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Essential Qualities of Innovation-Producing “Ba”

Special Conference 2016

FUJITSU Research Institute

2 3Essential Qualities of Innovation-Producing “Ba” Essential Qualities of Innovation-Producing “Ba”©FUJITSU RESEARCH INSTITUTE 2017

This document presents an overview of “Essential Qualities of Innovation-Producing Ba”, a special conference hosted by Fujitsu Research Institute on November 9, 2016. The main ideas discussed at this conference will be outlined below.

Knowledge creation activities are essential to realizing innovation, and such activities begin with individual people. Knowledge is created and expanded by applying both tacit knowledge and formal knowledge through social interaction. In order for knowledge creation activities to take root internally at corporations on an organizational level, it is necessary to systematically amplify the knowledge created by individuals and to crystallize it into a corporation’s knowledge network.

At present, corporations are proactively undertaking open innovation activities. In health and medical care, the environment and energy, and municipal services, in order to address problems and produce innovative solutions, co-creation activities involving participation by stakeholders from various sectors, including corporations, universities, government, NPOs and NGOs, as well as private citizens, are also becoming more active. In companies and governments, facilities called Future Centers are being established, and co-creation activities in the vein of Living Labs are being launched as ba — physical spaces or non-physical contexts — where discussions can be held with various people.

However, in many cases sustained dialogue cannot be realized, and activities cannot lead to new knowledge creation or co-creation activities. The major root causes of this include that fact that companies do not sufficiently consider the ideal forms of ba for knowledge creation and ba for innovation, the provision of physical workspaces and co-creation, and the initiatives undertaken with stakeholders outside of the company. Even when contexts

Abstract

for new dialogue are established, it is necessary to reform employee awareness, and there are companies where neither such activities nor the appropriate mechanisms to support them are established towards knowledge creation.

Going forwards, as CSV and the collaborative economy expand, in addition to knowledge creation from sharing tacit knowledge based on mutually understandable homogeneous relationships — such as conventional supply chains and customers — many are working with diverse stakeholders, so we are entering an era where it is increasingly necessary to create knowledge from the integration of tacit knowledge among participants. In other words, now is the time when we must reconsider what makes an ideal ba for knowledge creation and ba for innovation.

This conference was conceived of to respond to this challenge by proposing new theories about ba for innovation. In order to create innovation, and to build and develop ba of knowledge creation, the conference was participated in by corporate stakeholders and private citizens who are active on a daily basis, taking action by their own initiatives and support practices to approach solutions to problems in cooperation with business operators, as well as leading figures from knowledge creation research institutes, who discussed what action and awareness reform is necessary for corporations in order to realize sustainable co-creation activities involving diverse individuals, and how to reform both external and internal corporate communication and co-creation. We hope that this conference and this article will serve as a catalyst for new discussion and practices to pinpoint the essence of innovation and establish ba for innovation and ba for knowledge creation with stakeholders, both in Japan and throughout the world.

Special Conference 2016Essential Qualities of Innovation-Producing “Ba”November 9th, 2016 in TokyoProgrammeKeynote Speech: Noboru Konno, Professor, Tama Graduate School of Business Research Report: Koji Nishio, Senior Research Fellow, Economic Research Center, Fujitsu Research Institute Panel Discussion: Panelist: Yoshio Iwasaki, Research Fellow, Mayekawa Research Institute Co., Ltd. Atsuko Saito, Principal Researcher, WORKSIGHT LAB., KOKUYO Co., Ltd. Shintaro Minami, Research Fellow, Research Department, Kyushu Economic Research CenterCommentator: Noboru Konno Moderator: Koji Nishio


What is indispensable for my research into knowledge creation and innovation are the places that support them. In 1998, I co-authored a paper on such places (ba) with Professor Ikujiro Nonaka of Hitotsubashi University, which was published in California Management Review, and the importance of ba is now commonly accepted within the fi eld of innovation. In the past, there were many discussions of ba within the context of organizations, but a broader approach based on a societal expansion of the concept has recently emerged in response to the interest in open innovation and the signifi cant shift in the relationship between companies and individuals.

In addition to this research, we are building an organization called Future Center Alliance Japan (FCAJ), creating networks with companies, ministries, local governments, universities and so on. Today, I will speak about the relationship between innovation and ba, and participatory ba and their design, based on my experience and research at FCAJ.

What is Innovation?

In his book Economics of John Maynard Keynes and Joseph Alois Schumpeter, Professor Hiroshi Yoshikawa of Tokyo University discusses economics through the lens of these two giants of the fi eld. Until now, we have been engaged in Keynesian economics, where strategies are devised to maintain current conditions. In the 1980s and 1990s, which was a relatively stable period, this approach worked well, but the 21st century represents a time of major global uncertainty and complexity. The era of simply producing goods and feeding them into the market has ended, and innovation has become the central issue in management. In that sense, one could say that it is Schumpeter who has indicated how economics will evolve in the future.

Creating innovative ideas is now seen as a role of the top management, and also the world standard. However, this is an “old-new” theme. For example, in Sony’s foundation prospectus written by co-founder Masaru Ibuka, he wrote that one of the goals with company ba was “To establish an ideal factory that stresses a spirit of freedom and open-mindedness, and where engineers with sincere motivation can exercise their technological skills to the highest level.” So, ba is the starting point. One can also see references to ‘open partnerships’ and ‘a network of free individuals, not a hierarchy.’

In the past, innovation was thought of as something that was done separately from core business activities, but in this “core business plus innovation” model, the infl uence of the core business was too strong, and subsumed any new initiatives. The key performance indicators (KPI) were also ambiguous, so many attempts at innovation were perceived as ending in failure. However, now we have entered an era where even core business models are facing annihilation. We must make a shift to include innovation management as an integral part of our core businesses.

In the background of this Schumpeter-ian innovation — where entrepreneurs take cracks at problems, challenges and barriers, keeping in mind the shifts in era and society, responding to current social trends and pressures, acquiring new knowledge, and working to disseminate their ideas — are insights and discoveries, and the essential presence of a trial and error approach. Innovation is not merely technological invention. It is an activity that creates new perspectives, and we cannot utilize technology unless we have a novel viewpoint and new knowledge. Corporate innovation management requires ba to create organizational capabilities that will lead to innovation and facilitate knowledge creation.

Keynote Speech

Network-based Socioeconomics Centered on the Individual

Noboru Konno, Professor Tama Graduate School of Business


Places of Innovation

What are ba? Different from information, knowledge emerges out of the conditions and contexts of each of our lives, is shared and communicated. Ba are shared contexts which support knowledge creation. They are dynamic, not rigid. If from a phenomenological perspective, humans experience many things, which in turn give the places where their experiences occur meaning, then ba are the aggregate of these places. They are not just catalysts or auxiliary factors but actual sources of new knowledge, and are not only hard places but also places which relate to individual’s consciousness and inner aspects.

Building on the success of its predecessors, FCAJ has been conducting various research and surveys. In one investigation for example, just under 10% of surveyed companies answered that a context-sharing ba exists in their offi ces. Compared to companies without ba, at these companies, there was a positive trend towards innovation, with answers such as “there is good communication between those of different ranks” and “we can take chances on new projects”. It is organizations that can integrate various ba — such as experience-based ba to share knowledge with customers, ba to conduct dialogue reaching both inside and outside the company, ba of creative and technical process to shape knowledge, experiment-based ba to explore and verify new knowledge — which create innovation.

A couple of years ago when I investigated how successful executives perceived ba, it became clear that they saw them as having fi ve aspects: (1) a place where employees’ thoughts, individuality and roles mutually connect in a shared context, (2) a place which nurtures open relationships, (3) a place of clearly defi ned system and structure, (4) a place to share information, and (5) a business platform creating new business.

How do ba operate with these elements? “Value and context sharing” is the fi rst step in building ba. In this way, open relationships are fostered, sparking dialogue. Next, organizational institutions and systems are driven to create new knowledge. Following this, the role of ba as an information sharing places is leveraged, generating profi ts from the business platform, creating a good circulation of both capital and ideas.

Participatory Ba

Participatory ba are becoming more important to expand such circulation, including outside the company, to make use of it for innovation. Open innovation is now one of the new management standards, and the concept of “co-creation” has also been emphasized.

In Japan, the term “co-creation” fi rst emerged in the world of management in 1992. That year, a white paper published by the Japan Association of Corporate Executives contained the declarations “Manage creativity to foster people” and “Towards the co-creation of organizations.” It was at the core of Japanese companies’ DNA. It was thought that co-creation was a strength of Japanese companies, but this white paper asserted that in fact efforts for co-creation had to be redoubled.

Examining the numbers of technological cooperation initiatives launched among Japan, the U.S. and the EU from 1980 to 2006, from around the end of the bubble, in Japan the number of cases has declined, while in the U.S. and the EU, the number of cases actually climbed. Although this is just one phenomenon, my interpretation is that after the bubble burst, Japanese companies began to look inward instead of out. With the implementation of compliance systems and other factors, creating open networks reaching within and without the company became diffi cult. At the same time, American companies analyzed the success of Japanese companies, and learned the importance of keiretsu and other company-to-company networks. From there, the concept of virtual enterprises and so on was launched, and wielded the power of the internet to develop open innovation.

In terms of innovation as well, there has been a qualitative shift. For the technology and products developed by companies, there has recently been an about turn from supply-side logic — from the perspective of customers, society or markets — to demand side logic, fi rmly grasping customer and societal needs and creating a suitable ecosystem around them. As such, the conception of innovation from the 1980s and 1990s cannot be applied now. In terms of open innovation as well, it is said that we are now in the age of “Open Innovation 2.0,” with the growing understanding that we must work with diverse partners towards achieving goals for social good, partners are the capital that drive many strong mutual relationships, and that it is benefi cial to design business models and ecosystems which focus on local citizens and end users. Now, ba which allow for the participation of customers is of vital importance.

Society is also changing. Corporations are shifting from “factory-based companies” which manufacture a particular item and try to sell it, to companies which produce things while listening to consumer needs. It is the Age of the Consumer — the Information Age. Furthermore, relations between various actors are becoming vague, with the rise of interdependent relationships and co-creation initiatives. For example, through Airbnb, users can rent out their own


Keynote Speech

Network-based Socioeconomics Centered on the Individual

assets to customers, directly participating themselves in service production. The relationship between producers and consumers has been fl ipped on its head. Because ba are the sites of economic activity, without their skillful creation and maintenance, transactions and exchanges could not occur. The sharing economy functions because the individual is empowered through digital technology.

In the fi nal chapter of Innovation and Entrepreneurship (1993), Peter F. Drucker asserts that an era when everyone will demonstrate entrepreneurial qualities will come. Innovation and entrepreneurial spirit become every-day and continuous, and they will be embedded in organizations, the economy, and society. He writes that it will be a society where innovation activities will be carried out by individuals while they engage in lifelong learning. As the relationship between companies, society and individuals continues to evolve, participation-based open innovation has become inevitable for companies.

Designing Ba

Knowledge creation arises from interfaces between companies and customers, communities and social groups, and so on. For this reason, emergence does not occur unless boundary objects (boundaries and boundaries, fused objects and places) are properly designed. Participatory innovation asks how many boundary objects can be created.

For example, at FCAJ, various companies create ba which connect organizations to organizations, organizations to customers, and organizations to society. At the Future Center, which acts as the core of this initiative, various actors put forward future-oriented hypotheses, scenarios and programs, each individual creating prototypes at the Innovation Center. Bringing these ideas out into society, social experiments are conducted in a ba called the Living Lab. We are acting on the hypothesis that by embedding the functions of these ba within the corporate network, we can contribute to open innovation.

One such activity, the Public-Private Future Center, has started experiments that link ministries & agencies internally, between ministries & agencies, and between ministries & agencies and private companies and citizens for policy planning purposes. In government ministries and agencies, an emphasis on decision-making through ministerial council meetings is the mainstream, but as experts from each theme participate, relationships with other departments and other ministries are decreasing. Also, these meetings are not places to co-create new ideas with future benefi ciaries. The “Public-Private Future Center” is intended to act in a complementary or supplementary

role. While setting a larger objective, external knowledge is introduced and new knowledge is created with consumers, users, partners, and others through dialogue, and a methodology and procedure are implemented that will contribute to long-term, big-picture policy formation.

The guidelines for creating such a place are seven Ps which we summarized in our “Wise Place” guidelines. For what purpose? (Purpose) What is the aim of the impact? (Performance) What kind of people will manage/participate? (People) How to promote and develop the initiative? (Promotion) How should we design the process (Process?) and program (Program)? What about the ba to support it? (Place)

The most important of these is the Purpose. What is common to failed projects is that the overall objective is unclear and the purpose and means are not clearly defi ned. Successful projects, on the other hand, are aimed ultimately at a large common goal, the individual objectives of people, companies and partners, and the medium objectives are driving-force goals for coordinating individual objectives for major projects. There is always a hierarchy of object groups. How to implement the Purpose is one piece of wisdom to ensure ba operate well.

Companies that are more objective oriented will gain more investment in new product receptivity and new product development. That top management can take the initiative to indicate a Purpose is a major fi rst step for innovation. This is what we at FCAJ emphasized when we coined the term “Purpose Engineering”. It could be posited that innovation is a Purpose. The Purpose produces a renewed will and confi dence to work in a trial and error way, leading to good practice for all involved.

In order to form meaningful value in society, individual concerned parties, people and companies will share positive objectives that must be achieved through cooperation with the aim of realizing the future that should exist. Then, to create a community, contribute necessary resources, dynamically adjust the Purpose and means/technology system, and manage and synthesize knowledge to create higher value. We also aim to leverage the concept of this thought and method system in the Future Center.


Towards the Popularization of Multi-stakeholder Participatory Co-creation in Japan: Living Lab’s Initiatives as a Starting Point

Koji Nishio, Senior Research Fellow Economic Research Center,

Fujitsu Research Institute

I am currently researching methods to make clear the path towards involving diverse stakeholders from corporations, the government, universities, NPOs and private citizens in co-creation activities in Japan. In particular, I have examined the example of Living Labs, which have been active in Europe for the last decade and are beginning to emerge here in Japan.

Research Summary

In recent years, the concepts of creating shared value and sharing economy have expanded, centered on the healthcare and medical industries and municipal services among others, but there remains some hesitation about whether these initiatives should indeed be carried out and what sorts of products and services must be provided. Furthermore, individual- and community-centered knowledge creation activities such as user-based innovation, crowd sourcing, and open source have become commonplace, meaning that not only experts, but also those with an interest in the issue or product in question, and those who want to participate in co-creation and development, is now essential.

Based on this background, many posited that it is becoming increasingly necessary for companies to build ecosystems and to collaborate with a wide variety of stakeholders in order to increase the value potential of their products and services. The awareness of the issue is shifting, going beyond more typical social issues to the point where it is seen necessary to exert efforts on a broader level.

About fi ve years ago, I decided to conduct a survey of the current situation of Living Labs in Europe, which were gaining popularity at that time. I visited Living Labs in Sweden and Germany and examined what kind of activities they actually carried out and what kind of problems they work to solve, and presented my fi ndings as research reports. I am

currently interviewing stakeholders concerning the situation in Japan and thinking about how co-creation initiatives such as Living Labs can be spread in Japan based on the present situation and issues seen in Japan and Europe.

Living Lab Activities Overseas

According to the defi nition of Living Labs established by the European Commission, they are “user-centered, open innovation ecosystems based on a systematic user co-creation approach integrating research and innovation processes in real life communities and settings”. Today, about 380 Living Labs are registered as part of ENoLL (European Network of Living Labs), working in the fi elds of healthcare and medical industries and municipal services among others, with support from the EU or member states.

Living Labs have two chief functions. One is working with the users who actually use products or services to gain new insights on usage behavior and evaluate products and services. The other is co-creation activities with service and product providers and developers. Rather than creating new technologies like typical laboratories, Living Labs are aimed at actually using the technology or advancing prototypes to interrogate society about the possibilities. Rather than assigning roles just between developers and users, participating users and citizens also work together, characterized by the dual-functionality of participant and co-creator.

The Living Lab concept was originally proposed in the United States by William J. Mitchell, Kent Larson and Alex Pentland at MIT as a concept to observe the use of new technology. After that, this term became more commonly used in the late 1990s. At the time the word “ubiquitous” was used to describe ideal implementations, and the idea that insight should be obtained from usage in actual use

Research Report


There is no established way of deciding how to conduct a Living Lab, but usually things work as follows. First, core members who play a central role in corporate, administrative and academic institutions gather to decide the direction of the project, then recruit and select participating users. Members also gather information to understand the usage context while packing in ideas and details on the target service together with users. In this way, after members have comprehended what services will actually be provided, users are asked to actually use the service. After that, members observe user behavior during the experiment, compiling usage logs, conducting user interviews, brainstorming and so on, evaluating products and services through change of user recognition from beginning to end of the experiment, behavior analysis, and considering points of improvement or new projects. The process is repeated several times, developing a prototype.

It takes several months to work through this process from beginning to end. Instead of spending a long time on any particular stage, it is important to solicit feedback, incorporating it into the process as soon as possible.

environments emerged. In addition, the concept of co-creation that was emphasized in Scandinavia was folded into the mix. Thus, in Finland and Sweden, Living Labs were actually created as national projects, and support for these activities grew.

In 2006, the EU introduced Living Lab as a program in the ICT and innovation fi elds, and Living Lab activities expanded to each EU country. Even in EU’s recent Open Innovation 2.0 initiative, Living Labs are positioned as an important policy tool.

Living lab projects are conducted in various fi elds such as medical care, elderly care, living support, energy effi ciency benchmarking, shopping malls, universities, smart factory and so on (Fig. 1).

For example, at a large hospital in Italy, a long-term hospitalized children’s learning support system has been introduced. In Germany’s Fraunhofer Institute, active assisted living technology has been introduced in elder homes.

The Current State of Living Lab Activities

The goal of the participants in Living Labs is to develop products and services, use and acquisition of methods, acquisition of networks, and so on. In the case of large enterprises, since a reasonable market size is required, the focus is on methods and networks (Fig. 2).

The core activities of Living Labs comprise about two-thirds of administrative bodies, public centers, universities and others. There are four main pillars to Living Labs’ core activities; product and service developers, end users, the universities and research institutes which develop and provide internal procedures, and supporters such as government or other administrative bodies which provide capital and a venue. (Fig. 3)

Fig. 1 Fields where Living Labs are ActiveFig. 2 Why participate in Living Labs?

Fig. 3 Roles of Living Lab Participants

Towards the Popularization of Multi-stakeholder Participatory Co-creation in JapanResearch

Report


makeup of Living Labs, and that it is diffi cult to predict activity outcomes. They are also dissatisfi ed with the workload required in preparing to launch activities in the Living Lab. The challenges involved in European Living Lab activities are not unique to the region, and Japan will surely have similar problems in launching such initiatives in Japan.

Issues Surrounding Co-creation

Finally, I will discuss the challenges relating to co-creation in Living Labs. First of all, activities to build ba for dialogue and develop from dialogue to co-creation are very diffi cult even in Europe. Given that Living Labs are currently on the rise in Japan, it is necessary to examine the current situation of ba.

In order to build a ba for dialogue, it is necessary to maintain the motivation of all participants, including citizens and business operators. How should organizers go about preparing for discussion and dialogue, and setting goals for meetings and gatherings? At meetings, how can effective communication be ensured? Furthermore, since progress is not made just through dialogue, how can linkages be created to co-creation activities? Dialogue between participants that breaks down real or perceived barriers must be done, but how will dynamics change as discussion continues? How can participants and organizers drive change? Who will serve as leadership, and how will they demonstrate it? It is necessary to consider such matters.

What should be done to ensure that companies continue participating in Living Labs? I believe that it is possible for corporate strategy centered on Living Labs to emerge - for sharing tacit knowledge with people with diverse expertise and backgrounds and various organizations to implement new knowledge creation. I would like to take up such issues in the panel discussion, coming up next.

Living Labs in Japan

Living Labs are also being born in Japan. I will introduce two examples which are particularly advanced; the Fukuoka City-based Otagaisama Community [Otagaisama being a Japanese expression which means “Help neighbors in their time of need”], and the Matsumoto Health Lab, based in Matsumoto City.

In the Otagaisama Community, communities are created that allow local citizens to work with experts in their roles as directly concerned parties, also involving business entities. Generally, when public and private organizations work together with local citizens, there is concern about maintaining residents’ motivation, but in the case of Fukuoka City the spirit of positively pursuing common goals is being cultivated among residents and citizens.

The Matsumoto Health Lab aims at the creation and development of the health care industry by promoting citizen health co-creation activities with residents of Matsumoto City, which has established the “Sustainably Healthy City Plan.” Citizens participate in a membership-style “health passport club” program, and Matsumoto Health Lab provides a place for co-creation, demonstration, and consultation with experts.

Regarding Living Lab efforts in Japan, there are cases where those on the citizen side drop out, and the business side tends to approach Living Labs as opportunities for evaluating and marketing their companies’ products to users. However, as in the case of the Otagaisama Community in Fukuoka City, it is possible to cultivate citizens’ motivation. And there are an increasing number of companies that understand co-creation and are taking the lead in Living Lab activities.

Such problems are not limited to Japan, and in fact, similar situations can be seen in Europe (Fig. 4). For example, participants understand the signifi cance of Living Labs, but complain that they cannot participate easily. As I mentioned previously, there are 380 registered Living Labs, but there are reports that only about 50 sites actually continue to actively acquire new insights and undertake co-creation activities.

Even in European Living Lab projects, the withdrawal of participating citizens remains an issue. As far as incentives for local citizens, while fi nancial matters are of course necessary, the more important matters are the psychological aspects, such as understanding the signifi cance and value in participation, and personal connections to the problems Living Labs tackle. Even on the business side, many have concerns that results will not be original and not specifi cally born out of the unique

Fig. 4 Issues in Europe: Difficulties in Encouraging User/Citizen Participation


Towards Co-creation Activities with Diverse People and Organizations

Panelist Presentations

Yoshio Iwasaki Mayekawa Research Institute Co., Ltd.

Introducing Mayekawa Manufacturing

Mayekawa Manufacturing was established in 1924. Over the years, the number of employees has grown to approximately 4,400 people, but the traditions and character of a small town factory company still remains. In its archetypical culture, each individual knows each other well, and is kind and dedicated. One employee can play two or three roles. I have been told by the founder that “Do not say the correct thing — that is what one does when they want win a point against their target. How would you be able to continue a relationship with them after that?” From that example, I think you would be able to get a taste of what the culture at Mayekawa is like.

There are various concepts at Mayekawa. We value compartmentalization and do not take the strategy of defeating our competitors and dominating the market. Through the idea that the self is one form of ba, we encourage employees to feel the world is a combination of self, ba, and the environment where one lives and works. Good creative activities begin by reconciling disparate ideas and concepts. We have always highly valued the work of groups.

At Mayekawa we produce various machinery and equipment, equipment including industrial compressors (freezers), robot technology (automated production lines), food processing, energy and others. We focus on making things together with customers rather than responding to broader demand. For example, our chicken deboning machine “Toridasu” took 20 years to develop. Development was diffi cult and was once even put on hold, but efforts continued after being prompted by the customer. Technicians enter the customer’s site, carefully teaching craftsmen how to use the products themselves, and we continue to communicate with customers both formally and informally until manufacturing, sales and technology are fi nally united.

At Mayekawa, each individual is a specialist who has good skills, rich experience, and deep knowledge, and we gather and collaborate. As people break out

Panel Discussion

Atsuko SaitoKOKUYO Co., Ltd.WORKSIGHT LAB. Principal Researcher

Yoshio IwasakiMayekawa Research Institute Co., Ltd.Research Fellow

Panelist

Commentator

Moderator

Noboru KonnoTama Graduate School of BusinessProfessor

Koji NishioFujitsu Research Institute Economic Research Center Senior Research Fellow

Shintaro MinamiKyushu Economic Research CenterResearch Department Research Fellow


of their shells, they reach a “Eureka!” moment. In this moment, the place where the individual operates shifts. In Mayekawa terminology, we call this “jumping.” The “sense of knowledge” is also important. Employees fi rst sense, then consider and pursue an apprehension of the central issues, making this into a habitual practice and codifying it into language. It is important to call on everyone and act together. In other words, we value the cycle of “the sensing self” → “the considering self” → “the communicating self” → “the practicing self”.

Modern and western, individualism, scientism, rationalism and intellectualism produce a separation of self and other. What we have to think about is how to reevaluate our way of existing, thinking, and way of moving. We are big-headed, always looking to leap in with a clever morsel of reason or knowledge, but if we become humble and consider tacit knowledge, we can gain various wisdom from the unconscious world. At Mayekawa, our goal is seeking out such a “natural community”.

Atsuko Saito KOKUYO Co., Ltd.

Organizations, Spaces and Mechanisms for Implementing Innovation

Kokuyo celebrated its 110th anniversary in 2015. Continuing to evolve while collaborating with customers and partners, we now offer not only stationery and offi ce furniture, but also services which center on workstyles, space design, and operational support. Although I myself engaged in offi ce designing and consulting on site, I moved to research and development, feeling the need to think about the ba where we work from the managerial perspective. From creating ba suitable for research into future work styles and innovation, we work for actual management for change in workplaces, and conduct research and development on Future Centers and Co-working Spaces as next-generation spaces for work and collaboration.

In recent years, there has been a fl ood of discussion about innovation centers and innovation departments under the term “open innovation,” but the approach of calling in outside people to fi ll certain boxes with the goal of creating a new product will not spark innovation. Conversely, some companies put efforts into internal co-creation efforts, but internal divisions alone cannot break down the sectionalism between departments. It is necessary to shake these internal strictures from the outside and to establish a

co-creation mechanism from both within and without the organization using a 360-degree approach.

One example is the Technology Innovation Center of Daikin Industries, which opened in 2015. In response to the strong sense of crisis that top management felt, this facility opened to create the next pillar of business, while continuing to innovate aspects of the core business. Many Japanese manufacturers focus on one fi eld, extensively researching technology in that fi eld, but this initiative aims to drive innovation by meeting partners among technologists in diverse fi elds and industries.

There is a split level layout in the center of the large building, connecting all fl oors into one space. In the external co-creation space called “Knowledge Forest” on the 3rd fl oor and the “Future Lab” on the 6th fl oor, events and workshops such as hackathons are carried out including corporate and university partners as well as university students. In the eight months the space has been open, there have been 17,900 visitors, and more than 100 people a day visit a day.

In addition to attracting outside people, offi ce space was also revamped to promote similar co-creation activities, so that engineers can gather together and communicate when then need to.

This is the fi rst step to creating purpose-driven ba and co-creation mechanisms connecting internal and external stakeholders, as well as to draw out an independent identity. Also, how can one manage the processes of operations (PDCA) and innovation (trial and error), while understanding they are totally different? It is important to constantly verify ba and continue evolving it, looking for indicators beyond superfi cial success-failure factors.

Shintaro Minami Kyushu Economic Research Center

The Otagaisama Community Research Development Project

The Kyushu Economic Research Institute is a locally-based private think tank. We focus on revitalizing the community and are developing and researching methods while also focusing on cooperation with the private sector. The project I would like to introduce today is the public-private-academic consortium Otagaisama Community. We aim to revitalize the local region, creating relationships by fostering communities by linking residents, business operators, and administrative authorities.

There are fi ve stages in developing community


Towards Co-creation Activities with Diverse People and OrganizationsPanel

Discussion

Panel Discussion

Topic 1Necessary Preparations for ba of Dialogue

Koji Nishio: Let us kick off the panel discussion. First, I would like to hear your opinions about what kinds of diffi culties companies have in creating ba and what kinds of preparations are needed to ensure they can be places for fruitful dialogue leading to co-creation through the gathering of people.

Atsuko Saito: Rates of employee participation in new ba are around 10-20%, so it is important that everyone clearly understands their purpose and signifi cance. Even though we can retain people for the fi rst six months, everyone will lose interest if there are no results, and ba will become mere skeletons. It is important to formulate good questions in order to prevent this and create visible outcomes.

For example, at the Shinagawa Eco Live Offi ce, which Kokuyo has operated as a site for external co-creation since 2008, we gathered researchers from different industries and held regular discussions, trying to answer the question, “What are the problems that Research and Development Departments have?” In short, researchers tend to stay in their offi ces, which gives rise to the common problem that new ideas and linkages do not occur. So, how do you produce more and more ideas and lead to research and development? We had ideas such as opening up research buildings, installing movable furniture that can be used freely for everything from idea formulation, practical experimentation and prototyping production. By having such a ba, Kokuyo’s research and development process has evolved. Although this concept was actually commercialized, it is a product born from a customer’s problems, so we received a good evaluation.

Nishio: It is diffi cult to involve those within the company, but there are other problems in encouraging participation from private citizens.

Shintaro Minami: In local communities, disparities in lifestyles and between generations exist, which make it hard for residents and businesspersons to gather in the same place and communicate directly. Therefore, the coordinator interviewed the concerned parties in advance, heard what troubles them, what their requests are and so on, and then discloses this information as a spokesperson. Also, since direct participation will be limited in any case, we

making; the plural ignorance stage where nobody is aware of the problem, the stage where people notice the problem, the stage of community participation, the stage of participation expansion involving business stakeholders, and the fi nal stage where mutual relationships can be established between supporters and supportees. Certain stages cannot be leapfrogged; in other words, participation cannot be expanded if a company joins without having a precisely defi ned relationship to the proceedings.

For this reason, we intervene as human resources in the role of “Community Coordinator” to act as bridges between each stage. We have developed tools for each stage such as visualization of regional resources and needs, motivation for participation by residents, implementation of activities and expanding participants, business planning in collaboration with business operators and others.

We have demoed Otagaisama Community activities in three regions thus far. One such region is Kanayama, a mixed area of multi-family dwellings, which was fi rst developed 40 years ago, and is seeing some aging of buildings and infrastructure. Although there previously were elderly volunteers who were concerned that the sense of community in the region became weaker, and that isolated death were occurring in housing complexes, they were not able to take action. A coordinator visited and held a workshop. We tried out the idea that emerged, while making it a citizen-centered activity, bringing business operators together and developing a community cafe where multiple generations are encouraged to participate.

What we emphasize in the workshop is not the discovery of issues but the visualization of multi-generation challenges and regional resources. We match pressing issues with regional resources and try making ideas for activities that can produce immediate results. Because of this, businesses with various motivations participated, and stay-at-home moms and others raising kids also got involved. After that, organically-occurring expansion was also seen, such as the birth of new business ideas and similar initiatives being launched in other places. Through our efforts, rather than solving problems, we aim to foster the attitudes necessary to solving them. If relationships can be formed, regional continuity will be established by collaborating through a trial and error approach appropriate for the task. For that purpose, it is important to change the relationship, raising the awareness of all parties and making effective use of expert opinions. I would like to increase the number of case examples useful not only for regional revitalization but also for companies, and to further develop them.


will introduce business operators and prepare mechanisms to consciously collect diverse people while continuing activities.

Nishio: At Mayekawa Manufacturing, is there anything you keep in mind about communication with customers?

Yoshio Iwasaki: It is important not only to have friendly dialogues with customers, but also to improve the quality of relationships between people. The important thing for that is to invite others to feel.

The way people feel is unique to themselves. Where did your idea come from? Where does it connect with my idea? What is different from my idea? What is the same? The goal of dialogue is not the homogenization of ideas, but rather integration — it is in this way that new discoveries can be made.

Nishio: What kind of goals should be set to improve the quality of dialogue?

Noboru Konno: Although it is a diffi cult question, there are three approaches: customer, self, and society. First of all, it is necessary to learn the challenges and pain of participants in customer interactions and ba, thinking about what we can do through experience and sympathy. Second, what sort of things can we at our company do in the future society and market? Finally, beyond that, when we consider society as a whole, what is benefi cial for the common good?

Topic 2 Leadership connecting Dialogue to Co-creation

Nishio: To move from dialogue to co-creation and to create new things, another kind of force is needed. In doing so, who will shoulder the mantle of leadership?

Minami: At the local community level, the individuals leading co-creation efforts will change from stage to stage. The fi rst lead is done by a third party called the Community Coordinator. Thereafter, there are points of change along the way, and from the neighborhood where the concrete concept comes out, the person who is doing the core activities starts pulling the whole. At the stage of where participants try various approaches, leaders will emerge from the site responsible for production. Since diverse stakeholders will be involved, it is important that there is general consensus among participants about how the leader will change as the

project moves through various stages.

Saito: In the case of a company there are job rankings and classifi cations, so this seems to be slightly different. In the past, managers served as leaders, but the importance of leadership is being interrogated as project-based work is on the rise. For example, W. L. Gore and Associates, famous for Gore-Tex, has the idea of “natural leadership.” People who want to be involved will raise their hand and nurture the seed of the project — if more people get on board, then it becomes an offi cial project. I think that it is important to create a culture that empowers leaders and individual entrepreneurs, and has a liberated atmosphere.

Konno: Through surveys, it became clear that commitment from the top management level is a major factor in innovation. In other words, they would be happy to create ba which can produce new ideas. In addition to this, individuals who are directly involved in on-the-ground roles should also be leaders. Then, it is the role of the middle manager to connect participants’ individual purposes with an overall goal. Therefore, in enterprises, top and middle managers and site leaders must be linked.

Iwasaki: I agree with this theory of leadership, but it is very problematic to issue orders to those in the upper stratum of the management organization. At Mayekawa, since many years ago, we do not address people by their job titles like Manager So-and-So, or Director Such-and-Such, but by their own personal names. With no retirement age, we are striving for a combination of dynamic people (those in their 20s-40s) and established people (those in their 50s-70s). Even with senior people, we do not want to give employees a kick in the pants, we want to ask them what they aspire to do in fi ve or ten years. We want to encourage people to think and help each other, not to polish their egos, but how to apply their ideas to society and work together. I think that it is the fusion of dynamic and established people, revitalizing senior employees, that creates a real ba.

Topic 3Requirements to Ensure Sustainable Ba

Nishio: Dynamic and established employees — those are Mayekawa terms. If you are interested, “Why Does Mayekawa ‘Jump’?” by Mr. Masao Mayekawa might be a useful reference on this point. I agree that creating ba is not something to do with authority or hierarchy, but on the


Panel Discussion


other hand, the management side will seek results for these activities. How long would it take, and what would have to be realized, in order to ensure sustainable activities in ba?

Konno: Even if there is a noble goal, ba activities will not be sustainable if resources such as time and money are limited, so rules of project management are necessary. Regular project management decides goals, sets limits on resources and time, and evaluates outcomes at the end of project periods, but goal-oriented project management is dynamic and resources are considered infi nite. If you cannot do it yourself, there is a possibility that you can get a boost of power from partners. For this reason, to make the best of infi nite resources in a fi nite amount of time, it is necessary to have dynamic project management.

Nishio: In planning projects, the question of what kinds of people will be encouraged to participate will come up. At Mayekawa Manufacturing, how do you involve people?

Iwasaki: In the case of Toridasu, a young person volunteered, looking at how technicians were having diffi culties and becoming concerned about the challenges of the project. However, before anything was decided we all had an informal conversation. In the kind of environment where anyone can speak freely, people will encourage others by saying, “I think you should raise your hand,” or, conversely, advising caution and restraint.

Topic 4What are the essential qualities of ba?

Nishio: To wrap up, I would like to ask you to share your thoughts about the main theme of today’s conference: “What are the essential qualities of ba?”

Minami: I have two points. The fi rst is to establish a quick execution and review cycle. I feel the importance of this very much, especially when I visit local areas. Because it is not local peoples’ jobs to participate, we cannot provide them with monetary incentives for their activities. Accordingly, in seeing the result everyone must think together, gaining consensus and considering how things should change in the future. Repeating this cycle is necessary to make ba function. Another thing is to talk on the domestic level as much as possible. Activities work better if they are connected to concrete procedures — for example, not coming up with a general plan to eliminate social isolation,

but rather speaking to a specifi c troubled person about what practical help they need. Our project is positioned as a place for companies to gain experience. Throughout today’s discussion, I felt that it would be benefi cial to think about these issues as having two pillars: increasing usage of local ba, and implementing the lessons learned and problems outlined at internal corporate Future Centers.

Saito: Employees of large companies can become fairly impersonal, and having them demonstrate more personality is important. Also, instead of a ba as a physical facility, it is important to seriously incorporate society into companies as an important part of them. I think that creating something together with people in the external public sector, as well as in internal Future Centers, will incorporate society into the company.

Furthermore, how should a theme which can be tackled together be created? The fact is that companies and local governments will say that they are being open, but are actually only speaking within their specifi c contexts. Connecting will make ba more dynamic, but if you can only speak in your own language, there will never be any meshing between participants. We need skills such as communication and curation to connect people and contexts. If we fi nd a purpose or theme that seems to serve the common good, I think that we can begin, little by little, to see the moment when independence is intrinsically motivated.

Iwasaki: When creating a community, subjective individuals are important, as it is the individual mind where ideas are created. However, and this is true for me as well, individuals can be arrogant, egotistical and troublesome, so when you create a community ba, it is necessary to re-examine the specifi c people involved. In modern Western countries, there is a strong emphasis on the individual, establishment of the individual and subjective rights — all is from the perspective of the individual. Even if one cannot completely deny their individuality, if one sometimes leaves their “self” at the door, I think that there can be more mutual kindness and relationships will become stronger. Then, we will start to see a world with places where everyone can participate. The world of the place where all participants are active becomes visible there. After considering ba which emphasize such things, creation activities will get underway. I would like to work hard to create a community together with you.

Konno: The central issue is how to create ba, and how to trigger creation from the viewpoint of the outside world and the social ecosystem, including the community — not

14 PBEssential Qualities of Innovation-Producing “Ba” Essential Qualities of Innovation-Producing “Ba”©FUJITSU RESEARCH INSTITUTE 2017

Panel Discussion

just internally in a single company. Such a ba is the source of knowledge. It is important for the top management to understand this and commit to investing in it.

In addition, no ba can be established alone. It is important to focus on how to build a network or circuit, and increase its integration. Because it is diffi cult for companies to create ba independently, I think it would be benefi cial if efforts are made to actively utilize third party institutions such as the Kyushu Economic Research Association and Future Center Alliance Japan (FCAJ) and external innovation accelerators.

Management of ba is being lost to Japanese companies. Some companies still remain, but I strongly believe it is necessary to rebuild ba quickly before they

disappear completely.

Nishio: Although personal thought and subjectivity are important, it is impossible to accomplish anything with just these factors, and the support of a strong organization is necessary. It the management side of the organization correctly understands this, it will lead to the emergence of creation activities. However, because there is a limit to what individual companies can accomplish by themselves, how can we work to involve outside stakeholders? I hope that everyone here today will use this conference as a jumping-off point to further communication and create networks. Thank you very much for your kind attention.


FUJITSU Research InstituteEconomic Research CenterNew Pier Takeshiba South Tower, 1-16-1 Kaigan, Minato-ku, Tokyo 105-0022, JapanTelephone:+81-(0)3-5401-8392 Facsimile:+81-(0)3-5401-8438http://www.fujitsu.com/jp/group/fri/

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The “content” and “information” in this document includes statements not only about present and past facts, but also about possible future development. These statements reflect the information available at the time of the conference, and their objective accuracy is not assured.

For this reason, there is a possibility that the results of future business activities or events may not reflect the statements contained in this document. The Company accepts no responsibility for such a situation, should it occur. We ask all readers to understand the above.

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