Developing Knowledge Convergence through a Boundaries Vision—A Case Study of Fujifilm in Japan

• Date: 01 October 2016
• Author: Tomoatsu Shibata,Mitsuru Kodama
• DOI: http://doi.org/10.1002/kpm.1511
• Published date: 01 October 2016

■Research Article

Developing Knowledge Convergence

through a Boundaries Vision—A Case

Study of Fujifilm in Japan

Mitsuru Kodama

1

*and Tomoatsu Shibata

2

1

College of Commerce, Nihon University, Japan

2

Faculty of Economics, Tohoku University, Japan

In recent years, there has been a growing need for strategies that provide for convergence in the development of prod-

ucts and services and building of business models that integrate different technologies and services and span different

industries. The question is: What kind of strategies and organizations should a company construct for R&D activities

to develop new products, services, and business models that will be realized through the integration of different tech-

nologies and convergence across industries? The key concept in a company’s actions for adapting to (or creating) a

worldview of such convergence lies in knowledge convergence through a boundaries vision, which this paper

discusses.

The paper presents a case study that analyzes in detail the R&D framework of Fujifilm as a company that achieved

success in new business areas by realizing knowledge convergence through a boundaries vision. In the days of ana-

logue photographs, Fujifilm stood alongside Kodak of the USA as a leading brand in the photo industry. Foreseeing

the steady decline of the analogue business, however, it moved into other business sectors such as pharmaceuticals,

health care, and cosmetics as a new departure that it refers to as the “second foundation”and, in so doing, achieved

spectacular success.

The main objective in its R&D strategy for the second foundation was to “create new value.”To do this, Fujifilm sets

its sights on achieving what it described as “intellectual fusion”(by combining and integrating different fields and

technologies) and “innovation”(by creating new, differentiated technologies) and, as a result, to contribute to society.

We will now analyze the mechanism of knowledge convergence through boundaries vision in Fujifilm’s R&D and

new business strategy for supporting its second foundation, which was a key factor in its successful business trans-

formation. Copyright © 2016 John Wiley & Sons, Ltd.

INNOVATION THROUGH THE CONVERGENCE

OF DIFFERENT TECHNOLOGIES

In recent years, global hi-tech companies are becom-

ing increasingly interested in the development of

new products and services based on new technolo-

gies achieved through the “convergence”ofdifferent

technologies as a guiding principle in the develop-

ment of new products and the development of new

business in other fields that will differentiate them

from their rivals. This is because in many cases

new concept products and services that had never

existed before are realized through the convergence

of technologies in one area with technologies in an-

other. Thereis a growing need for business strategies

that provide for convergence in the development of

products and services and building of business

models that integrate different technologies and ser-

vices and span different industries.

Therefore, the research question this paper will

consider is: What kind of R&D strategy should a

company adopt to accommodate an R&D view of

convergence as described earlier? As one example,

this paper presents a case study that analyzes in de-

tail the R&D framework of Fujifilm as a Japanese

company that succeeded in developing new busi-

ness areas. In the days of analogue photography,

Fujifilm stood alongside US Kodak as one of the

leading brands in the industry in the global market

and achieved distinction not only for its superior

technology and quality but also for its high earnings

attributable to its business model based on film de-

veloping and film paper sales, making it the envy

of other industries. Foreseeing the steady contraction

*Correspondence to: Mitsuru Kodama, College of Commerce,

Nihon University,5–2–1 Kinuta, Setagaya-ku, Tokyo157–8570, Japan.

E-mail: kodama.mitsuru@nihon-u.ac.jp

Knowledge and Process Management

Volume 23 Number 4 pp 274–292 (2016)

Published online 13 June 2016 in Wiley Online Library

(www.wileyonlinelibrary.com) DOI: 10.1002/kpm.1511

Copyright © 2016 John Wiley & Sons, Ltd.

of analogue business through processing labs because

of the growing popularity of digital cameras and

printers, Fujifilm not only entered into digital X-ray

diagnostic systems and digital camera business but

also further broadened its business reach by breaking

into the medical equipment and healthcare business

and cosmetics business.

While more than a few companies that transformed

their businesses have viewed the transitional period

from analogue to digital as an opportunity, in an

environment where basic technologies and products

of a business rapidly become obsolete, companies that

have succeeded in making spectacular business trans-

formations to date are few. Fujifilm happens to be

one of these. In fact, in 2013, it was selected as one of

Thomson Reuters Top 100 Global Innovators as one

of the most innovative corporations and research bod-

iesintheworld.ThemainobjectiveofitsR&Dstrat-

egy for the second foundation was to “create new

value.”To do t hi s, F uj ifilm aimed to achieve “intellec-

tual fusion”(by combining and integrating different

fields and technologies) and “innovation”(by creating

new, differentiated technologies) and, as a result,

achieve specific outcomes that would contribute to fu-

ture society.

What became the key factor in its successful busi-

ness transformation in terms of R&D and new busi-

ness strategy for supporting the second foundation

was the process of “knowledge convergence through

boundaries vision,”which is presented as the theoret-

ical framework of Fujifilm’s transformation in this

paper. In knowledge convergence, not only is the con-

vergence of diverse kinds of knowledge across differ-

ent organizations and areas of specialization within a

company vital but the practical processes of building

global networks with outstanding global partners and

integrating superior knowledge dispersed throughout

the world with knowledge within the company are also

tasks of top importance. The driver that accelerates this

kind of knowledge convergence within and outside a

company is the concept of boundaries vision, a thinking

frame that practitioners have. This paper will first dis-

cuss the framework of knowledge convergence through

boundaries vision. Second, it will discuss the research

methods used for this paper. Third, it will present a

detailed case study analyzing the R&D framework of

Fujifilm. And finally, it will present managerial and

practical implications and future research iss ues.

KNOWLEDGE CONVERGENCE THROUGH

BOUNDARIES VISION—CORE FRAMEWORK

Knowledge boundaries

In the knowledge economy, the diverse knowledge

people possess (technology is one element of this

knowledge) becomes the source of valuable products,

services, and business models that create new com-

petitiveness. The convergence of diverse technologies

and different industries results in the creation of new

products, services, and business models that span

various boundaries to form value chains that become

new strategy models. Therefore, as companies move

to create new business, they must rethink their busi-

ness processes beyond the boundaries of knowledge

held by people, groups, and organizations.

To succeed in new innovation that transcends dif-

ferent areas of specialization, the convergence of dif-

ferent types of technologies, that is, the convergence

of knowledge is crucial (e.g., Klein, 1990; Porter et al.,

2006). Therefore, new innovation can be understood

as a process that occurs when knowledge particular

to different fields of specialization is combined in a

technology convergence process (e.g., Hacklin et al.,

2009; Kodama, 2005a, 2009); in other words, a

knowledge convergence process occurs at a level

that spans different fields of specialization. Technol-

ogy convergence occurs when knowledge of a differ-

ent nature, previously belonging to separate

specialized area of technology, merges. Therefore,

for technology convergence to occur, there must be

a merging of knowledge that spans different fields

of specialization.

However, knowledge boundaries generally exist

between different kinds of knowledge (Carlile,

2002). In other words, contents of an unfamiliar na-

ture between different kinds of knowledge as well

as idiosyncratic differences exist without fail. For ex-

ample, a company is divided into various functional

organizations and areas of specialization, and com-

panies and industries are separated by various sec-

tors and business types. Also existing within these

respective divisions is a host of boundaries from

macrolevel to microlevel, and these include both

visible and invisible boundaries. Various knowl-

edge boundaries attributable to not only organiza-

tional boundaries as seen in sectionalism among

practitioners in a company but also values, back-

grounds, and specialist fields of the respective prac-

titioners also exist at the microlevel (Figure 1). The

existence of such boundaries among various forms

of knowledge can isolate mental models and path-

dependent knowledge that practitioners have and can

also become a barrier to new innovation (e.g., Spender,

1990; Kogut and Zander, 1992; Leonard-Barton, 1995;

Nonaka and Takeuchi, 1995; Brown and Duguid,

2001; Carlile, 2002).

Figure 1 Existing various boundaries

Developing Knowledge Convergences 275

Copyright © 2016 John Wiley & Sons, Ltd. Know. Process Mgmt. 23, 274–292 (2016)

DOI: 10.1002/kpm