This paper provides a new point of view regarding the knowledge management of new product and service development (NPSD), a high-tech field requiring the merging and integration of different technologies and business models. As case studies, we examine the dynamism of the knowledge creation process in NPSD at traditional Japanese telecommunication companies, as they merge and integrate the different elements of broadband wired and wireless network technologies and business models, and we analyse the new knowledge creation process of NPSD in two cases. In a short period of time, strategic teams at the companies formed strategic communities outside the company including customers, and then formed a network that transcended the strategic communities' boundaries. The synthesizing capability of the leadership-based strategic communities comprising community leaders inside the networked strategic communities enabled strategic teams to build new business models aimed at customers and achieved successful NPSD ahead of other competitors. Copyright © 2006 John Wiley & Sons, Ltd.