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NETWORKING VETERINARY MEDICINE SERVICES 171 Creating New Services Based on the Formation of a Strategic Community with Customers: A Case Study of In...
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Creating New Services Based on the Formation of a Strategic Community with Customers: A Case Study of Innovation Involving IT and Multimedia Technology in the Field of Veterinary Medicine M. Kodama This paper discusses the management processes for forming strategic communities by means of strategic partnerships between businesses and customers. It considers the introduction into these strategic communities of the knowledge and core competence of customers with a high degree of learning experience with respect to the products and services provided by the businesses. This creates new products and services and at the same time extends the results of the strategic communities to many other associated customers. The innovation of a telemedicine system in the field of veterinary medicine in Japan is taken as a case study. Here a strategic community of business and innovative customers developed new systems using IT and multimedia technology. The results from the strategic community were extended to many other related customers in a chain of community creation, and the new systems were widely proliferated throughout the whole of Japan.

1. Introduction

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p until now, the typical style of business strategy of the second half of the 20th Century has been to focus on the active introduction of extra-mural knowledge and core competence through strategic cooperation between businesses centered mainly on business partners, suppliers, distributors, etc. In the automotive industry, typified by Ford and Toyota, for example, there is the establishment of long-term partnerships with parts suppliers. In the fields of IT and multimedia, strategic business cooperation with different types of industries such as the household appliances and communications industries with the software and entertainment industries are instances of this type of business partnership. Until recently, many businesses have come to understand and accept the strategy of this sort of business style as a necessary condition for a business to expand existing markets or to open up new markets. # Blackwell Publishers Ltd 2000. 108 Cowley Road, Oxford OX4 1JF and 350 Main St, Malden, MA 02148, USA.

The great majority of customers, although they had the right to make up their own minds with respect to purchasing products and services being offered by many businesses, took a passive stance and came to understand that it is only natural for them to accept the products and services. The more discerning customers made purchasing decisions after a comprehensive consideration of the quality and cost of the goods and services being offered unilaterally by businesses, and were interested in after-sales service, maintenance, support, and so on. Now, however, in a background of rising interest among customers in personal computers and multimedia technology as well as the acquisition of sophisticated information with respect to products and services, made available by gathering information through the Internet, customers themselves seem to be becoming keen to learn more about the details of the products and services being offered by businesses. For this reason, before they make

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up their minds about products and services that are being offered by several businesses, wise, well-educated and experienced customers are now capable of sending positive messages and proposals to businesses regarding demands for improvements to their products and services. Consequently, the critical appraisal and new values of products and services perceived by such sophisticated, well-educated and experienced customers hold the potential for exerting a major influence on expediting the proliferation of the products and services offered by businesses. As Prahalad et al. (2000) point out, coopting customer competence to develop and market goods and services of the businesses of the 21st Century is likely to become an increasingly important factor at the core of business strategy. In this paper we draw attention to the importance of the process of including customer knowledge and core competence in the process of product development. We argue that this is a strategic process, aimed at creating a strategic partnership with a core of highly educated and experienced customers [referred to as innovative customers). Then, in addition, we discuss the management processes by which a business will expand the proliferation of its products and services as a result of creating a strategic community with innovative customers. This happens by strategically and consciously planning a chain of community creation with other related customers. The innovation of a telemedicine system in the field of veterinary medicine in Japan is taken as a case study. The strategic formation of a community by the business and innovative customers, and the close collaboration between the business and innovative customers, has designed the innovation of knowledge and core competence within the community and spread new systems throughout Japan, providing many customers with new values.

2. Innovation in the Field of Veterinary Medicine due to IT and Multimedia Technology 2.1 Current Status and Issues in the Field of Veterinary Medicine in Japan In Japan at present, there are 27,000 veterinarians, about thirty percent of whom are working in practice and research related to public health inspection such as the inspection of food items. Recently new fatal infectious diseases such as the Ebola hemorrhagic fever are appearing on a global scale,

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and zoonotic infections (communicable to man and animals) contracted from animals and pathogenic microbes such as O-157 are crossing national boundaries so that the role of the veterinarian is expanding.1 Several years later, health veterinary medicine departments in Japan were reorganized in several research institutes. It has been pointed out that teaching staff numbers at universities were about half those in Europe and the United States so that research and education levels were falling behind. The European Union completed the standardization of common teaching criteria and qualifications for veterinarians in 1999. The United States and Canada are also close to internationalization by standardizing their national veterinary examinations and qualifications. It has been recognized in Japan also that ``bringing veterinary medicine teaching levels close to international levels is a matter of urgency,'' therefore the ``internationalization of veteriarians' qualifications'' is making progress. Unless the levels of education and research in veterinary medicine are brought into line with European and American standards, there is serious concern that Japan's veterinary medicine will be excluded from international veterinary medicine. Under these conditions, international cooperation and international exchange of information between veterinarians in the future is absolutely essential. This important issue is an issue common to industry, academia and government, an issue that must be solved jointly. In January 1996, Dr. Hirose2, Professor Emeritus of Obihiro University of Agriculture and Veterinary Medicine, built the ``Animal Medical Information and Science Development Research Institute'' (situated in Obihiro, Hokkaido, hereafter called the Institute) as a joint venture of industry and academia. The research staff who constitute the Institute consist of people from different working backgrounds such as university instructors, practicing veterinarians, group veterinarians, businessmen, dairy proprietors, and general citizens. ``Giving greater significance to veterinary medicine in the community not only requires the gathering of the opinions of us veterinarians who are specializing in veterinary medicine; we must also prevent the narrow fixing of ideas by creating the opportunity to open up experience and ideas by inviting the participation of many people in different industries. In particular, when it comes to the prevention of disease to minimize economic losses with respect to production livestock, we can never expect true results without a practical plan that involves the participation

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of the producers, the agriculturalists. In other words, it is not enough to have a veterinarian with abundant knowledge. Several veterinarians who can pool their knowledge will be required in order to dig up the true values. Now is the time when our eyes must be turned towards what the producers are earnestly hoping for, the activities of veterinarians with such flexible ideas as this. It is very important to exercise free thinking in order to overcome n inflexible professionals. If the conventional framework is not demolished when it needs to be, there will be no new ideas or new personnel. For interdisciplinary research, it is certainly necessary to step out a framework in the area of modern clinical veterinary medicine and to create an interdisciplinary organization from previously non-existent collective bodies (collective bodies of different industries). There should be collaboration in creating together within the collective body, with each veterinarian developing their own original ideas.''3 The aim of the Institute was to construct a virtual organization with 54 research members scattered throughout Japan, ``a concept that gives full rein to independence in towns and villages, that makes manifest local expectations and characteristics and is not centralized in Tokyo, the capital of Japan.'' An additional objective, from the international viewpoint, was that it would serve as a base for the transmission of information. Meanwhile, the preparation of a new media environment in the area of clinical veterinary medicine has not progressed. Utilizing new media for education and research in veterinary medicine and from the activation of local communities was one of the key points of the initiative. Specifically, by exchanging information using an ISDN-based video phone4 face-toface as in an itemized explanation while sharing veterinary medicine information greatly broadens communication among veterinarians and facilitates the expansion of the interactive telemedicine network.

2.2. Creation of Innovation by Merging Different Business Areas For some time past, X-rays, CT, MRI, and so on have been used in veterinary medicine on both large animals (such as cattle and horses) and small animals (such as dogs and cats). They are still being used for the imaging diagnosis of various types of disease with great success in early treatment and prevention. In particular, the latest trends, in ``efforts to reduce the cost of animal production as agricultural competition is intensified inter-

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nationally'' and ``the enhancement of the status of companion animals in a household as people age and have fewer children,'' are creating a major flow, in veterinary medicine as in the human world, ``from treatment to prevention'' and the weight of imaging diagnosis is growing. Amongst these moves, research workers such as Dr. Hirose, a central figure as an innovative customer, have introduced the first X-ray diagnostic vehicle in Japan dedicated to large animals to all universities in Japan. They have been conducting a great number of pioneering trials (Hirose et al, 1985). Nevertheless, the current picture is that the introduction of imaging diagnosis in veterinary medicine is still scarce and there are few specialists. For that reason, in the process of developing and expanding imaging diagnosis such as this, it has become necessary for distant veterinarians to collaborate in education, diagnosis and instructions for treatment. On the other hand, lately the distinction between the diseases of animals such as pets and humans is low and, therefore for the veterinarian, the time has arrived when quick action by imaging diagnosis is demanded. Therefore, the demand for bi-directional remote treatment by imagery is growing stronger, not only simply between veterinarians but also in areas of clinical veterinary medicine such as ``between veterinarian and large animal producer'' and ``between veterinarian and small animal breeder.'' On this basis, at the start of 1996, the research group centered on Dr. Hirose and the NTT project group began research into the development of remote diagnosis in veterinary medicine. The NTT project group was faced with the immediate problem of how to popularize ``Phoenix,'' a desktop video conferencing system they had started to market in March 1996 (Kodama, 1999a). One of the project targets was to develop the use of an application using the video conferencing system in the field of medical treatment. The NTT project leader's problem was how to approach customers with the new system that had been developed and to have them appreciate its commercial value. However, in 1996 there were few customers in Japan who needed video conferencing with personal computers. The necessity to use a video conferencing system was not deeply rooted in the culture of the entire community. However, the vision and idea of the NTT project leader was that the concept of ``creating a new interactive video communication culture in Japan'' should definitely be achieved. Expediting its use in the fields of welfare of the elderly and education, and especially in all

A virtual organisation was planned

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medical care including the field of veterinary medicine, was an important issue. I thought that the key to popularizing the video conferencing system, which is a tool for interactive video communication, was a hint to research on the form of usage by customers. Video conferencing systems are generally used for virtual conferencing in business, but in analyzing the future market, he inferred that the demand in telemedicine and distance learning would grow. However, we are a telecoms carrier, and when it comes to medicine and education, we had not built up any knowledge, we had absolutely no know-how, and we had much to learn from wellversed doctors and teachers in these areas. We believed it was quite possible that the field of medical treatment, from the medical care of humans to that of animals, would be a potential area for the application of video conferencing systems and that a partnership with Dr. Hirose, who is an authority in the area of clinical veterinary medicine using radiology, would be an important business opportunity. At the same time, from the viewpoint of animal protection, we thought that the fact that the Phoenix which we had developed could contribute to the development of clinical veterinary medicine was a matter of very deep significance.5 Dr. Hirose's research group planned to construct their own information exchange system using ISDN in the area of veterinary clinical medicine. This system was constructed on the basis of summarizing the opinions of the Institute's 54 participating research members. The main objective for all of them was to be able to exchange clinical image information easily on the same level. Specifically, it was a system structure to suit the mutual exchange of information with a uniform method, in which all research members would have the same equipment. For us veterinarians to develop our own telemedicine system in the area of clinical veterinary medicine would not be possible with only our own knowledge and knowhow. A tie-up with NTT, with their many years of knowledge and know-how in communication network technology and image communication technology, was a splendid opportunity to produce new innovation through collaboration that concentrated the experts of industry and academia in partnership.6 In this way, the visions and values of both the NTT project leader and Dr. Hirose, who

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was a customer, coincided, and a partnership for reaching the one single objective was established. The enterprise and customers formed a strategic community consisting of a virtual team with about seven project members from NTT, and the innovative customers were the veterinarians group of 54 (scattered geographically throughout Japan) with Dr. Hirose at the center. All members who formed the community shared values based on the same vision and concept. They became as one body fired with enthusiasm for creating fresh innovation in the area of clinical veterinarian medicine. Furthermore, in order that the strategic community that they had formed would be maintained continuously, it was important for Dr. Hirose and the NTT project leader to envisage empowerment and motivation within the community members. NTT proceeded to develop a new method of use for the video conferencing system by incorporating into their own company product the knowledge and core competence possessed by Dr. Hirose and his group, which was rooted in their many years of experience. Then, thanks to innovation from the knowledge and core competence within the strategic community, over a period of about one and a half years they developed a new telemedicine system and its popularity proceeded to spread throughout Japan. In this paper, the leader of the business that becomes the core, playing the central role within the strategic community of business and customers (in this case, the NTT project leader) is called the community leader)7.

2.3. Innovation in Community Knowledge The biggest issue the strategic community faced was that of deciding what would be the ideal telemedicine system for veterinarians. The assessment of the system would be based not only on performance and cost, but, from the human aspect, it was necessary to create a system that many veterinarians would find easy to use. 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, and so on. Within the community these will follow the steps of sharing, inspiration through contact, creation and accumulation (Kodama, 2000a) (See Figure 1). This process may be described, if in somewhat simplified terms, as follows: The first process of sharing involves a step consisting of sufficient dialog and resulting

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Figure 1. Process of Innovating Community Knowledge. understanding among the parties concerned regarding the vision and objectives pursued by different organizations toward understanding and sharing of each other's knowledge. The second process of inspiration through contact involves a step of inspiring and multiplying within the circle of organizations various aspects of community knowledge in support of identifying problems, challenges and solutions. This means that the vision and concept can be realized on the basis of the community knowledge shared by the different organizations concerned. The third process of creation involves a step of 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, accumulating within the community, the various aspects of the community knowledge harvested through the processes of sharing, inspiration and creation. The issue for the community at the time of starting up was the conception and design of the telemedicine system. The information and knowledge possessed by community members from different industries was shared. The constructive dialog between the many community members towards the design of the ideal telemedicine system triggered mutual knowledge within the community. The factor that bonded each member in the community was the common value with respect to their vision and concept of ``innovation in the field of veterinary medicine.'' In order to create and provide new values for many veterinarians, while bearing in mind what is meant by ``the application known as interactive video communication,'' com-

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munity knowledge was triggered and created by both the physical and intangible aspects of the telemedicine system, including its conception, design, construction and method of utilization. However, a major problem occurred at the initial startup stage. The problem was the use of personal computers by veterinarians. There was no doubt that a personal computer is an extremely convenient device, but this did not necessarily mean that a personal computer was immediately an excellent data system. In other words, a device with a high gradeprocessing capacity and a device that is easy for a person to use are two separate issues. Instead of matching the person to the personal computer, since the informationallyhandicapped would not come forward, it would be necessary to construct a system equipped with the ideas and characteristics of the community and having functions for the exchange of information that anyone (including veterinarians of various ages) could use in a similar way to the household telephone. Therefore, the community had no alternative but to abandon the idea of applying the ``Phoenix'' video conferencing system, which uses a personal computer, as a telemedicine system. The next hurdle for the community was to consider how to enable each of the veterinarians to participate without feeling any difference in capacity to operate the device. Bearing in mind the design concept of ``ability for easy operation by any veterinarian'' in order to overcome the problem of information literacy, the community developed a simple, high-quality, low-cost video phone in September 1997 and customized it for the telemedicine system.

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Innovation occurred through trial and error

The system that was developed is connected to ISDN and, by transmitting and receiving voice and video, enables face-toface discussion while providing various imagery (X-ray, CT, MRI, pathological photography). Since the research workers have the same equipment installed, which are all completely interchangeable, the ability for the mutual interchange of information between all research workers is an important feature. The functions of the video phone itself can be greatly extended by connecting peripheral devices such as an external camera and external monitor (see Figure 2). Costwise, one complete set was able to be kept at around the 400,000 yen price range. Moreover, a system that can be accessed by all veterinarians throughout the country has been developed for successively storing the various types of image data, such as cases and instances that are transmitted in real-time, in video-on-demand (VOD)8. In this way, comparatively low-cost technology has been established that can transmit high-definition images of various case types to facilitate remote diagnosis and can also be used in the field of veterinary medicine. As we have shown, the most suitable telemedicine system was achieved through a process of trial and error over about one and a half years in the start-up period. In this process, community knowledge, including a variety of knowledge, know-how and skills,

was created and built up within the community (see Figure 3-a). The stage since start-up time is the step that proceeded to popularize and spread the developed system among veterinarians who are customers across the entire country. Within the community, the establishment of a strategy to extend throughout the country was debated by community members. The framework of the strategy was the following two points. One was to introduce this system to a core of veterinarians (doctors practicing in clinics and so on) in each region of Japan's 48 prefectures and to form a virtual community by networking these base facilities through video phones with the Obihiro Center in Hokkaido. The second point was that the base facility, as the core in each of the 48 areas, would become the center for that region, and clusters of communities are formed by connecting other new veterinarians in each area (see Figure 4). By forming these virtual communities, the base facility of each area was able to select topics for study that are characteristic of that area, as well as strengths (or weaknesses) as research topics for the interchange of discussion. At fixed intervals, each base facility was connected at the same time for a virtual ``nationwide remote area multi-point video phone veterinary conference'' (Tokachi Mainichi News, 1999b). Moreover, diagnoses, treatment instructions, and so on were conducted

Figure 2. Telemedicine System that was Developed and its Manner of Use.

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Figure 3. Process of Innovating Community Knowledge. among veterinarians in remote areas and data such as X-rays, CT, MRI, and so on for many cases was built up in VOD. Then, the system has been modified and improved through questionnaires and hearings from many veterinarians concerning the details gained by providing the system, through which problems with the system were extracted and which reflected customer opinions and demands. In retaining the veterinarians who are customers by networking and clustering the

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community in this way, and planning a chain of community creation, there is a recurrent innovation cycle in which new community knowledge is shared, triggered, created and accumulated. As of March 1999, the community has already expanded to include several hundreds of bases. This stage was the growth period of the community (Figure 3-b). ``Image transfer technology for remote diagnosis and treatment technology,'' which is a series of research activities for this community, has been adopted by the ``Fiscal 1998 new project

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Figure 4. Nationwide Expansion of Communities. creative research and development system'' of the Telecommunications Advancement Organization of Japan (hereafter TAO)9, which is a corporation approved by the Ministry of Posts and Telecommunications, and eligible for the investment of research and development funds by the Japanese government (Tokachi Mainichi News, 1999a). This result of community innovation was acknowledged by government organizations and has further heightened the motivation of the community members towards greater expansion of the community. Next, in the period of development of community knowledge came the step of challenging new technology and services (Figure 3-c). The community introduced the developed system to veterinarians all over Japan and while the communities expanded one by one, they began to develop a new system that introduced newer technology. In the growth period up to this point, the system that had been introduced successively all over the country was the basis of a telecommunications network using ISDN. The reason for this is that with the technology at that time, ISDN had the most stable circuit quality and

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was the best solution to achieve high-quality interactive video communication. However, high-capacity telecommunications network technology has been greatly developed over the past few years (at the start of the 21st Century) and the community thought that it was absolutely essential for these new telecommunications infrastructures to form the base for the new telemedicine system. In 1998, TAO constructed a super-fast optical fiber communications network for research and development (commonly known as the gigabit network) to be compatible with the nextgeneration Internet and intended for use by academic research organizations all over Japan. TAO launched an appeal to the public, including research organizations throughout Japan, in connection with ``Using the gigabit network for research and development.'' In this connection, ``Image transmission experiments for a telemedicine system in the areas of animal care treatment and stockbreeding'' that was proposed by the community was selected by competitive tender in 1999 (Tokachi Mainichi News, 1999c). As with the selection matter on the previous occasion, the community obtained research funds from

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the Japanese government and began to develop the new telemedicine system on the gigabit network. New knowledge concerning the development of the telemedicine system using new technology, and the development of methods for using it, was shared among community members. The community searched for the optimum telemedicine system using the highspeed gigabit network. NTT members were planning to acquire new image transmission technology in order to achieve high quality interactive video communication on the gigabit network. At the same time, Dr. Hirose was aiming at research on the nature of its usage. As a specific field trial, the community thought of connecting the Obihiro Center in Hokkaido and a meat processor in the Kansai region with the gigabit network and conducting a remote pathological examination of a large meat animal (beef cattle, for instance). If this research and development is successful, it will make it possible to conduct a reliable virtual form of prior examination by a specialist veterinarian with respect to various communicable diseases (such as mad cow disease and O-157) before processing a large animal for meat.

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In the space of about six months, the community succeeded in the trial manufacture of the latest type of web-based video phone10 and gateway system11 compatible with the Internet protocol (TCP/IP) and began to experiment from April 1999. The community used a web-based video phone and an ISDN-based video phone and conducted various image transmission experiments by connecting with the gateway system to four types of networks: the gigabit network, an ISDN circuit, the Internet and a mobile network, and proved the potential practicality of the new telemedicine system in the area of veterinary medicine. Then, with the aim of making the ``telemedicine system,'' (which was potentially usable on all of these networks) fit for practical use and of establishing the use of this new system in fields that should be called ``remote radiology'' and ``remote pathology,'' Dr. Hirose's team promoted research aimed at pioneering the form of the next generation of medical treatment. Meanwhile, the NTT team was aiming at a practical integrated video transmission service that would connect seamlessly between ISDN circuits, the Internet, the gigabit net-

Figure 5. Integrated Video Transmission Services and Expected Markets. # Blackwell Publishers Ltd 2000

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work and the mobile network (the network that is the base for mobile phones and personal handy phones). Within this experiment, they decided on a strategy of virtual business using video phones in the fields of distance learning, telemedicine, welfare and remote relay (see Figure 5) (Nikkei Communication, 1999; Nippon Kogyo News, 2000). As of January 2000, having already had success with seamless image transmission experiments between the Gigabit, ISDN, the Internet and the mobile network, our target was to make the new telemedicine system practical. What we can expect after this is that by interconnecting with the nextgeneration mobile network (IMT-2000)12, which is scheduled to start services from March 2001, and ISDN and the Internet, customers anywhere, can have seamless interactive video communication at any time with anyone without being aware of the type of communications network. Then I believe that video phones will be used not only for business but their use will be extended to various fields such as education, medical treatment and welfare as well.13 Thus, toward an innovative creation of new technology and 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 technology and services. Having passed through each of the above stages, the community embarked on selfassessment directed towards the proliferation of telemedicine systems in the field of veterinary medicine. Innovation was achieved through the spiraling-up of community knowledge. This innovation then created added value for the many veterinarians who were the customers.

2.3. Community Competence Sophistication Process In the sustenance 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, 1999e). As shown in Figure 6, while innovation (start-up phase ?growth phase ?development phase) realized through the spiralingup of community knowledge creates new values for the customers, the process of community competence sophistication (sharing ? creation ?renewal) also becomes indispens-

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able for ongoing strategic community formation. In the process of developing community competence sharing, the core competences possessed by NTT and the veterinarians become mutually understood within the community organisation. This is the step that triggers the phase of mutual merging of core competences. For instance, NTT's core competence with ISDN technology, video terminal technology, and so on, and the veterinarians' core competence with diagnosis, etc. are shared mutually among the organizations. It is by triggering and merging these core competences that the community competence that gives rise to the telemedicine system is born. Furthermore, the merging of the shared core competences is the step that gives rise to new creations (products, services, etc.) In this step, the telemedicine system field of veterinary medicine was born as a result of development by trial and error. At the same time as it was proliferated to many veterinarians throughout the whole of Japan, a better quality system was created by trying improvements and modifications. This means that the core competence is being generated within the community. The process of renewal mode is the step that further innovates the community competence that was upgraded in the sharing and creation modes. The seamless telemedicine system that integrated the gigabit network, the Internet, ISDN and the next-generation mobile network is a new innovation that is a complete change from other systems up to now and is a result born from the renewal of community competence. Thus we see that in order to enhance the performance of an entire community, to provide new values for its customers and to attain the community's business objectives, it becomes crucial to implement continually in a spiraling fashion the above-mentioned process of community knowledge innovation. In addition one must promote within the community increasing sophistication of, understanding of the community competence.

3. Discussion 3.1. Strategic Community Creation with Customers There are four points about strategic thinking and behavior that are of importance to the community leader within the organization. The first point is that the community leader, who belongs to an organization of

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Figure 6. Advanced Process of Community Competence. which he is a member (a top-echelon manager or middle-tier manager in a corporate setting, or an independent business operator with entrepreneurial prowess) must have an ability to comprehend quickly and interactively the exterior environment in which his organization is placed, technological speeds, market composition and customer needs. The second point is that the vision upheld must be complete with thoughts and beliefs integrated and that the leader must be equipped with the power to create networks of person-to-person contacts in terms of stated concepts, both within and outside his organization. It will be by dint of this human networking power that contacts and constructive dialog with innovative customers become possible. The third point relates to the importance of creating an arena of sympathy and resonance for value perspectives that respect visions and concepts through constructive dialog with innovative customers. This, in turn, will make it possible to create a platform for harmonizing the value outlooks of community leaders, creating room for the birth of a strategic partnership with innovative customers. The fourth point is the continuous birth of innovation by the creation of an organizationally strategic community with innovative customers. For these things to happen, it becomes important to create a value-harmonized

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platform at the level of an organized body within a strategic community, with the participation of many community members. The community members have individually to strive for self-improvement and selfinnovation through constructive dialogues promoted within the community, based on the value-harmonized platform, so as to make possible the acquisition of new knowledge, and hence competence. It will then become important for innovative leadership comprising the community leader and innovative customers, 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, discussed in the foregoing section. 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 reported product quality improvements. At the same time, community competence, that is to say, the core competence of a community, will end up the more sophisticated for it. This string of innovation processes of community knowledge and community competence will in the end provide continual value creation for the customers and so attain the business objective of the strategic community (See Figure 7).

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Figure 7. Strategic Community Management with Customers.

3.2. A Chain of Spiraling, Strategic Community Creation with customers

Innovation success spirals on

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A mechanism under which success with one strategic community with an innovative customer leads to the formation of a next, new strategic community to fulfill business requirements will translate into a relevant process in 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-a-vis another customer. In this case study, the results of the strategic community of the research group centered on Dr. Hirose, who are innovative customers, and the NTT project group were proliferated to veterinarians throughout Japan. In order to do this, the community was deliberately and strategically extended in a chain of strategic communities by networking and clustering of the community as shown in Figure 4. The research group centered on Dr. Hirose aimed at having the telemedicine system which they had themselves developed become the de facto standard in Japan by

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progressively expanding it to veterinarians throughout the country. Meanwhile, the NTT community leader proceeded to make best possible use of the IT and multimedia technology that is NTT's core competence by establishing the efficiency of the video phone in telemedicine and at the same time establishing the technical competitive predominance of the telemedicine system in the area of veterinary medicine.

4. Conclusion In this paper we have pointed out the importance of the process of creating new products and services by a company, in developing its own products and services, deliberately and strategically taking in the knowledge and core competence of customers and creating a strategic community based on a strategic partnership with innovative customers who become a core having a high degree of academic experience. In addition, we have discussed the management process of expanding the proliferation of products and services by strategically planning the creation of a chain of communities with other related customers as the result of creating a strategic community with innovative customers.

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An important message of this paper relates to the creation of organized strategic communities on the basis of harmonizing values, working with innovative customers under the farseeing, innovative leadership of community leaders who come with new visions and concepts. It will become possible in such strategic communities to promote community innovation by deploying the innovation process of community knowledge and community competence. This is the framework for strategic community management with customers. It will be required of community leaders, whose task it will be to promote strategic community management with customers, 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 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.

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3. 4.

5. 6. 7.

Notes 1. In recent years, veterinary medicine is in the process of advancing towards the prevention of various diseases with organ transplants and at gene level and explaining the phenomenon of life. These days, when veterinary medical treatment is being questioned on the basis of life ethics, from a wide-ranging viewpoint that integrates medicine, engineering and science, ``the education of talented personnel and the establishment of research and development having the characteristics of veterinary medicine in the chemical view of data related to animal medicine'' is essential for the mastering of veterinary medicine. The place where veterinary medicine differs from other natural sciences is that having discovered the meaning and value of the existence of all animals, it helps them to survive. With respect to the existence of industrial animals and companion animals, because of the existence of social meanings and values in each case, clinical veterinarians carry the burden of fulfilling that duty every day with a great sense of mission. (Interview with Dr. Hirose) 2. Dr. Hirose is the Director of the Animal Medical Information and Science Development Research Institute and Professor Emeritus of Obihiro University of Agriculture and Veterinary Medicine. He specializes in clinical veterinary radiology. Using Japan's first imaging diagnostic terminology, he is a world pioneer in contributing to the development of

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8.

9.

10. 11.

imaging diagnosis by developing and introducing large animal X-ray diagnostic vehicles and industrial animal general imaging diagnostic vehicles, which even now he is active in bringing into the farmyard. He was awarded the Japan Veterinary Association President's prize in 1972. He is a director of the International Veterinary Radiology Association and sits on the review board of the Veterinary Radiology and Ultrasound Journal. He is the chair of the organizing committee for the 12th International Veterinary Radiology Association (IVRA) to be held in Obihiro, Hokkaido, in August 2000. See http://www.obhiro.ac.jp/~ivra/ Interview with Dr. Hirose 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 , and ITU-T recommendations are also available at . ISDN-based video phones are standardized by the ITU-T. (See Kodama, 1999c, 1999d, 2000b) Interview with NTT project leader Interview with Dr. Hirose A particularly important element in innovative leadership lies in psychological qualities of the community leader. In order to make the community members' thoughts, ideas, beliefs, work attitudes, and other values resonate with his or her behavior and ideas, the leader must have the ability to produce, be skilled in conceptualization and interpersonal relationships, and possess political sense and leadership ability both within and outside of the company. The community leader must use his or her superior leadership ability to continually create and innovate with regard to the community competencies accumulated in the community, and to leverage the sympathy and cooperation between community leaders to smoothly promote the primary target of success in the overall business. See Kodama (1999b,1999c) 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. The Telecommunications Advancement Organization of Japan is a corporation approved by the Ministry of Posts and Telecommunications that provides various types of assistance in respect of research and development and telecommunications advancement projects in the field of data communication. See http:// www.shiba.tao.go.jp/ A movable video phone that uses the Internet communication protocol TCP/IP and is capable of accessing the Web. An image protocol conversion system that interconnects an ISDN-based video phone

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and a Web-based video phone. NTT plans to develop a practical integrated video transmission service using this system. 12. Current mobile phones and portable terminals are capable of high-speed transmission, but these are next-generation mobile, portable video terminals that can transmit video, and not just voice and text, interactively. W-CDMA and cdma2000 are next-generation mobile telephone systems proposed by the Swedish company Ericsson and the U.S. company Qualcomm, respectively. 13. With respect to an integrated video transmission service that reflects research and development using the gigabit network and the results of associated experiments, including the results of developing a telemedicine system in the field of veterinary medicine, we intend to publish at the 12th International Veterinary Radiology Association (IVRA) (An interview with the NTT project leader)

References 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. Kodama, M. (1999b) ``Customer value creation through community-based information networks ± the whole picture'', International Journal of Information Management, 19, 6, 495±508. Kodama, M. (1999c), ``Community Management Support through Community-Based Information Network'', Information Management & Computer Security, 7, 3, 140±150. Kodama, M. (1999d), ``Strategic business applications and new virtual knowledge-based busi-

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nesses through community-based information network'', Information Management & Computer Security, 7, 4, 186±199. Kodama, M. (1999e) ``Business Innovation through Community Management ± A Case Study of a Virtual Education in Japan'', Team Performance Management, 5, 8, 225±237. 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, (To be published). Tokachi Mainichi News (1999a) ``Bi-directional data networks in veterinary medicine (construction of remote medical treatment system)'', Jan. 1. Tokachi Mainichi News (1999b) ``Animal Medical Information and Science Development Research Institute (25 points nation-wide connected to video phone net conference)'', Feb. 1. Tokachi Mainichi News (1999c) ``Gigabit network practical research ± project adopted from Obihiro'', Dec. 4. Nippon Kogyo News (2000) ``Imaging protocol conversion system ± NTT development'', Feb. 4. Nikkei Communication (1999) ``Potential of portable video phone'', No. 298, pp. 99±96 Hirose, T. (1985) ``Veterinary medicine ± results and research prospects'', Japan Veterinary Association, 233±237. Prahalad, C.K. and Ramaswamy, V(2000) ``Coopting Customer Competence'', Harvard Business Review, 78, 1, 79-87.

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

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