Laboratory Strategies
R&D that can Capture Value
Haruhisa Ichikawa
Director of NTT Network Innovation Laboratories
NTT Network Innovation Laboratories, with a fiveto ten-year outlook, is focusing on i) creating innovative services and the network concepts that will support them, ii) providing the new network foundation
technologies required to win the business competition, and iii) being a leading force in the field of innovative, foundation technologies.
In the Japanese name for NTT Network Innovation
Laboratories, we deliberately chose to write “net”(for network) in cursive Japanese characters (hiragana rather than kanji). This expresses our determination to break into new fields with a free and unrestricted approach and to create a “supple network”
that can cope with variations in traffic and services
with flexibility and adaptability in the future network.
This should be carried out by bringing together awide range of researchers—working in the fields ofoptics, wireless systems, and software and tacklingthe network architecture from the physical layer tothe application layer.
Since NTT Network Innovation Laboratories wasestablished in 1999, broadband Internet access services have become very popular and NTT has madeconsiderable effort to adapt its business structure to
the emerging broadband service era. It was essential
for us to provide technologies to scale up our network
capacities and speeds with higher quality and reliability at a competitive cost. These goals are evenmore critical now because network traffic is increasing drastically. In addition, we put top priority on providing innovative service visions and technologies toassist the NTT Group in developing new markets.
Evidence is rapidly mounting that we are entering
the so-called ubiquitous era. Mobile phones havebecome enormously popular. Data communication
services for mobile phones have already been accepted as standard features rather than optional add-ons
and the phones are constantly being enhanced, forexample by including digital cameras. This seems toindicate that an enormous market is emerging behindthe mobile phone trend. Various kinds of data andfunctional features become valuable when mobilephones are used. The multi-million dollar market formobile phone content can be explained by the factthat mobile phones enable content providers to determine the user’s circumstances (usually referred to ascontext). Versatile devices such as radio frequency
identification tags are emerging that will enhance theavailability of context information. The real world
will be captured, affected, controlled, or even constructed by ubiquitous networks.

Professor Rebecca Henderson of MIT Sloan school
gave an interesting talk at the OXYGEN project dinner. (OXYGEN is an MIT project for ubiquitous
computing R&D.) She pointed out that value creation
does not always ensure value capture. It is not enoughto have a great idea. We need a strategy that not only
makes markets but also beats the competition. Nowadays, good ideas are instantly shared via the Internet.
Broadband technologies strengthen this fact. In thetraditional R&D paradigm invented by German
chemical industries, R&D activities were organizedstep by step from basic research to commercial
deployment. That paradigm seems to need modification now. Creating ideas, finding good ideas among
the many proposals, creating markets based on goodideas, capturing the market value—all of these activities must proceed concurrently. That is, it is important to develop an R&D system that captures value
through knowledge creation rather than one that only
creates valuable knowledge.
From 1993 to 1996, I worked for a joint projectwith Microsoft regarding multimedia information
sharing business creation. At one meeting, Dr.
Myhrvold, chief technology officer of Microsoft, said
they wanted to jointly cook a delicious pie and take a
portion of it. The history of Microsoft proves thatvalue can be created and captured simultaneously
through partnership. A large and valuable pie is difficult to cook by yourself. We have skillful chefs in ourengineers and we have high-quality ingredients in thecutting-edge optical, wireless, and distributed network technologies in our laboratories, but we needpartners to provide the spice to secure success.
Ubiquitous networks will require significant efforts
over many years. NTT Network Innovation Laboratories will work to develop an R&D system that cancapture the value of ubiquitous networks throughknowledge creation incooperation with NTT
staff and outside organizations and individuals.