Keitai boomu: the case of ntt docomo and innovation in the wireless internet in japan

To examine the capacity of a large firm to innovate, this dissertation focuses on NTT DoCoMo and the development of the i-mode system in Japan. Clayton Christensen's Innovator's Dilemma framework predicts failure for once successful market leaders pursuing market-altering innovation due to mechanisms inherent to their success. The i-mode case, however, shows how an incumbent industry leader can overcome key obstacles to produce a disruptive innovation. Using a modified “ecology of games” approach limited to examining a single game at the industry and firm levels, the analysis establishes NTT DoCoMo as the unparalleled industry leader. However, decisions at the firm level enabled NTT DoCoMo to overcome obstacles attendant with its position. Christensen observes that disruptive innovations by large firms arise from small organizations autonomous from corporate headquarters. While setting up the i-mode development team as an entrepreneurial organization was indeed a condition for disruptive innovation, other factors were equally important, including executive level support and hiring risk-takers. It was a combination of these factors that led to the successful development of i-mode. Where previously carriers competed on voice quality and price, i-mode disrupted the wireless industry by introducing a new attribute, interactive on-line content. Within a period of 18 months, subscribership exploded from zero to 11 million. Resulting network effects produced a self-reinforcing adoption dynamic that pushed i-mode subscribership far ahead of its competitors. Not only did the service inspire new users and new content, but new users produced new content, transforming i-mode from a self-contained communication system to a platform for user innovation. This case contributes evidence for a new model of innovation in communication technologies in which users play a central, not peripheral, role, a significant departure from the traditional network model. Finally, a brief examination of NTT DoCoMo's attempt to produce another disruptive innovation based on third generation wireless technologies shows that, despite the i-mode success, NTT DoCoMo was still vulnerable to the pitfalls of the Innovator's Dilemma. Notwithstanding, firms that design products or services that facilitate user innovation are likely to see success arise from unanticipated directions, ones likely to form the basis for market disruption.