Japanese-style innovation comes from Japanese ambidextrous leaders

Ambidexterity creates innovation

The original concept of the ambidexterity theory was presented in 1991 by the American sociologist James March.

From this point on, ambidexterity has been applied to the practical field by Charles O’Reilly and Michael Tushman, who are researchers of organizational culture and business management, and is now called the core theory of innovation theory.

Ambidexterity contains and refers to both knowledge exploration, which is an act of newly combining different knowledge beyond the scope of recognition, and knowledge exploitation, in which knowledge is thoroughly exploited.

Knowledge in this context can be defined as an existing business model from an organizational or management perspective.

Then, exploiting one’s existing business model, for example, repeating minor product changes to improve competitiveness and increase profits is considered knowledge exploitation.

On the other hand, combining one’s own business model with other companies’ business models to create new business models, products and services will be knowledge exploration.

In my research, I take this knowledge at a slightly micro level, that is, at the level of a new product development project. In this context, knowledge means the resources of a company, such as field-level technologies, abilities of human resources, patents, and know-how.

The process of deepening and improving existing technologies and knowledge then corresponds to knowledge exploitation, and the process of incorporating resources that can bring new perspectives and fields from outside is regarded as knowledge exploration.

Ambidexterity is based on the idea that in order to ensure the growth and survival of a company in the modern global market, it is important to balance these two tasks and actions.

For example, Pfizer was one of the first to successfully develop vaccines for COVID-19 by applying mRNA technology amid the pandemic.

The mRNA technology was being studied by a German company called BioNTech. Pfizer has long focused on the mRNA technology and partnered with BioNTech. At first, the research was said to be carried out for the purpose of developing drugs for cancer treatment.

However, in the face of the coronavirus pandemic, Pfizer believed that it would be possible to develop a vaccine against COVID-19 by efficiently and effectively combining the mRNA technology with its own management resources, including its diverse knowledge of vaccines, development infrastructure, and mass production technology.

In other words, by combining its own resources, which have been constantly exploited, with another company’s technology obtained through exploration, Pfizer has succeeded in the innovation of developing a new vaccine at speed. Although there was a special development support system by the entire country and companies at that time, we can say that this is a good example of ambidexterity.

Ambidextrous leadership required

What, then, is important in practicing ambidexterity? For one thing, it is necessary to systematically create an environment where project teams based on the technologies and knowledge gained through exploration can work well.

For example, Pfizer’s COVID-19 vaccine project team appears to have been placed directly under Pfizer’s CEO. In short, an environment was created so that other departments in the company could not interfere.

In many cases, the CEO’s judgment and top-level management become important.

At the field level, however, the key is that the leader of the project team has ambidextrous leadership skills.

In fact, in the case of Pfizer, Philip Dormitzer, the leader of the project team, had once conducted his own research on the mRNA technology and seemed to be well aware of its potential.

That is why he was able to explore BioNTech, the leading company in this research. He then partnered with BioNTech and pursued to combine their resources with Pfizer’s resources.

In other words, to promote ambidexterity, a leader with ambidextrous leadership who is able to explore the value and importance of other companies’ resources, has the ability to form partnerships with such companies, and can lead the team in the direction of creating new innovations by combining the resources that his company has been exploiting with other companies’ resources is needed.

I can imagine that such leaders are likely to be born in Western societies with a strong sense of entrepreneurship. However, I wonder if this will be the case in Japanese society.

Ambidexterity that utilizes Japan’s strengths

During the period of rapid economic growth after the war, Japanese companies mainly developed products based on their in-house production principle.

By doing all the research and development within its own company and keeping it secret, the company could have an advantage and uniqueness over other companies. That was one of the strengths of Japanese companies.

In fact, Japanese products began to sweep the world, and in the 1980s, Japan produced the fruits of its labor to the extent that it was touted as “Japan as number one.”

In the 1990s, however, with remarkable technological innovation by companies around the world, it became increasingly difficult for Japanese companies to stick to the in-house production principle.

For example, it can be said that many of the large companies that are now known as multinational corporations have not only exploited knowledge but have also explored it from a global perspective.

Why couldn’t Japanese companies lead the trend ahead of Western companies? We can think of several factors.

For one thing, Western companies are more inclined to seek short-term results, whereas Japanese companies tend to evaluate projects over a long period of time.

Companies in Europe and the United States often produce larger innovations while creating smaller ones by repeating exploration and exploitation within a short span of time.

This means to Japan that there is a limit to in-house research and development or forming alliances only within the country; you are required to carry out exploration from a global perspective.

In addition, there is a quality issue with leaders as I mentioned earlier.

In Europe and the United States, where there are many entrepreneurial people, people are not afraid to go through trial-and-error processes. Conversely, Japanese people are said to have a strong tendency to avoid uncertainty, which is the flip side of prudence, our strong point. This may put the brakes on exercising ambidextrous leadership.

Another possibility is that the quality of knowledge may be involved.

In Western countries, the main form of knowledge is explicit knowledge, which is verbalized and informationized knowledge that is easy to share. In Japan, however, there said to be a lot of unverbalized tacit knowledge.

When you carry out research and development based on the in-house production principle, tacit knowledge becomes the so-called “a-un no kokyu” (an approach to instantly understand what other people want or think of and act accordingly) and works efficiently. However, when you form partnerships with outside parties with different cultures and values, it can be more effective to share explicit knowledge which makes it easier to understand each other and is more convincing.

In light of these factors, it may be necessary to discuss a little more about the affinity between the business environment and resource culture of Japanese companies, and activities that explore knowledge from a global perspective and combine resources to generate innovation.

On the other hand, these factors are Japan’s strengths. For example, the in-house production principle is very effective in knowledge exploitation.

Of course, without knowledge exploration, the growth of a company cannot be expected. However, we should not stick to it too much. This is because we have a core formed by exploitation such that the partnership after exploration becomes effective.

In addition, it is said that Japanese people have a high ability to convert tacit knowledge into explicit knowledge. You can say that this is a skill that is difficult to develop in Westerners, who mainly communicate with each other through explicit knowledge.

In the future, when globalization is more progressed, this ability may become useful for partnerships with countries and regions that are difficult to communicate with through explicit knowledge.

Japanese companies can look at these efforts from a long-term perspective.

In short, I think it is not the only solution to directly import Western methods and adopt them as they are. The concept of ambidexterity is one of the important concepts in modern companies. However, in its practice, I think it would be good to have a Japanese way.

In such a case, we need people who do not deny the characteristics of Japan but take them as our strengths and use them to demonstrate Japanese-style ambidextrous leadership.

In this sense, education to develop such human resources and building an organization that is tolerant of trial and error may be our challenges.

Although European and American companies have taken the lead in developing COVID-19 vaccines, Japanese pharmaceutical companies are also doing well in developing oral medicine for treatment. One day, this medicine may become a shining light in the coronavirus pandemic.

Should such an occasion arise, people may say the high quality of the medicine is an innovation unique to Japan that was born by combining excellent external resources with in-house resources while respecting the Japanese elements of the in-house production principle and avoidance of uncertainty.

* The information contained herein is current as of June 2022.
* The contents of articles on Meiji.net are based on the personal ideas and opinions of the author and do not indicate the official opinion of Meiji University.
* I work to achieve SDGs related to the educational and research themes that I am currently engaged in.

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