscious thought processes (1976 p. 13). Common to all these notions seems to be the idea of creativity as something unexpected and surprising, emerging from outside the realm of rational thought processes, which are the playground for modernistic approaches to theory generation. It is a question of calling forth and realizing the unknown. In Lyotard's words (Ibid. p. 81) to `ìnvent allusions to the conceivable which cannot be presented'', an activity which he views as a main characteristic of the postmodern world. This would seem to be related to the psychoanalytical notion in the creativity literature of a crucial incubation period in the creative process between preparation and illumination (Wallas,



1926) when unfocussed and dreamlike processes are transformed into definite formative ideas in a struggle between depth and surface perception. (Ehrenzweig, 1967) It is by looking at the creative process itself that we may most easily recognize the similarities and differences between postmodern views of knowledge and creativity theory.The creative process (NystroÈm, 1979, 1990) may be seen as a balancing act between divergent and convergent thought processes, in order to generate new knowledge and develop original and constructive solutions to perceived problems. Usually the process is seen as consisting of several stages. The early stages are to a large extent dependent on divergent processes for success, while the later stages are highly dependent on convergent processes. The most crucial issue is switching constructively between the opposite processes, and this is complicated by the fact that some individuals are more skilled at or inclined towards divergent thinking and others towards convergent thinking. More open cognitive mechanisms such as intuition and visual thinking are more important during the early stages while more closed cognitive mechanisms, such as formal analysis, are better suited the requirements of the later processes. Tolerance of ambiguity and intellectual flexibility, as well as openness to experience and a willingness to experiment, are other abilities that are advantageous during the early stages. Differentiation (Lasch, 1990) can be seen as a major characteristic both of the later stages of the creative process and of modernity and dedifferentiation of the early stages and of postmodernism. In the psychological sense (Witkin et al, 1962) differentiation implies making detailed comparisons, distinctions and judgments between different entities. This requires formalization and should tend to increase clarity, a major requirement for analysis and systematic discourse, which are important during the later stages of the creative process. Dedifferentiation, on the other hand, by relaxing perceptual boundaries (Arieti, 1976, p. 44) leads to an increase, rather than a decrease, in ambiguity, which, as we have noted above, is important in order to reduce psychological closure during the earlier stages of the creative process. Postmodernism, by stressing dedifferentiation, would appear to be open to the same type of criticism that may be directed towards early creativity theory, namely that too much focus is placed on the early, more open, unformalized stages and too little on the later more closed, systematic stages. This misses


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the main point that creativity is the result of interaction between more unstructured, intuitive judgment and more structured, analytical reasoning. In the terminology of Wittgenstein we may say that new insight and creativity depends on the interplay between different language games or discourses, something which only recently has been recognized in the creativity literature and still is not sufficiently stressed in postmodern approaches to knowledge generation. Deconstruction is one of the most used and least precise terms in the literature on postmodernism. Making allowance for this, the above mentioned definition of creativity as making the strange familiar and the familiar strange still seems to capture some of its intended meaning. More directly, deconstruction may be defined as a regulated overflowing of established boundaries (Staten, 1984, p. 24), and a rethinking of accepted meaning. But this rethinking may be either used primarily in a negative critical capacity, dismantling reality, or seen as a possibility for constructive change. In the postmodern literature it would seem to be the former meaning of the term that is emphasized, while in the creativity literature the latter meaning of the term takes precedence. At the same time critical capacity, by going beyond the information given and uncovering hidden content, may be seen as a necessary but not sufficient condition for creativity. Postmodern theory, however, seems to be more concerned with deconstruction as such, then with using it as a basis for creative reconstruction. Other terms used to describe postmodern approaches in the literature (Cooper & Burrell, 1988) are, for instance, problemizing, edifying discourse, images, disorder, indeterminacy and heterogeneity. All of these terms could as well be used to describe the early stages of the creative process, but the literature tends to view them as isolated descriptions of existing or preexisting conditions, rather then as part of a constructive future oriented change process. Problemizing is questioning rather than verifying, the latter activity being given priority in modernistic approaches to knowledge generation. Edifying discourse (Rorty, 1980, p. 12) helps us to break free from existing notions and ideas, compared to using systematic discourse based on logic and prevailing reason, which may be seen as a limiting and stabilizing factor in modernism. Disorder, indeterminacy and heterogeneity may be viewed as characterizing the postmodern condition, leading to ambiguity and unpredictability.

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Reflections of reality

Images in postmodern theory tend to be viewed as more real than the reality they are supposed to mirror. (Baudrillard, 1983). Instead of reflecting reality they constitute it. Essentially, however, images by postmodern writers are seen as the result of erratic uncontrollable development, rather than as determinants of constructive change, which may be managed indirectly by creating favorable conditions. In a more creative framework images, as a result of what we may call their constructive vagueness (NystroÈm, 1990) may make possible both flexibility and direction. Thus they can facilitate constructive change during the early stages of the creative process, when intellectual flexibility is needed, and ambiguity and unpredictability make it impossible to use logical analysis to determine what is best to do. Image is also related to intuition, (Bastick, 1982) another central term both in the creativity literature and in postmodern thinking. Croce's view of intuition as the `ùndifferentiated unity of the perception of the real and of the simple image of the possible'' (Aireti, 1976, p. 408), presented in 1909, would seem to be a precursor or forerunner to many of the central ideas in postmodernism. At the same time intuition can be seen as a creative mirror, both reflecting and transforming reality. By not faithfully reproducing reality images may be viewed as innovations. This again points to a certain parallelism in ideas between creativity theory, where images may be seen as predeterminants of creativity, and postmodern thinking, where they are the basic substance constituting reality and therefore also the medium for possible change.

Economic Management Economic management is based on the worldview of economic theory. It is a relatively closed and static view, emphasizing stability, continuity, homogeneity and fixed ways of organizing resources to achieve short run efficiency in producing and marketing products. It assumes rationality in expectations and decision making, objective knowledge, reducibility and single value optimization. This is much the same as the worldview of modernism, characterized by clarity, order, predictability, rationality and systematic discourse. This is a model of human behavior and society that owes much of its intellectual heritage to Hobbes (Hollinger 1994). Using physics as a basis for his thinking Hobbes viewed human behavior as predictable and controllable, governed by rational choice. Based on free exchange between parties

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cost-efficiencies result as ``reasoning becomes reckoning'' (Ibid., p.22). Following Hobbes, Smith went even further, turning rational selfinterest into a moral virtue, by postulating an invisible hand, using pure competition as a theoretical device to resolve the conflict between individual self-interest and societal well-being. Even if we accept the underlying modern assumptions of this thinking, that human behavior is rational and based on complete knowledge of an objective reality, the restrictive assumptions with regard to how society and the economy functions makes its difficult to find applicable real world situations. Differentiation is perhaps the best term to summarize the economic approach to management, and this as we have noted above is also one of best terms to describe modernism. Differentiation requires clarity and leads to order in describing and managing the world, and therefore may be seen as the main analytical tool in modernism and economic management. At the same time complexity and diversity makes it difficult to differentiate the world according to the assumptions of economic theory and we therefore need to simplify the model to make it work. Assumptions such as identity between competing products and continuous aggregate demand and cost functions make it possible to arrive at determinate solutions to the optimization of individual and societal welfare, but it is difficult to find, or even imagine, real world situations that fit these requirements. Complexity and heterogeneity, rather than simplicity and homogeneity, are used by most insightful observers to describe the world, and these are conditions that are not easy to deal with analytically in modernistic socio-economic models. The assumptions of economic management are also similar to the requirements of the later stages of the creative process, where formalization is used to achieve analytical rigor in testing and implementing the insightful solutions derived from the earlier stages of the creative process. The basic assumptions of a modern world view and economic theory therefor should not be viewed as useless for understanding and managing a world, which seems to correspond more closely to the postmodern than the modern view of reality, as some postmodern writers would seem to imply. Instead they should be seen as applicable to different stages of the creative process in the construction and implementation of the world we live in and to different types and levels of activity. Entrepreneurship, for instance, putting action before analysis in creating new ventures,



is better understood against the background of creativity theory (NystroÈm, 1993) and postmodern theory, while day-to-day decisionmaking in established firms is closer to the modern model of how companies and the economy functions. Regarding society and the economy as essentially modern or postmodern therefore seems not to be a fruitful way to better understanding. Instead elements of both these approaches should be combined to achieve a more adequate view of the world today.

Creative Management Creative management (NystroÈm, 1989, Henry, 1991) is a more open, dynamic and flexible approach to management than economic management and includes economic management as part of its framework. In this approach the requirements of both the early and later stages of the creative process are balanced. The early stages may be seen as postmodern and the later stages as modern, but the focus is on the total change process, rather than its components. It is a dualistic management approach, combining opposing tendencies to achieve a balanced outcome. Creative management considers differentiation and dedifferentiation, continuous and discontinuous change, objective and subjective knowledge, intuition and analysis, predictability and experimentation, reducibility and holism. It may be seen as an integrated economic and psychological approach to product and company development (NystroÈm, 1979, 1989).The early, more postmodern development stages emphasize intuition and entrepreneurship, enacting and developing visions and managing images, while the later, more modernistic stages emphasize systematic analysis and planning, to reduce cognitive uncertainty and establish order. Managing image and innovation therefore may be seen as the main overall objective of creative management. Products are the outcome of the managerial process, as the word itself implies, and producing products therefore mainly reflects the requirements of the late stages of the creative process, viewed as the way from idea to market offer. Product innovation and marketing, however, are much more concerned with the early stages of the creative process. Different buyers and consumers usually view and use products in different ways and images than become better predictors of product demand than products, described by their physical attributes. This, of course, is


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particularly the case when products are difficult to evaluate according to objective, aÂ priori criteria. Non-standardized services may be seen as one type of product where this is the case, but also products such as jewelry or oil paintings, which are bought more for their subjective linkage to personal values, than their objective functional use, as in the case of gasoline or stoves. Image marketing (NystroÈm, 1989, Cova, 1996) is more concerned with the psychological reality of buyers which postmodern theory focuses on, while product marketing is more concerned with their objective needs stressed in traditional economic theory. If the emphasis is on image marketing, focusing on subjective psychological values, postmodern theory therefore is more useful as a guide to understanding the relevant reality. If the main concern is product marketing, stressing more objective physical and technical attributes, traditional modern management ideas are more applicable. But to understand the whole process from developing new products to producing and marketing them we need to combine postmodern and modern thinking.

Combining Modern and Postmodern Management Ideally we need to combine modern and postmodern management styles to achieve constructive creative change. Traditional economic theory and economic approaches to management, I will argue, are based on a modern world-view and mechanisms for realizing this ideal. This basically reflects the needs during the later stages of the creative process, when applying existing knowledge is the main concern. In a rapidly changing world, with a greater need for developing new knowledge, we need, however, to pay more attention to the earlier stages, which may be seen as more closely corresponding to the postmodern world-view. The crucial requirement, however, is to integrate and balance the early and later stages of the creative process. Instead of viewing postmodernism as the end of the modernization process, I therefore suggest that it should be viewed as the beginning of the creative process, that is the creative transformation of society. In a creative framework postmodernism, as a set of conditions, can therefore be either pre- or postmodern, depending on the timing, whether it is the beginning of a new creative cycle or the end of an old one.In a dynamic development perspective these cycles repeat themselves over time, as creative destruction

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(Schumpeter, 1934) alternates with creative construction. This, then is the postmodern challenge to management on all levels of society. We need to move from a traditional, modern economic management approach to a creative management approach by integrating modern and postmodern elements, rather than focusing on one to the exclusion of the other. These elements have always been intuitively balanced in practice by insightful decisionmakers, but are separated in theory. A creative management approach should therefore also help to bridge the gap between academics and practitioners in describing and understanding their relevant realities

References Arieti, S. (1976) Creativity: The Magic Synthesis. Basic Books, New York Baudrillard, J. (1983) Simulations. Semiotext, New York. Bastick, T. (1982) Intuition ± How We Think and Act. John Wiley and Sons, Chichester. Best, S. and Kellner, D. (1991) Postmodern TheoryCritical Interrogations. Macmillan Press, London. Boje, D. A, Gephart Jr., R. P. and Thatchenkery, T.J. (eds.) (1996) Postmodern Management and Organization Theory. Sage Publications, Thousand Oaks. Bruner, J.S. (1965) On Knowing ± Essays for the Left Hand, Athenum, New York. Bruner, J.S. (1974) Beyond the Information Given ± Studies in the Psychology of Knowledge. George Allen and Unwin, London. Cova, B. (1996) The Postmodern Explained to Managers: Implications for Marketing. Business Horizons, November/December, 21±23. Cummings, S. (1996) Back to the Oracle: PostModern Theory as a Resurfacing of Pre-modern Wisdom, Organization, 3, 249±266. Henry, J. (ed.) (1991) Creative Management. Sage Publications, London Hollinger, R. (1994) Postmodernism and the Social Sciences ± a Thematic Approach. Sage Publications, Thousand Oaks.

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Isaksen, S.G. (ed.) (1987) Frontiers of Creativity Research. Bearly, New York. Koestler, A. (1964) The Act of Creation. Hutchinson & Company, London. Lasch, S. (1990) Sociology of Postmodernism. Routledge, London Lincoln, J.W. (1962) Developing a Creativeness in People, in: Parnes S.J. and Harding H.F., (eds.) A Source Book for Creative Thinking, Charles's Scribners Sons, New York, 269±275. Lyotard, J-F (1986) The Postmodern Condition: A Report on Knowledge, Manchester University Press, Manchester. NystroÈm, H. (1979) Creativity and Innovation. John Wiley and Sons, Chichester and New York. NystroÈm, H. (1989) Technological and Market Innovation ± Strategies for Product and Company Development. John Wiley and Sons, Chichester. NystroÈm, H. (1993) Creativity and Entrepreneurship. Creativity and Innovation Management, 2 (4), 237±242. Rickards, T. (1999) Creativity and the Management of Change. Blackwells, Oxford. Rorty, R. (1980) Philosophy and the Mirror of Nature. Blackwell, Oxford. Staten, H. (1984) Wittgenstein and Derrida. University of Nebraska Press, Lincoln and London. Schumpeter, J. (1934) The Theory of Economic Development. Harvard University Press, Cambridge, Mass Sternberg, R.J. (ed.), The Nature of Creativity. Cambridge University Press, New York. Wallas, G. (1926) The Art Of Thought, Harcourt Brace, New York. Witkin, H.A., Dyk, R.B., Faterstone, H.F., Goodenough, S.A. and Karp, S.A. (1962) Psychological Differentiation. John Wiley and Sons, New York.

Harry NystroÈm is Professor at the Department of Marketing and Organization, Institute of Economics, SLU, Uppsala, Sweden, and Visiting Professor at the School of Management, Oslo, Norway.


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Innovation through Strategic Community Management: A Case Study Involving Regional Electronic Networking Promotion in Japan Mitsuru Kodama This paper discusses the basic framework of strategic community management. It will be argued that a community producer creates, based on his vision, a concept of a business community comprised of diverse types of businesses and processes to achieve business innovation. The producer serves an important function in creating a strategic community. A regional initiative towards electronic networking will be studied that illustrates the use of information and multimedia technologies as an instance of the latest business case of strategic community management. It shows how a community producer has created a strategic community in which the central government, regional government, universities, hospitals, private businesses and Not for Profit Organizations take part in the advancement of regional electronic networking.

1. Introduction Rapid progress in information and multimedia technologies is leading the way for gradual renovation in diverse areas including society, economy and industry. An ever widening acceptance of the Internet, Intranet and Extranet is spawning the flattening of corporations based on novel communications platforms as well as the creation of a newbusiness model for inter-corporation transactions, explained by e-commerce. The Internet is poised to change the way new jobs are handled by people in corporate settings and the lifestyle of individuals in their day-to-day living in a major way. It is also stimulating the proliferation of SOHOs (small offices and home offices). New business styles based on such concepts as virtual teams and a virtual community are representative of such a trend. (Cf. Bechard et al., 1996; Lipnack et al., 1997) Amid such change, the advent of the new 21st-century networking generations will usher in major changes in individual's value systems, especially as they relate to living and working. At the same time, it is anticipated that increasing importance will accrue in the years to come to the manner of existence of, # Blackwell Publishers Ltd 2000. 108 Cowley Road, Oxford OX4 1JF and 350 Main St, Malden, MA 02148, USA.

and new ways of thinking about, the ``communities'' represented by corporate entities and non-profit organizations, which constitute massive aggregates of individuals. (Hesselbein et al., 1998) In corporate settings, in particular, knowledge management methods, refined through rapid information technology sophistication, are being adopted to address internal corporate issues, bringing about structural renewal. The important point here is that, no matter how information technology is used in business renovation, a corporation's strategic behavior most importantly depends upon innovation of the value systems of the individuals concerned and of the knowledge and core competence accumulated by them. Leadership capable of generating business innovation on a continuous basis, strategically tapping the knowledge and core competence of extra-corporate human resources, including customers, will become important. To achieve this, it becomes most important for corporate leaders to create strategic communities, tapping their own organizations as well as outside contacts. These will include customers, in leading staff, towards innovating their own in-house core competence while simultaneously creating new values

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and offering them to their customers. An important task, then, would be how to create strategic communities. Innovative leadership will always be required of a community leader. (Kodama, 1999a, 1999b) This paper will focus on the business process involved in strategic community management. An example of the establishment of strategic community management will be the business case of the promotion of a regionally based electronic networking community in Japan that makes use of information and multimedia technologies. The case will examine how a strategic community involving the central government, the regional government, public agencies, the private sector, NPOs and other parties promoted electronic networking in a regional setting in Japan to create the world's first ever multimedia village project and the impact on such areas as education, medical care, social welfare and regional administration will be considered.

2. A Case Study of the Promotion of Diffusion of IT in Regions of Japan The World's First Multimedia Village Project Uses Multimedia to Vitalize Depopulated Areas 2.1 The Importance of Regional Information Technology Diffusion Promotion Regional governments throughout the world, seeking to establish a regional society characterized by abundance and a high quality of life, are actively taking steps (listening to various requests and complaints brought to them daily by residents, and developing various measures) in order to solve problems in fields such as education, medical care, social welfare, the environment, industry, tourism, city planning, and disaster prevention. Recently, particularly with individual problems in fields such as education, medical care, and social welfare, finding solutions has been considered a matter of some urgency. On the other hand, over the past few years, the words, ``diffusion of information technology,'' ``multimedia,'' and, ``the advent of the advanced info-com society'' have come to be used frequently by newspapers, television, and other mass media outlets. But it would be difficult to say that there has been sufficient discussion of the fundamental issues of what kind of influence and constructive effects the diffusion of information technology will exert

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outside of business fields, on the lives of ordinary people, and regional residents in particular. The essence of information technology lies in overcoming distance and time in various human activity, from daily life to business, and broadening the range and possibilities of human activity. Having various fields of application, the most prominent example of which is the Internet, affordable, increasingly easy-to-use info-com technology holds many possibilities for addressing the needs of residents and for solving regional problems in order to establish regional societies characterized by greater abundance and a higher quality of life.

2.2 Background and Aims of Measure Multimedia-based enrichment of the regional community is becoming an important topic as we approach the 21st century. As the population declines due to a falling birth rate and society continues to age, progress is being made in the social structure with regard to internationalization and the decentralization of authority to the local level. For village residents in various regions to lead secure, healthy, and enjoyable lives, we must work to enrich the local, intra-village community, encourage active extra-village intercourse, and improve the environment for lifelong learning. Efforts with enrichment begin with fields such as health insurance, social welfare, medical care, and education, and improvement of regional government services. The Multimedia Village Project is a measure in which the government and private sector (the Ministry of Posts and Telecommunications, regional governments, Japan`s largest telecommunications carrier NTT, and others) are cooperating and coordinating their efforts. It is based upon a special project concerned with working to improve the depopulation problem, to improve the living environment in mountain villages, and to vitalize them, while investigating the question, ``what kind of multimedia would village residents be glad to use?''

2.3 Creation of a Strategic Community Mission and Challenges In September, 1997, Nippon Telegraph and Telephone Corporation (NTT), Japan's largest telecommunications company, launched the marketing throughout Japan of a new-generation videophone. Use for business and virtual classroom communications was its initially targeted sales market, but its use in household circles began to gradually catch on, helped by the product's features that allowed,



at the world's lowest price of Yen 198,000 a pair (approximately US$110), the enjoyment of a high-quality two-way video communication. The vision and concept under which the NTT project leader pursued the popularization of the videophone called for offering a helping hand in the areas of medical care, insurance, social welfare and education for the aged populations, bed-ridden folk among them, in remote regions. This vision and concept was furthermore intended to have an impact on society by selecting one remote village in Japan and connecting all the households in it by videophone to the rest of the country. A larger version of the project concept, called the Multimedia Village Project, envisioned the creation, and provision to large numbers of the aged, of new values through a number of applications in the areas of medical care, health insurance, social welfare and education. And the vision and concept of the project leader was to realize such a multimedia village in some village in Japan and create a new template as a model project ± the world's first of its kind. The project, however, faced some obstacles, such as the following, that stood in the way of its start-up: . Financial difficulty with the installation of

equipment to support the videophone and associated systems. The problem was how to secure government subsidies from the Ministry of Posts and Telecommunications and other sources. . The selection of one village from among many. Consensus-building among the villagers concerning the introduction of the videophone to each household of the village. . The problem of how to diffuse an extensive application of the videophone to the areas of medical care, insurance, social welfare and education. . The videophone, when it was developed, was promoted with the catch phrase, ``So easy to use, anyone can use it,'' but it was not certain if gadget-allergic older people would take to it. A host of other problems needed to be addressed. Decision-Making Based on Past Accomplishments For the project leader, selecting a village posed a major challenge. It was additionally important to secure the consensus and cooperation of those concerned at the level of the local prefectural government under whose jurisdiction the village hosting such a large-scale project was. NTT did have a track record of working with the Prefecture of Fukushima in the institution of a multi-


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media-supported, virtual-format life-long learning program. For example, Koriyama Women's University, which celebrated the 50th Anniversary of its foundation as an educational corporation in 1996, launched a ``Multimedia Telecommunications-Based Life-Long Continuing Education Service'' as one of its commemorative projects (Fukushima Minpo Shinbun, 1997). As part of this program a PC-based teleconferencing system, a multi-room teleconference system that enables participation with a regular TV set or by simple monitor hook-up, and an interactive life-long continuing education course accessible to subscribers through multiple-point-of-access teleconference hookup were in demand. Specifically, multimediabased two-way classes were inaugurated in the framework of a network linking the ``LifeLong Learning Center'' with a plurality of citizens' centers in farming communities. Under the slogan of `Àttend College Courses Near Your Home,'' the program promoted life-long learning whilst making an important contribution to ending the dwindling opportunities in education. A course linking the Center to three citizens' centers in the prefecture in real time offered a total of five lectures centering around the general theme of ``Respecting Regional Needs'' and focusing on such specific topics as ``Real-life problems in day-to-day living,'' ``Themes that make our lives worth living'' and `Èvents of topical social interest.'' The participants took part with enthusiasm, and fever-pitch debates unfolded. Satisfying exchanges of information and knowledge took place between participants and lecturers and among the participants themselves. Coordinated by NTT, a linkup between Fukushima Prefecture and faraway Brazil was realized using the teleconferencing system in August of 1997, providing an opportunity for, among other things, an exchange of opinions between the Fukushima Governor and Fukushima-born residents of Brazil. In view of this experience, the first thought on the project leader's mind was to target some village in Fukushima. `Ì believed there was in Fukushima Prefecture a sufficiently deep-rooted culture receptive to the teleconferencing system and the videophone. The telecommunications-based life-long continuing education course had won acclaim from the aged and housewife groups and I was aware that we had made the Fukushima Governor, the highest-ranking official of the prefecture, sufficiently cognizant of the value of video communication. We were thus to choose a village in Fukushima as the primary candidate. Of the several villages in the

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prefecture, we chose the one where Katsurao Middle School was located. This is known for its emphasis on Internet utilization in its curricular program, which caught our attention, leading us to eye Katsuraomura [Katsurao Village] as the Multimedia Village Project site. We believed that the leadership of the Governor, the prefecture's highest-ranking official, would be key in the startup of the large-scale project that was the Multimedia Village Project. Our first, most important task, then, was to make a presentation of the vision and concept for the project before the Governor and secure his consent.''1 From Community Creation as an Executive Action to Organized, Strategic Community Creation In January, 1998, the NTT project leader made a presentation of the vision and concept for the project before a panel of executive-level core leaders including the Fukushima Prefectural Governor, Katsurao Village Mayor and the Ministry of Posts and Telecommunications senior officials. Following an exhaustive discussion, the sympathy and positive response of the core leaders was obtained in support of the project. Accordingly, an umbrella project was formed that would coordinate the interworkings of different entities toward the realization of the Multimedia Village Project, and a decision was taken to work out the details. A proposal based on a vision and concept developed by an NTT project leader triggered the realization of a community as an executivecreated project, which in turn provided a vehicle for the mutual sharing of values held by the core leaders. In April, 1998, an organization called Katsuraomura Multimedia Village Promotion Council (`MV Council' hereafter) was formed that worked across various organizations, hospitals and schools among them, such as the Ministry of Posts and Telecommunications, the Ministry of Education, the Prefecture of Fukushima, the Village of Katsurao, the University of Fukushima, Koriyama Women's University, hospitals, medical associations, villagers' livelihood cooperatives, NTT, etc. The purpose was to take further steps toward the accomplishment of the project. The MV Council was forearmed to aggressively promote and verify the experiment, promote the introduction of the videophone-based multimedia system to remote village communities across the nation. From this initiative it was hoped that the Multimedia Village Project idea would be accepted throughout the country. As part of the

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particulars of the implementation of the experiment, a Health Maintenance and WellBeing Subcommittee and an Education Subcommittee were formed. The Health Maintenance and Well-Being Subcommittee was to provide care, medical consultation, health counselling and other services for the aged. It was also hoped that through this experience a videophone-based remote medical care and multi agency system would be established in the future. It was also decided that the Education Subcommittee would organize videophone-aided remote classrooms, seminars and inter-school student interchanges and provide support for lifelong learning in farming communities so that educational environment that would eliminate regional disparities could be created. In this way, a community was created by the systematic institution of the MV Council initially led by an individual, it evolved into a key strategic project. The MV Council, with a view to bringing the Multimedia Village Project ever closer to reality, studied every minute detail relating to the conceptual foundation of the Multimedia Village Project. The design of the system structure, matters pertaining to medical care, insurance, social welfare and education, presentations to the villagers toward building a consensus, test run schedule, etc. were all scrutinized. Thanks to the swift action of the community, the village residents, customers to the project, were able to deepen their understanding. And by June, 1998, equipment installation had been completed, and under a 3-year plan, to end at the end of March of 2001, a test run of the videophone-aided Multimedia Village Project got under way.2 (Figure 1 shows a conceptual drawing of the Video-Net instituted in Katsuaomura.) (Nihon Keizai Shimbun, 1998; Nihon Kogyo Shimbun, 1998; The New York Times, 1999)3 By laying ISDN 4 lines in all 473 of the households in Katsuraomura, in the schools, the town hall, and other public facilities, organizers prepared an environment in which videophones could be used freely under a Multimedia Village System (``MV System'' hereafter) which would be established. Equipment was installed that consisted of a Multipoint Connection Unit (MCU)5, which permitted a maximum of 94 locations to be simultaneously connected to the multimedia center in the town hall to make arrangements and hold meetings. A Video-On-Demand (VOD)6 based video server, from which various graphical information could be searched and retrieved using a videophone was also installed. Residents took the initiative in expressing numerous opinions, such as, `Ì`d



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Figure 1. Video-Net in Katsuraomura Village, Fukushima Prefecture [Conceptual Diagram] like them to put a lot of information closely related to daily life on the video server,'' `Àren't there any applications that let children play and have a good time?'' and, `Ì want to use my videophone to talk to family and friends outside the village.'' In the experiment, as a measure to vitalize mountain village regions, multimedia that can be easily, cheaply, and readily used by anyone was put to practical use. Methods were examined for applying multimedia in various fields, starting with medical care, social welfare, education, and government services, with the objective of promoting the diffusion of information technology. Specifically, the experiment demonstrated how efforts can be made to put to practical use bi-directional communication through easyto-understand, videophone-based graphical information in order to improve the depopulation situation, improve the living environment in mountain villages, and vitalize them. The approach to raise the information and knowledge levels of individual residents about many subjects, lay in using a VideoNet between public facilities and each home


to provide various services that met the individual needs of village residents. By demonstrating their effect, an effort was made to form a society for village residents in which everyone from children to the elderly could feel secure and lead a life worth living. In Katsuraomura, amid a rapidly shrinking and aging population, and in an effort to form a regional society in which village residents could live healthy, secure lives, a multimedia center was installed in the town hall. Public facilities were networked to each home using ISDN, and health preservation, social welfare, education services, and government information were made available. The vision and concept of an NTT project leader, coinciding with the values systems of key leaders, lead to the creation of a community organized on a group level which resulted in the provision of services to the village population. In this paper, the leader who realizes the creation of a community as described is defined as a ``community producer'' (this case study happens to be an NTT project leader). The core leaders of the various intra-community organizations (government

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agencies, the Prefecture of Fukushima, the Village of Katsurao, universities, hospitals, medical associations, NPOs, etc.) will be referred to as ``community leaders.''

2.4 Innovation in Community Knowledge

The biggest challenge

The biggest challenge for the MV Council, which was a community, was how to provide truly worthwhile content and applications for the village residents, the customers, using a completed MV system as the platform. This was a major challenge that addressed the human side of the proposition that was looking at inspiring life (that is software) into the vessel we called MV system (that is the hardware). Now, one of the basic requirements for continued development of a created community consists in innovation of community knowledge in terms of information, knowledge, skills, know-how, experience, etc., which within the community will follow the steps of sharing inspiration through contact, creation and accumulation (Kodama, 2000a). (See Figure 2.) This process may be described, if in somewhat simplified terms, as follows:

I.

Sharing Step Understanding and sharing existing knowledge held in community

II.

Inspiration Step Propagating knowledge through inspiration related to existing knowledge

III.

Creation Step Creation of new knowledge

IV.

Accumulation Step Storing of diverse new knowledge born in process of inspiration, propagation, and creation

Figure 2. Process of Innovating Community Knowledge The first process of sharing involves sufficient dialogue and resulting understanding between the parties concerned regarding the vision and objective pursued by different organizations toward understanding and sharing of each other's knowledge. The second process of inspiration through contact involves inspiring and multiplying various aspects of community knowledge within the circle of organizations. This knowledge is used to generate challenges and solutions so

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that the vision and concept can be realized on the basis of shared community knowledge. The third process of creation involves creating new community knowledge on the basis of the community knowledge inspired and multiplied within the circle of organizations concerned. The fourth process of accumulation involves a step of methodically, as an organizational effort, accumulating within the community, as treasured know-how, the various aspects of the community knowledge harvested through the processes of sharing, inspiration and creation The challenges faced by the community at the time of startup were the consolidation of the Multimedia Village Project, conceptualization of the MV system, and the designing and building of the system. To ensure the building of an MV system most suitable for the residents of Katsuraomura, who could then share the information and knowledge held by various organizations including businesses. Sessions were organized within the community for knowledge give-and-take in the form of constructive dialogue between community leaders, among whom figured a number of community members as well. Ever conscious of the content of material that would imbue life into the village and create values for the villagers, the leaders induced the creation and accumulation of community knowledge in terms of the ``hard'' as well as ``soft'' aspects. This involved the consolidation of the Multimedia Village Project, the conceptualization, designing and building of the MV concept, and the refinement of the method of providing virtual knowledgebased services in the areas of medical care, insurance, social welfare and education (Kodama, 1999d; Kodama, 2000b). (Figure 3-a.) In the stages following the start-up, the content and applications of services in the fields of medical care, insurance, social welfare and education, all services already in place were made available to villagers as virtual knowledge-based services offered on the MV system platform. The new task was then to work out a way to get the system acceptable communitywide. Services such as the following were provided in the fields of medical care, insurance and education: It became possible to provide videophone health consultations, in which videophones are used to remotely provide home medical care and health consultations, lightening for patients and their families the physical burden of commuting to a hospital, and improving for doctors the efficiency of making house calls. In an elder care-related part of a comprehensive social welfare and medical care support initiative, it became possible for



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Figure 3. Process of Innovating Community Knowledge (Katsuraomura Project)

a home helper to check the appearance of his or her elderly charges via videophone screen at any time, permitting early detection of emergencies and detailed caregiving. It also became possible to receive at-home calisthenics instruction from the social welfare center.


Furthermore, a mechanism was established whereby hearing impaired residents could use VOD to retrieve videophone-based sign language assistance and graphical information related to insurance and social welfare on demand.

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Making regional differences irrelevant

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Services provided in the area of education included the following: So that village residents would be able to avail themselves of various educational opportunities from home, Koriyama Women's University village residents and other institutions offered them a variety of lifelong learning programs via videophone. To offer children in depopulated areas an educational environment in which regional differences are irrelevant, they made possible via videophone, and in real time, participation in nationwide seminars, cooperative learning, and inter-school exchanges. School-centered videophone uses continued to be established, among them joint research announcements with elementary and middle schools outside the village, debates and student exchanges with other schools, videophone-based inspection of classes by parents and guardians, and remote English conversation classes taught by non-Japanese English teachers. Applications for administrative and other services of various kinds were test-run by way of a pioneering effort into a new field outside medical care, insurance, social welfare and education. Experiment organizers, for example, produced various informational video content, including a government guide and data related shopping, recreation and various services, and stored it on the VideoOn-Demand Server. This allowed users to search and retrieve this various graphical information, and to readily utilize and enjoy everything from governmental information to window shopping and karaoke. Moreover, a multipoint video connection service was used to allow multiple individuals to simultaneously and interactively engage in such activities as making appointments and participating in seminars. In this way, village residents were able to easily participate in videoconferences held in their own village or anywhere in Japan, from the comfort of their own homes. Further improvements to the virtual ledgebased services were made through the process of having problems with the system and services flagged by means of opinion surveys and interviews. These were conducted regarding the content of such services for the purpose of reflecting the opinions and wishes of the villagers. To achieve this, we opened up in a forward-spiraling fashion an innovation process of sharing, inspiring, creating and accumulating community knowledge through repeated service offerings. This phase coincided with the community's growth period (Figure 3-b). Virtual knowledge-based services was thus established on firm ground through organizational learning

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based on the spiral process of community knowledge. The development phase of community knowledge furthermore provided the launch stage for realizing yet newer virtual knowledgebased services (Figure 3-c). For example, innovations such as remote medical care using vital-sign sensors and home delivery of medicine to chronic patients based on videophone medical examinations, triggered the development of a new era of residentcentered multimedia in this village of Katsuraomura.7 (Nikkei Sangyo Shinbun, 1999, Asahi Shimbun, 1999) Under the provisions of the existing Japanese Medical Act, in particular, a face-to-face meeting between the diagnosing physician and his patient is required for drug prescriptions. This would make it necessary for residents of doctor-deprived villages such as Katsuraomura afflicted with chronic ailments (patients with relatively stable symptoms such as diabetics, hypertension patients, etc.) to undertake, because of geographical circumstances, trips of several hours expressly to visit doctors for drug prescriptions. An onerous burden, indeed, for aged people. To break away from such a situation, the community producer engaged in aggressive negotiations with the Ministry of Public Health and Welfare, the governmental department regulating medical care. The outcome was a legalization of medicine home delivery on the basis of videophone-aided remote diagnoses (referred to as ``Medicine Pack Service''). The creation of this ``medicine pack service'' was a major advantage for aged sufferers of chronic disorders. Thus, in the development of new virtual knowledge-based services, a sharing and inspiring of new and never before acquired knowledge occurred while new know-how and skills were accumulated through the creation and practice of new services. The whole community itself strove through the stages described above for self-improvement under the slogan of providing quality services to its customers, the villagers. This enhanced the upward spiral of innovation of community knowledge. It was this innovation that would abidingly create new values for the community's customers.

2.5 Community Competence Sophistication Process In the sustainability of continuous innovation by a community, the heightening of core competence within the community (referred to as ``community competence'' in this paper) becomes an important factor (Kodama,



1999a). As shown in Figure 4, while innovation (start-up phase Jgrowth phase Jdevelopment phase) realized through the upward spiral of community knowledge creates new values for the customers, the process of community competence sophistication (sharing Jcreation Jrenewal) also becomes indispensable for ongoing strategic community formation. In a process in which community competence is in a sharing mode, the core competencies pertaining to the participating corporations and organizations of various types will lend themselves to mutual understanding among the entities within the community. This serves as a step towards a phase where a core competence fusion takes place. For example, core competence such as NTT has in the areas of ISDN, Internet, video system technology, and the appropriate supporting and such core competence as the diagnostic know-how, know-how in health management for the aged, etc. which hospitals and other medical institutions have, and the various know-how in life-long education which universities have will be shared among the participating entities, and it will be through stimuli

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touched off by contact and through fusion that a community competence capable of creating virtual knowledge-based services will be achieved. The process of the creation mode is a step toward the production of new creations (products, services, etc.) through the fusion of shared core competence. In this step, a quality-services-creating core competence will form itself within the community. This happens through a process of creating virtual knowledge-based services in the areas of medical care, insurance, social welfare and education. This arises as a function of developments in new applications and their permanent availability in the market, The process in the renewal mode involves adding a further dimension of sophistication to the community competence by elevating the sharing mode to the creation mode. The ``Medicine Pack Service'' and the ``Videophone-Aided Diagnostic Service with Vital Signs Sensors' represent the latest in innovation that has completely overridden the services of the conventional type ± the fruit of community competence at its renovated best.

Figure 4. Advanced Process of Community Competence # Blackwell Publishers Ltd 2000

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It can be seen that to heighten the performance of an entire community, provide new values for its customers and attain the community's business objective, it becomes crucial to continually implement in a spiraling fashion the community knowledge innovation as well as to promote within the community the sophistication of the community competence.

2.6 Creation of an Even Newer Strategic Community Diffusion of the Project to Other Regions

Three important points

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No example of an experiment comparable in size or technology with the Multimedia Village Project developed in Katsuraomura can be found anywhere in the world. Amid the digitization (conversion to ISDN) of public circuits, Video-Nets allow homes, schools, and regions to be linked through advanced multimedia services on the basis of the simple user interfaces of videophones, which require no mastery to use. Today, when the formation of a truly free communication society is anticipated, much is expected from this project as a means of building a model of an ideal society and sounding out new, ideal forms of regional communication and culture. The community producer's next strategic step was to deploy the Katsuraomura test case, which provided a multimedia village project template, to other Japanese villages and towns. His project team contacted regional governments throughout the country to sell them on the project idea and concentrated on forging community ties with the key persons, namely the core leaders. The upshot was that a second multimedia village project was launched in Nosegawa, Nara Prefecture, in April, 1999 with a project budget of the order of Yen 65 million (approximately US$360,000). The project installed an MV system under a similar scheme to the Katsuraomura project in which a government subsidy was put to use (Asahi Shimbun, 1998). At the same time, the formation of a community with the participation of local entities including hospitals, a medical association and universities enabled work on the content and applications relating to the areas of medical care, insurance, social welfare and education. Furthermore, the project size was scaled up from village to town when it was decided in November, 1999 to launch Japan's first multimedia town project based on a similar scheme and with the backup of a Government subsidy in Yajimamachi, Akita Prefecture, with a project budget of the order of Yen120 million

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(approximately US$650, 000) (Akita Sakigake Shimbun, 1999). Thus, success with one community (the case of Katsuraomura with a project budget of approximately Yen 75 million, approximately US$420,000) led to success with subsequent communities (the cases of Yasakugawa and Yajimamachi) in a strategic community creation spiraling chain, providing a sampler of an important management process for description in this case study.

3. Discussion 3.1 Laying the Foundation for Strategic Community Creation There are three points about strategic thinking and behavior that are of importance to the community producer. The first point is that the community producer, who belongs to an organization of which he is a member (a top-echelon manager or middle-tier manager in a corporate setting, or an independent business operator with an entrepreneurial prowess) must have an ability to comprehend the exterior environment in which his organization is placed. This means that he must understand technological speeds, market composition and customer needs quickly and through interactive communication. The second point is that the vision put forward must fit with his thoughts and beliefs and that he be equipped with the power to create networks of man-to-man contacts in terms of stated concepts, both within and outside his organization. It will be by dint of this human networking power of his that contacts and constructive dialogues will become possible with community leaders, who are the core leaders from within as well as outside his organization. The third point relates to the importance of creating, through constructive dialogues with community leaders, an arena of sympathy and resonance for values which respect visions and concepts. This, in turn, will make it possible to create a platform to harmonize the value outlooks of community leaders, creating room for the birth of a strategic partnership with the community leaders. These manners of strategic thinking and behavior on the part of the community producer will in due course translate into the next step, discussed below, which consists of the organized creation of a strategic community and the laying of a crucial foundation on which innovation-orientated movements can be based (Figure 5).



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Figure 5. Foundation for the Creation of Strategic Community

3.2 Organized Strategic Community Creation and Innovation The next task for the community producer and the community leader is to create a strategic community on an organized basis and pave the way for continual innovation. For these things to happen, it becomes important to create a value-harmonized platform at the level of an organized body within a strategic community composed of many different entities, with the participation of many community members. It will then become important for the innovative leadership comprised of the community producer and community leaders, based on this solid value-harmonized platform, to deploy in a spiraling fashion the process of sharing, contact-triggered inspiration, creation and accumulation of community knowledge. This spiraling process of community knowledge would correspond, in general corporate activity terms, to the development and marketing of products and services that meet consumer needs and the implementation of product quality improvements and ameliorations repeated in spiraling circles toward community knowledge quality improvement. At the same time, the community competence, that is to say, the core competence of a community, will end up the more sophisticated because of this process. This string of innovation processes of com-


munity knowledge and community competence will finally provide continual value creation for the customers and so attain the business objective of the strategic community (Figure 6).

3.3 Interactive Linkage between Community Knowledge and Community Competence One more important point here is how crucial the two elements of community knowledge and community competence are to the business community as strategic management assets. The interactive link of these two strategic management assets is critical, if a continual innovation of the business community is to be achieved. We are looking at an interactive linkage in which quality community knowledge promotes community competence sophistication, which in turn comes back to feed into an even higherquality community knowledge. The interactive linkage as referred to in the present case study may be explained as follows (Figure 7): At the time of start-up of community knowledge, it was community knowledge in concrete conceptualization of the multimedia village project that was first created and accumulated. There was spawned a community competence (in the sharing mode) which would create new virtual knowledgebased services through the sharing of community competence within the community

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Figure 6. Organized Creation and Innovation of Strategic Community

Figure 7. Linkage between Community Knowledge and Community Competence

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(Process A in Figure 7). Through the actual practice of virtual knowledge-based services in the field by means of the shared community competence, a new community knowledge closely connected to the customers and the actual situation was created and accumulated (Process B in Figure 7). At the growth stage of community knowledge, the virtual-knowledge services were improved and ameliorated on the basis of customer wishes and opinions, and higherquality community knowledge was thus created and accumulated. As a result the virtual knowledge-based services became widely accepted, and a higher level of community competence (in the creation mode) was formed (Process C in Figure 7). In the meantime, advanced community competence in the community touched off stimuli for the creation of new community knowledge with a view to a further leap in innovation, namely toward the realization of new, heretofore unknown virtual knowledgebased services (Process D in Figure 7). In the development stage of community knowledge, new virtual knowledge-based services such as the ``Medicine Pack Service'' and the ``Videophone-Aided Diagnostic Service with Vital Signs Sensors'' were developed. Through the actual practice of services, new discoveries and understandings unavailable through traditional virtual knowledgebased services were started in the community and were submitted to creative processes and accumulation in the form of new community knowledge. New virtual knowledge-based services were streamlined, enriching customer services even further and elevating the community competence to an even higher degree of sophistication (in the renewal mode) (Process E in Figure 7). This interactive linkage can be attained through the innovative leadership of the community leaders, the important point being that the community leaders must be conscious players in handling the interactive linkage mechanism. In more specific terms, it is of basic importance that the community leaders create and provide an arena where it can be assured that all the community members will continue to uphold in common the idea, thought and spirit that will inspire them to provide new value creations for their customers at all times and on a continual basis (that is, an arena serving as a value-harmonized platform). The community members, then, are to individually endeavor for self-improvement and selfinnovation through constructive dialogues promoted within the community involving clients as well, based on the value-harmonized


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platform, so as to make the acquisition of new knowledge, and hence competence, possible. It is important, with the acquired competence as the foundation to build on, to further endeavor to acquire even newer knowledge and so develop one's own competence, namely to promote one's interactive linkage with knowledge and competence on a personal plane. Accordingly, the community leaders must have a leadership capacity to continue to provide empowerment and motivation on an ongoing basis for the members of their communities with an eye to attaining the community objective (business objective) rooted in harmonizing value outlooks. At the same time a leadership capacity will be required to integrate on the collective and organized level, the knowledge of the individual members of the community with the interactive linkage process of competence. This will establish on firm ground an interactive linkage process as a community-wide management system.

3.4 A Chain of Spiraling, Strategic Community Creation A mechanism which enables success with one strategic community leads to the formation of a next, new strategic community to fulfill business requirements will translate into a process enabling the attainment of ongoing innovation in a corporate setting of activity. A case in point would be one in which success with a large-scale joint project operated with a customer for the purpose of deploying a strategic line of products or services served as a model for spawning a spiraling management system to support a similar deployment vis-aÁ-vis another customer. Here are a few relevant points pertaining to the realization of such a management system: First, the community producer must through interactive communication grasp the given situation in terms of the five elements of environment, technology, market, customer and competition. Equally important, he must strive to assimilate the vision and spirit with which to quickly take stock of any change in the exterior environment in which his organization is placed as well as any technological change and establish the competitive superiority of his organization by pioneering new markets and customers. Second, a community producer must be armed with a human networking power to help him discover and recruit new core leaders both within and outside his company. With such human networking power, he will be able to form a value-harmonized platform

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Creating strategic communities

working with the new core leaders, and strategic partnerships with them should make it possible to create organized strategic communities and realize innovation. The chain of successes with large-scale businesses that have lasted for almost two years for the realization of the Katsuraomura, Nosegawa and Yajimamachi projects, the subject of the present case study, are shown in the system descriptions in Figures 5 and 6 and in Figure 8. Rectifying the existing region-to-region imbalance in the quality of services provided in the areas of medical care, insurance, social welfare and education, is an issue much discussed in Japan today. An NTT community producer, making maximum use of the information and multimedia technologies which make up the core competence of NTT, established a competitive superiority of the creation of strategic communities comprised of diverse businesses on the basis of regional electronic networking organized as a spiraling chain. The resulting new virtual knowledge-based services established through strategic community creation now provide new value creations for the customers, making it possible to attain the business objective of strategic communities.

4. Conclusion In this case study, we have proposed a concept for a platform that will serve as the core for multimedia businesses by positively incorporating in corporate management a business style represented by the ``creation of strategic communities''. These communities are comprised of diverse businesses interested in development and expansion of virtual knowledge-based services based on information and multimedia technologies. We have discussed the process for managing the diffusion and expansion of this concept throughout Japan. An important message of this paper relates to the creation of organized strategic communities on the basis of harmonizing values. This involves working with outside community leaders under the farseeing, innovative leadership of community producers who come with new visions and concepts. It will become possible in such strategic communities to promote community innovation by spirally deploying the interactive process of linkage between community knowledge and community competence. By creating a succession of ensuing strategic communities

Figure 8. Chains of Spiral-Shaped Strategic Community Arrangements

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of like orientation, it should become possible to spirally deploy a chain of innovations. That, then, will be the essential embodiment of strategic community management. It will be required of community producers and community leaders, whose task it will be to promote strategic community management, to project both inside and outside their corporate organizations the persona of a new leader of a hitherto unknown breed. It will become crucial for corporate organizations to strategically spawn and nurture good community producers and community leaders to take charge of corporate innovation, a mirror of the new age, the 21st century, against the backdrop of the future multimedia- and cyberspace-based society. Increasing relevance is bound to accrue to continued attention to business innovation through strategic community creation.

Notes 1. Interviews with NTT senior managers who are responsible for business in the Multimedia Village Project 2. Government (Ministry of Posts and Telecommunications) subsidies, made available under the heading of regional electronic networking promotion (Networking Facilities Upgrade Project Grants-in-Aid), include a facilities-building costs component, one-third of which is shouldered by the Government and the remaining two-thirds by regional governments (prefectures, cities, towns, villages). In the case of Katsuraomura project, the total construction cost came to Y = 75 million, which amount was covered in equal parts by the Ministry of Posts and Telecommunications, the Prefecture of Fukushima and Katsuraomura. This total construction cost was incurred by the VOD (Video on Demand), MCU (Multipoint Connection Unit), networking equipment and other multimedia center-related construction components. NTT agreed to undertake alone the building of the multimedia center, proceeding to lease videophones free of charge to all the households in the village, which numbered 500, and putting the Video-Nets system in place. For the VideoNets concept and virtual knowledge-based services applications, see Kodama, 1999d and Kodama, 2000b. 3. Many television stations, newspapers and other media did stories on the world's first videophone-aided multimedia village project realized in Katsuraomura. Some of them were TV Tokyo (``World Business Satellite,'' aired May 18, 1998), TBS (``Wide Show,'' aired May 11, 1998) and NHK (news). 4. 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


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, and ITU-T recommendations are also available at . 5. A network system that connects, over ISDN, multiple videoconferencing systems and/or videophones differing from those standardized by the ITU-T. (See Kodama, 1999c) 6. 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. 7. A patient receives a diagnosis via videophone, then the doctor writes a prescription if needed, faxes it to a pharmacy outside the hospital, and mails it to the patient. The pharmacy prepares the medicine according to the prescription facsimile, and an employee then takes it directly to the patient's home, and compares the original prescription with the facsimile. If they match, the employee exchanges the medicine for the original prescription and payment (including a delivery fee). Patients eligible for home delivery include those with chronic illnesses, such as high blood pressure and rheumatism, who are in stable condition. (Home delivery of medicine on the basis of videophone diagnosis was approved by the Ministry of Health and Welfare in April, 1999.) The ``Medicine Pack Service'' was the first of its kind in Japan in the area of medical care, and the event was reported by Japan Broadcasting Corporation (NHK) in nationally broadcast television programs, such as `Òhayo Nippon (Good Morning Japan)'' (December 9, 1999) and ``News at Nine'' (December 1, 1999).

References Akita Sakigake Shimbun(1999) Decision Taken to Select Yajimamachi, Akita Prefecture, as Leading-Edge Model Region, December 25, 8. Asahi Shimbun (1998) Videophone-based Villagelevel Networks: Nosegawamura, Nara Prefecture, 19, Dec. 24. Asahi Shimbun (1999) 19, Dec. 25. Your Home to Double as Clinic: Diagnosis by Videophone, Drugs Delivered to Your Door. Bechard, R., Goldsmith, M. and Fesselbein, F. (1996) The Leader of the Future. Jossey-Bass Inc., California, 3±9, 25±39,121±124. Fukushima Minpo Shimbun (1997) Kooriyama Women's University Offers Distance/Lifelong Learning Courses Featuring University Lectures over Television Monitors, 11. Jun., 3. Hesselbein, F., Goldsmith, M., Beckhard, R. and Schbert, R. F. (1998) The Community of the Future, Jossey-Bass Inc., California. Kodama, M. (1999a) Strategic Innovation at Large Companies through Strategic Community Management ± An NTT Multimedia Revolution Case Study, European Journal of Innovation Management, 2 (3), 95±108.

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Kodama, M. (1999b) Customer Value Creation through Community-Based Information Networks , International Journal of Information Management, 19 (6), 495±508. Kodama, M. (1999c), Business Innovation through Joint Ventures Supported by Major Businesses: Case Study on US-Japan Joint Venture Businesses, Journal of Management Development, 18 (7), 614±627. Kodama, M. (1999d), Strategic Business Applications and New Virtual Knowledge-Based Businesses through Community-Based Information Network, Information Management & Computer Security, 7 (4), 186-199. Kodama, M. (2000a) Business Innovation through Customer-Value Creation-Case Study of a Virtual Education Business in Japan, Journal of Management Development, 19 (1), 49±70. Kodama, M. (2000b) New multimedia services in the education, medical and welfare sectors, Technovation, 20 (6), 321±331. Lipnack, J. and Stamps, J. (1997) Virtual Teams. John Wiley & Sons, Inc., New York.

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Nihon Keizai Shimbun (1998) Government Services by Videophone: Installation in Every Household in Katsuraomura, Fukushima Prefecture, Feb 12, 38. Nikkei Sangyo Shimbun (1999) Home Delivery of Medicine via Videophone: Doctors in Katsuraomura, Fukushima Prefecture Making Remote Diagnoses, 14 April, 8 Nihon Kogyo Shimbun (1998) Vitalizing Mountain Villages by Videophone: A Response to the Aging of Depopulated Areas, 2.5. Feb., 8 The New York Times (1999), Japan Bets on a Wired World to Win Back Its Global Niche, VOL. CXLVIII, No.51,630, p1.

Mitsuru Kodama PhD is Executive Director, the Community Laboratory, Tokyo, Japan.


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First We Throw Dust in the Air, then We Claim We Can't See: Navigating in the Creativity Storm Jacob Goldenberg and David Mazursky It is often claimed that many of the leading successful products emerge incidentally. It is hardly possible, even in a retrospective examination, to account for such incidents by ideation methods devised to enhance randomness. The present research reviews the criticism raised in past literature claiming that the widespread randomness-enhancing methods, which advocate unbounded ideation, are ill defined; they do not specify the goal, the initial state, the operators, or the constraints of the ideation problem. In contrast, scant attention has been devoted, both in research and practice, to bounded scope ideation methods, which advocate that inventive thinking becomes more productive when the ideation process is channeled into pre-defined routes, particularly, if it follows templates that underlie the internal dynamics of past product-based trends. The present research exemplifies the use of templates in explaining major marketing breakthroughs, outlines the procedures for using component templates, and assesses empirically the value of this approach among practitioners in relevant ideation tasks.

Introduction

I

t is often claimed that the sequence of events leading to the invention of many successful leading products was merely incidental, or even accidental. Several examples of blockbuster products described in this paper, like the car Polo Harlequin, the Walkman, and Post-It, represent but a few of a long list of such unplanned inventions that turned out to be major marketing successes. Freeman and Golden (1997), who collected 200 stories of a major successes in new product history, concluded that one of three major drives for the original invention of a new product is a ``brilliant stroke of genius that came by accident or by design''. This phenomenon calls for research designed to examine the random nature of invention. Since many inventions occur randomly, the key assumption underlying several of the widespread ideation methods available today is that randomness should be stimulated and enhanced in order to facilitate a better environment for productive ideation. For example, on the premise that a random piece of information is one of the best thinking # Blackwell Publishers Ltd 2000. 108 Cowley Road, Oxford OX4 1JF and 350 Main St, Malden, MA 02148, USA.

stimuli, Von Oech (1983) described a set of tools devised to generate random stimuli and allow random leaps of ideation. Quinn (1985) even characterized ideation as ``controlled chaos'' in the innovator's mind. Referring to the use of randomness-enhancing methods, Kiely (1993) noted that more than one-fourth of all US companies employing more than 100 people offer some kind of creativity training of that kind to employees. However, although randomness in inventions has been recognized by researchers studying new product design (e.g., Ulrich, 1995; Urban and Hauser, 1993), this field has provided no research evidence that systematically assesses the efficiency of the accidental occurrence of inventions in methods of ideation. Indeed, the dilemma regarding the role of randomness in ideation is mirrored in the dichotomy observed in past ideation studies. Some advocate that the process of generating ideas is most productive in a random ± ``limitation free'' environment, or in unbounded scope ideation (e.g., de Bono, 1992), whereas others assert that inventive thinking becomes more productive when the ideation process is confined and conducted within

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bounded scopes (e.g., Perkins, 1981; Goldenberg, Mazursky, and Solomon, 1999a, 1999b, 1999c). Although the use of methods consistent with the former view is widespread (e.g., Rickards, 1998), scant attention has been devoted either in research or practice to methods associated with the latter view. The present paper illuminates the potential theoretical and practical implications of the bounded-scope perspective and assesses its value. The unbounded-scope approach induces people to use their imagination and suspend their judgments (and criticism) until after the ideation task is completed, thereby encouraging the generation of a large number of ideas (for related concepts see ``divergent thinking,'' Batra, Aakers and Myers, 1996 and `ùnstructured methods,'' Arnold, 1962). The process of unbounded ideation has involved methods such as brainstorming, synectics, lateral thinking, random stimulation, personal analogy, and force fit-get fired (for detailed reviews see Urban and Hauser, 1993, and Kotler, 1994). By creating an `ànarchy of thought,'' these methods strive to simulate those accidents and create new opportunities for the mind to generate new ideas. In contrast to this view, the concept of bounded scopes involves thinking within a pre-defined frame of reference (e.g., morphological analysis, e.g., Urban and Hauser, 1993; note also the HIT procedure; Tauber, 1972). It is unclear from the research reported to date, however, which of the two approaches is the more promising for ideation. Some guidance in approaching this dilemma may be drawn from the more general literature on problem solving which indicates that enhancing randomness to stimulate problem solving ability is inefficient, and often even faulty. Generally speaking, the simplest way to solve a problem is to use ``brute force''; to thrash around and explore the alternative exhaustively until a solution is found. In computers, this kind of approach relies on adherence to exhaustive procedures guaranteed to yield a solution. Speed of computation is also important if the solution is to be found within an acceptable time period. There are, however, problems (e.g., ``keys and boxes'' puzzle, described by Boden, 1978) which, on the one hand, are solvable by a program in as few as 21 steps but, on the other, require enormous amounts of computer resources if an exhaustive search is to be conducted. By analogy, there are certain problems, many of which relate to ideation, for which reduction of the solution space to a well-defined boundary of possibilities is imperative. Such a bounded scope can be obtained only by a

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method that directs the problem-solving effort along relevant solution paths most likely to lead to a solution. Therefore, exhaustive search seems more appropriate when the problem solver has a clear goal, understands the initial state and constraints, and knows exactly what operators are likely to be useful. Reitman (1964) observed that many problems resembling ideation situations are ill defined in that the representations of one or more of the basic components ± the goal, initial state, operators and constraints ± are seriously incomplete. Many ill-defined problems seem difficult, not because the solver is swamped by the task of searching through an enormous number of alternative possibilities, but because he/she has trouble thinking of even one idea worth pursuing. Indeed, it is tempting to explore the space randomly, in the hope that, by chance, a worthy idea will surface. Simon (1979) criticized this strategy: ``. . .In a wholly unstructured world, random search is as efficient or inefficient as any other kind. Only in a world with structure can search be selective and systematic; and only by extracting from the world information about its structure can that selectivity be implemented.'' This latter view was supported recently in creativity research. Finke, Ward, and Smith (1992) reported that restrictions on elements and components force one to think in more creative and less conventional ways. Imposing such restrictions, therefore, helps to stimulate creative thinking. If correct, the implementation of this view should consist of predefining sets of constraints that will help to structure ideation and channel it, rather than to follow the theme underlying the unbounded methods of breaking rules of thought. For example, morphological analysis (e.g., Urban and Hauser, 1993; Tauber, 1972) calls for identifying the parameters of the product, listing all the possible combinations of parameters, examining the feasibility of all the alternatives, and selecting the best alternative. A different method was suggested by Altschuller (1986) who attempted to uncover hidden underlying logical patterns in the creative solutions to technological problems. By a backward analysis of problem-solution relationships, he succeeded in identifying a number of such patterns, which he labeled, ``standards''. These standards represent common phenomenological patterns suggesting that problem solving can be improved if such standards are considered. Recently, Goldenberg, Mazursky and Solomon (1999a, 1999c) introduced the notion of inventive templates which are the



fundamental meta-schemes underlying past new product development. In the context of a related domain (ad creativity) the superiority of templates has been shown to be robust, not even requiring human psychological intervention or input (Goldenberg, Mazursky and Solomon, 1999d). The templates represent abstract structures that are generalizable across product categories and services. This approach integrates three major invention-enabling perspectives. The first stems from the proposition that a limited number of identified templates underlie the internal dynamics of past trends in product evolution and have the capacity to guide ideation and predict new candidate products in a wide array of related domains. The second is the ``bounded-scope'' principle, embodied in the template approach, which suggests that thinking should be channeled along pre-defined inventive routes. This principle is consistent with Perkins (1981) who indicated that thinking within a frame of reference requires sensitivity to the rules of the game and that, by functioning within a frame, one achieves a better position to notice or recognize the unexpected. The third perspective, which is in line with Finke, Ward, and Smith's (1992) Function-Follows-Form principle of superior creativity, is manifested in ideation in the sequence of first proposing new configurations of the product (which are template-based) and only then, considering the benefits, the aesthetic values, and other market parameters. Considered together, the template approach transforms the ideation task from the status of ill-defined to well-defined because it lends itself to specific definitions and to well-defined solution plans. In their research Goldenberg, Mazursky and Solomon (1999a, 1999e) focused on a major template termed Attribute Dependency, which occurs when two previously independent product variables (e.g., price, delivery time) become related (as in the case of the Domino's Pizza discount commitment if the delivery exceeds 30 minutes). It was found that training individuals in the AttributeDependency template helps them to generate ideas that are judged by independent experts as superior to ideas generated by individuals who were either not trained or trained in other unbounded methods. Another example illuminating the advantage of the AttributeDependency template is provided by the `ànnouncement'' (not for actually launching objective but merely as an `Àpril Fool's Day'' joke) of the ``Polo Harlequin'' car uniquely featuring differently colored parts. Massive response by customers calling in to place orders convinced the manufacturer to go


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ahead and produce it although there had been no plans to introduce such a car. Its widespread success and the appearance of imitations by competitors indicate that the match between a latent consumer need and the company's sales opportunity, which in this case occurred incidentally, could have been projected by knowledge and use of the Attribute-Dependency template. However, unlike the template tested in that study, which is attribute-based other templates, have been identified, although not schematically formulated and tested, that involve operation of the product components. Certain changes in the configuration of the product components appear to recur throughout the evolution of products. There appear to be at least three major advantages associated with the component templates that illuminate their potential as guidelines in ideation. First, it is far easier to identify and define components and their boundaries since in a configuration of a product, the components lend themselves naturally to identification as unique and mutually exclusive entities, relative to the frequently obscure and subjective meaning scope and boundaries of the attributes. Second, given the importance of effective dialogue between R&D and marketing personnel in the stages of ideation and screening, it is imperative that their language of interaction be common and comprehensive (Wagner and Hayashi, 1994). Hence, interacting on possible manipulations of components rather than attributes in projecting promising new ideas is more suitable in trying to achieve the company's goals. Third, ideas that emerge from singular manipulation on the components as obtained by component template training tend to be overlooked and less likely to emerge from training in unbounded methods that advocate ``total freedom'' ideation. This interplay between unbounded and bounded approaches is mirrored in the difference between schema-driven and data-driven processing. Several schematic theories portray people `às blithely glossing over important details, as stubbornly refusing to see the information in front of them, and as maintaining their schemas at any cost'' (Fiske and Taylor, 1991, p. 98). Thus, when asked to create new ideas in ``total freedom'' settings, inventive thinking is more likely to focus on the relationships between the structures (as a whole) and their environmental attributes, rather than restructuring the configuration of components and their ties. In contrast, data-driven approaches postulate that people do, in fact, consider the information elements individually (e.g. Higgins and Bargh, 1987). Thus, component templates are more likely to provide a

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new and important perspective for ideation, complementing the unbounded methods. Accordingly, the present research extends the potential value of the template approach by proposing procedures for utilizing component templates in ideation, and examining the usefulness of the four leading templates that operate on the components of the product. Another extension involves testing the usefulness of the approach among managers in relevant ideation tasks.

Construction of Templates and their Procedures The characteristics of a product can be divided into components (objects such as the wires, and electronic signals in a computer mouse) and attributes (variables of the product such as voltage, and the size of the shell). The intentional relations between two given characteristics (either between two components or between two attributes) are defined by links. The set of relevant components and their designed functions (defined by links) form the Configuration of the product. A partial configuration of a computer mouse is presented in Figure 1. Components are denoted by circles and links by arrows. In this example, there is a link between the wire and the electronic signal which the mouse is generating: The wire enables the signal to be transferred from the mouse to the computer. Note also that the wire may also inhibit smooth movement of the mouse. However, the latter is not defined as a link because it is not an intentional relation. Note also that the

configuration depends upon both the product structure and its usage context. In a regular context of use, the following links also exist: tracking system and the ball are responsible for producing an electronic signal that is associated with the mouse position in a two dimensional space. In order to create a new product, the dynamics of change have to be defined as well. Templates define systematic changes between an early configuration (i.e., a previous product version) and the one that follows it (i.e., the next product version). The changes between configurations can be expressed as combinations of elementary steps, termed operators. The six operators are including and excluding a component, linking and unlinking two components and splitting and joining a link. Transition from an existing product to a new idea can be accomplished by applying these fundamental operators in a defined sequence. While the template initially draws solely on product-based information, marketbased information is subsequently examined to complete the formulation of the product idea. In order to illustrate the template dynamics an example the portable computer category is used below.

The Replacement Template According to the Replacement template, an intrinsic component is removed from the configuration. However, the link between the removed component and the other components remains. This generates a temporarily inconsistent abstract structure. Because of the

Figure 1. a) A link between a wire and a mouse signal. b) A partial configuration of a mouse.

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dangling link, the operation is completed only when the missing component is replaced by another component. The replacement has to be an external component with a similar function to that of the removed component. This template (comprised of the operators sequence splitting, excluding, including, and joining) is described below and depicted in Figures 2 a±c.

1) Split and Exclude A partial configuration of a portable computer is presented in Figure 2a. An intrinsic component is eliminated from the configuration while preserving its associated intrinsic function. In the resulting intermediate configuration, this intrinsic function is not performed by any component and it remains an unsaturated intrinsic function. The intermediate configuration is a necessary step in the replacement procedure even though it represents an incomplete product form. In this example, the battery of the computer is eliminated but its

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``containing charge'' function remains to be performed. The resulting intermediate configuration is shown in Figure 2b.

2) Include a Suitable External Component The unsaturated function can be fulfilled by an external component. As this component is out of the manufacturer's control it has to perform a similar function, or be generally similar, to the removed component. Such a component might be the user's fingers (see Figure 2-c), whose activity can provide the needed source of energy.

3) Join By joining the incorporated component the configuration of a new product is defined (Figure 2-d). This new configuration creates a portable computer in which the keyboard charges its smaller battery. When the user clicks on the keys the energy is transformed to electrical charge.

Figure 2. The Replacement Template: a) A partial (initial) configuration; b) Splitting a link and excluding the unattached components; c) Including a suitable external component; d) Joining the suitable component to form a new configuration. # Blackwell Publishers Ltd 2000

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Figure 3. The Displacement Template.

The Displacement Template Here too, an essential internal component is removed from the configuration. However, unlike the former template, its associated link is removed as well. Upon excluding this component, all the components that fulfill a function related to this component are excluded from the configuration as well. In this case, a new idea for the product has to be based on a new appeal, one that the former product did not provide. The essential process of this template is illustrated by the portable computer configuration depicted in Figure 3. The result of excluding the screen and its function might be a smaller and lighter computer that is used solely for presentations.

The Component Control Template The Component Control template involves the creation of a link between one internal component and another internal or external component.

radiation implies that a meaningful benefit will be provided by reducing the radiation that disturbs the eyes. A new configuration illustrating this template is presented in Figure 4.

The Division Template According to this template, a component is split into two components and each new component becomes responsible for a different function (e.g., splitting the ingredients of a strong washing powder to produce two brands, one regular and one stronger for highly soiled laundry. In the context of the portable computers category an example of this template might be a set of different mice: An internal and external one. The outcome of the division template is depicted in Figure 5. These four component templates were found to be recurring in a series of mapping studies reported in Goldenberg, Mazursky, and Solomon (1999a) in which four product classes were examined: Soap category, hygiene products, bank accounts, and sneakers. Of the four component templates, the range of

1) List the External Components External components, by definition, come into contact with the computer at points in time (e.g., user's fingers, eyes, table etc.).

2) Include an External Component In our example, consider the user's eyes, which are affected by the screen radiation.

3) Link the Included Component to One of the Internal Elements or Create a Link Between Two Components that Directly Influence the Included Component. The new link between the screen and the

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Figure 4. The component control template. # Blackwell Publishers Ltd 2000


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Figure 5. The division template ± two mice in portable computers (the user can choose which one he wants to use). Component Control frequency was 10±30 per cent, Replacement ± (51)±19 per cent, Displacement ± 1±6 per cent, and Division ± 1.5±4 per cent).

Can Templates Explain and Predict the Emergence of Blockbuster Products? The answer to this question is: Definitely in the case of some of them, but not all of them, partly because the paradigm we present adheres to rules of parsimony and, as in the case of other comparable explanatory approaches, it does not purport to account for all random events. However, we claim that instead of competing for an exhaustive explanation rate, the relevant question is whether such new blockbuster products can be uniquely explained by applying the taxonomy of templates based on past successful product-trends. Consider, for example, the famous 3M's ``Post it'' (see detailed description in Freeman and Golden, 1997) which was invented incidentally. Internal testing within the 3M organization produced extensively enthusiastic employee reactions. However, although the results obtained in test marketing conducted in four cities were acceptable, they


were not outstandingly optimistic. Nevertheless, careful inspection of the data by the firm's executives indicated a high sales potential when promotion involved free sampling and demonstration. It was that combination of selling effort that elevated purchase intention scores markedly, making Post-It the most successful new product of 3M by 1984, and subsequently placing it among the top four office supply products, along with copier paper, file folders, and cellophane tapes. For another example, consider the invention and early introduction of the ``Walkman'' (for a detailed description see Mingo 1994). In this case too, the invention was not initially intended. Indeed, even during the first stages following its introduction, the marketers did not envision the success potential of this product. The earlier monophonic ``Pressman'' which had a recording device failed and was abandoned. Attempts to make it smaller in size failed too, because the recording system did not fit in its small size. Rather than invest any more effort, it was put aside and used by the company's engineers for their entertainment. Only after the integration of this concept and that of a light headphone, was the Walkman concept defined. These are but two examples of a host of classic new product breakthroughs that can

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be characterized by two important features; first, they match one of the templates defined and illustrated in the previous section, and second, the input of consumer needs, derived from assessment of current market trends at the invention stage, did not contribute to the accurate appraisal of the products as major long-term marketing achievements. Figure 6 provides the formal representation of examples of well-known product successes that can be depicted as extrapolation of product component templates. Note that the sequence of events underlying their development can be portrayed in a well-defined manner, and thus, although in reality, they emerged accidentally, they could have been foreseen.1 The templates provide a ``skeleton'' that relies on past product-based information for new inventions; the scope of possible solutions is finite and manageable, and invariant to the random process. Obviously, in order to create an operational agenda of stages that might replace the accidental nature of such inventions, two conditions must be met. First, the approach has to be trainable, that is, knowledge of the templates has to be assimilated by workshop participants, and applied by them in the desired context. Second, measures of creativity and performance must have the capacity to differentiate between inferior and superior ideas and allow for an early screening by experts in market knowledge. In the following, we report a preliminary study by examining the trainability of the templates, and Studies 1 and 2 which assess the value of ideas generated by applying template knowledge, by comparing them with those generated by training in rival unbounded methods.

Assessing the Advantage of the Templates

(including attribute dependency and the four component templates) with about equal time devoted to each template. In all cases the training and examples used were drawn from contexts and product categories different from those used in the study. Upon indication that the templates were satisfactorily comprehended and could be used in ideation, the participants were asked to generate product ideas relating to a specific type of medication. Then, the next template was presented. In the ideation task participants were encouraged to use conventional ideation methods that involve ``total freedom'' idea generation, such as brainstorming, and to elicit as many different ideas as possible. All participants were previously trained in, and were familiar with, applying such conventional methods. In addition, idea generation was conducted by using the creativity template taxonomy. Although it is recognized that ideation might have been skewed toward template usage rather than reliance on conventional methods, the objective of the preliminary study was nevertheless to assess whether participants could generate a meaningful number of ideas that match the templates.

Results and Discussion The results are presented in Table 1 (column 1). Overall, 55 ideas were obtained by the group. The template procedures yielded 34 ideas (62 per cent of the total number of ideas). Since the main task of the group was to generate ideas for new products, the obtained number of templates-based ideas implies that thinking within bounded scopes is as natural as divergent, unbounded thinking. It should be noted that for the company this workshop represented a ``real-life'' task: Neither the participants nor the instructor were told that the results of their work were also a part of an experiment.

Preliminary Study The purpose of the preliminary study was to provide a first step in assessing whether the templates are trainable as an ideation method, and whether individuals responsible for new product decisions in their company can actually generate template-based ideas following such training. A workshop was designed to train the participants to use the template taxonomy and to implement it in developing new product ideas. Five senior employees of a mid-size pharmaceutical company participated in a workshop consisting of a series of four sessions, each lasting about four hours. In that workshop the participants were trained in all five templates

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Study 1 The study was a field research focusing on the effectiveness of the creativity templates. Specifically, the study was designed to examine whether the utilization of creativity templates in the ideation process leads to superior outcomes. Procedure. Five senior employees of a credit company participated in a training workshop. The workshop consisted of a series of six sessions, each lasting about four hours. The workshop was designed to teach the participants about the template taxonomy and to



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Figure 6. Template-based representation of several successful products. # Blackwell Publishers Ltd 2000

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train them to implement it in developing new product ideas. Participants were first trained with the use of conventional ideation methods involving ``total freedom'' in idea generation, including brainstorming, synectics, lateral thinking, and free association. Training ceased when participants indicated comprehensibility and ability to utilize the methods in ideation. Participants were then asked to generate as many different ideas as possible. This phase yielded 14 ideas. This was followed by training in the use of templates. Subsequently, participants re-engaged in idea generation, this time, based exclusively on templates. That session yielded 30 ideas. Table 1 (column 2) displays the breakdown of ideas into template and non-template categories. About a month after the workshop ended, all the ideas were rated for their overall quality. Eight judges performed this rating procedure ± five have been the participants in the workshop and the remaining three were senior marketing professionals who had not participated in the workshop. The one-month delay in the rating procedure by one month was introduced to counter undesired effects attributable to recall of the classification of ideas as originating from either conventional methods or from creativity template procedures. The potential confounding due to self versus external rating effect was assessed by performing individual level analysis for each judge separately, as reported in the Results section below.

Results and Discussion All eight judges were asked to rate the ideas on a five-point overall quality scale. Following an Intra-classification procedure, which yielded a reliability level of .70 (Winer, 1971,

p. 283) the ratings were averaged. The analysis focused on the differences between the ideas derived from the template procedure and those generated by using conventional methods. Comparison between the ratings of the template-based ideas and those generated by using conventional methods indicated the advantage of the former over the latter methods (F(3,40)=17.37, p5.0001). Comparisons between each one of the templates individually and the conventional methods produced significant differences (p5.001 in all comparisons), whereas no differences were found in comparison among the templates themselves (in all comparisons p4.10 or above). In order to assess potential bias originating from the fact that five of the judges had also participated in the workshop, the ratings of the participant judges was compared with those of the non-participating judges. The mean judgment of the former group was 3.13, whereas that of the latter group was 3.18, with no significant difference between the two (t(42)51, n.s.). Furthermore, the ratings were analyzed individually for each of the eight judges. In all eight cases, the ratings of the creativity template-based ideas were significantly higher than the ratings of ideas generated by the conventional methods (all t's ranged between 2.09 and 4.77 and were significant at least at p5.05 level). Thus, the five workshop participants as well as the three non-participants rated the templatebased ideas as superior. The comparison in Study 1 was between template-based ideas and ideas generated by conventional methods. Although, for the sake of testing the effectiveness of the template method it was useful to compare it with other methods, Study 1 was confounded by the difference in the timing of the measurement

Table 1. The Distribution of Generated Ideas Templates

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Study 2

Attribute Dependency Component Connection Replacement Displacement Division

16 10 6 2 ±

16 10 ± ± 4

16 9 3 ± 3

Total

34

30

31

Non Templates Total

20

14

28

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between ``total freedom'' methods and the bounded thinking approach. In Study 2 comparison between template and non-template ideas was conducted only after participants had been exposed to both the conventional and the template approach. The difference between template and non-template ideas depended on whether or not the ideas fitted the templates. It should be noted that the objective was to obtain a real life application regardless of any preference to the source of the idea, that is whether it stemmed from the template approach or from other approaches.

Study 2 Procedure. The procedure of Study 2 was essentially similar to that employed in Study 1 except for two main differences. First, the workshop took place in a bank and involved the domain of saving accounts using senior employees responsible for designing and planning of saving accounts. Second, ideas were generated upon completion of the workshop after balanced training in both ``total freedom'' and template-based ideation. Overall, 59 ideas was generated; 31 ideas fitted the templates whereas 28 did not. Table 1 (column 3) displays the breakdown of ideas into the templates and non-template categories. The ideas were subsequently presented to two banking experts who served as judges in evaluating the ideas. The judges were unfamiliar with the methods and were blind to the categorization of ideas into templatebased and non template-based ideas. The ideas were rated on the same scale as in Study 1. The mean judgement obtained for template-based ideas was higher (mean=3.91) than for non template-based ideas (mean=2.85, F(4,54)=6.24, p5.001). There was no significant difference among the templates-based ideas (in all the comparisons p4.35 or higher).

the breakdown of judgments by the individual template categories is presented in Table 2.

Conclusions It is sometimes hard to define a clear-cut divide between the unstructured and total freedom advocates, and the focussed or structured advocates within the creativity field. Indeed in many reported cases random events helped to overcome some psychological blocks. The main conclusion from the present study is that a bounded approach, which draws on past successful templates of product development, can contribute to reduction of the reliance on randomness characterizing the invention of many new and successful products. In addition, such an approach can be utilized to ideate promising product concepts for the future. The article outlines the structure of the leading component templates by formally specifying the sequence of operators which jointly compose a set of welldefined manipulation process of product components. The operation focuses on the components that can be uniquely and comprehensively defined, and have the capacity to serve as a suitable source for a common language interaction between R&D and marketing personnel in the ideation stage. The indication that past product-based trends may serve as a useful source for ideation should shift attention from sole reliance on unbounded ideation approaches. In addition, the templates approach may add value to the ideation methods that draw new ideas from current market needs. While responsive approaches that are based on analysis of the current market needs (obtained by the majority of the marketing research methods) are highly useful in the more advanced stages of the product life cycle, the generalization that these may be

Bounded approaches contribute

Table 2. Mean Ratings of the Ideas Template

Attribute Dependency Component Connection Replacement Displacement Division Non-template


Study 1

Study 2

Means

S.D.

Means

S.D.

3.4600 3.6760

0.5273 0.3257

4.000 3.7778 3.6667

0.7071 0.7949 1.0408

3.1900 2.3679

0.8040 0.4717

4.1667 2.8571

0.7638 0.8909

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similarly powerful in invention and should therefore dominate the ideation process, is questionable. Reservations with regard to the use of consumer reactions in ideation have been echoed in a number of past studies (e.g., Davis, 1996). For example, Urban and Von Hippel (1988) noted that while customers may be able to express their opinion about existing products and even predict whether or not they will succeed, they may be unable to supply researchers with information about future needs and predict which products will be needed in future. Competition, too, does not always serve as a productive source for ideation. Even if attempts to create a competitive edge require knowledge of the entire spectrum of available products as well as other previously contemplated concepts, the ability of that knowledge to improve the quality of ideation is questionable. Chan and Mauborne (1999) noted recently that the only way to avoid a war between firms is differentiation. The problem is that they do not know how. The fact that they have to be creative is known to them but ``thinking out of the box'' is only a general strategy. They do not know where to start and what exactly they should be doing. The recurring templates in product-based trends serve to prescribe bounded ideation approach. Recent studies also provide justification for the use of structured ± procedural approaches in that they avoid the ``convenient light'' syndrome (Zaltman and Higie, 1993) associated with traditional unbounded ideation methods. In addition, reliance on random events (or luck) is both inefficient and, for the most part, unreliable. Many new products have emerged as a consequence of coincidence. However, we do not have reports on numerous other cases in which random events led to failure or to no ideas at all. The pure assumption of randomness leads to the conclusion that reliance on the occurrence of such an event is not sufficiently efficient. Another major conclusion is that the template approach should be assessed not merely as an ideation method but in its role within the broader scope of integration between R&D and marketing activities. Product-based trends that underlie the templates represent long-term reflection of past marketing realities. The template approach projects their extension to the present marketing environment. In other words, the product ideas that are the most natural extension of past trends are offered as potential ideas for the present. The main task then, becomes examination of their appropriateness in the current market situation (which is a well-defined problem,

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Tauber, 1972). If the emergence of latent need to an existing need resembles an occurrence in the past, it is likely that the templatematching idea will be recognized as superior idea in the current market situation as well. This process coordinates and unifies the ideation objectives of R&D and marketing personnel via a comprehensive and common language. Indeed, this convergence represents the ultimate objective of the template approach. It is important, in future research to address the roles of structured vs. random driven creativity and their interplay. There might be situations that one approach is superior to the other and vice versa. There is also a possibility that the two effects can be unified. For example, in a recent work, Rickards & Moger, (1999) discussed benign structures as ways of bounding yet liberating ideas in teams (and for individuals). It may appear that efforts to introduce randomness are not uniformly ànti-structural' they may be versions of avoiding premature closures. IT is also important to note that if we accept the template constraining as a closure, we can still improvise on the component we remove or replace, and how we control the external component within the template boundaries. Thus a productive balance between randomness and predefined restrictions is formed.

Note 1. In order to conduct a more systematic examination of template-matching ideas underlying blockbuster products, the 50 published case histories reported in Freeman and Golden (1997), out of the 200 that were examined, were analyzed. Out of 23 cases identified as random invention 19 were found to be template-based.

Acknowledgement This research was supported by grants from the K-mart foundation and the Davidson Center. The authors wish to thank SIT Int. for a great help and assistance in the empirical studies. E-mail addresses for correspondence are [email protected] and [email protected].

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Jacob Goldenberg is a Lecturer in the Jerusalem School of Business Administration, The Hebrew University of Jerusalem, Mount Scopus, Jerusalem. David Mazursky is a lecturer at the School of Business Administration, The Hebrew University of Jerusalem, Israel.

Volume 9

Number 2 June 2000

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