The story of PlayStation Sony engineer Ken Kutaragi had always been curious about videogames and marketing new technologies. In 1984, he ran into a team of engineers at the Sony Information Processing Research Institute that included Akio Oba and Masaaki Oka. They had come up with System G, a 3D software engine. Around the same time, Kutaragi also hung out with teams of designers studying the future potential of computer graphics. These teams also engaged with engineering groups inside and outside Sony, who were interested in worldwide trends in the semiconductor industry. Based on his various relationships, Kutaragi sensed that shifting trends in semiconductor prices, the pace of technological progress, and Sonys work on 3D technology together opened up a major opportunity in videogames: a paradigm shift from two-dimensional to three-dimensional game worlds. In 1988, Kutaragi set up a team to collaborate with Nintendo on a CD-ROM peripheral for the cartridge-based Super Nintendo Entertainment System. The team gained valuable insider information about the games industrys distribution and inventory woes. Many problems stemmed from the limitations of mask ROM (i.e., removable cartridges) as a distribution medium. Mask ROMs were extremely slow to producetwo-month lead times were typicalwhich meant that while high-quality titles were often in short supply, repeat production was unviable. Software houses whose titles sold out sometimes found that by the time stock was replenished, gamers interest had moved on. Users, for their part, liked mask ROMs access speedbut the benefits ended there. Its high production cost, plus the OEM fee of $30 payable to Nintendo on every copy sold, pushed unit retail prices up towards $100. On top of that, Nintendos strategy was to increase prices over time as it released new consoles. If gamers wanted fun, they had to pay. It became clear to Kutaragi that the industry needed to ditch cartridges and move to cheaper and higher-capacity CD-ROMs. The Sony-Nintendo alliance held great promise, but in 1991, Nintendo abruptly dumped Sony for Philips, its greatest rival. Sony President Norio Ohga was so incensed by this betrayal that he put his full weight behind Kutaragis venture, urging him to develop a console beyond anything Nintendo had produced. To do so, Kutaragi would have to grapple with a fiendish problem: developing a product that was technologically advanced yet reasonably priced for mass production, and designing a business model that would allow for scalable and repeatable sales, thus sustaining profitability and customer satisfaction. In search of the answers, he turned to several teams in the fields of hardware, software, and entertainment. Kutaragi assembled teams to develop the PlayStations hardware, beginning with 3D innovators Oba and Oka. PlayStation inherited many advanced techniques from System G, but the main challenge lay in incorporating them into hardware that could offer the speed and responsiveness of a home gaming consolewithout costing the earth. Kutaragi had always taken a long-term view of technology; in 1985, he had foreseen a console release in 10 years. As his teams development work began in earnest, their feedback convinced him that the next three years would deliver an eightfold improvement in processor performance, and he built such projections into his plans. At the time, consoles used a mix of general-purpose microprocessors and customized chips. But as his teams tested various options, Kutaragi recognized that PlayStation would run too slowly with this method, so he opted for 100% customized chipstruly radical for the 1990s. The design of the console and its interface fell to a team led by Teiyu Gotoh. The touchstones were simplicity and ease of manufacture, which would be essential to achieving volume production. All members of the PlayStation team were based at the same site and mixed with each other constantly, making it easy for them to understand each others needs. For instance, Gotoh often visited the production floor with his team, where they would discuss design with engineers. When told that his design was not technically feasible, he invited designers and engineers to keep working together to find out how his concept could be achieved in a way that could improve overall productivity. When ideas were hard to express, designers relied on sketches and prototypes, while engineers produced demos. Unlike Sonys conventional appliance business, which depended on direct profits from hardware sales, videogames allowed profits to be made from sales of software as well as consoles. Because of this, Kutaragi decided that all development work for the PlayStation would take place at Sony Music, which had much in common with videogames in terms of its commercial setup and distribution channels. Key contributions from this source included an artist-management mindset that helped the team deal with game developers and publishers, and recruit developers very early on. Unlike its rival Sega, Sony depended on third parties for software supply. If they didnt commit to the new console, it would be game over. If Sony followed Nintendo in adopting mask ROM for its new console, it would have to replicate a similar distribution structure, and suffer all the same problems. Kutaragis teams had to build a system that meant developers could make money, retailers could forecast sales, and users could afford the product. With the CD-ROM, they could transplant a music-industry business model into the world of games: small-lot production of a large range, with quick response to demand and accurate predictions of sales volume. In the distribution system they came up with, called purchase for resale, Sony itself would act as a wholesaler, purchasing products from software houses for direct sale to retailers and taking on responsibility for setting production volumes and optimizing inventory. Kutaragi could draw on Sony Musics knowledge of how to manufacture, market, and distribute optical digital discs. As in the music world, CD-ROM production was flexible enough to respond to the market: the master copy could be delivered just one month before the release date, and replenishing stock took only three days. Retailers received their order the following day if a title was in stock, or within six days if it wasnt. The feedback that PlayStation teams received from retailers enabled Kutaragi and executives to know what was happening in-store. This was important because there was no guarantee that everyone in the distribution chain would work the way Sony needed them to. Software developers also had to change their marketing approach. Kutaragi invited team members to provide developers with concrete examples of what replenishing stock for a particular software title would mean, given manufacturing schedules. Given the feedback they received, they realized the market was so time-sensitive that games would have to take priority over music. Once PlayStation hit the market, the main aim was to maximize the number of titles developers produced. Taking its cue from Sony Musics reverence towards its artists, the PlayStation teams put game developers at the center of their thinking. To motivate them to produce more games more quickly, they set up a creator-friendly environment and developed a software library in-house. This saved developers teams from having to produce every line of code from scratch, so they had more time for creative thinking. The library aimed to support all game development teams equally, but not all developers welcomed it. They preferred to code everything themselves, even if it meant more work, so they could own and resolve every issue. On a technical level, existing consoles had allowed game development teams to issue instructions to the hardware directly, but PlayStation was too complex for that. To ensure compatibility, its operating system and device drivers had to act as a bridge, or perhaps a barrier, between game developers code and the hardware. This frustrated game development teams, who felt it was holding them back and making their games run too slowly. All this came as a surprise to the PlayStation team, which hadnt worked with game developers before. Nevertheless, the team continued to argue for the benefits of the library, citing the growth in PC software following the release of Windows. Pondering over such pushback, the team came to the realization that a performance analyzer was needed to show game development teams how much of the PlayStations computing power their software was actually usingeven long into the 1990s, few titles came close to utilizing it all. Little by little, developers came round to the idea, even admitting that their work was quicker and easier thanks to the library. Indeed, it was the library that allowed Namco to bring Ridge Racer from the arcade to the PlayStation in under a yearan achievement that figured strongly in the story Kutaragi told to potential developers, senior Sony managers, and other stakeholders. Eventually, Sony acquired game developer company Psygnosis, based on the studios impressive work with 3D graphics. Following this deal, people from both companies slowly started to familiarize themselves with each others perspectives. Sony didnt assert full control right away, as the PlayStation teams also needed to learn from Psygnosiss experience of developing, selling, and distributing games. For its part, Psygnosis had to learn to create games with a much stronger financial backbone, and to deal with the associated pressure and control from its new owners. By the late 1990s, PlayStation was gaining a lot of traction. Sega, meanwhile, failed to learn from Sonys distribution innovations, and its persistence with the wholesaler approach was the main cause of the Sega Saturns failure. By 1997 PlayStation accounted for 22 per cent of Sonys consolidated operating profitmore than any other Sony business unit, and an unprecedented success, even for Sony. By then, strong relationships were being forged in the U.S. with Wal-Mart, K-mart, Toys-R-Us, and Sears. This ensured that as sales in Japan began to slow, the U.S. and European markets continued to deliver strong growth. In sum, the story of the Sony PlayStation illustrates the significance of the team-learning routines as they interact with managerial cognitive abilities throughout the sensing, seizing, and reconfiguring processes. The senior manager, Kutaragi, was at the center of a network of teams that supported him at those different stages, and the learning routines (reflexive, experimental, contextual, and vicarious) in which they engaged varied accordingly. Discuss some common ways knowledge is constructed through social interactions?