Developing Holistic Leadership

This chapter discusses the importance of strategic knowledge creation where new business innovation across different technologies and industries forms dynamic business ecosystems through “co-creation and co-evolution.” To accelerate strategic knowledge creation through high-quality global strategic collaboration that intersects departments and industrial sectors internally and externally, the formation of business communities that originate with the formation of “Ba” and the holistic leadership of practitioners at every management level, which also promotes the ongoing growth of business communities are particularly important management elements.

This chapter discusses the theoretical framework of the strategic knowledge creation process for realizing business innovation. It presents an explanation of the relationship between the concept of the business community that originates with the formation of “Ba” (which is required in the formulation and execution of the strategic knowledge creation process) and the strategic knowledge creation process. The chapter also analyzes and examines the theoretical framework where the holistic leadership of practitioners achieves new business innovation through the formation of a business community, which is the organizational platform for practicing strategic knowledge creation, that is, the sharing, inspiration, creation, and stockpiling of knowledge.

In particular, the chapter presents a dynamic, theoretical framework where all practitioners at every level of management demonstrate holistic leadership across a three-layered structure (three practice layers) including the formal organization layer, the informal organization layer, and the psychological boundary layer to connect elements for formulating and executing macro and micro strategies and the business community, which has its origins in the formation of “Ba,” to drive the strategic knowledge creation processes.

Bearing in mind reviews of the existing corporate management leadership theory, this chapter presents a theoretical framework of holistic leadership for top and middle management as well as the staff for strategically promoting knowledge creation activities in companies in industries with rapidly changing competitive environments. “Holistic leadership” here refers to leadership with characteristics that allow for the coexistence of centralized leadership, distributed leadership, and dialectical leadership and their dynamic application according to circumstances by practitioners at each management level (top management, middle management, and staff) of the three practice layers, that is, the formal organizational layer, the psychological boundary layer, and the informal organizational layer. This new theoretical concept of leadership has been derived a posteriori from existing theory and cumulative fieldwork by the author to date.

As a company that has continuously achieved business innovation, Apple in the United States has successfully applied strategic knowledge creation to produce a series of products that integrate various digital devices as well as diverse contents and applications, such as the iPod, iPhone, and iPad, based on a corporate vision of a digital hub concept. At the same time, the redefining of corporate boundaries that expanded Apple’s business in a horizontal direction from the Macintosh PC business to the delivery of music, smartphones, and tablets is also an indication of the evolution of a corporate vision involving Apple’s strategic transformation. This chapter presents the strategic and creative processes that enabled practitioners, including the late Steve Jobs, to demonstrate “strategic innovation capability” by “holistic leadership” at every level of management at Apple and successfully achieve a business ecosystem strategy through “creative collaboration” across diverse boundaries within and outside the company.

Through collective management at Cisco Systems in the United States, practitioners at all levels of management, rather than just a select few, overcame various contradictions through “strategic collaborations” across divisions within the company to respond to the challenge of new business innovation. Moreover, through skillful management of leadership at the formal organization layer, the informal organization layer, and the psychological boundary layer (the boundary layer between the two aforementioned layers), all practitioners of the company demonstrated holistic leadership, which enabled creative dialogue, cooperation, and understanding as well as rapid decision-making and action. Strategic collaboration based on holistic leadership enables outstanding ideas to be readily incorporated into the organization and to be examined and acted on by a single team. This chapter discusses processes whereby collective management based on Cisco System’s holistic leadership changed staff behavior and the corporate culture to achieve business innovation.

This chapter analyzes and considers the relationship between original new product development processes and holistic leadership at Great Britain’s Dyson. An innovative aspect regarding staff structure in the Dyson organization, unlike many development manufacturers, is the absence of differentiation between designers and engineers. All employees are “engineers,” and all employees at all times are engaged in some sort of initiative in technology or experimentation. At Dyson there are product developers known as “designer engineers” who are responsible not only for technology, but also for design and development as they closely link function with design. All designers and engineers are involved in all processes from product concept planning and development until the final testing. In other words, unlike at many development companies, almost no knowledge boundaries exist between different specialist areas at Dyson.

Realization of such business processes at Dyson is achieved by practitioners at every management level including James Dyson (former CEO). Aiming for a single development goal, practitioners form business communities which originate with the formation of multilayered “Ba” that crisscross the company, irrespective of formal or informal organization, through holistic leadership. Through the formation of business communities, practitioners achieve strategic collaboration, which is the starting point of the company’s product development concepts.

This chapter analyzes and considers new business strategies in the area of ICT, where competition is intense, in regard to mechanisms for companies to achieve ongoing change as a means of realizing corporate innovation. As a case study, the chapter takes a look at Japan’s Softbank, which in recent years acquired Sprint Mobile, a major U.S. carrier, to become the largest mobile communications carrier in the world. When the only vital element for achieving ongoing corporate innovation is the demonstration of top-down leadership as centralized leadership through the presence of certain charismatic leaders or a management team, it will be difficult for a company to achieve ongoing strategic innovation. The presence of not only leaders, managers, and staff who have centralized leadership to assist and foster the development of autonomous, distributed knowledge integration (creation) activities that occur locally in every department within a company, but also leaders, managers, and staff who apply dialectical thinking to various contexts and who promote creative knowledge integration (creation) activities locally through distributed leadership is essential. This chapter analyzes and contemplates mechanisms for achieving corporate innovation through the implementation of dialectical leadership where practitioners at every management layer dynamically differentiate between centralized leadership and distributed leadership or allow for both forms of leadership to coexist to respond to changes in the environment through holistic leadership.

This chapter analyzes and considers from the perspective of business models and holistic leadership strategic knowledge creation for leading internal ventures in large corporations to success. The case study takes a close-up look at the games business, focusing chiefly on Sony’s PlayStation.

One lesson learned from the case study was that the elements of productive friction and creative abrasion among practitioners at the knowledge boundaries between project teams, existing organizations, and external partners encouraged creative strategic collaboration among practitioners. Another lesson was that practitioners at all management levels of top management, project leaders, and project staff established distributed business community networks within and outside the company through strategic collaboration based on holistic leadership.

Furthermore, the existence of “community networks (networked knowledge boundaries)” inside and outside the company enabled the integration of different kinds of knowledge and achieved technological innovation (incremental innovation, architectural innovation) in the development of PlayStation as a new product.

This chapter goes into deeper discussion and consideration of holistic leadership through the concept of holistic leadership presented in Part 1 and analysis of a number of case studies presented in Part 2. The chapter first analyzes and considers the concept of dialectical leadership, which is an element for achieving a balance between centralized leadership and distributed leadership at the psychological boundary layer located at the boundary layer between the formal organizational layer and the informal organizational layer from the perspective of four dimensions: the time axis, spatial axis, strategic axis, and management axis. This is because there is new knowledge gained from multiple case analyses and because dialectical leadership has an impact on management elements in these four dimensions when companies execute strategic knowledge creation processes to achieve business innovation. Second, the chapter discusses the concept of leadership interaction which occurs among leaders at the individual boundaries of the three-layered structure (practice layers) of the informal organization layer located in the business community, the psychological boundary layer located in the boundary layer of the business community, and the formal organization layer located in the formal organization, and the three management layers. Third, as demonstrated in the cases of Apple, Cisco Systems, Dyson, SoftBank, and Sony, strategic collaboration with other companies including customers is extremely important for those practitioners who are promoting business ecosystem strategies across different companies. To achieve this, synchronization of leadership at the three practice layers and three management layers in holistic leadership through boundary negotiations among individual leaderships across different companies is important. These concepts are discussed in this chapter. Fourth, this chapter indicates that excellent holistic leadership is necessary for practitioners to achieve strategic knowledge creation high in quality, but this requires leadership for value creation for the formation of new business communities that originate in the formation of “Ba.” The chapter also indicates that “practical wisdom” is an important element for practitioners in such value creation, and the presence of this element is a necessary condition for generating excellent holistic leadership.

In the current business environment of uncertainty, indeterminacy, complexity, insecurity, and ambiguity, practitioners must develop sensible judgment through their experience in decision-making and, guided by values and morals, they must take action based on actual circumstances. Leadership demonstrated in this way has been described as holistic leadership in this book, and the underlying thought and behavior of this leadership is practical wisdom. Practical wisdom is a concept advocated by Aristotle and its importance remains as relevant today as it was in ancient Greece. This final chapter will briefly review the sources of practical wisdom and holistic leadership discussed thus far.