High Speed Management, Tacit knowledge, Creative Chaos, and Cultural Changes:

The Incredible Transformation of NTTDoCoMo under Keiichi Enoki, Mari Matusunaga, and Tadeshi Natsuno

Linda Zambenini

01/19/2001

Introduction

The aim of this paper is provide a literature review and analysis of information regarding the Japanese digital wireless company NTTDoCoMo using the framework of Organizational Information Resources (OIR), specifically in the context of information/knowledge and the information/knowledge worker.  NTTDoCoMo (doco mo means "anyplace” in Japanese) was formed in 1992 as the wireless offshoot of NTT (Nippon Telephone and Telegraph), a state-owned company that had the well-deserved reputation of being a stuffy, rigid, hierarchical, old-style corporation wary of change. NTT considered DoCoMo a “dumping ground for wild-eyed engineers and failed technocrats who could not walk the company line.” Today it has a market cap twice as large as its former parent. (Herskovitz, 2000) The aim of this paper is to show that it accomplished this feat by dramatically changing its corporate culture: utilizing tacit knowledge of outsiders, creative chaos, transformational leadership, paradigm shifting and a new style of management - that of high-speed management. 

Literature Review

Brief Background on NTTDoCoMo

NTTDoCoMo’s success has come about since February 1999 when it created and marketed a revolutionary and wildly successful mobile Internet service called I-Mode - the world’s most successful mobile Internet service. I-Mode, unlike its disappointing competitor WAP (Wireless Application Protocol) is full-color, always-on and packet-switched. Due to the success of i-Mode, NTTDoCoMo is now Japan's largest company, the world's number one mobile phone company (by market capitalization), number two in the world (behind Vodafone) in number of subscribers, undisputed global leader in wireless Internet access, and Japan’s largest Internet provider. (Hoover’s, 2001) I-mode's success has been nothing short of meteoric. It has attracted nearly 17.7 million subscribers since February, 1999 debut and is gaining new customers at the rate of more than 50,000 - 60,000 a day! In fact, 81% of the world's mobile Internet users are in Japan! And NTTDoCoMo has about three-fifths of Japan's booming mobile phone market. (Eurotechnology, 2001) (See Appendix for further background)

Organizational Knowledge Creation, Tacit Knowledge and Creative Chaos

One of the reasons for NTTDoMo’s success is that they broke from the cultural rigidity of their parent company and brought in talent from outside, thus creating a new organizational knowledge based upon their tacit knowledge. Drucker (1993) stated that knowledge is the “only meaningful resource” in the new economy – beyond the traditional resources of labor, and capital. Tacit knowledge according to Nonaka and Takeuchi (1994) is “personal knowledge embedded in individual experience…personal belief, perspective and value system” and they argue that it is the “most important kind of knowledge…and is an important source of Japanese companies’ competitiveness.” In fact, they argue that unlike Westerners, Japanese primarily view knowledge as tacit (e.g.: hunches, intuition, and insight) and not as explicit (e.g.: “logical” numbers and facts).  Indeed, they state that Japanese culture values personal experience over intellectual abstraction. They believe, as well, that Japanese companies have become successful because of their skill at “organizational knowledge creation.” They further state that, in times of uncertainty, such as during the recent recession in Japan, companies “often seek knowledge held outside the company…almost in desperation.” But Japan uniquely “takes this outside knowledge and widely shares it within the organization.” This “linkage between outside and inside” is what has made successful Japanese companies successful they argue. 

Other factors that seems to apply to the incredible transformation at NTTDoCoMo are theories of fluctuation and creative chaos.  Nonaka & Takeuchi (1994) find that in successful Japanese companies there is fluctuation and creative chaos. They even point out that top management often creates this on purpose to “shake up the habitual, comfortable and complacent state of employees.” Out of this chaos a type of order and creativity emerges. This breakdown “brings about dialog and…helps create new concepts,” creating, “order out of chaos” they propose. The authors also state that at times chaos is created independently of top management’s philosophy (as happened when NTTDoCoMo leadership bucked the stuffy NTT line). They go on to quote two of Japan’s great corporate leaders the chairman of Canon who said of this phenomenon: “The role of top management is to give employees a sense of crisis as well as a lofty ideal;” and the former chairman of Fujitsu who put it this way:

“Relaxed in a comfortable place, one can hardly think sharply. Wisdom is squeezed out of someone who is standing on the cliff and is struggling to survive…”

Both the creation of organizational knowledge via tacit knowledge and the use of creative chaos seem to come into play in the transformation of NTTDoCoMo.

High-Speed Management Style, Transformational Leadership, and Paradigm shifting

Several theories apply to the management style of NTTDoCoMo, and help explain why it became so hugely successful.  In the book Organizational teamwork in high-speed management (Cushman & Ju, 1995), the authors state that in the new economy as the environment becomes increasingly unstable, to be successful, it is necessary for organizations to move from having a formal structure to a decentralized flattened hierarchy, thus increasing communication. One way to do this is via what they describe as a paradigm shifter: “one who throws out old rules of the game and institutes radical change, a leader who foments revolution, not evolution.” King (2000) describes another theory that applies to DoCoMo, that of high-speed management which employs “communication principles…creating a rapid response system that is innovative, adaptive, flexible and efficient.” One successful type of leader in high-speed management is a transformational leader. Obloj (1994) describes a transformational leader as a charismatic leader who has a compelling vision and “breaks existing frames and energetically rebuilds organization;” and “has the courage to think the unthinkable, dream the unattainable…and creates motivation to overcome the status quo.” He also states that transformational leaders “encourage and empower people, helping them to build teams, share information, and unleash their energy, initiative and creativity.” According to Conger and Kanungo (1988), transformational leaders exhibit self-confidence, have an extraordinary vision and strong convictions, exhibit extraordinary behavior (perceived as unconventional and novel) and have an image as a change agent (seen as an agent of radical change rather than a “caretaker of the status quo”).  Another key thing that DoCoMo did was to put the consumer and user-friendliness first before the creation of the technology.  Cushman & King (1994) state that a successful company today must “always know what their customer needs” and that “…user friendliness, ease of service and competitive pricing, are essential for market penetration.”

Analysis

NTTDoCoMo indeed, used the forces described above in developing I-mode. The project was begun at NTTDoCoMo in 1997 by three mavericks, Keiichi Enoki, Mari Matusunaga, and Tadeshi Natsuno. (Rohwer, 2000) Initially, Enoki a “youthful minded” engineer, who has now been named one of the most influential people in the world of e-commerce by Business week, was put in charge of the project. He had a reputation for speaking his mind and quickly began bucking the conservative management at NTT who could not understand why people would want to browse the web on a mobile phone. He told them bluntly: “The device is not for you, it is for your children and grandchildren.” Indeed he had come up with the idea as he watched his own children play computer games on similar small devices. He knew it could be a winner. (Herskovitz, 2000) More amazingly, he committed corporate sacrilege by hiring not only a female but also an outsider, Mari Matsunaga (left), to develop the content of I-Mode. Matsunaga was a savvy and successful editor-in-chief extraordinaire with a degree in French Literature who had transformed the failing publishing company, Recruit, into a powerhouse. To Enoki’s surprise, Matsunaga was a self-described Luddite - when Enoki hired her in July 1997, she didn’t even do email or own a mobile phone!  Nonetheless, Enoki was aware of her incredible reputation in Japan as an “ideas person” (Large, 2000) and as “one of the most savvy people for knowing how to sell information to the consumer market.” (Herskovitz, 2000)  By hiring her he tapped into her tacit knowledge and something else he didn’t bargain on. Matsunaga turned out to be a paradigm shifter and charismatic transformational leader. Matsunaga embodied the very definition of a transformational leader. As soon as she came in, she turned the stuffy NTTDoCoMo corporate culture on its head. The first thing she did was throw out the boardroom table and bring in big squishy sofas and refrigerators full of beer and wine. The laid-back conference room was nicknamed “Club Mari.” The three young mavericks spent a lot of drinking beer and brainstorming together there.  Matsunaga quipped in her charismatically self-confident style: “What stiff-as-a-rod DoCoMo needed was a place where people could make themselves at home and get the alpha waves flowing…You can’t do that in an ordinary meeting room.” (Stoker, 2000) Barely 5 feet tall, this petite imp of a woman is said to have a “giant personality.” She was truly a transformational leader who “created motivation to overcome the status quo.”  Stoker (2000) states:

“…she has a loud infectious laugh, and unlike many of the Japanese, underscores her words with dramatic arm gestures. She is the sort of boss for whom you could imagine employees lying in front of tanks. You also get the feeling she would expect nothing less.”

She thumbed her nose at the ingrained NTT corporate vertical structure encouraging senior and subordinate staff to brainstorm and schmooz together. “Revamping the prevailing corporate culture has become a prerequisite for success in the New Economy,” Matsunaga has stated. (Large, 2000) In developing content for I-mode she had many heated disagreements with the technical-geeks who saw the technology as paramount. She thought that, first and foremost, content was king and that the device should be simple to use. Additionally, she wanted to avoid using the term “Internet” since many Japanese saw this as something “difficult” or “scary.” She thought the service should be something regular people could relate to: a convenience store -  “information anyplace, anytime and anywhere.” Her crucial role was in understanding what type of information people wanted and would pay for; and her other insight was in marketing I-mode to teenagers, and the man or woman on the street, unlike the unsuccessful WAP, which has been targeted to businessmen. (Stoker, 2000) Matsunaga is now a celebrity in Japan and Fortune, (2000) crowned her Asia's top businesswoman and one of the top 50 businesswomen in the world.

The third maverick in the development of I-mode was another outsider: a young, energetic Net entrepreneur, Takeshi Natsuno. He not only understood the technology that would be needed, but developed both the successful business model of charging a small commission on portal sites that are accessed, and came up with the idea of lump sum billing of all the micro-purchases of products and services sold via I-mode. He and Mari both understood that to be successful I-mode service had to be user-friendly and cheap. (Herskovitz, 2000)

 Implications for Management

NTTDoCoMo’s success story, reminds us that in the New Economy organization, speed, flexibility, adaptability, and innovation are paramount rather than the old ridged hierarchical organizational style. This tale also shows us that sometimes the rules for the New Economy don’t work as expected. Typically hi-tech companies create a new technology and then try to stimulate demand for it. This is what happened with the release of WAP, now crowned a “hi-tech turkey.” Technology was number one for the WAP companies and the consumers’ wants and needs were considered second if at all.  NTTDoCoMo did the opposite. Under the leadership of Mari Matsunaga, content and the consumer were kings and technology was only developed after good content was in place.  In a similar vein, WAP service is expensive, difficult to use and targeted at businessmen, whereas NTTDoCoMo under Matsunuga’s savvy marketing leadership made sure that I-mode service was cheap, easy to use and targeted at teens and “people on the street.”  (This is similar to the way Nokia attained success when they released the world’s first colorful green cell phone and targeted it toward common people rather than the previous cell phones that were serious, black and targeted at businessmen.) As a result of these differences consumers are using WAP phones to access the Internet less than once a week, whereas, I-mode users are viewing an astonishing 300-400 web pages a month. (Pringle, 2000)

Executive Summary

By valuing and utilizing transformational leadership, paradigm shifting, and high-speed management style, in addition to organizational knowledge creation, tacit knowledge and creative chaos, NTTDoCoMo has developed I-Mode, the most successful mobile Internet system on the planet. As a result of its meteoric success, NTTDoCoMo has become Japan's largest company, the world's number one mobile phone company (by market capitalization, undisputed global leader in wireless Internet access, and Japan’s largest Internet provider. Takeuchi and Porter (1999) state that what Japan needs today are leaders who are “not afraid to rock the boat and make bold moves…they exemplify the risk-takers who are emerging in Japan today” and further, that to pull out of its current slump: “Japan must embrace competition, innovation, and bold leadership.”  In NTTDoCoMo has done all three of these things in the creation of i-Mode.

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Appendix

NTTDoCoMo Background (continued)

WAP proponents are praising I-mode for proving that a real market exists for the wireless Internet. And many experts are now predicting that if i-Mode doesn't replace WAP it will hybridize with it.

Now NTTDoCoMo’s i-mode business model looks ready to reverberate around the world.  Utilizing their “global strategy” of conquest they have established a foothold in Europe (with Dutch KPN Telecom) and Asia (with Hutchinson Whampoa in Hong Kong - which is now the 2nd place in the world to access i-Mode). (Vaughn, 2000).  And in November 2000, NTTDoCoMo acquired 20% stake in KG Telecom in Taiwan. (NTTDoCoMo, 2000a)  Continuing its manic global acquisitions in late November 2000, NTTDoCoMo bought 20% of AT&T Wireless (NTTDoCoMo, 2000b) and shortly afterward set up an advisory panel to help them with their entry into the US market. (Clifford, 2000)  Later this year, I-Mode will be available in Italy, Germany, Belgium and Holland through alliances with Dutch KPN and Telecom Italia Mobile (TIM). And with the help of these partners will be setting up research labs (to create I-Mode applications) in both Italy and Holland this year. (AllNetDevices, 2001)