During the 1980s, external changes that affected demand for beer in Japan caused Japan's four major brewers to shift to product strategies featuring a heavy emphasis on new product development. This article focuses on the implementation of those strategies, that is, the building of organizational capability to carry out new product development successfully. It examines organizational weaknesses and obstacles that blocked product development, as well as measures taken and organizational arrangements instituted to overcome resistance and support innovative product development. The building of "local" capability—in the units specifically in charge of product development—is a necessary but insufficient condition for successful new product development; support from the broader organization is required as well. The article also shows how the Japanese brewers, rather than eliminating bureaucracy, creatively used "bureaucratic" means such as formal working arrangements, systems, and procedures to foster and support innovation.
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