Design, innovation and corporate integration

Functional integration is a new trend in corporate organization. By changing the balance between functional differentiation and integration, functional integration gives up some supposed economies of scale and benefits from division of labour in order to increase the degree of interaction and task-sharing between diverse functions. The aim is to achieve faster response to threats and opportunities in the persistent turbulent business environment of today. The exact location of the new functional boundaries and inter dependencies differs from industry to industry; in some cases external integration, say with customers or suppliers, may be justifiable. Advantage can be taken from new forms of organization such as flatter hierarchies, the building of interfunctional teams, and the adoption of new design and manufacturing control technologies.
The paper gives examples of functional integration and discusses implications and problems generated by its adoption. Some of the implications may eventually induce radical rethinks on a whole range of presuppositions about corporate structure, relationships between the firm and its suppliers and customers, the role of management, industrial relations and the socio-cultural impact of increasing reliance on automated information systems.     

An Information Transfer Model for Integrating Marketing and R&D Personnel in New Product Development Projects

Marketing and R&D personnel are key actors in the development of new product innovations. Interdependence between the marketing and the R&D functions necessitates integration. Rudy Moenaert and William Souder feel that task specification, structural design and climate orientation are the major integration mechanisms advocated in the literature. Supported by an extensive literature review, they propose a nomological network which interrelates integration mechanisms, interfunctional information transfer, uncertainty reduction and new product innovation success. They develop a causal framework to describe the determinants of successful information transfer between marketing and R&D in the development of technologically new products.     

Developing Sustainable New Products in the Textile and Upholstered Furniture Industries: Role of External Integrative Capabilities

Environmental sustainability has become one of the key issues for strategy, marketing, and innovation. In particular, significant attention is being paid by companies, customers, media, and regulators to development and consumption of green products. It is argued that through the efficient use of resources, low carbon impacts, and risks to the environment, green products can be essential to help society toward the environmental sustainability targets. The number of green product introductions is rapidly increasing, as demonstrated by the growing number of companies obtaining eco‐labels or third party certifications for their environmentally friendly products. Hundreds of companies representing most of the industries, such as Intel, SC Johnson, Clorox, Wal‐Mart, and Hewlett–Packard, have recently introduced new green products, underlining the need to develop products that create both economic and environmental values for the firm and customers. A review of the literature shows that academic research on green product development has grown in interest. However, to date, only a few empirical studies have addressed the challenge of integrating environmental issues into new product development (NPD). Previous empirical works have mainly focused on a set of activities for the green product development process at the project level. After years of paying no or marginal attention to environmental sustainability issues, most of the companies now generally realize that it would require knowledge and competencies to develop green products on a regular basis. These knowledge and competencies can be varied, such as R&D, environmental know‐how, clean technology/manufacturing process, building knowledge on measuring environmental performance of products, etc., that may be developed internally or can be integrated through external networks. Adopting a resource‐based view of the firm, this article aims at (1) investigating the role of capabilities useful for companies to integrate knowledge and competencies from outside of the firm on green product development in terms of both manufacturing process and product design and (2) understanding whether green product development opens new product, market, and technology opportunities, as well as leads to better financial performance of NPD programs. To this end, a survey was conducted in two Italian manufacturing industries in which environmental issues are becoming increasingly important, namely textiles and upholstered furniture. A questionnaire was sent to 700 firms, and 102 useable questionnaires were returned. Results show that (1) companies engage in developing external integrative capabilities through the creation of collaborative networks with actors along the supply chain, the acquisition of technical know‐how, and the creation of external knowledge links with actors outside the supply chain; (2) external knowledge links play a key role in the integration of environmental sustainability issues into the manufacturing process, whereas capabilities such as the acquisition of technical know‐how and the creation of collaborative networks prove to be more important for integrating environmental issues into product design; and (3) the integration of environmental sustainability issues into NPD programs in terms of product design leads to the creation of new opportunities for firms, such as opening new markets, technologies, and product arenas, though not necessarily leading to improved financial performance of the NPD programs.     

Capabilities for advanced services: A multi-actor perspective

Servitization involves manufacturers developing service offerings to grow revenue and profit. Advanced services, in particular, can facilitate a more service-focused organization and impact customers' business processes significantly. However, approaches to servitization are often discussed solely from the manufacturer's perspective; overlooking the role of other network actors. Adopting a multi-actor perspective, this study investigates manufacturer, intermediary and customer perspectives to identify complementary and competing capabilities within a manufacturer's downstream network, required for advanced services. Interviews were conducted with 24 senior executives in 19 UK-based manufacturers, intermediaries and customers across multiple sectors. The study identified six key business activities, within which advanced services capabilities were grouped. The unique and critical capabilities for advanced services for each actor were identified as follows: manufacturers; the need to balance product and service innovation, developing customer-focused through-life service methodologies and having distinct, yet synergistic product and service cultures; intermediaries, the coordination and integration of third party products/services; customers, co-creating innovation and having processes supporting service outsourcing. The study is unique in highlighting the distinct roles of different actors in the provision of advanced services and shows that they can only be developed and delivered by the combination of complex interconnected capabilities found within a network.     

From collaborative community to competitive market: the quest to build a crowdsourcing platform for social innovation

Crowdsourcing presents new opportunities to generate social innovation. However, many crowdsourcing social innovation initiatives struggle with turning their promising projects into sustaining platforms. We studied how to design crowdsourcing platforms for social innovation by building and examining a platform called travel2change. We illustrate a framework of crowdsourcing platform building blocks based on the evolution of our case study from a collaborative community to a competitive market. Thriving platforms have a clear purpose, they facilitate value‐creating interactions for well‐understood actors and build a valid business model. The insights reveal design principles to guide organizations that seek to leverage crowdsourcing for social impact.     

A tentative model of the innovation process

The paper proposes a model of innovation claimed to be applicable both to the lone entrepreneur and the large institution. It treats innovation as a social process and views it in some respects as analogous to natural selection.
The model takes into account 12 elements: the innovator, the new concept, the innovating group, the new product, target user, competitors, capital supply, strategy, supplying organization, technology, relevant environment and chance. The author characterises each element and shows how they interact in the course of guiding a particular innovation to success or failure.
The operation of the model is illustrated by applying it to two cases — the rise and decline of the metal ski and the launch and success of a national US newspaper.
The paper concludes with a list of possible uses of the model, as a checklist for action, as a basis for incorporating other approaches to the innovation process and as a starting point for a quantitative representation of the innovation process.     

The manufacturing/design interface

The paper explains why the traditional relationship between design and manufacturing needs to be changed and what it should be replaced with. Traditionally, the relationship has been sequential. At the beginning of the innovation process design goes ahead alone, manufacturing's input being largely overlooked. Only after the design has been completed does manufacturing take over responsibility, and only then may it emerge that re-design is necessary to make production feasible. The results can be high costs, late delivery and disappointing performance. The changes that have made this practice less supportable include shortened product lifecycles, Japanese competition, customers becoming increasingly quality-conscious, need to deliver exactly on time, and minimization of inventories. Fortunately, new technologies such as CAD/CAM and FMS have come along that can help to rectify these deficiencies; how far they are taken up and effectively used depends on the sharp distinction between the functions being discarded and replaced by their substantial integration. Possibilities that each enterprise could explore include ensuring continuous communication and cooperation between the functions, joint problem solving, replacement of functional management by project management, supplier involvement, elimination of the status differential between design and manufacturing, design for manufacturability, and better understanding by the design function of the realities of the business world. The author warns that integration may not be a universal cure. In particular, he suggests that the innovations closely linked with scientific advances may need some degree of functional differentiation. Changes in the competitive environment require manufacturing organizations to change their view on the relationship between manufacturing and design, and on the way the interface between these two functions has to be managed. In this paper we will first describe the traditional view. Afterwards we will describe the environmental changes that make us question the effectiveness of this view. Finally in a third part we will describe the characteristics of the new approach.     

Measuring Involvement of a Network of Customers in NPD

The new product development (NPD) literature is rife with suggestions to involve customers in the innovation process, and many firms collaborate with customers. But the extant literature does not offer much guidance concerning the nature and quality of involving such a network of customers. This paper contributes to the extant literature on customer involvement by identifying a comprehensive set of metrics to measure the involvement of a network of customers in NPD. It introduces metrics describing three aspects of customer involvement: (1) the rationale for involving a network of customers in NPD, (2) the network of customers involved in NPD, and (3) the interaction process between manufacturer and customers at the level of individual customers. These metrics help to understand the roles of customers, the timing of their involvement at each stage in the development process, the type and number of customers that are involved, as well as the frequency and intensity of their involvement. The use of these metrics is illustrated by a study of customer network involvement by Irish business‐to‐business companies. Forty‐six percent of the sampled firms (n = 1400) were actively involved in NPD, but very few of them involved customers in the early stages (n = 77). The involvement of customers in early NPD stages is significant, although manufacturers tend to go back to the same customers repeatedly. The intensity of customer involvement is also extensive, but even more so during the later NPD stages, especially for new products as opposed to product improvements. By incorporating a network perspective, the proposed metrics for customer network involvement provide a new approach for researchers to study the involvement of customers in NPD.     

The neglect of industrial design

This paper aims at helping innovators to rethink their overall approach to industrial design in product innovation. It examines the role of industrial design in product innovation and demonstrates with both normative and empirical evidence that industrial design is still neglected in British manufacturing industry. The research reveals that firms satisfied their industrial design needs through engineering designers in preference to professional industrial designers. It is concluded that to make the most of design and create market-winning products, the synthesising, interfacing and 'integratorial' approach of an industrial designer is of paramount importance; engineering design, while both necessary and crucial, is by itself insufficient to ensure that innovative products satisfy physical form as well as functional requirements of customers/users. The paper warns that the continued inattention to industrial design may place UK firms at a competitive disadvantage in international markets.     

The Interplay of Customer and Product Innovation Dynamics: An Exploratory Study

The challenges of successfully developing radical or really new products have received considerable attention from a variety of marketing, strategic, and organizational perspectives. Previous research has stressed the importance of a market‐driven customer orientation, the resolution of market and technological uncertainty, and organizational processes such as cross‐functional teams and organizational learning. However, several fundamental issues have not been addressed. From a customer's perspective, a more innovative product tends to have uncertain benefits and requires customers to learn new behaviors. Customer preferences can, therefore, change as product experience and learning increase. From a firm's perspective, it is unclear how to be customer‐oriented under such dynamic preferences, and product strategies using evolving technologies will tend to interact with how customers learn about an innovation. This research focuses on identifying unresolved issues about these customer and product innovation dynamics. A conceptual framework and series of propositions are presented that relate both changing technology and customer learning to a firm's strategic decisions in developing and launching really new products. The framework is based on in‐depth interviews with high‐tech product managers across several sectors, focusing on the business‐to‐business context. The propositions resulting from the framework highlight the need to consider relevant customer dynamics as integral to a firm's product innovation process. Successful innovation strategies and future research challenges are discussed, and applications to better understanding customer needs and theories of disruptive innovation are examined. Several key insights for innovation success hinge on a broad, downstream orientation to customer needs and product innovation dynamics. To be effective innovators, firms must know their customers' customers and competitors as well as or better than their immediate customers do. Market research must extend downstream for a comprehensive understanding of customer needs dynamics. In the context of disruptive innovation, new dimensions of customer needs may become more valuable based on perceived downstream customer trends. Firms may also innovate on secondary needs because mainstream customers do not always give firms the design freedom to radically innovate on primary features. Understanding customer commitments and how they develop under evolving needs can help firms focus resources on innovative efforts more likely to be accepted by customers.     

The strategic management of re-innovation

Abstract
Most studies of the management of the technological innovation process cover the range of activities that culminate in the commercial introduction of a new product. In certain sectors of industry, however, especially those characterised by extended product lifecycles, continued competitiveness depends on vigorous and continuous product improvement, i.e. on the process of 're-innovation' to satisfy evolving user requirements. Ongoing research at SPRU has investigated the process of re-innovation in a number of industry sectors, and the paper presents material relating to two of the characteristic patterns of re-innovation identified in this research.
The first characteristic pattern is re-innovation combining the existing with the new. Two brief case studies are presented. In both cases, the manufacturer and customer gained significant benefits from this re-innovation strategy. For the manufacturer there were reduced development and testing costs, scale and learning curve benefits, distributed inventories of spares and servicing experience. For the customer there were familiarity benefits and reduced entry risks associated with proven reliability of parts and sub-systems.
The second, and more general pattern of re-innovation is based on the concept of the 'robust design'. This is a basic design which has sufficient inherent technological slack or flexibility to enable it to evolve into a significant design family of variants. Product design families offer the producer economies of scale in R&D, manufacturing, marketing and sales and servicing. They offer the user learning from experience, the enhanced possibility of user-inspired modifications, a wider range of price/ performance packages and rapid adaptations to changing environments. Robust designs can effectively combine economies of scale with economies of scope; they are strategically more flexible than leanly configured designs which satisfy only transient user requirements.     

Strategizing as networking for new ventures

Strategizing as networking has become a powerful theme particularly in the IMP tradition. This paper focuses on new ventures and how these develop through the relationships formed by them. Strategizing through network development concerns how the firm perceives its network of interconnected relationships and how it interacts with other actors in relation to these perceptions. The aim of the paper is to identify patterns in the network development of new ventures and in how their strategizing relates to this development. The paper is based on a longitudinal case study of three new ventures. The case study captures the firms' ‘stories’ of how the networks of relationships have developed since their start. Based on the case illustrations we identify three patterns of how the new ventures strategize in their networking and how they network in their strategizing. These patterns concern: (1) exploration and exploitation of similarities, (2) knowledge sharing among customers, and (3) developing relationships with mediating partners. All three rely on interaction with counterparts that provide access to external resources which is of particular importance for new ventures.     

The role of multiple ties in knowledge networks: Complementarity in the Montefalco wine cluster

After decades of studies about pervasive, wide, and inclusive knowledge externalities and the advantages of being there, recent literature on management, industrial marketing, economic geography, regional studies, and related fields has stressed that knowledge spreads imperfectly, unevenly, and selectively within regional and cluster contexts. In this respect, little is known about the role played by heterogeneous knowledge ties among the same set of actors and to what extent they follow overlapping or different routes of exchanging knowledge. Thus, an investigation of multiple knowledge networks in clusters is a fundamental approach to interpret the reasons for innovation and economic performance.With an original dataset comprised of data collected by surveys directly administered in local wineries in the Montefalco wine region of Italy, this paper aims to analyse the roles played by different local knowledge ties within a sector that is critically driven by the exchange of knowledge among economic actors. Social network analysis and exponential random graph modelling were applied to investigate the driving forces of the knowledge flows. The empirical results showed that economic and social ties positively affect the spread of knowledge, but the former has a higher magnitude impact than the latter. Moreover, they follow complementary routes of exchange rather than overlapping ones. We suggest that such a structure has implications for understanding the diffusion of knowledge and structures of innovation in cluster contexts.     

Innovation in Process Plant: A Case Study of Ethylene

Successful companies in any industry recognize the importance of involving customers and suppliers in the design and development of products and services. When complex product and process technologies are involved, these relationships create a network of companies and industries, each of which is a potential source for technological innovation. At the same time, however, such interrelationships further complicate the already challenging task of analyzing the evolving nature and sources of innovation. Using ethylene manufacture as a case study, Peter Hutcheson, Alan Pearson, and Derrick Ball present a three-stage model of innovation. The model provides a framework for understanding the evolution of technological innovation in ethylene manufacturing, as well as the changing roles of the equipment suppliers, the process plant suppliers, and the operating companies througout this evolution. The applicability of this approach to other sectors of the chemical processing industry is also evaluated. In much the same way that a product's life cycle can be traced through distinct phases of creation, growth, maturity, and decline, technological innovation progresses through three main phases: uncoordinated, segmental, and systemic. The progression through these three phases is marked by changes in the relative levels of product and process innovation activity. In this three-stage model, innovative activity progresses from an extreme of high product and low process innovation during the uncoordinated phase, through the segmental period of low product and high process innovation, to the low product and medium process innovation levels of the systemic phase. In other words, as the industry matures, the focus of innovative activity gradually shifts from the product to the process. As illustrated by the example of ethylene manufacturing, companies operating in an industry that has reached the systemic stage will find little or no scope for innovation in the end product or the core manufacturing technologies. In such a mature market, the product is a commodity item, and the fundamentals of the manufacturing process are well known. At this stage, the quest for productivity improvements focuses on cost reductions from task structuring and specialization, task integration, and automation. As such, equipment manufacturers play an increasingly important role in refining existing technologies and improving equipment reliability and capabilities. Such efforts are facilitated by close cooperation with the operating companies, which can contribute process expertise that the equipment manufacturers might otherwise lack.     

The logic of innovation in construction

The paper investigates the logic of innovation in construction by addressing four questions: What is actually being renewed in construction? How is it being done? Who is involved? and Why do or do not the companies innovate? The paper draws on a combination of an industrial network perspective and the exploration–exploitation dichotomy to analyze data from a study of innovation in the Norwegian and Swedish construction industries. The findings show that construction companies are increasingly working more systematically to turn project-level ideas into company-wide knowledge. This indicates an innovation logic that is oriented towards exploitation of new combinations through the internal network. The companies are also increasingly concerned with establishing closer connections to customers and users, which have traditionally been weak. This has led to an orientation towards exploitation through the external network, at least on the customer side. In turn, this may lead to more innovative behavior and renewal in the industry as a whole. However, it requires that not only the customer relationships, but also the relationships on the supply side must change. Companies in the construction industry should be conscious about their innovation logic, in terms of whether they base their innovation behavior on a biased orientation towards exploitation or exploration or towards the internal or external network. A balance is needed.     

The impact of network configurations on value constellations in business markets — The case of an innovation network

A growing body of scholars are advocating a better understanding of how value is created in business networks, rather than merely in business relationships or at the level of single actors. Among such networks, innovation networks, i.e. the configurations of strategic entrepreneurial nets aimed at improving the effectiveness of innovation performance, have come under scrutiny in the business marketing literature. However, research that explicitly connects value considerations with innovation network configurations is still in its infancy, with empirical evidence being notably scarce. This study is aimed at identifying if and how network configurations affect value constellation aspects in business networks, in terms of value recipients and value outcomes. We interviewed key informants representing 46 high-technology entrepreneurial firms co-located in an innovation network (Daresbury Science and Technology Park — UK). Our study identifies that different network configurations can co-exist in the same overall network; these, nevertheless, are not alternative independent structures, but rather they interact with each other through actors spanning their boundaries. Our study thus provides an understanding of network configurations relating to specific value consequences, but also provides evidence relating to the interactions between different configurations. By doing this, we establish a bridge between a business marketing and a strategy perspective on value in networks. Important managerial implications and implications for policy makers also emerge from our study.     

Paths Toward Radical Service Innovation in Manufacturing Companies—A Service‐Dominant Logic Perspective

Research on servitization of manufacturing companies concentrates on typologies of product–service bundles, on transition pathways to increased servitization, and on resource and capabilities configurations necessary to accomplish this transition. Missing from existing research is an analysis of the degree of novelty of service innovations introduced by manufacturing companies. Therefore, this article shifts the focus from the transition process itself to the question of how manufacturing companies can introduce radical service innovations to the market. This article links servitization literature with service innovation literature and investigates how manufacturing companies can introduce radically new services in terms of three forms of innovations: service concept innovations, customer experience innovations, and service process innovations. Service‐dominant logic (SDL) is applied as the theoretical lens because it covers four significant factors influencing the success of companies’ innovation activities: actor value networks, resource liquefaction, resource density, and resource integration. Based on a multiple case study of 24 Danish business‐to‐business manufacturing small‐ and medium‐sized enterprises and through a fuzzy set qualitative comparative analysis, different configurations of the principles of SDL are analyzed. They describe the paths to radical service innovation. Digitalization appears as a central causal condition in the bulk of the configurations. Big and rich data generated internally within the focal company in combination with for instance customer data can enhance the innovativeness of the service offerings. However, digitalization is not a sufficient condition for launching radical service innovation—it should be combined with an efficient mobilization of resources internally within the focal company and/or collaboration with other organizations within the value system. In addition, the analysis hints to a need to detach from immediate customers as the prime driver of service innovation.     

The Contribution of In‐house and External Design Activities to Product Market Performance

Design may be seen as one of several key factors contributing to new product development, along with research and development, marketing, manufacturing, purchasing, etc. More and more, creative design comes to the fore, and many companies believe that superior design will be the key to winning customers. It has the ability to create corporate distinctiveness and also possesses the potential to give a product an individual or new look. Furthermore, the model of open innovation suggests that firms can and should use external and internal knowledge flows in order to create valuable ideas, and also internal and external paths to the market. Also, in the design process, a common trend toward external design skills has emerged in recent years. Due to cost and control factors, firms are increasingly outsourcing design activities. By using a sample of Belgian companies, this paper explores the contribution of design activities to product market performance. While there is mounting evidence that design can be seen as a strategic tool to successfully spur sales of new product developments at the firm level, the topic of design innovation has not yet been linked to the open innovation concept. In this paper, it is empirically tested whether design activities conducted in house differ in their contribution to new product sales from externally acquired design. So, do design activities that have been developed only with internal resources lead to a greater success than those that have been carried out with external sources of knowledge? Using a large cross‐section of manufacturing and service firms, the effects on sales of products new to the market and of imitations or significantly improved products of the firm are investigated. At first glance, the findings indicate that externally acquired design is not superior to in‐house design activities: the results show that only design activities that are mainly conducted with internal knowledge sources play a crucial role regarding the product innovation's success with market novelties. Design conducted in collaboration with external partners, however, has no significant influence. This is not the case for imitations, that is, products only new to the firm. Their success is also influenced by design activities developed with external collaborators. This effect is robust for several modifications of the model specification. In contrast to earlier literature on new technological developments, this paper argues that external design may not affect the sales of market novelties as the “market news” may spill over quickly to rivals through common suppliers including external designers.     

Customer involvement in big data analytics and its impact on B2B innovation

Extant literature assumes that customers mainly serve as passive data providers and that firms take responsibility for big data analytics. In line with a current trend in real-world practice, this research, based on the open innovation literature, challenges this assumption and argues that customers can have more engagement in big data analytics. The authors distinguish two constructs: Customer as Data Provider (CDP) and Customer as Data Analyst (CDA). The former is consistent with the mainstream view that customers serve as the data source. The latter, on the other hand, sheds light on an active role customers play in big data analytics – that is, customers participate in a co-creation process where they acquire, analyze and act on big data. Using survey data of 148 Business-to-Business (B2B) innovation projects, the authors find that both types of customer involvement facilitate B2B product innovation. Furthermore, the authors examine moderation effects of customer need tacitness and customer need diversity. Results show that customer need tacitness negatively moderates the relationship between CDP and new product performance while customer need diversity yields a positive moderation effect. Customer need tacitness is also found to positively moderate the relationship between CDA and new product performance.     

Controlling and combining resources in networks — from Uppsala to Stanford, and back again: The case of a biotech innovation

This paper explores how resources are controlled and combined in a biotech network that spans from Uppsala, Sweden, to Stanford, USA. A case study is reported that describes and analyses how the original discovery, developed at the Department of Genetics and Pathology at Uppsala University, Sweden, was combined with other innovations at Stanford University, California, and under the influence and control of several different actors, including venture capitalists, were exploited within a newly founded company, ParAllele.The paper analyzes the resources that are created, combined and controlled in the network around these scientific discoveries and the company hosting them. This analysis shows how actors are using and are exposed to different control mechanisms, such as action, results and personnel controls, in the innovation process. Our discussion emphasizes how the involved actors apply various types of controls on resources in order to reach their objectives. Forms of control that both entail mobilizing other actors and preventing actions in the emerging network are of importance. We conclude the paper by pointing out the features of control in innovation processes as well as obstacles to control in a business network setting.