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Knowledge management and new product development: a study of two companies Abraham B. (Rami) Shani James A. Sena and Tommy Olin The authors Abraham B. (Rami) Shani is based at California Polytechnic State University, Orfalea College of Business Management Area, San Luis Obispo, California, USA and The Fenix Program, Stockholm School of Economics, Stockholm, Sweden. James A. Sena is based at California Polytechnic State University, Orfalea College of Business Management Area, San Luis Obispo, California, USA. Tommy Olin, Ericsson Microwave Systems AB, Molndal, Sweden and The Fenix Program, Chalmers University of Technology, Goteborg, Sweden. Keywords New products, Knowledge management, Strategic planning, Organizational design Abstract The essence of new product development is the creation, utilization and exploitation of new knowledge. Business sustainability is embedded in the firm's ability to manage its new product development (NPD) processes. This paper explores the complex relationship between organizational context, NPD and knowledge management. A design-based framework is proposed and utilized in the investigation of two NPD units in telecommunication and software development organizations. Directions for future research are identified and briefly discussed. Electronic access The Emerald Research Register for this journal is available at http://www.emeraldinsight.com/researchregister The current issue and full text archive of this journal is available at http://www.emeraldinsight.com/1460-1060.htm

European Journal of Innovation Management Volume 6 . Number 3 . 2003 . pp. 137-149 # MCB UP Limited . ISSN 1460-1060 DOI 10.1108/14601060310486217

Introduction New product development is continuing to be an area that is receiving increased attention, both in practice and academic spheres. The upsurge in the amount of knowledge that is readily available to organizational members seems to add increased complexity to the design and management of NPD work. (Kogut and Zander, 1992; Hansen et al., 1999). This large amount of information transmission and availability creates a complex knowledge-rich context for new product development. The design of new product development work is anchored in knowledge management (Verona, 1999). At a very basic level, knowledge-intensive units are characterized by their requirement to gather and convert information to knowledge (Schilling and Hill, 1998). Their key inputs are of a strategic nature (i.e. technical expertise enabling units to out-perform their competitors) (Liebowitz, 1999). Knowledge work is a complex process that requires multidisciplinary expertise to achieve a complex synthesis of highly specialized state-of-the-art technologies and knowledge domains (Krogh et al., 2000). Of note in recent studies certain knowledge-intensive units achieved significant competitive advantages and product successes (Sena and Shani 2000; Olin and Shani, 2001). All of these firms have a dynamic type of architecture enabling them to optimally utilize technological, financial and human capital. As of late, the ability to reduce cycle time in new product development has been viewed as key to business success and business sustainability (Shani and Sena, 2002). Organization design and knowledge management architectures have been identified as moderating factors in the success of new product development processes (Adler and Docherty, 1998; Nadler and Tushman, 1999). However, a design-based conceptual framework that integrates new product development processes with organization design and knowledge management architecture seems to be absent from the literature (Mohrman et al., 2002). In this paper, we integrate knowledge found in the fields of organization design, information technology and knowledge management. We advance an alternative design-based perspective that incorporates

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strategic thinking and sociotechnical systems design. Our approach couples strategic sociotechnical system theory, knowledge management and new product development. In the following sections, we discuss our alternative design framework within the framework of sociotechnical systems. We first briefly review sociotechnical systems theory. Our alternative framework is then introduced and illustrated by describing two NPD units in separate organizations ± a software development unit and a telecommunications unit. A discussion is followed with an identification of directions for future research.

Towards a design-based framework of NPD The rapid technological changes, global competitive environments and sophistication that are occurring in the workplace have set the stage for an alternative design-oriented perspective of NPD (Hatchuel et al., 2002). Such an orientation includes all activities needed to conceive, design, produce and deliver a product to market. As such, a design-based framework is viewed as inclusive, integrative and comprehensive. A vast number of new product development models can be found in the literature. Brown and Eisenhardt (1995) organized the empirical literature into three streams: (1) product development as rational plan; (2) communication Web; and (3) disciplined problem solving. Krishnan and Gupta (2001) explored different variations of platform-based product development configurations. Lewis et al. (2002) organize the different models by their focus, i.e. project factors, organizational factors and environmental factors. Some scholars tended to focus on a specific element in NPD work, such as: . ``front end'' and ``back end'' issues (Zhang and Doll, 2001); . time (Iansiti and MacCormack, 1997); . NPD process (i.e. Schilling and Hill, 1998); . early phases (Verganti, 1997); . resources (Verona, 1999); and . learning. Others have applied different functional perspectives such as:

. .

. .

.

marketing; design engineering (Hatchuel and Weil, 1999); manufacturing; management (Shani and Sena, 2002); and strategy (Grant, 2001).

Yet others focus on the effects and role of different levels ± individual, team and organizational ± in NPD (i.e. McAdam and McClelland, 2002) and NPD across product families (Krishnan and Gupta, 2001). A design-based view The complexity of NPD and the vast variety of NPD models led many firms in most industries and researchers to begin and consider integrated frameworks to guide action and research. A design-based orientation provides an alternative way to view the processes by which knowledge is created, transferred and utilized. According to Hatchuel and Weil (1999), design-based new product development units are viewed as entities that are based on ``collective learning cycles, which are themselves conducive to the simultaneous regeneration of new concepts, objects, skills, and occupations.'' Understanding the dynamics (i.e. collective learning cycles), performance (i.e. new concepts, skills) and sustainability of NPD units requires exploration of the complex business and environmental context within which the units exist. Sociotechnical system design theory provides the conceptual foundation for the exploration of the business and environmental context of the NPD units. Sociotechnical systems Based on sociotechnical system theory organizations are composed of social, technical and environmental subsystems (van Eijnatten, 1994; Pasmore, 1994; Shani and Sena, 1994; Taylor and Felton, 1993; Trist, 1982). The human subsystem involves the knowledge workers as they deploy and utilize tools and techniques to produce a product or render a service. The technical subsystem consists of the knowledge base, the corporate database, computer and network infrastructure, computer hardware and software, and office automation products designed to support and facilitate the knowledge workers. The environmental subsystem frames and balances the social and

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technical subsystem interfaces with various external constituencies. At the most basic level, sociotechnical system design perspective provides both design principles for organizing NPD work and a way to map out the context within which knowledge is created, exploited and managed. Knowledge management The knowledge management literature addresses a vast number of topics such as knowledge creation, knowledge transfer, knowledge capabilities, knowledge strategy, knowledge management systems, microcommunities of knowledge or social networks of knowledge, and knowledge worker. In the context of this paper, our focus is on knowledge creation and knowledge exploitation. Furthermore, to be useful, the knowledge worker has to assign relationships to change the data to information. Knowledge requires inferences, interpretations and rules. True knowledge is being able to take the interpreted information and understand the relationships in a social context. According to Newman and Conrad (2000), knowledge management is an ``integrating practice'' of meshing human and automated activities (the social and technical subsystems). An environment is created wherein existing sets of documentation and shared understanding (thoughts, pictures) represent an organization's knowledge (Newman and Conrad, 2000). Thus, knowledge is viewed as a socially constructed phenomenon within the context of collective learning cycles in an organizational context. From a design-based perspective, the challenge is to design routine and non-routine practices that together harness individual and collective knowledge. This situation occurs frequently in the software development industry. Thus, developing organizational mechanisms and management processes that enhance knowledge creation, knowledge transfer and knowledge exploitation are critical for sustaining business success and human development. Business sustainability NPD work has been characterized as ``intensive work'' that tends to drain resources (Shani and Sena, 2002). Since research reveals the negative consequences of work intensity at the individual, team, business and societal levels, creating sustainable work

systems should be a desirable alternative (Docherty et al., 2002). In the context of NPD work, sustainability is viewed as the firm's strategic and design choices about the continuous investment in the development of resources. Business sustainability is the regeneration of resources and processes that yields long-term successful performance. Thus, sustainability is both an outcome of complex relationships between the environmental and business context, the business strategic and design choices around knowledge management, and new product development configurations and processes, as well as strategic and design choices. Proposed design-based framework Our proposed framework integrates sociotechnical system thinking and new product development from a knowledge perspective. The framework is composed of six basic clusters: (1) environmental and business context; (2) business strategy (resource capital ± technical, human and financial); (3) organization design configuration; (4) knowledge management configuration; (5) new product development (processes and performance); and (6) business performance and sustainability. Figure 1 portrays new product development as an outcome that is influenced by complex causal relationships among the other clusters that influence business performance and sustainability. Given the complex nature required for a flexible NPD process, a guiding framework, such as the one presented in this paper, that facilitates a more flexible development process is needed. Our framework is especially useful when one is attempting to understand why NPD efforts result in specific outcomes and as an aid for planning changes that can lead to improved results. The environmental context cluster, depicted in Figure 1, is comprised of elements and forces in the market place in which the firm competes. The business strategy centers on vision and strategic goals set by the company. The strategy drives the business capital investments (in technical, human and financial) that set the stage for the organization design configuration. The design configuration is composed of social and technical subsystems. This is an important

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environment. A variety of data collection methods were used, including ethnographic observations of activities and field studies of decisions in the firms, the keeping of a diary, periodic sharing of data and ongoing semi-structured interviews with staff regarding their views of the firms, their working experiences, project and documentations.

Figure 1 A design-based framework of NPD

The software development firm (CDM)

area wherein the structure of the business units, the project team and ancillary units influences and is influenced by the NPD and knowledge management processes. Following sociotechnical system thinking, the management system establishes the communication and coordination among and for both the project team and the support units. The business strategy, the various forms of capital and the organizational design configurations, together influence the firm's capability to manage knowledge and foster innovation. Knowledge management and innovation configuration determine how the firm can capitalize and create new knowledge, providing the context wherein NPD efforts are designed, developed and completed. The NPD work design, processes and outcomes influence the performance and sustainability. The routines that emerge, the NPD collective learning cycles, processes and mechanisms are likely to impact the long-term performance of the business and regeneration of resources.

The inquiry approach The two field studies described in the next section are based on longitudinal research that attempted to answer the basic questions of how performance and sustainability is obtained in the new product development

CDM specializes in the building, implementing and supporting of agent-based ``cooperative decision making'' computer-based systems. The majority of their customers are military or governmentbased organizations. Typical applications include: . facilities management; . transportation planning; . military logistics and control; and . engineering design. Business environment Like other software firms, CDM is faced with pressures to reduce development time and the requirement to stay abreast of technological innovations. There are pressures from clients to get their products to market that may not be complete or that do not meet all of the specifications. This is due to the fact that much of their work is ``proof of concept'' and although they deliver workable systems, the intention of their products was not to create deployable systems. Frequent meetings, a good infrastructure of networks and electronic communications, and a well-thought out plan of workspace all facilitate the firm's operation. Business strategy New products evolve from existing products and involve technology transfer and adherence to shared ground rules. Management plays an integral role wherein unique knowledge and skills of the employee are utilized. Their development approach utilizes engineering and architectural design techniques with respect to space management, space constraints and storage priorities; and, employs a series of software agents to assist human decision making. Recruitment, selection and training to support the mission are carefully planned.

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The content of each product team has to be well thought through ± what are the human capital requirements? Each team is an amalgamation of specialties, some of which are solely housed within the product, while other areas such as testing, quality control, service, customer liaison and training are independent of the product. These units, especially testing and quality control, from a delivery perspective, are integral parts of product development. Product environment team members are assembled and scheduled, much like contractors and transition in and out of the development, based on the use of their skill sets. The teams and the team clusters (e.g. programming, testing and service) provide the identification, stability and long-term balance. The design and development phase activities are jointly shared by the product manager and the technical lead. Here, human resource acquisition is a primary consideration. The technical lead must draw from the programming team, requiring him to deal with a programmer pool consisting primarily of part-time workers and a small cadre of experienced programmers. A great deal of autonomy is given to various departmental units. In effect, these units exhibit behaviors similar to an internal form of outsourcing. They have not experienced the turnover in personnel or the inability to secure trained employees. Formal seminars and forums are held weekly to share expertise and to provide the big picture ± the firm's plans, current and proposed projects, and technological developments. There is an overall caring that is projected, encouraged and modeled by senior management. Specific efforts have been made to develop and retain permanent staff. In contrast to other firms in the software industry, CDM has a very low turnover rate. Organizational design configurations CDM employs product teams where leadership is divided between a product leader and a technical leader. Within the product structure, responsibility and direction of the support groups are divided and/or shared between the technical lead and the product manager. Various departments contribute and play significant roles over the product development life (e.g. testing, customer support and training). The various support units provide services to the product

development team in a fashion that resembles a hardware production environment. Another role of the support units is that of maintenance, coordination and advisement for and about existing products that have become operational within the military clients. Disputes or differences are resolved through discussion or are brought to senior management for resolution. Work content and work constituency are relatively homogeneous. CDM emphasizes the need for individuals to maintain and develop their technological expertise by continuously investing in its human capital. All employees are expected to spend at least 10 percent of their work time in continuing education by taking outside courses, in-house training, attending workshops and conferences, and through self-study. Formal seminars and forums are held weekly to share expertise and to provide the big picture ± the firm's plans, current and proposed projects, and technological developments. There is an overall caring that is projected, encouraged and modeled by senior management. Specific efforts have been made to develop and retain permanent staff. In contrast to other firms in the software industry, CDM has a very low turnover rate. The typical product development begins with an analyst working and observing the operations at the customer's workplace. A formalized knowledge acquisition process begins between the client and the analyst that utilizes a set of knowledge facts and rules along with a joint CDM-customer established rule base to construct the knowledge base for the product. A software agent bank containing previously developed agents (e.g. service (domain), mentor, planning, message and facilitation agents) is used to create a specific set of software agents for the customer's product (the agent engine). In many cases, the computer-based agents do not exist and require a new knowledge set and expertise, which must be acquired or developed. A user interface tailoring process uses a bank of user interface technologies and routines to create a user interface. The final customer product is then created using a set of tools, termed the Information Servicing Collaboration Facility. NPD mechanisms CDM, over the past eight years, has developed a repertoire of related products for

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various military clients. They retain a toolkit that belongs to them exclusively. This toolkit serves as the nucleus for product development and, by contract, is not shared with the client. With each product and its special needs new agents are developed and existing agents are refined. The set of routines, nomenclature and agents developed for the client are their property, but they also become part of the toolkit. Human agents are specialists who understand the artificial intelligence and expert systems-based aspects of the hardware agents and are used to create the intelligent information management layer for the client's product. In effect, know-how is transferred to the client staff such that they are able to use the product independent of CDM. This hardware and human agent-based technology accounts for CDM's success, and provides an explanation for the firm's ability to viably deliver its product. Business performance outcomes and sustainability CDM was able to perform tasks and create systems that were said to be ``un-doable'' by major software vendors. They demonstrated that human and computer-based agents could be deployed in a collaborative infrastructure to meet spatially-oriented military-based problems (e.g. cargo loading, weapons deployment, smart-base management, etc.) CDM used permanent, experienced product teams supported by experienced, permanent staff throughout a product's development. They only grew or increased staff when they were certain that a particular stream of product development was established. CDM has no debt ± all purchases and acquisitions are paid in cash. They have always operated profitably. In the software development industry, the typical project life cycle ends upon the delivery of the product. At the firm, the design choice is to keep a small nucleus of employees for the future development and maintenance of the product line. When a product development is initiated, there is not the need to assemble a team from scratch. Self-management relies on established routines housed within existing agent modules, thus reducing uncertainty in work processes. The driving force for the ongoing deliberation is the shared fundamental norm that says:

. . . it is better to develop the product correctly the first time rather than having to do expensive re-makes.

The telecom company: the ASTERIX project Business environment Within the telecom industry, competition among the suppliers is intensive. Actions taken by one supplier are countered by competitors. Two of the major telecom suppliers are Ericsson and Nokia. When Nokia announced that the world's smallest base station for GSM would be demonstrated in the upcoming telecom exhibition, Ericsson responded by quickly building a demonstrator to be exhibited at the same fair. The demonstrator had to be smaller and lighter (than Nokia's), and had to possess a few features that Nokia's micro base station did not have. Business strategy The new concept, micro base stations for GSM, generated significant interest among leading telecom operators ± causing Ericsson to immediately start an NPD project. The work had to begin from scratch, as the demonstrator had been designed extremely fast, in order to meet the telecom exhibition deadline. It did not meet all the standard or legal requirements for radio equipment of GSM. Matching Nokia's date for product release implied a ``mission impossible.'' A normal development process would result in a time overlap or ``gap'' of half a year. To be able to finish on time, the development team, namely the Asterix project, had to find new ways of working to reduce lead-time. Most of the human resources at the department for GSM base stations development were allocated to existing products. A division within the Ericsson group, that had experience with base station development in the Japanese market, was invited to participate in the development project. The division had to create a new organizational unit, learn a new system (GSM) and collaborate in a different company culture. A pioneering spirit was evident in the process, making it fun and exciting to work on the project. The project team was distributed to three different Ericsson companies at five different locations.

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The different companies and the distances made coordination factors (such as communication, information flow and working towards the same goal) a major point of concern. Organizational design configurations A centralized database was used for all documents and drawings. This presented a workflow handicap because the progress distribution to other locations was slowed down, as documents were not spread until they had been reviewed, officially approved and stored in the database. Drawings were not used for description of the mechanical and industrial design. Instead, three-dimensional models were stored in computers and then transferred to the toolmaker for downloading into his numerical controlled machines. For fast communication and distribution of documents and information, an electronic mail system was used. Ericsson used the Tollgate guiding model to ensure that the project was initiated and accomplished in a business-oriented manner. The cornerstones of the model are: Tollgates, a super ordinate decision point in a project when formal business oriented decisions are made by the project sponsor (i.e. what design methods to use in the particular project); and Milestones. An integration driven development (IDD) approach was used to integrate all parts as quickly as possible by discovering errors and mistakes as early as possible such that it allows ample time for corrections. Technical decisions were made using the System Alert forum. The System Alert was for short presentations and decisions. The System Alert was not dependent on people being physically together. Some of the forums were conducted via telephone and videoconferences. All projects started with a pre-study, followed by a feasibility study to evaluate different alternatives and to guarantee the business case for the product. During the Asterix project, management chose one alternative from the beginning to save lead-time. Two months before the official start of the project, the first draft was sufficient to convince the sponsor to approve a substantial expenditure for die-cast tools. Several plastic mock-ups were built and distributed throughout the project. This

provided a visual model as a reference point for discussion and problem solving. The mock-ups also made it possible for every new member of the team to get an image of the final product, which enabled better low-level decision-making. The plastic mock-up also made the project more understandable for people outside the project. Much of the design work could be started in advance, as every designer knew the size, functionality and performance of his/her part of the product. NPD mechanisms To reach time to market (TTM), the first castings had to be delivered within the first six months. Normally, it would take six months to design the die-cast tools and another six months to produce them. As they only had seven months to do all the work, a way around this had to be found. Instead of one single major delivery date, several delivery dates were set. An exception to normal practice was that as little as possible should be fixed at every delivery. Instead of having an output driven by trying to deliver as much as possible at every stage, an input pull was used by allowing the receiver to define what was necessary to be delivered. As the toolmaker was very skillful, he quickly understood the needs and began to share his ideas with the designers in order to avoid making mistakes. This close and collaborative way of working continued until the time when the cast tool had to be hardened. When the first casting was delivered only a few weeks later than planned, the president of the foundry said: I really didn't believe in this. I didn't think that it was possible to design and produce a die cast tool of this size in just seven months. This must be the world record.

The impact of the Asterix project contributed substantially to the long-term sustainability of the GSM organization within Ericsson. Traditional economic performance indicators such as, increasing the system's capability and flexibility to develop new products, regeneration and development of human resources, quality of working life for the employees, and business change processes for renewal and learning were some areas that were influenced by the project and its outcome. Beyond these traditional indicators, there were others such as the ability to form an ad hoc team and meet ``unrealistic''

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deadlines, revealing the depth of Ericsson's human capital. A new organizational component was built, resources had to be recruited from other parts of the organizations, and most project members were unfamiliar with the division's culture or the area of radio base stations. Many of the engineers also came directly from the university without prior experience in the industry. Business performance and sustainability In the competitive telecom industry, the critical goal of TTM is all-important. Ericsson, being one of the first telecom suppliers to include a micro base station in their product portfolio, gained a substantial market share of the micro cell market. The large market share, in combination with relatively high margins, led to a break-even point reached during the first year. Regeneration and development of human resources were considerable. The most significant contribution to the long-term sustainability of GSM was the verification subproject's remodeling of their work. This subproject consisted of two experienced engineers, working in cooperation with newly employed engineers to remodel the HW verification strategy and reduce the lead-time. This new model was not used by the sub project only, but was also introduced as a business change process for renewal and learning at other organizations within Ericsson.

Discussion Our research focused on new product development and knowledge management coupled with the two case studies to provide rich data for discussion, theoretical exploration and managerial implications. A changing business environment, focusing on sustaining the success of the NPD process and outcomes, presents many challenges. The balance between sustaining human and business development becomes critical. Tables I and II provide detailed summaries of the two organizations with respect to the proposed framework. As can be seen from a careful examination of these tables, many issues can be explored. In this section of the paper we chose to focus on four issues:

(1) the need and relevance of a new comprehensive framework; (2) sustaining a competitive edge and knowledge management; (3) capital investment strategy (human, technical and financial) in the NPD environment; and (4) creating a sustainable work environment and learning mechanisms. The relevance of the framework There are multiple perspectives characterizing NPD and knowledge management. Collectively, these fields lack a holistic, integrative, theoretical and agreed upon framework (Balachandra and Friar, 1997; Brown and Eisenhardt, 1995; MacCormack et al., 2001). One recent framework that attempted to integrate contextual factors with management systems and system sustainability in the context of an NPD project in a software development organization fell short in its comprehensive nature (Sena and Shani, 2000). Olin and Shani (2001) advanced an alternative framework that focused on system sustainability, but it, too, fell short in the integration of organizational design. Recently, Mohrman et al. (2002) advanced a model that is anchored in the perspective that knowledge is contextual and relational. While noting the importance of collective sense making, they stopped short of integrating the strategic and organizational design dimensions. The proposed framework, advanced in this paper, attempted to overcome some shortcomings that can be found in the literature. As such, the proposed framework is interdisciplinary, comprehensive, and built upon sound theoretical grounding. The framework integrates strategic thinking, sociotechnical system design thinking, knowledge management, new product development theories and the emerging body of knowledge around learning and system sustainability. In this paper, we identified six clusters of dimensions that affect business sustainability and performance. The proposed framework was used as a way to present a summary of the two companies (see Tables I and II). The discussions of the Asterix NPD project and the CDM process illustrated some of the interdisciplinary integration issues about sustainability.

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Table I A view of CDM through the design-based framework Dimensions

Business environment Competitiveness Environmental uncertainty

Dominating market Business strategy Technical capital

CDM EstabIished market niche (military industry) ± experience moderates level of competition Military market aIthough competitive ± as established credibility and reputation Agent-based technology provides competitive edge ConstantIy monitoring and enhancing technological advances Military market

Leading-edge, bleeding-edge computer-based technology Government looks to it as model Human capital Core competencies, management cadre Human and computer agent symbiosis Institutional know-how promulgated and continuously evoIves Focus on team-based, project-based learning Financial capital No debt Established reputation of work excellence Good marketing system such that it has a steady stream of forthcoming products and expands only when it has financial resources Has the ability to cut-back by maintaining a small number of core employees Delivers ``real'' product as opposed to paper studies of competitors Organizational design configurations Technical subsystem Complex, dynamic, evolving, leading edge ability to scale, flexibility, all managers tech-based Structures Multi-layer matrix, dual leadership, platform-based architecture Processes Agent-based technology ± includes computer-based and human-based agents Sensitive to military trends, demands HighIy structured platform technology adherence Social subsystem Collaborative, team-based Creating in-house expertise and technical mentoring process Management open-door policy lndividual-driven learning Knowledge management configurations Creation of knowledge Agent creation employs rule-based, expert system engines Human expertise developers ± encouraged, support, provide mechanisms for harnessing knowledge reservoir Utilizes existing corporate and industry knowledge bases Utilizes collaborative Web-based infrastructure Creation of new Continuous evolution of agent technologies knowledge Learn-by-doing disseminatIon Investment in development of testing tools ± shared venture New product development Phases Product initiation; product design; product construction; product delivery Key processes Dual leadership (product manager and technical lead) Distinct building blocks Iterative cycles Focus on ``how'' vs ``who'' No hierarchies in teams Mechanisms Good system of checks and balances Agent-based technologies (human and computer) High level of informal communication Formal coordination mechanisms Business performance Outcomes Customer satisfaction; quality product; mechanism for ongoing maintenance Sustainability Regeneration and reproduction of human resources Quality of work life Business change process for renewal and learning

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Table II A view of Ericsson through the design-based framework Dimensions

Business environment Competitiveness Environmental uncertainty Dominating market Business strategy Technical capital Human capital

Ericsson Telecommunications industry is highly competitive ± requires heavy investment to sustain competitive edge Continuous changes in materials and electronics and leading edge time-to-market impacts profitability Global market

High investment in technology utilizes developments (e.g. patents) Research-oriented R&D materials and properties Investment/development permanent staff Creation of Ericsson University for knowledge acquisition and knowledge deployment Formal institutional memory preservation Financial capital Reputation as first class engineering company High rating by trade publications Financial stability over 30 year period and steady growth Keeps/protects technical know-how and excellence in-house Created fire walls to protect technical core ± confidentiality and innovation Organizational design configurations Technical subsystem Leading edge, continuous experimentation, dynamic Technical excellence, highly technical, flexible, competent. All managers are technologically trained Structures Modified matrix ± hybrid, high degree flexibility, hybrid project-product and program Processes High sensitivity to market trends and competitors Ability to shift resources based on business intelligence (sensitivity to market trends and competitor actions) Social subsystem Collaboration, team-work Major respect for technological excellence Available 7 by 24 for support Technical centers of excellence High investment, support for education, training, skills development Creates, fosters university-industry partnership Knowledge management configurations Creation of knowledge Knowledge centers Individuals as knowledge brokers High value on scientific inventions Partnering with university-tech research institutions Scientific experimentation is welcomed Utilizes existing corporate and industry knowledge bases Utilizes Lotus Notes as collaborative infrastructure Creation of new knowledge Platform-based orientation for knowledge fusion Strategic partnership with complimentary technological expertise with competitors New product development Phases Tollgate-based phases Key processes Continuous bench-marking throughout process development Periodic, systematic, review of programs Mechanisms Informal and formal arenas for dialog IT infrastructure for knowledge sharing Protocols for inserting data Extensive use of video conferencing

Business performance Outcomes Sustainability

On-time product delivery Planning for introduction of next generation product while developing existing product Three levels: (1) Built-in practice progression from product to product ± continuous human asset development investment ± team leaders move to next product development (2) Continuous improvement ± process continuously developed and improved mechanisms to build-in learning (3) Establish new market niche ± become market leader

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Sustaining competitive advantage and knowledge management At a basic level, sustainable competitive advantage results from an organization's ability to continuously add value from the customer's perspective and create a product that is difficult for competitors to imitate (Grant, 2001). Business strategy around capital investments influences the design of the organization, which, in turn, sets the stage for the way knowledge is being created, exploited and managed ± influencing the new product development processes and performance. The organizational culture that emerges enables the building of those capabilities to provide a competitive advantage, ensuring an organizational alignment among the key organizational configurations. In the NPD environment, knowledge management is a critical element (Iansiti and MacCormack, 1997). The increasing focus on knowledge management stems from the realization that a limited amount of the knowledge residing within individuals and small organizational units is surfaced and utilized at the organizational level (Dixon, 2000; Liebowitz, 1999; Glasgow et al., 2001). It is important to distinguish between knowledge and information. Knowledge is the residue of thinking, created in the interface between humans, belongs to mini-communities, and is created at the boundaries between systems. Since knowledge is embedded and hard to extract, organizations, as a result, lose considerable productivity and performance. Thus, creating, transferring and exploiting knowledge involves a unique combination of human, technology, markets, business strategy and managerial systems ± all of which have a direct impact on new product development. In our examination of the two companies, the attention devoted to the development of knowledge management configurations (structures and processes) for the purpose of knowledge creation and knowledge exploitation had a major effect on both firms' ability to sustain a competitive advantage. For example, at CDM the set of routines, nomenclature and agents developed with each new product became a part of their toolkit. At Ericsson, the ability to create (very fast) a new product development unit, have a portfolio of products and establish NPD processes and

diverse knowledge centers resulted in a successful new product delivery to the market ahead of their competition. Yet, since knowledge management is critical to sustaining business competitiveness there is a need to further investigate the dynamic complexity of knowledge management processes and structures, knowledge creation, knowledge transfer and exploitation, and the sustainability of business competitive advantage. Capital investment strategy (human, technical and financial) in the NPD environment The resource-based view of the firm's perspective suggests that resources are valuable when they enable an organization to enact strategies that improve performance and exploit knowledge and market opportunities (Lepak and Snell, 1999). Accordingly, the value of capital investment in human, technology and financial systems is inherently driven by the business strategy of the firm (Grant, 2001; Teece et al., 1997). The financial, human and technological assets of the firm are viewed as core assets that are vital to the competitive advantage of the organization and require continuous development in order to sustain business success. These assets are even more crucial in the context of new product development (Verganti, 1997). For example, some argue that to ``win the war'' (on talent) ± the needed capabilities to sustain competitive advantage ± organizations must continuously invest and develop the talent (the human resources) that exists within the firm. The presence of transaction cost in any type of resource development can encourage and facilitate new product development (Grant, 2001). For example, the strategic decision to invest in the development of human capital at CDM, and the mechanisms that were developed, created an environment for continuous experimentation and learning. This resulted in the ongoing scanning of the military environment for possible needs for new products. At Ericsson, the continuous investment in technological capital created an environment in which people were encouraged to search for and find possible new utilizations of the new technology available (see Table II). However, due to their importance and role in the NPD

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environment, the need to quantify the value of human, technological and financial capital, and their transaction costs requires further investigation. Creating sustainable work environment Knowledge resides within the minds of individuals. Sharing tacit knowledge, and creating a shared understanding of individuals from different disciplines, backgrounds and experiences require significant commitment (in terms of time and energy) to develop the most appropriate mechanisms (Shani and Docherty, 2002). As such, they play a critical role in establishing business and human sustainability. Careful examination of Table II reveals that, at Ericsson, the emphasis on the creation of new knowledge and the exploitation of new knowledge in different new product development endeavors helped the project move forward at a high and unprecedented speed. This was supported by ICT integration mechanisms, checks and balances procedures. At CDM (Table I), the utilization of the agent-based technology development mechanisms allowed for the continuous exploitation of new technologies for new and differing product development projects. In the context of NPD, sustainability is viewed as the organization's ability to continuously regenerate resources; improve its quality of work life; its achievement of a high degree of system flexibility ± allowing for continuous change and development of human, technological and work processes; and the capacity to improve business processes and outcomes (Docherty et al., 2002). While most will agree about the importance of these mechanisms, more investigation is needed to learn about the specific mechanisms that will enable organizations to achieve human and business sustainability and to establish the critical balance between economic performance and human development.

Conclusion Recently, Hatchuel et al. (2002) argued that to address the increasing challenges of new product development in a knowledgeintensive environment, organizations needed to follow a ``design-oriented-organization''

paradigm. This paradigm treats the organization from a holistic and comprehensive perspective (i.e. production or new product development must be seen as one of few key elements in the design process). This paper proposed a holistic and comprehensive framework that integrated strategic thinking with sociotechnical system design theory, knowledge management, new product development theories and the emerging body of knowledge about sustainability. The comprehensive nature of the proposed framework provided an opportunity to conduct examinations of current NPD practices in two companies ± telecommunication and software development firms. The paper documented some new insights into the nature and dynamics of NPD work and proposed some directions for new research. The lack of academic research on sustainability, and the possible interplay or cause-and-effect relationships among capital strategies, organization design configurations, NPD structure and processes, knowledge management, and business and human sustainability may reflect an inherent difficulty in empirical measurement and testing. Thus, sustainability of the NPD work systems is in need of systematic research and experimentation.

References Adler, N. and Docherty, P. (1998), ``Bringing business into sociotechnical theory and practice'', Human Relations, Vol. 51, pp. 319-45. Balachandra, R. and Friar, J.H. (1997), ``Factors for success in R&D projects and new product innovation: a contextual framework'', IEEE, Vol. 44, August, pp. 32-56. Brown, S.L. and Eisenhardt, K.M. (1995), ``Product development: past research, present findings, and future directions'', Academy of Management Review, Vol. 20 No. 2, pp. 343-78. Dixon, N. (2000), Common Knowledge, Harvard Business School Press, Boston, MA. Docherty, P., Forslin, J. and Shani, A.B. (Rami) (2002), Creating Sustainable Work Systems: Emerging Perspectives and Practice, Routledge, London. Glasgow, K., Sena, J. and Shani, A.B. (Rami) (2001), ``Strategic human resource management, knowledge management and platform-based design'', paper presented at the 17th EGOS Conference, Lyon, July. Grant, R. (2001), Contemporary Strategy Analysis, Blackwell, Oxford.

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Hansen, M.T., Nohria, N. and Tierny, T. (1999), ``What's your strategy for managing knowledge?'', Harvard Business Review, Vol. 77 No. 2, pp. 106-16. Hatchuel, A. and Weil, B. (1999), ``Design-oriented organizations: towards a unified theory of design activities'', paper presented at the 6th International Product Development Management Conference, Churchill College, Cambridge, 5-6 July. Hatchuel, A., Le Masson, P. and Weil, B. (2002), ``From knowledge management to design-oriented organizations'', International Social Science Journal, Vol. 171 No. 1, pp. 25-37. Iansiti, M. and MacCormack, A. (1997), ``Developing product on internet time'', Harvard Business Review, September-October, pp. 109-17. Kogut, B. and Zander, U. (1992), ``Knowledge of the firm, combinative capabilities, and the replication of technology'', Organization Science, Vol. 3, pp. 383-97. Krishnan, V. and Gupta, S. (2001), ``Appropriateness and impact of platform-based product development'', Management Science, Vol. 47 No. 1, pp. 52-68. Krogh, V.G., Ichijo, K. and Nonaka, I. (2000), Enabling Knowledge Creation, Oxford University Press, New York, NY. Liebowitz, J. (1999), Knowledge Management Handbook, CRC Press, New York, NY. Lepak, D.P. and Snell, S.A. (1999), ``The human resource architecture: toward a theory of human capital allocation and development'', Academy of Management Review, Vol. 24, pp. 31-48. Lewis, M.W., Welsh, A.A., Dehler, G.E. and Green, S.G. (2002), ``Product development tensions: exploring contrasting styles of product management'', Academy of Management Journal, Vol. 45 No. 3, pp. 546-64. MacCormack, A., Verganti, R. and Iansiti, M. (2001), ``Developing products on ``Internet time``: the anatomy of a flexible development process'', Management Science, Vol. 47 No. 1, pp. 133-50. McAdam, R. and McClelland, J. (2002), ``Individual and team-based idea generation within innovation management: organizational and research agenda'', Journal of Innovation Management, Vol. 5 No. 2, pp. 86-97. Mohrman, S.A., Finegold, D. and Mohrman, A.M. (2002), ``An empirical model of the organization knowledge system in new product development firms'', Journal of Engineering and Technology. Nadler, D.A. and Tushman, M.L. (1999), ``The organization of the future: strategic imperatives and core competencies for the 21st century'', Organizational Dynamics, Vol. 28 No. 1, pp. 45-60. Newman, B.D. and Conrad, K.W. (2000), ``A framework for characterizing knowledge management methods, practices, and technologies'', in Reimer, U. (Ed.), Practical Aspects of Knowledge Management Proceedings of the Third International Conference, Basel, Switzerland, October 30-31, pp. 16.1-11.

Olin, T. and Shani, A.B. (Rami) (2001), ``New product development and sustainability: learning from Ericsson'', paper presented at the 8th International Product Development Conference, EIASM, Enschede, June. Pasmore, W.A. (1994), Creating Strategic Change, John Wiley, New York, NY. Schilling, M.A. and Hill, C.W.L. (1998), ``Managing the new product development process'', The Academy of Management Executive, Vol. 12 No. 3, pp. 67-81. Sena, J. and Shani, A.B. (Rami) (1999), ``Intellectual capital and knowledge creation: towards an alternative framework'', in Liebowitz, J. (Ed.), Knowledge Management Handbook, CRC Press, New York, NY, pp. 8.1-16. Sena, J. and Shani, A.B. (Rami) (2000), ``Knowledge management and new product development: learning from a software development firm'', in Reimer, U. (Ed.), Practical Aspects of Knowledge Management, Proceedings of the Third International Conference, Basel, Switzerland, 30-31 October, pp. 19.1-5. Shani, A.B. (Rami) and Docherty, P. (2002), Learning by Design, Blackwell, Oxford. Shani, A.B. (Rami) and Sena, J.B. (1994), ``Information technology and the integration of change: sociotechnical system approach'', The Journal of Applied Behavioral Science, Vol. 30, pp. 247-70. Shani, A.B. (Rami) and Sena, J.A. (2002), ``Integrating product and personal development'', in Docherty, P., Forslin, J. and Shani, A.B. (Rami) (Eds), Creating Sustainable Work Systems: Emerging Perspectives and Practice, Routledge, London, pp. 89-100. Taylor J.C. and Felton, D.F. (1993), Performance By Design: Sociotechnical Systems in North America, Prentice-Hall, Englewood Cliffs, NJ. Teece, D., Pisano, G. and Shuen, A. (1997), ``Dynamic capabilities and strategic management'', Strategic Management Journal, Vol. 18 No. 7, pp. 509-33. Trist, E.L. (1982), ``The evolution of sociotechnical system'', in Van de Ven, A.H. and Joyce, W.F. (Eds), Perspectives on Organization Design and Behavior, Wiley, New York, NY, pp. 19-75. Van Eijnatten, F.M. (1994), The Paradigm that Changed the Work Place, Van Gorcum/Arbetslivscentrum, Assen/Stockholm. Verganti, R. (1997), ``Leveraging systemic learning to manage the early phases of product innovation projects'', R&D Management, Vol. 27 No. 4, pp. 377-92. Verona, G. (1999), ``A resource-based view of product development'', Academy of Management Review, Vol. 24, pp. 132-42. Zhang, Q. and Doll, W. (2001), ``The fuzzy front end and success of new product development: a causal model'', European Journal of Innovation Management, Vol. 4 No. 2, pp. 95-112.

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Determinants of adoption for organisational innovations approaching saturation Alan A. Brandyberry The author Alan A. Brandyberry is Assistant Professor of Information Systems at Kent State University, Department of Management and Information Systems, Ohio, USA.

Keywords Innovation, Computer-aided design, Advanced manufacturing technologies, Organizational culture Abstract A large-scale random sample is used to empirically examine the relationships between adoption of computeraided design (CAD) and five organisational characteristics that are likely to affect the probability of a firm adopting an information technology. The organisational characteristics tested are bureaucratic control, internal communication, external communication, organisational innovation, and the firm's size. Results indicate that bureaucratic control, internal communication, and external communication do affect the likelihood of a firm adopting CAD but organisational innovation and organisational size do not. These results suggest there are differences and similarities between the organisational influences associated with classic adoption models developed with emerging technologies and the organisational influences associated with CAD adoption and possibly other mature information technologies. Electronic access The Emerald Research Register for this journal is available at http://www.emeraldinsight.com/researchregister The current issue and full text archive of this journal is available at http://www.emeraldinsight.com/1460-1060.htm European Journal of Innovation Management Volume 6 . Number 3 . 2003 . pp. 150-158 # MCB UP Limited . ISSN 1460-1060 DOI 10.1108/14601060310486226

Introduction The adoption of technologies and other innovations is one of the most widely studied areas in academia (Damanpour and Gopalakrishnan, 1998; Wolfe, 1994). However, there still remain many aspects of technology adoption that continue to yield inconsistent results (Wolfe, 1994; Downs and Mohr, 1976). A proposed reason for this inconsistency is the tendency to treat all innovation adoptions the same. Several efforts have been conducted to try to classify innovations into different categories in an attempt to explain these inconsistent results. Innovations have been classified into groups such as administrative and technical (Daft, 1978; Kimberly and Evanisko, 1981; Damanpour, 1987), radical and incremental (Dewar and Dutton, 1986; Ettlie et al., 1984), and initiation and implementation (Zmud, 1982). These studies and others acknowledge the inconsistencies in current adoption research and seek to differentiate between innovation types to explain these inconsistencies. Although the term ``innovation'' may imply to some that the study of innovation adoption for technologies is only concerned with emerging technologies, it should be noted that an innovation is commonly defined as: Adoption of an internally generated or purchased device, system, policy, program, process, product, or service that is new to the adopting organisation (Damanpour, 1991, p. 556).

In addition, although most current research has concentrated on emerging technologies, the study of the societal diffusion of innovations and the individual adoptions that contribute to that diffusion is actually concerned with the entire life cycle of the innovation. In particular, the study of the diffusion of innovations is interested in describing the process of adoption and implementation of an innovation from inception all the way through to saturation (Rogers, 1962; Mahajan, 1985). It is known that the overall number of adoptions in a society does decrease dramatically as the number of individuals (or organisations) that have adopted the innovation approaches saturation (Mahajan, 1985). This is primarily attributed to the reduction in the number of potential adopters as the saturation limit is approached. Another influence on the decline in the number of adoptions during this stage

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may be the differences between early adopters and late adopters. While these characteristics have been studied extensively in individuals, they have been substantially neglected in organisational innovation. This is particularly true in the area of information technology adoption where there have been few opportunities to differentiate between these early and late adopters due to the relatively recent introduction of most of the technologies that are being studied. The purpose of this research is to examine the differences between early and late organisational adopters by looking at a mature information technology (CAD) that is demonstrably nearing the saturation point. The differences in characteristics between the firms that have adopted this technology and those that have not should help reveal the characteristics of late or non-adopting organisations for CAD adoption in particular, and for information technology adoption in general. Furthermore, as more information technologies approach saturation, an understanding of these characteristics will become increasingly important. The remainder of this paper is organised as follows. First, relevant research pertaining to organisational characteristics and information technology adoption is reviewed and used to develop the characteristics of interest and their theoretical attributes. This leads to the presentation of hypotheses and a research model for this study. This is followed by details of the empirical study, including data collection, measurement, and analysis. Finally, a discussion of the results and some concluding remarks that focus on implications of this work for theory, practice and future research is presented.

Organisational characteristics and the adoption of innovations General innovations Damanpour (1991) has reported a fairly comprehensive collection of the organisational characteristics that act as determinants in organisational innovation. Since the adoption of information technology is a subset of organisational innovation, Damanpour's study serves as a valuable starting point in this discussion. A total of ten determinants that are suggested to have positive relationships with organisational

innovativeness are listed along with three that are suggested to be negatively related. The ten positive organisational determinants are: (1) specialisation; (2) functional differentiation; (3) professionalism; (4) managerial attitude toward change; (5) managerial tenure; (6) technical knowledge resources; (7) administrative intensity; (8) slack resources; (9) external communication; and (10) internal communication. The three negative organisational determinants are: (1) formalisation; (2) centralisation; and (3) vertical differentiation. Other general studies of organisational characteristics and innovation adoption include Cohn and Turyn (1980). This study explores the relationship between organisational structure and the adoption of process innovations in manufacturing. They find negative relationships between formalisation and centralisation and process innovation adoption. Information technology innovations Research specifically focusing on information technology innovation adoption is less prevalent and less developed than the more general studies. When limited to organisational characteristics it is restricted further. However, several studies have addressed this area. Rai and Bajwa (1997) study factors relating to executive information system (EIS) adoption. The organisational characteristics studied are organisational size (no effect on EIS adoption), information system department size (part of technical knowledge resources ± larger IS departments are found to be positively related to one type of EIS), and top management support (part of managerial attitude toward change ± found to be positively related to EIS adoption). Chengalur-Smith and Duchessi (1999) have studied a variety of factors related to the adoption of client-server technology. The organisational characteristics included in the study were organisational structure, culture, size, and management styles. No relationship between these variables and clientserver adoption was found and the authors argue that these factors are less important than in the 1970s and 1980s because of the

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recognised benefits of applying IT to respond to threats and opportunities by a variety of organisational types. Lai (1997) found that management support, openness, and formalisation all positively influence ISDN implementation and centralisation failed to demonstrate an effect. It should be noted that this finding is for implementation rather than adoption and formalisation and centralisation influences have been shown to differ between the adoption and implementation phases (Zmud, 1982). Grover et al. (1995) studied telecommunications adoptions and various characteristics associated with these adoptions. They find that centralisation was negatively associated with five of the study's 15 telecommunications technologies and positively associated with none. Formalisation was found to be negatively associated with five technologies but positively associated with one. Grover and Goslar (1993) find that greater centralisation is a negative influence on the adoption of telecommunications technologies and that formalisation and organisational size demonstrate no effect.

Research hypotheses An analysis of the current literature points toward several organisational characteristics that have well-developed theoretical and empirical evidence as to their general relationship with organisational innovation. These characteristics lend themselves to investigation in this study due to the ability to test hypotheses associated with these expected relationships. From this existing literature, the availability of data associated with potential characteristics and the statistical characteristics of this data, five constructs have been identified. Since there is no existing theoretical basis apparent for hypothesising that a technology nearing saturation will differ on these characteristics from the relationships established for innovations at any stage, the hypotheses will be consistent with these general relationships. Exceptions found may demonstrate differences in these late potential adopters. Formalisation and centralisation are commonly analysed characteristics. The expected relationship of each with organisational innovation is negative. Centralisation deters innovation due to a centralised decision-making authority

preventing innovative solutions to problems and opportunities (Thompson, 1965). In addition, decentralisation increases the involvement of a greater number of organisational members, increasing the likelihood of innovative solutions (Damanpour, 1991). In the case of formalisation, it is found that lower reliance on rules and procedures facilitate innovation (Burns and Stalker, 1961). A factor analysis on the data collected showed that the attributes used for these two organisational characteristics loaded on a single factor (statistically discussed under measurement of organisational characteristics section). Due to this characteristic of the collected data they were combined into a single construct that represents both elements. This construct will be called bureaucratic control. Since both characteristics incorporated into this larger characteristic should negatively affect adoption the H1 results: H1. Adopters of CAD will have less bureaucratic control than non-adopters. Internal communication creates diversity of ideas and cross-fertilisation of ideas (Aiken and Hage, 1971) while external communication promotes environmental scanning and professional activities and interactions outside of the organisation (Miller and Friesen, 1982). This conceptually supports the proposed influence of these characteristics on innovation adoption as being positive (Damanpour, 1991) and yields H2 and H3: H2. Adopters of CAD will have greater internal communication than non-adopters. H3. Adopters of CAD will have greater external communication than non-adopters. Prior innovativeness by an organisation can generally be expected to predict future innovativeness. This conceptual argument is supported by studies that have linked the number of prior adoptions to current adoptions. H4 results from this concept: H4. Adopters of CAD will have a greater level of organisational innovation than non-adopters. Finally, organisational size is expected to positively contribute to organisational innovation for several reasons. Especially in

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the area of information technology, innovations may require substantial investment making a larger organisation more capable. A greater number of organisational members suggests greater possibilities of an innovative solution being proposed. Finally, larger organisations are often more capable of accepting the inherent risk associated with innovation, especially technological innovations. H5 is informed by this argument: H5. Adopters of CAD will have a larger organisational size than non-adopters. These hypotheses suggest a relationship directly with the adoption of CAD since this is the measurable outcome. However, they actually influence the intermediate aspects of awareness, interest, and evaluation suggested by Rogers (1962). These, in turn, positively influence the end result of adoption. As in most adoption studies, since the outcome can be easily determined and the intermediate stages are more difficult to measure, it is assumed that relationships between the organisational characteristics and adoption actually define the relationship depicted in the research model shown in Figure 1. Once the characteristics have been defined it is necessary to determine a strategy for measuring those characteristics. The individual attributes associated with these characteristics are shown in Table I along with their sources in the literature. The operationalisation and statistical analyses associated with these constructs are discussed in a later section.

The empirical study Method and sampling frame The study consists of a cross-sectional mail survey addressed to senior-level executives in Figure 1 Research model with directions of hypothesised relationships

large manufacturing firms in the USA. The unit of analysis is a firm in the manufacturing sector of the economy. The survey investigates the top-level executives' perceptions of their companies' uses of technology and their perceptions of the technology itself as part of a larger study concerning justification and impacts of manufacturing information technology. Therefore, we are concerned with corporate-level aggregate assessments of the variables being examined in this study. The population of interest from which the sample was taken includes public manufacturing firms with recent annual capital expenditures of at least $5 million and are listed on the Compustat PCPlus database. This database contains financial and market information on over 7,000 public industrial corporations, utilities, banks, and telecommunications companies. The database includes the fields critical to identifying the population. In addition, address and officer information is available for each company. The mailing list included 1,054 firms selected from this database. It is important to carefully define the respondent who is most informed while using survey research methods for complex organisational phenomena (Sethi and King, 1991). This research is interested in assessing the adoption of CAD within the organisation and the important organisational characteristics that affect adoption. Accordingly, the questionnaire was personally addressed to the senior-level executive who would most likely be knowledgeable about all areas covered by the questionnaire. Usually, that individual was the COO, CEO, president, CFO, or treasurer. A cover letter accompanied the questionnaire that explained the purpose of the research study and requested that, if necessary, the survey instrument be forwarded to the most informed respondent. Sample and nonresponse bias analysis Nonresponse bias in mail surveys is an issue that is always of concern. The problem of nonresponse in general mail surveys of individuals has had a variety of methods investigated to improve response rates and lessen its effect. These include follow-up letters, monetary incentives, and pre-notification (Kannuk and Berenson, 1975; Wright, 1995). As with most

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Table I Constructs and associated attributes Construct

Attributes

Bureaucratic control

1. 2. 3. 4. 1. 2. 1. 1. 2.

Internal communication External communication Organisational innovation

Organisational size

Formal channels Strict hierarchy Decision-making centralisation Formal rules and procedures (Damanpour, 1991) Level of contact between members of the same organisational level Level of contact between members of different organisational levels (Damanpour, 1991) Level of contact and involvement with external professional organisations (Damanpour, 1991) Number of technology adoptions in the last year Average number of technology adoptions over last five years (Damanpour, 1987; Damanpour, 1991; Ettlie et al., 1984; Daft and Becker, 1978) 3. Total assets 4. Number of employees

non-commercial surveys, monetary incentives, although effective for individual surveys (Brennan, 1992), were not a practical alternative due to costs. Pre-notification was also not employed due to its additional costs and uncertain effects on nonresponse. Wright (1995) found that pre-notification by mail does not reduce nonresponse when combined with postage-paid reply envelopes and two reminder letters including replacement questionnaires. Brennan (1992) found that the approach of using a minimum of two reminders, each including a replacement questionnaire, along with postage paid return envelopes was among the most successful approaches. For this study, the original mailing and two reminder mailings, all including questionnaires and postage-paid return envelopes, resulted in a cumulative response of 132 usable questionnaires (12.52 per cent). Previous surveys (Wilner et al., 1992) of comparable populations have identified anticipated response rates of between 10 per cent and 20 per cent per mailing. Because the response rate was somewhat lower than expected, the third mailing (second follow-up) included a postcard designed to determine the reasons for nonresponse in addition to the questionnaire. Table II gives the results for postcards sent out with the third mailing (Brandyberry et al., 1999). A total of 944 cards were sent out and 275 were returned, resulting in a response rate of 29.13 per cent for the cards (the total count of responses is more than the number of cards returned since some respondents checked more than one category). The most common reason cited for not completing the survey was either the firm or

Table II Results of postcards returned by nonrespondents Postcard item It is our firm's policy not to respond to surveys It is my personal policy, rather than my firm's, not to respond to surveys I do respond to surveys selectively but was unable to respond to this survey I do not have time to respond currently This survey is not directly applicable to my firm This survey is applicable to my firm but should have been sent to a different officer Other No reason checked Yes remove me from project's mailing list

Count Percentage 51

18.5

32

11.6

67 79 36

24.4 28.7 13.1

24 17 30 228

8.7 6.2 10.9 82.9

the individual have a policy against completing questionnaires (30.1 per cent). Next was a lack of time (28.7 per cent). Although indicative of organisational surveys, neither of these is particularly disturbing as reasons for not responding to this survey. Tomaskovic-Devey et al. (1994), found that time constraints, headquarters being responsible for the decision to respond, policies against filling out surveys, and sensitivity to divulging financial information (not applicable to this research) as being the primary reasons for nonresponse to organisational surveys. Since having a policy against responding to surveys effectively removes the subject from potential respondents, it is possible to compute a response rate based on the true number of potential respondents. If only the actual number of postcard respondents that identified a policy against responding are eliminated, the number of potential respondents is reduced to 971. If the percentage of returned postcards identifying a

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policy against responding to surveys is extended to all nonrespondents, the number of potential respondents is reduced to 776. Using these figures the effective response rate for potential respondents can be estimated to be 13.6 per cent and 17.0 per cent respectively. The possibility of nonresponse bias is of particular concern when the organisational characteristics related to nonresponse also relate to the variables being addressed by the survey instrument. A test of homogeneity between the respondents and the population was performed on the following categorisations of measures relating to industry, firm size, and geographic location. Total assets and annual capital expenditures were used to test for bias on company size. Industry codes (SIC) were used to measure potential industry bias and both zip codes and state were used to measure potential bias on geographic location. Where applicable, the categories were analysed based on ten equal-sized percentiles in addition to the natural categories (by 100s or 1,000s). The test employed was the test for homogeneity for multinominal distributions developed by Potthoff and Whittinghill (1966). This test is superior to the chi-square goodness of fit test since it does not employ approximations and is more powerful in general. The results of these tests are given in Table III (Brandyberry et al., 1999). This analysis shows there is no significant response bias on the tested variables.

would indicate a greater degree of what was being measured. The individual items in the multi-item constructs were then summed to obtain the construct value. The measurement of organisational innovation was accomplished by asking the respondent to give a numeric response to how many technology adoptions have occurred over the past year and over the past five years. The five-year value was divided by five to put it on the same scale and the two items were then summed to obtain the construct value. Finally, the measurement of organisational size was accomplished by obtaining the published total assets for each firm and by requesting the respondent to provide the total number of employees in the firm. These items are on completely different scales so the items were normalised before being summed to obtain the value for the construct. Table IV summarises the descriptive statistics for these measures. Multi-item measures should be tested to make sure that the items are measuring the same characteristic. Principal components factor analysis followed by varimax rotation, as recommended by Straub and Carlson (1989), was used to perform these tests on the four items used to measure bureaucratic control, and the two items used to measure each of internal communication, organisational innovation, and organisational size. If multiple items measure the same construct then they should load on a single

Measurement of organisational characteristics The attributes for bureaucratic control, external communication, and internal communication were all measured using five-point Likert scales. Some of the wordings in the questions were logically reversed to avoid a pattern bias, however, all were re-coded so that a higher numeric value

Measure

Table IV Descriptive statistics for the measures

Bureaucratic control Internal communication External communication Organisational innovation Organisational size

Min.

Max.

Mean

SD

4 3 1 0.2 0.0243

16 8 5 35 85.6748

8.8605 8.3053 3.4504 5.2518 2.0000

2.7972 1.6543 0.8432 5.9592 9.2121

Note: The responses were coded so that the most positive response was the highest number on the scale regardless of the implied direction of the question, therefore, the higher the number the greater the characteristic

Table III Results of response bias testing Variable Zip codes (percentiles) Zip codes (by 10,000s) States Sic (percentiles) Sic (by 100s) Capital expenditures Total assets

Degrees of freedom

2

P > 2

10.8 10.5 26.3 10.8 20.7 10.8 10.8

9.54 12.32 29.24 12.18 19.36 10.37 6.81

0.5549 0.3113 0.3241 0.3472 0.5401 0.4832 0.7960

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factor (Straub and Carlson, 1989, p. 160). All of the multi-item measures loaded appropriately on different factors and their factor eigenvalues and Cronbach's alphas (measure of internal consistency) are given in Table V. Measurement of CAD adoption Respondents were asked to indicate whether CAD had been installed and was operational in any area of their organisation. A total of 108 (81.82 per cent) of the respondents indicated that they had adopted CAD and 24 (18.18 per cent) indicated that they were not using CAD. The respondents to the survey were carefully defined as individuals who are likely to be knowledgeable about production processes and the use of technology including CAD. These respondents can be expected to provide well-informed estimates of the applicable production processes for which a specific AMT is being used.

Analysis and results The hypotheses were examined using multivariate analysis of variance (MANOVA) and t-tests. The first step was to determine if an overall difference exists between adopters and non-adopters of CAD on the variables being investigated. The results for the MANOVA test for this portion is summarised in Table VI. After the overall differences between the groups were established, the individual variables responsible for these differences were investigated employing t-tests for the differences between variable means. A test for equal variance between the groups was conducted and all variables except organisational size passed this test. The t-test

for unequal variances was employed for this variable and standard t-tests were conducted for the other four items. Only t-values significant at the 0.05 level for the directional (one-tailed) hypothesised relationships are shown. These results are summarised in Table VII. In this case, the hypotheses concerning differences between adopters and non-adopters of CAD were supported for bureaucratic control, internal communication, and external communication but not for organisational innovation and organisational size.

Discussion Impact of bureaucratic control Since the hypothesis that the level of bureaucratic control is inversely related to the adoption of CAD has been supported, and the hypothesis is consistent with the general view of organisational innovation, this suggests that as an innovation approaches saturation this characteristic of adopting organisations continues to be important. If this hypothesis had not been supported it would suggest that the relationship between adopters and non-adopters in the early stages of societal diffusion are influenced by bureaucratic control but this difference is only important when differentiating between early adopters and potential mid-to-late adopters (who would be non-adopters at the time). As the technology moved into maturity and towards saturation, more bureaucratic organisations adopted the innovation making the characteristic unimportant in differentiating between early-to-mid adopters and potential late adopters. Since this is not the case, it appears that as we move from

Table V Factor eigenvalues and Cronbach's alpha for multi-item measures Construct

Number of attributes

Factor eigenvalue

Cronbach's alpha

4 2 2 2

1.735 1.912 1.381 1.416

0.6710 0.9117 0.7263 0.9674

Bureaucratic control Internal communication Organisational innovation Organisational size Table VI Results of MANOVA test Test employed

Value

F

P>F

Hotelling-Lawley trace

0.2058

4.0332

0.0023

Note: Ho: adopters and non-adopters are equal on the five variables tested

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Table VII Results of t-tests Variable Bureaucratic control Internal communication External communication Organisational innovation Organisational size

Mean for adopters

Mean for non-adopters

t

P>t

8.538 8.421 3.533 5.259 1.776

10.348 7.792 3.083 5.220 3.034

±2.89 1.70 2.40 ns ns

0.0023 0.0462 0.0089 ns ns

Note: Ho: means of tested item are equal for adopters and non-adopters; ns = not significant

and against suggesting this is due to the relative stage of the life cycle of the innovation. As discussed previously, one of the underlying causes of organisational size being generally related to innovation adoption is the concept of greater risk tolerance in larger organisations due to greater resources. By the time the innovation has reached a mature stage the perceived risk would decline due to evidence of many organisations successfully implementing the innovation. The lower perceived risk would allow more risk-adverse organisations to adopt the innovation.

initiation towards saturation the effect of bureaucratic control remains important and directionally negative. Impact of internal and external communication Similarly to bureaucratic control, the hypotheses for these characteristics were supported. Using the same conceptual argument as above, this suggests that the benefits of both external and internal communication toward information technology adoption remain consistent throughout the life of the innovation. Impact of organisational innovation The amount of organisational innovation present in the organisation is considered a positive predictor of future innovation. It would be expected that an organisation that adopts innovations regularly would be more likely to adopt the innovation under consideration. This hypothesis was not supported. There are several conceptual explanations related to innovations nearing saturation that can be put forth. It could be said that even though the adoption of a technology not being employed in an organisation is by definition the adoption of an innovation, the behaviour associated with adopting the technology this late in its cycle is not innovative. The concept of awareness as a stage in the adoption process is virtually eliminated by this stage since non-adopters (that are at least potential adopters) must be aware of the existence of the innovation. This finding suggests that the amount of general organisational innovation, while important in describing early adopters, is not an important differentiating characteristic when applied to a technology nearing saturation. Impact of organisational size The hypothesis that organisational size is positively associated with CAD adoption is also not supported. There is an argument for

Concluding remarks The main contribution of this research is to provide some evidence that the relationships between the adoption of information technology innovations and organisational characteristics may not be consistent across the technology's life cycle. This information may provide important insights into aspects of technology adoptions for technologies that are later in their life cycle. As life cycles become more compressed, technologies will enter the realm of societal saturation more quickly. Understanding the issues associated with the adoption of these types of organisational innovations is important to properly manage organisations on both sides of the vendor relationships associated with these technologies. Although this research provides insights into these relationships, the evidence provided is based on a single information technology and substantial future research is needed before these conjectures may be confirmed. Future research opportunities exist in exploring other technologies as they approach saturation and also in exploring how and if other organisational characteristics and adoption determinants are affected by the changing phases of an innovation's life cycle.

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Introduction

Knowledge integration processes and the appropriation of innovations Donald Hislop

The author Donald Hislop is a Lecturer at Sheffield University Management School, University of Sheffield, Sheffield, UK. Keywords Innovation, Knowledge management Abstract This paper examines the appropriation of innovations in a number of qualitative case studies through the theoretical lens of the activity based perspective on knowledge. Because knowledge is deeply embedded within its context of use, and the practices through which it is utilized, the knowledge base of most organizations is highly distributed. This means that innovation processes which are multi-site, or cross functional in scale, are likely to involve the integration, and reconfiguration of diverse bodies of internal, organizational knowledge. This suggests that one of the dominant themes in the contemporary innovation literature, which emphasizes the extent to which they involve the integration of internal and external knowledge, requires to be re-evaluated to take greater account of equally important processes of internal knowledge integration. Further, the embeddedness of knowledge in practice, means that the blending together of such diverse bodies' knowledge is likely to involve processes of intensive social interaction. Electronic access The Emerald Research Register for this journal is available at http://www.emeraldinsight.com/researchregister The current issue and full text archive of this journal is available at http://www.emeraldinsight.com/1460-1060.htm

European Journal of Innovation Management Volume 6 . Number 3 . 2003 . pp. 159-172 # MCB UP Limited . ISSN 1460-1060 DOI 10.1108/14601060310486235

Cohen and Levinthal's seminal article (1990) on ``absorptive capacity'' articulated the extent to which innovation processes involve the identification, and utilization of external sources of knowledge. Subsequently, this became one of the most important themes in the innovation literature in the 1990s (Koza and Lewin, 1998; Powell et al., 1996). Thus, in terms of knowledge sharing, innovation processes have become conceptualized as primarily involving the integration of (new) external knowledge with pre-existing, internal organizational knowledge. However, recent theoretical developments now suggest that the knowledge bases of organizations are highly fragmented, diffused and dispersed (Grant, 1996; Tsoukas, 1996), being made up of diverse, but inter-related communities of knowledge (Brown and Duguid, 1991, 1998), where knowledge is inseparably embedded in the specific, local activities that individuals and work groups undertake (Baumard, 1999; Blackler, 1995; Brown and Duguid, 1991; McDermott, 1999; Tsoukas, 1996; Von Krogh et al., 1998). These developments have potentially significant implications for the way innovation processes are conceptualized, and one of the main objectives of the paper is to evaluate these implications, by examining innovation processes through the theoretical lens of contemporary perspectives on knowledge. These insights suggest that the implementation of large scale, enterprise wide innovations will involve not only the integration of internal with external knowledge, but also the integration and reconfiguration of different bodies of specialized internal knowledge. This therefore brings into the question the dominant focus of the contemporary innovation literature on the external-internal axis of knowledge integration. The growing importance of combining fragmented organizational knowledge is also the result of empirical changes in the The author would like to acknowledge the input of Harry Scarbrough, Jacky Swan, and Sue Newell, to the development of this paper. This paper is based on data collected as part of the ESRC funded project ``Knowledge articulation and utilization: networks and the creation of expertise'', which had Harry, Jacky, and Sue as the principal investigators.

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structuring of organizations. Becker, for example, (2001) suggests that the global expansion of large organizations has created the ``problem'' of managing dispersed knowledge. Further, recent innovations in the structuring of organizations, such as the move towards networks and virtual forms of organizing can be seen as attempting to induce what Fenton and Pettigrew (2000, p. 24) call the ``decline of rigid compartmentalism'', through transcending traditional functional and business unit boundaries and facilitating greater levels of intra-organizational knowledge sharing (Jackson, 1999; Castells, 1996). Arguably, one of the main catalysts behind the phenomenal level of interest in knowledge management, is that it addresses this issue through holding out the promise of improving levels of intra-organizational communication and knowledge sharing (Newell et al., 2000). Finally, for all of the companies examined, one of the main motivations for the implementation of the information management systems examined was that they would improve levels of internal co-ordination, and knowledge sharing between business units and sites (Swan et al., 2000). The data used here to investigate these issues are drawn from longitudinal case studies of five organizations, all of which were appropriating similar information management systems. To allow an adequately detailed analysis on the theme of knowledge integration the paper focuses narrowly on this aspect of the innovation processes examined[1]. Specifically, three mechanisms are considered in detail: intensive team based interaction; formal education; and the dissemination and utilization of formal documentation. While the five case companies each used all of these knowledge integration methods, the way in which they used them, and the emphasis placed upon them varied significantly. The paper shows how the different knowledge integration philosophies utilized significantly affected the way in which, and the extent to which, the integration of different bodies of relevant knowledge occurred. The paper also concludes by suggesting that the data presented do point towards important ways in which innovation processes could be usefully reconceptualized.

Theoretical review The period since the late 1990s has seen a flowering of interest in the nature of knowledge in organizations. This paper utilizes some of these concepts in order to allow the nature of innovation processes to be reconceptualized, with the aim of providing fresh insights into understanding their dynamics[2]. The importance of knowledge integration to innovation processes has been made explicit in a number of different literatures. Firstly, much of the innovation literature from the 1990s highlighted the extent to which innovation processes involved the integration of external knowledge with existing organizational knowledge (Cohen and Levinthal, 1990; Leonard-Barton, 1995; Powell et al., 1996). Secondly, the socio-technical perspective on technological change also places significant importance on knowledge integration. This perspective, which conceptualizes technological change as involving the mutual adaptation of both the technological system being implemented and the organizational context within which such systems are being introduced, considers the blending and synthesis of new and existing knowledge as being of fundamental importance (Clark and Staunton, 1989; Hislop et al., 1997; Robertson et al., 1996; Scarbrough, 1996). Finally, the importance of knowledge integration to change processes has been developed in some of the contemporary knowledge literature, most significantly in the work of Nonaka (1994), which has been highly influential. For Nonaka, the creation of new knowledge occurs through the dialogue and synthesis between four main types of knowledge. Thus, the growing consensus about the centrality of knowledge integration to innovation processes helps reinforce the need to further develop our understanding of these processes. Typically, however, much of the innovation literature has primarily conceptualized innovation processes as involving the integration of external and internal knowledge. Such an emphasis characterizes the innovativeness of organizations as being closely related to their ability to identify and utilize external knowledge (Alter and Hage, 1993; Ebers and Jarillo, 1997-1998; p. 5; Kaufman et al., 1994; Koza and Lewin, 1998;

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p. 256; Powell et al., 1996; Powell, 1998; Tidd et al., 1997). Having said that, there are a number of studies which question the validity of the internal-external distinction through blurring the boundary of what constitutes internal and external knowledge, and suggesting that more generally, innovation processes involve the integration and reconfiguration of distinctive and heterogeneous bodies of knowledge which are possessed by a wide range of different actors including users, designers, other organizational interest groups, consultants, equipment suppliers, customers, etc. (von Hippel, 1988; Fleck 1997; Badham et al., 1997). The burgeoning actor network theory literature represents that largest body of work in this tradition (Callon, 1986; 1992; Law and Hassard, 1999). The analysis developed here builds from and extends this perspective through placing a greater emphasis on the nature of knowledge, and knowledge integration processes than has thus far been undertaken. The late 1990s witnessed the development of an extensive body of work which suggested that knowledge is embedded within, and inseparable from, practice (Blackler, 1995; Brown and Duguid, 1991, 1998; Cook and Brown, 1999; DeFillippi and Arthur, 1998; Lam, 1997; Lave and Wenger, 1991; Tsoukas, 1996). This perspective conceptualizes knowledge not in objectifiable, entitative terms, but as being something inextricably related to practice. This represents what Cook and Brown (1999) called an ``epistemology of practice'' and what Scarbrough (1998) referred to as the relational perspective on knowledge. Another closely related theme has been concerned with the internal distribution, structuring and management of knowledge within organizations. One of the emergent findings from this work is that organizational knowledge tends to be highly distributed (Blackler et al., 2000; Grant, 1996; Tsoukas, 1996), being dispersed among specialist knowledge sub-communities (Brown and Duguid, 1991, 1998). The innovation processes examined will be analyzed using these perspectives on knowledge, which will be shown to have significant implications for the way innovation processes are conceptualized. The importance of undertaking an empirical evaluation of these ideas is

significant, due to the general lack of empiricism in much of the knowledge literature just discussed. While this literature has developed a number of important theoretical insights, much of it lacks empirical support (see for example Blackler, 1995; Brown and Duguid, 1991, 1998; Spender, 1996; Tsoukas, 1996; Grant, 1996). Thus, while Nonaka has produced an extensive amount of writing to develop the concept of dynamic knowledge creation, these ideas are supported more through the use of anecdotes than through detailed empirical data (Baumard, 1999, p. 93).

Methodology The data presented are from five case studies, drawn from a number of different countries, and sectors. The common element to all of the case companies was that they had all implemented standardized, cross functional, multi-site information management systems. Information on the companies, and the innovations they implemented, is summarized in Table I. A qualitative and longitudinal methodology was utilized for this research, with the primary source of data in each of the companies being semi-structured interviews with two main types of personnel: those directly involved in the innovation projects, and more senior management staff with decision making responsibilities over the focal projects. Each innovation project was followed for a period of between 18 months and two years, with progress being monitored through discrete, regular visits. Typically visits occurred twice yearly, with each company thus being visited between two and three times, with an average of four to five interviews being conducted on each visit. This provided a way in which the accounts provided by individual personnel could be cross-checked, and reduced the dependence of the research on the accounts of particular informants. Further, the longitudinal nature of the research, avoided the dangers of single visit, ``snapshot'' studies (Pettigrew, 1987), through giving a sense of the temporal dynamics of the projects. The analytical approach utilized involved combining what Marshall and Rossman (1999, p. 151) referred to as an emergent approach to data analysis, with a dialectical

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Table I Company and innovation characteristics Company

Company details

UK-Cast

UK casting and injection moulder Specialist, international pharmaceuticals corporation UK pension and life assurance company French mechanical connectors Swedish based, international fork lift truck company

UK-Pharm UK-Pension France-Connect Swed-Truck

International project

Innovation

Number of sites involved in innovation project

Yes

ERP (enterprise resource planning) system

12

Yes No No

ERP system Sales automation tool ERP system

4 (in initial pilot) 60 6

Yes

ERP system

11 divisions (20+ sites)

approach to data analysis and theory development (Mason, 1996). More specifically, the initial categories that were used to structure the data were developed through an ongoing immersion in the research data, from relating the data to relevant theoretical concepts, and from the dialogue between these processes.

Knowledge integration methods: five IT implementations Across the five case companies, an extremely diverse range of mechanisms were utilized to facilitate knowledge integration. For example, a selection of the most important methods used include: teamworking, telephone and teleconferencing, e-mail, intranets, formal education, documentation, workshops, formal and informal meetings, and personal communication. Constraints of space make the detailed examination of all the various methods utilized impossible. Thus the paper examines only three of the mechanisms utilized: teamworking, formal education, and the use of documentation. Teamwork refers to the bringing together of a project team to work closely and intensively over an extended, but finite period of time. These represent three of the most important, and widely used knowledge integration mechanisms utilized by the case companies. While in broad terms, each of the case companies used all of the knowledge integration mechanisms examined, the importance attached to them, and the specific ways in which they were utilized, varied significantly. Generally, each company utilized one dominant mode of knowledge integration, which was supported and reinforced by a number of others (see Table II).

From the five case companies examined here, two broad philosophies of knowledge integration were apparent, which relate closely to the two mechanisms of knowledge sharing outlined by Lam (1997). First, there was the socially based model of knowledge integration, used by Swed-Truck, UK-Pharm, and UK-Cast, which was primarily based on intensive social interaction. Second, there was the formal communication model of knowledge integration, utilized by UK-Pension and France-Connect, which was based primarily on the use of both documentation and education. Social model of knowledge integration In Swed-Truck, UK-Cast and UK-Pharm our research examined the implementation of identical innovations: enterprise resource planning (ERP) systems. While their products and the markets that they operated in varied, there were a number of similarities between them. First, they had similar multi-divisional structures, with autonomous business units which had only limited interactions. Second, the ERP systems they were implementing were of a similar scale. Thus in all three companies the ERP systems were implemented across a range of business units, with the objective of standardizing some core business functions. The implementation methodologies adopted by these three companies were all relatively similar, and utilized the social model of knowledge integration. For these companies, teamworking, involving the physical bringing together of staff with different, relevant knowledge to work together during systems development, was the principal method of project working which was consciously used from the outset of their innovation projects.

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Table II Summary of knowledge integration methods used Knowledge integration philosophy

Socially based knowledge integration

Companies utilizing each philosophy Swed-Truck, UK-Cast, UK-Pharm Primary method of knowledge integration Intensive teamworking Subsidiary knowledge integration Education, personal communication, methods documentation

In the cases of Swed-Truck and UK-Cast intensive teamworking was used in very similar ways. In these companies, the ERP systems being implemented involved the introduction of a common information system across a number of different business units. This was summed up by one Swed-Truck project team member: That is the change, of course, because this is one major system [ERP] where we operate all together. Before we have had different systems in different areas.

A UK-Cast project team member made a similar comment about their transition:

Formal communication ± education centred approach

Formal communication ± document centred approach

France-Connect

UK-Pension Dissemination of encoded knowledge in documentation, etc. Teamworking, personal communication

Formal education and training Documentation, personal communication

. . . because each [local] company has its way of dealing with things. They are very stand alone. If you are responsible for IT in a company, you can do a lot of things without asking the people here [at the corporate centre] . . .

One important consequence of this for the ERP projects examined, was that relevant organizational knowledge of operating processes and IT systems was fragmented, and widely distributed across business units, being possessed by each business unit locally. One UK-Cast interviewee articulated this as follows: . . . the thing that is perceived to have impeded integration of the European operation is an absence of any connectivity between the manufacturing groups . . . There is no dialogue between them at any level in Europe particularly. There is no exchange of any experience or information or knowledge at all.

. . . we have different cultures across Europe and all of our units . . . everyone has different business ways, business systems, currencies, legal requirements, chartered accounts . . . So it was an opportunity for us to try and create a single European team . . .

In both cases, their business units had operated autonomously, with their corporate centres making few demands to use common operating procedures, or IT systems. Consequently, the business units in both organizations had somewhat different operating processes, as they had evolved independently over time, being shaped by the local needs of each division. In UK-Cast the business units were said to have run as ``local fiefdoms''. One project team member suggested that: . . . the general managers [of the business units] were bred up to be so independent, in effect run it like a personal business.

UK-Cast's project manager made a similar point more forcefully: As long as they are turning in profits they can do as they damn well like.

Both companies had also allowed their business units to develop their IT systems independently, based on their specific needs, with little regard given to issues of compatibility. One Swed-Truck interviewee suggested:

The project teams in both organizations decided that the development and implementation of a common ERP system would require the utilization of this distributed knowledge, and that this would be achieved through the creation of project teams bringing together staff from different business units to work together full time on their projects. In the case of Swed-Truck, where a substantial amount of development work was necessary, this process lasted for almost a year. In UK-Cast, where less development work was necessary, the team based development phase lasted for approximately two months. In both cases, these inter-business unit project teams worked intensively with consultants to develop common systems which were compatible with the diverse needs of their different business units. One of the project team members from Swed-Truck articulated the benefits of teamworking as follows:

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. . . gave us [project team] the opportunity to fight for our [local] business, for what we need to support our customers. That gave us the

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opportunity to bend the system so that it works best for . . . [all of] . . . the sales companies.

Another Swed-Truck project team member suggested that the organizational staff selected to work on the project were chosen primarily because:

perceived effectiveness of this process was summarized by UK-Pharm's project manager as follows: The people who have been working on the process have all said that they have learnt more in that twelve weeks than they learnt in the preceding, in many cases, twelve years . . . [with] a much better understanding of the business as a whole rather than their own area.

. . . they had good knowledge of the [local] business.

The benefits this had in linking their knowledge with that of the consultants was described thus: . . . the better they knew the [business] processes, the better they can judge if something will function. If it is done in a different way in [ERP], is it possible to do it this way? They can make the right judgment for what is possible and what is not.

In UK-Pharm, teamworking was also used extensively as a knowledge integration method, although here a slightly different method of intensive teamworking was utilized. In UK-Pharm a process mapping exercise was carried out during the early stages of their project to identify, and codify knowledge on their existing production processes. The production of these process maps was deemed necessary, as this knowledge was felt not to be known explicitly. One interviewee explained this situation: . . . the reason why [we] have got to do this process mapping is because the understanding of what we were doing was, wrongly, in the heads of a lot of these technical guys and part of our heritage is trying to untangle the fact that we didn't document things.

UK-Pharm's project team decided that to access and utilize this knowledge would require working closely with production staff. This was done during the course of workshops which were facilitated by one of the project team. The process mapping activity was summarized as follows: . . . our initial task was to understand what went on just by talking to different people and collecting that information together.

At a later stage in UK-Pharm's project, the project team also utilized cross-business unit teamworking similar to that undertaken by Swed-Truck and UK-Cast. This occurred when the pilot project expanded to include four sites, two in the UK, and two in the USA. At this stage of the project multi-site project teams were created, as this was perceived to provide one of the best ways of integrating the knowledge that staff from each site had of their local businesses. The

Formal communication model ± France-Connect's education centred approach[3] France-Connect had a number of striking similarities to the three companies outlined above. It was also structured into highly autonomous business units. It was implementing a similar innovation, on a similar scale. Finally, the motivation of increasing the level of company-wide standardization was also the same. However, the implementation methodology they utilized represented a completely different philosophy of knowledge integration from that adopted by Swed-Truck, UK-Pharm, and UK-Cast. France-Connect's ERP project involved the utilization of knowledge drawn from a diverse range of areas, including specialist technical knowledge on ERP systems, which had to be drawn in from external sources, combined with detailed knowledge of the organizational context. In France-Connect this internal knowledge was fragmented and widely diffused within different functional silos, which had traditionally operated autonomously. Of primary relevance to France-Connect's ERP project was knowledge on their existing IT systems, knowledge of the production environment, and knowledge of the sales environment. The functional isolation which existed meant that this knowledge was contained within three separate communities. The fact that these functions were not even geographically co-located increased the sense of separation and isolation of these functional communities. In terms of IT, the project manager suggested: . . . the second point where we suffer is clearly the interface with MIS [Management Information Systems] and the implementation . . . there is no local MIS structure to work with.

In France-Connect, the initial project methodology utilized was to provide internal staff with a substantial amount of formal education and training to give them

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knowledge on the general principles of ERP systems and how to use them. These workers then had the responsibility for cascading this knowledge in their own functional area, with each functional area then implementing and developing the system in isolation. The main external consultants summed this strategy up: . . . The general rule is that the education is done first of all just on the outside . . . public courses . . . with key people, 5-10 per cent [of managers] . . . is what we recommend should be educated on the outside . . . . They have one inside course with only France-Connect people but we have had about 25 since then. Then these people become instructors in their own education program on the inside which creates the internal network. That is extremely important, that is the second step, you have to create this internal network . . .

The training that was given was also supported by a significant amount of documentation. The knowledge integration philosophy adopted assumed that once the general principals of ERP systems had been learned, staff would then be able to translate them to the circumstances of their own working environment, using their detailed knowledge of the local working context. Thus, of the five case companies, France-Connect placed the greatest emphasis on formal training as their primary method on knowledge acquisition. One of the major consequences of this knowledge integration philosophy was that the sharing of knowledge and information between functions was extremely limited. No real mechanism was developed, or was felt needed to be developed, to facilitate the integration and blending of the different functional knowledge bases. The general assumption was that each function could acquire any necessary specialist knowledge on ERP systems through the education programme and then independently apply it within their own functional area. However, this implementation methodology proved to be unsuccessful, with France-Connect experiencing substantial difficulties with its implementation. First, substantial delays occurred in the development phase, which meant that the system was almost a year late when it ``went live''. Further, once the system had gone live even greater problems occurred, primarily due to poor co-ordination between the sales and production functions. These problems were so chronic that the full implementation

of the system was postponed until these problems had been addressed[4]. Formal communication model ± UK-Pension's document centred approach While the innovation being implemented by UK-Pension, a sales automation tool, was different from that being implemented by the other companies, there were a number of similar factors which made these innovations comparable. Their sales automation tool was also an IT based information management system. Further, it was equally being implemented across a range of sites and functions which had traditionally operated autonomously. Finally the rationale of introducing a greater level of standardization was also similar. Similar to France-Connect, UK-Pension's implementation methodology followed the formal communication model of knowledge integration. However, where UK-Pension differed from France-Connect was the emphasis placed on formal documentation, rather than education. The development and implementation of UK-Pension's sales automation system was the responsibility of a project team of three people. The working methods adopted by this group involved an element of intensive, faceto-face teamworking, as all three members of the project team worked full-time for most of the projects duration, during which time they worked from the same office space, allowing them to share knowledge on a face-to-face basis[5]. However, significantly different working arrangements were utilized to involve one of the main groups which possessed knowledge of importance to the innovation process: the systems developers, an external software company. The working arrangements adopted by the project team to involve them were largely based on the use of formal documentation, and involved a substantially smaller element of face-to-face interaction. It had been decided by the project team to substantially modify the basic system that the supplier had initially offered. To achieve this a formal partnering arrangement was set up, described by one of the project team as follows:

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And later: It's been a joint development, but initially we're being the drivers and they weren't thinking beyond what UK-Pension want to do.

The development work involved adding extra functionality to the system, to more closely model UK-Pension's existing sales processes. This, therefore required the communication of a substantial amount of knowledge by the project team, of UK-Pension's sales processes and procedures, to the system developer. As the project leader said: . . . [what] we have given them is a lot of our knowledge and expertise to build this . . . They wouldn't have been able to develop their product without our expertise.

During this development work there was little team based, intensive work undertaken between UK-Pension and the system developer. Instead relations between them were managed through the transferal of formal documentation, supported by the use of other methods. This was summarized by two interviewees who said: . . . there has been a lot of contact but not someone dedicated from either party working full time with the other.

And: Q. In terms of your own interactions what has been the mode of communication, has it been Email? A. Email and phone, and we have gone to see them. Most of the technical communication has been by Email whereas face-to-face [was] used to follow their progress.

However, these collaboration techniques created a number of problems. As one interviewee said: . . . the documentation . . . has been quite a nightmare, because a lot of things have been decided during discussions, and various memos and bits of paper have been flying backwards and forwards.

The project manager also said that: . . . they were a small company . . . one man and a dog . . . they don't know how big companies work. Big companies work in a much more disciplined and structured way . . . we have everything documented. A small company can't give all the time and effort to do that . . .

One of the main problems for UK-Pension from managing their collaboration via documentation was the amount of ambiguity this method created, with each piece of documentation that was transferred between the companies requiring clarification via some

form of direct, personal communication. Therefore, this was a knowledge integration method that was not without its problems.

Analysis What do the data just presented say about the character of knowledge integration processes, and their role in the innovation processes examined? This section of the paper reflects on these issues in detail, and is structured into two sections. The first examines the nature of the knowledge bases of the companies, and considers the implications of these findings for the way innovation processes are understood. The second half of the analysis section extends these arguments by reflecting on what the data presented say about how the character of organizational knowledge influences the effectiveness of different knowledge integration philosophies. (a) The organizational knowledge base: fragmented and dispersed In all five case companies, the character of the organizational knowledge possessed by the company staff involved in the innovation projects typically had a number of distinctive characteristics. Fundamentally, as suggested by Kogut and Zander (1992), Tsoukas (1996), Grant (1996), and Blacker et al. (2000), the organizational knowledge base of the case companies was highly distributed in character. The organizational knowledge possessed by the internal staff in all five case companies was primarily focused around the activities, products, and/or services they were involved in providing. Thus, these organizations require to be conceptualized not as a single, homogeneous, community of practice, but instead as being made up of a diverse number of inter-related, but distinct (sub) communities of practice, each possessing their own body of somewhat distinctive knowledge (Brown and Duguid, 1991, 1998). Further, the architecture of these knowledge communities reflected how the structuring of work activities shaped the internal division of knowledge (Brown and Duguid, 1998). For example, the autonomous business units in each of the companies constituted distinct communities of practice, each with their own customers, product ranges, accounting procedures, and

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IT systems. Consequently, each business unit had its own separate and specialist knowledge base and possessed only a partial understanding of the knowledge base of other business units. These findings also provide tentative empirical support for the activity based view of knowledge, as the distributed knowledge bases of the companies examined was arguably the result of the specific way knowledge was used, developed and applied by separate business units within each company (Blackler, 1995; Cook and Brown, 1999; Tsoukas, 1996). Arguably, the contemporary innovation literature doesn't adequately account for how these characteristics of organizational knowledge affect innovation processes. The literature on the implementation of technological innovations is both extensive and diverse. Three major strands of it are actor network perspectives (Law and Hassard, 1999), process perspectives (Badham et al., 1997; McLoughlin, 1999), and network perspectives (Jones et al., 2001)[6]. All these perspectives have added to the understanding of innovation processes through highlighting a number of important issues including: politics and conflicting interests; the importance of trust in shaping interpersonal interactions; how choice and negotiation during ``local configuration'' processes influence implementation dynamics (Badham et al., 1997); and the role of individuals in network building/maintenance. But, one collective weakness of this heterogeneous literature is its relative blindness to the importance and role of knowledge in innovation processes. For example, in Jones et al.'s (2001) book, which represents a diverse collection of perspectives on the topic of innovation networks, not one of its nine substantive chapters contains a detailed analysis of knowledge issues. This blindness is summed up in a quotation from Jones et al. (2001, p. 14) which argues that:

factors referred to are skills, attitudes, and interests, and take no real account of how the knowledge possessed by actors may be an equally important factor shaping the innovation process. Equally, the focus of actor network studies (for example Edwards, 2001; Graham, 1998), is on issues such as the interests of actors and how they can be shaped, the skills of actors in problematisation, network building, conflict negotiation, etc. This perspective is therefore equally silent on the role of knowledge in innovation processes. The data presented here suggest that this represents the neglect of a potentially important issue. Therefore one significant way in which innovation processes can be reconceptualized is through paying greater attention to knowledge related issues such as: . the type of relevant knowledge involved; . its characteristics (tacit/explicit, etc.); . its location; and . the mechanisms used to share, integrate, or communicate it.

. . . researchers must be sensitive to the skills utilized by actors in coordinating behaviour and practice (emphasis added).

Such an emphasis has been reinforced by much of the organizational networking literature, which takes as one of its basis premises that the competitiveness of organizations is related to their ability to utilize external knowledge. For example, Lam (1997, p. 973) suggested that:

In all three of the innovation literatures considered, when issues of human competency are considered, the emphasis is predominantly on the skills of the actor, rather than the knowledge they possess Thus, in Badham et al.'s (1997) configurational model of the innovation process the human

The data presented suggest that all of these factors are likely to affect the dynamics of innovation processes more than is accounted for in the majority of the innovation literature. However, there is a significant body of contemporary writing which does conceptualize innovations processes as involving processes of knowledge integration, but this is largely focused around the axis of integrating internal and external knowledge (see for example, Leonard Barton, 1995, Ch. 6; Powell et al., 1996; Tidd et al., 1997). This emphasis on the integration of internal and external knowledge is embodied in Cohen and Levinthal's concept of ``absorptive capacity'' (1990)[7]. The importance of external knowledge is also encapsulated in the first sentence of their seminal paper which says: Outside sources of knowledge are often critical to the innovation process (1990, p. 128).

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. . . firms increasingly build cooperative ventures in order to sustain and enhance their competitiveness.

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However, Becker (2001, p. 1038) argues that: . . . the dispersedness of knowledge has important consequences for organizations.

The data presented here suggests that this is an insight which requires to be taken account of by the innovation literature. Therefore, another way in which innovation processes can be reconceptualised is through taking greater account of the distributedness of organizational knowledge, which suggests that greater emphasis needs to be placed on the extent to which innovation processes involve the integration and reconfiguration of dispersed and fragmented organizational knowledge, as much as new external knowledge. The research data presented suggests that primarily, innovation processes require to be understood as knowledge integration processes, involving the blending together of diverse and heterogeneous bodies of both specialized internal and external knowledge, as all innovation processes, to some extent, involve the re-combination of different bodies of internal knowledge in new and novel ways. For the innovation processes examined, for example, fragmented and specialized knowledge, business unit level knowledge was integrated and reconfigured with the objective of developing corporate level meta-standards. In conclusion, two specific ways in which innovation processes could be usefully reconceptualized is through, generally, taking greater account of knowledge related issues. More specifically, greater account requires to be taken of how the distributedness of organizational knowledge affects innovation processes. The importance of taking account of knowledge issues in such fine grained detail is illustrated in the following section, which reflects on how the different knowledge integration methods used affected the extent of knowledge integration which occurred. (b) Knowledge integration as a social process The case study material illustrated how the integration of knowledge, whatever the philosophy of knowledge integration utilized, was not a simple or straightforward process and was typically complex and time intensive. This section reflects on why this was the case, focusing largely on the nature of organizational knowledge as an explanatory factor.

Cook and Brown (1999) usefully articulate two distinct ways in which knowledge in organizations may be conceptualized, defining them as being based on epistemologies of possession and practice. In broad terms these two epistemologies can be related to the two philosophies of knowledge integration described. The epistemology of possession, which conceptualizes knowledge as an entity which people possess, underlies the formal communication philosophy of knowledge integration utilized by both France-Connect and UK-Pension. Thus, the emphasis on knowledge integration methods such as formal education, and the use of documentation, assumes that relevant knowledge can be objectified and communicated through disembodied means. The epistemology of practice on the other hand, which conceptualizes knowledge as fundamentally being embedded in practice, appears to underlie the socially based philosophy of knowledge integration utilized by Swed-Truck, UK-Cast, and UK-Pharm. This philosophy utilized intensive teamworking as its primary knowledge integration mechanism, and was based on the assumption that effective knowledge integration required detailed social interactions between relevant individuals. The data presented arguably suggests that the most effective knowledge integration method utilized by the five case companies was intensive teamworking. Therefore, an interesting and relevant question to consider is: what were the characteristics of intensive teamworking which made it an effective knowledge integration mechanism? One convincing answer to this question can be provided by the ``knowledge as practice'' literature. For example, Boland and Tenkasi (1995, p. 359) suggest that: . . . [the] . . . integration of knowledge in knowledge-intensive firms is not a problem of simply combining, sharing or making data commonly available. It is a problem of perspective taking in which the unique thought worlds of different communities of knowing are made visible and accessible to others.

For Boland and Tenkasi (1995, p. 351) the complexity of perspective making and taking, is that it involves the development of an understanding of the ``unique social and cognitive repertoires'' that each knowledge base is founded upon (Tsoukas and Vladimirou, 2000), which are typically highly tacit, and often sub-conscious. Brown and

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Duguid (1998) suggest similar reasons for the difficulty involved in sharing knowledge across different communities of practice. Effective learning and knowledge integration thus requires the existence of an environment in which individuals can share and exchange such detailed knowledge and information (Lave and Wenger, 1991; McDermott, 1999). The utility of intensive teamworking in the facilitation of knowledge integration was that it created a physical and social environment conducive to a process of ongoing, activity related, knowledge sharing. It provided a method for: . . . connecting people so they . . . [could] . . . think together (McDermott, 1999, p. 103).

For the innovation projects examined, relevant knowledge was highly distributed, and the integration processes so complex, that relatively extensive periods of team based working were necessary to achieve the knowledge integration required. Thus, in the cases of Swed-Truck, UK-Pharm and UK-Cast, the project teams that were created, and the intensive team working methods that were used brought together individuals who possessed relevant knowledge and expertise, and allowed them to utilize it collectively. Such team working conditions were effective for the integration of diverse knowledge bases involved as it provided an environment where a relatively rich form of communication could occur, which as Mintzberg et al. (1996, p. 63) suggest, allowed for: . . . non-verbal communication, facilitating the delicate process of integrating ideas and energies.

Further, the richness of the communication which occurred in these circumstances allowed the utilization and sharing of relatively tacit, local and contextual knowledge (Baumard, 1999, p. 201). This type of activity therefore directly engaged these teams over extended periods of time with real, and ongoing problems related to the integration of new IT systems within their existing organizational context. These findings are also supported by a number of other empirical studies, which all concluded that effective knowledge integration required detailed and intensive social interactions amongst people in possession of relevant knowledge (Blackler et al., 2000; Lam, 1997; 2000, p. 508; Leonard-Barton, 1995, p. 103).

However, this is not to suggest that other methods of knowledge integration are totally inneffective. For example, the knowledge integration methods utilized by France-Connect and UK-Pension provided a way of disseminating general principles and concepts, while providing limited support to project staff in their attempts to apply them to their specific working context. It could thus be suggested that documentation, and formal training can be used as limited knowledge integration tools ± in the transferal and communication of general, abstract principles etc (Lam, 2000, p. 490, reached similar conclusions). However, on their own, the research data presented suggests that both these methods, have limited utility to facilitate and support either the application of abstract principles and knowledge within a specific context, or the integration of different specialist knowledges.

Conclusion The central concern of the paper has been to reflect on the character of innovation appropriation processes through utilizing contemporary theory on the nature of organizational knowledge. The evidence presented shows that the dominant contemporary conceptualization of innovation processes usefully captures the extent to which they involve the integration of internal and external knowledge. This perspective is embodied in Cohen and Levinthal's ``absorptive capacity'' concept, which suggests that the innovativeness of organizations is closely related to their ability to absorb and utilize external knowledge. Thus, in all of the five innovation processes examined, significant use was made of external knowledge, provided either by consultants, or specialist equipment suppliers. These organizations provided the case companies examined with access to specialist knowledge NOT possessed internally. However, it was also concluded that, for all five cases examined, this provided only a partial, and limited understanding of the character of the innovation processes that occurred. What is neglected in the dominant conception of innovation processes, is the extent to which they also involve the integration and reconfiguration of disparate bodies of fragmented and specialized internal knowledge. Thus, in all five cases, the

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reconfiguration, and integration of internal knowledge was equally as important as the extent to which new, external knowledge was utilized. Typically, for the innovations examined this involved the bringing together of knowledge possessed by different, autonomous business units. One caveat regarding these findings is that the importance of blending together dispersed internal knowledge in the five cases examined may be related to the specific nature of the changes being introduced, which were enterprise-wide in scale, affecting and involving a range of functions, and business units. Thus, innovation processes more focused within specific functional areas, or business units, may not involve the same degree of internal knowledge integration. However, the paper does suggest that there is an element of generalizibility to these findings. The highly distributed nature of the organizational knowledge base of the five case companies, is arguably related to the embeddedness of knowledge in practice, and the soci-cultural context within which it occurs (Blacker, 1995; Cook and Brown, 1999). This perspective on knowledge suggests that the knowledge base of any organization is not a coherent entity, and can be more accurately represented as a collection of fragmented bodies of knowledge. This means that to some extent, all organizations can be regarded as distributed knowledge systems (Blackler et al., 2000; Grant, 1996) and that the knowledge base of any organization is likely to be somewhat segmented due to the diversity of specific contexts within which, and activities through which, knowledge in organizations develops (Becker, 2001). Finally, the paper also suggests that the effective integration of knowledge is likely to require significant processes of social interaction. This is because, as articulated by Boland and Tenkasi (1995) the sharing of knowledge requires a process of perspective making and taking to occur which allows the highly tacit assumptions on which all bodies of knowledge are based (Prichard, 2000), to also be shared and understood.

Notes 1 Other aspects of the innovation process are considred in different papers, see Hislop (2002); Hislop et al. (2000) and Newell et al. (2000).

2 The terms innovation processes and innovation management as referred to in this paper relate to organizational activities concerned with the implementation of new working practices and systems, similar to the way the term is used by McLoughlin (1999), and Fenton and Pettigrew (2000). The use of these terms can be distinguished from their use to refer to formalized organizational activities aimed it developing new innovations, such as R&D, which is the way they are used by Burns and Stalker (1994) and Cohen and Levinthal (1990). Thus, the focus is on the implementation, rather than creation of technological innovations. 3 The interview data on France-Connect are less rich than for the other companies examined, as most of the interviews had to be conducted in French, and summarized notes, rather than full transcripts were produced. 4 In France-Connect intensive teamworking was eventually utilized. It was considered that the problems which existed could not be addressed by the original knowledge integration philosophy, as they were problems which required bringing together knowledge from across the traditional functional boundaries. To achieve this cross functional working teams were created. 5 There was a need for a significant amount of knowledge sharing amongst the project team, as each member possessed quite specific knowledge. The project leader was experienced in project management, but had limited knowledge of the sales process that was being automated. The other two full-time members included a senior manager from within the sales function, who possessed detailed knowledge of the sales process being automated and an IT specialist who had knowedge of the company's IT systems. 6 This provides a comprehensive review of what they call the ``innovation network'' literature. 7 Cohen and Levinthal do not consider a firm's absorptive capacity to be solely about the integration of internal and external knowledge, as they also refer to integration and absorption of internal knowledge when referring to ``inward looking absorptive capacity'' (p. 133), and ``cross functional absorptive capacity'' (p. 134).

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Grant, R. (1996), ``Towards a knowledge based theory of the firm'', Strategic Management Journal, Vol. 17, Winter, special issue, pp. 109-22. Hislop, D. (2001), ``The client role in consultancy relations during the appropriation of technological innovations'', Research Policy, Vol. 31, pp. 657-71. Hislop, D. (2002), ``The client role in consultancy relations during the appropriation of technological innovations'', Research Policy, Vol. 31, pp. 657-71. Hislop, D., Newell, S., Scarbrough, H. and Swan, J. (1997), ``Innovation and networks: linking diffusion and implementation'', International Journal of Innovation Management, Vol. 1 No. 4, pp. 427-48. Hislop, D., Newell, S., Scarbrough, H. and Swan, J. (2000), ``Networks, knowledge and power: decision making, politics and the process of innovation'', Technology Analysis and Strategic Management, Vol. 12 No. 3, pp. 399-411. Jackson, P. (1999), Virtual Working: Social and Organizational Dynamics, Routledge, London. Jones, O., Conway, S. and Steward, F. (2001), Social Interaction and Organizational Change: Aston Perspectives on Innovation Networks, Imperial College Press, London. Kaufman, A., Wood, C. and Theyel, G. (1994), ``Collaboration and technology linkages: a strategic supplier typology'', Strategic Management Journal, Vol. 21, pp. 649-63. Kogut, B. and Zander, U. (1992), ``Knowledge of the firm, combinative capabilities, and the replication of technology'', Organization Science, Vol. 3 No. 3, pp. 383-97. Koza, M. and Lewin, A. (1998), ``The co-evolution of strategic alliances'', Organization Science, Vol. 9 No. 3, pp. 255-64. Lam, A. (1997), ``Embedded firms, embedded knowledge: problems in collaboration and knowledge transfer in global cooperative ventures'', Organization Studies, Vol. 18 No. 6, pp. 973-96. Lam, A. (2000), ``Tacit knowledge, organizational learning and societal institutions: an integrated framework'', Organization Studies, Vol. 21 No. 3, pp. 487-513. Lave, J. and Wenger, E. (1991), Situated Learning: Legitimate Peripheral Participation, Cambridge University Press, Cambridge. Law, J. and Hassard, J. (1999), Actor Network Theory and After, Blackwell, Oxford. Leonard-Barton, D. (1995), Wellsprings of Knowledge: Building and Sustaining the Sources of Innovation, Harvard Business School Press, Boston, MA. McDermott, R. (1999), ``Why information technology inspired but cannot deliver knowledge management'', California Management Review, Vol. 41 No. 4, pp. 103-17. McLoughlin, I. (1999), Creative Technological Change: The Shaping of Technology and Organizations, Routledge, London. Marshall, C. and Rossman, G. (1999), Designing Qualitative Research, Sage Thousand Oaks, CA. Mason, J. (1996), Qualitative Researching, Sage, London. Mintzberg, H., Jorgenson, J., Dougherty, D. and Westley, F. (1996), ``Some surprising things about collaboration ± knowing how people connect makes it work better'', Organizational Dynamics, pp. 60-71. Newell, S., Scarborough, H., Swan, J. and Hislop, D. (2000) ``Intranets and knowledge management:

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de-centred technologies and the limits of technological discourse'', in Prichard, C., Hull, R., Chumer, M. and Willmott, H. (Eds), Managing Knowledge: Critical Investigations of Work and Learning, Macmillan, London. Nonaka, I. (1994), ``A dynamic theory of organizational knowledge creation'', Organization Science, Vol. 5 No. 1, pp. 14-37. Pettigrew, A. (1987), ``Context and action in the transformation of the firm'', Journal of Management Studies, Vol. 24 No. 6, pp. 646-70. Powell, W. (1998), ``Learning from collaboration: knowledge and networks in the biotechnology and pharmaceuticals industries'', California Management Review, Vol. 40 No. 3, pp. 228-40. Powell, W., Koput, K. and Smith-Doerr, L. (1996), ``Interorganizational collaboration and the locus of innovation: networks of learning in biotechnology'', Administrative Science Quarterly, Vol. 41, pp. 116-45. Prichard, C. (2000), ``Know, learn and share! The knowledge phenomenon and the construction of a consumptive-communicative body'', in Prichard, C., Hull, R., Chumer, M. and Willmott, H. (Eds), Managing Knowledge: Critical Investigations of Work and Learning, Macmillan, London. Robertson, M., Swan, J. and Newell, S. (1996), ``The role of network in the diffusion of technological innovation'', Journal of Management Studies, Vol. 33 No. 3, pp. 335-61. Scarbrough, H. (1996), ``Introduction'', in The Management of Expertise, Macmillan, London. Scarbrough, H. (1998), ``Path(ological) dependency? Core competencies from an organizational perspective'', British Journal of Management, Vol. 3, pp. 219-32. Spender, J.-C. (1996), ``Organizational knowledge, learning and memory: three concepts in search of a

theory'', Journal of Organizational Change Management, Vol. 9 No. 1, pp. 63-78. Swan, J., Newell, S. and Scarbrough, H. (2000), ``Globalizing innovation: an exploratory framework and cases'', paper presented at the British Academy of Management Conference, Edinburgh. Tidd, J., Bessant, J. and Pavitt, K. (1997), Managing Innovation: Integrating Technological, Market and Organizational Change, John Wiley & Sons, Chichester. Tsoukas, H. (1996), ``The firm as a distributed knowledge system: a constructionist approach'', Strategic Management Journal, Vol. 17, Winter, special issue, pp. 11-25. Tsoukas, H. and Vladimirou, E. (2000), ``On organizational knowledge and it's management: an ethnographic invesitgation'', paper presented at the Knowledge Management: Concepts and Controversies, University of Warwick, February. Von Hippel, E. (1988), The Sources of Innovation, Oxford University Press, Oxford. Von Krogh, G. and Roos, K. (1998), Knowing in Firms: Understanding, Managing and Measuring Knowledge, Sage, London.

Further reading Kogut, B. and Zander, U. (1996), ``What do firms do? Coordination, identity and learning'', Organization Science, Vol. 7 No. 5. Oliver, A. and Ebers, M. (1998), ``Networking network studies: an analysis of conceptual configurations in the study of inter-organizational relationships'', Organization Studies, Vol. 19 No. 4, pp. 549-83.

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Introduction

Memes and cognitive hardwiring: why are some memes more successful than others? Richard J. Pech

The author Richard J. Pech is a Senior Lecturer at La Trobe University's Graduate School of Management, Melbourne, Australia. Keywords Information, Cognition, Language, Behaviour Abstract Memes communicate ideas and some memes are more successful at doing this than others. The reason for such success has been hotly debated. It is argued that there is an ontogenetic explanation for meme success in that a feature of the successful meme's content or message may more readily conform to the mind's evolved structure. The hardwiring of the mind facilitates learning but some information is often more palatable than others. In a competitive environment where the mind can process only a limited amount of information, information that does not conform to our evolved cognitive structures and the implicit rules under which our minds work best, will be less likely to be accepted. This suggests that we are more susceptible to instinct or hardwired cognitive behaviours than we may like to admit. This has numerous implications for people working in advertising, marketing, and management. Electronic access The Emerald Research Register for this journal is available at http://www.emeraldinsight.com/researchregister The current issue and full text archive of this journal is available at http://www.emeraldinsight.com/1460-1060.htm European Journal of Innovation Management Volume 6 . Number 3 . 2003 . pp. 173-181 # MCB UP Limited . ISSN 1460-1060 DOI 10.1108/14601060310486244

A great deal has been written (and argued) about memetics since Richard Dawkins first coined the term meme in 1976 (Dawkins, 1976). At the time of writing, a search for the word ``memetic'' on the World Wide Web identified over 16,000 pages or Web sites that mention or discuss memetics. The majority of these discussions concern the areas of psychology and evolutionary theory. Almost everything that is written about memes adds to the level of controversy surrounding this volatile topic (Rose, 1998). This article will briefly discuss some of these controversies but then aims to address the question of why some memes are more successful than others. The answer will impact on marketers, managers, advertisers, politicians, and any other decision makers involved with the management or manipulation of memes. Even the simple act of attempting to find a definition for the term meme, can be a difficult task. According to Rose (1998), the meaning of meme is ambiguous. However, the literature appears to repeat several common themes: the term meme was first used by Dawkins as a cultural analog to the biological notion of the gene in their ``need'' to replicate, memes are units of information, ideas or mental representations, culturally transmitted instructions, and the key element appears to be that these ideas or units of information are contagious, self-replicating, they are imitators (Blackmore, 1998; Dawkins, 1976; Oxford English Dictionary). Commonly cited examples of powerful memes include religious beliefs, political views, a catchy tune, fashions in clothes, cars, or music. Blackmore (1999) goes so far as to argue that humans, because of our powerful imitative abilities, have become the physical hosts for memes to replicate and get around. There is some disagreement as to the extent of our imitative ability (Boyd and Richerson, 2000), suggesting that memes can be adapted or transformed as they are passed on, quite unlike their biological counterparts, genes, which mutate successfully only rarely. Plotkin (1997) mentions transient and unstable memes such as fashion memes. It could therefore be argued that to qualify as a meme, the message, idea, or fashion it conveys does not need to be exactly or digitally replicated. For the purposes of this discussion, memes can then be defined as ideas, beliefs,

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concepts, or behaviours that are successfully replicated from mind to mind in a manner that ensures the success of the meme but may involve selective mutations and adaptations during the replication process. Some may argue that memes are non-existent, a lot of noise about very little, that they describe nothing more than a popular idea, a fashion, or, speaking in business terms, an advertising slogan, a corporate vision, or a marketing strategy. Dawkins and Blackmore use the term meme in an attempt to explain away some of the mystery of human success in evolutionary terms. Blackmore (1999) argues that the ability of humans to firstly innovate and then imitate, may in some way explain our relatively larger brain size and overall success as a species. Both authors argue that a meme's replicative power cannot be explained just in terms of fashions, ideas, and catchy tunes. According to Deakon (1997) memetics provides a sound theory to explain many aspects of the human evolutionary success story. The concept of memetics has now exploded across a diverse range of fields in an effort to explain success between competing ideas.

Therefore memes are not necessarily more successful because of their simplicity. While some may interpret a meme as nothing more than a yawn and memetics as a means of describing compulsive yawning behaviour, others (see Bloom, 2000) are experimenting with the view that meme management and manipulation could throw open the doors of power and even immortality (in the form of ideas, beliefs, and creations such as musical arrangements). In short, to understand how memes work is to understand how ideas, knowledge, and information is not only conveyed, but also how they leave lasting mental footprints. Memes have the power to sustain or alter behaviour. While authors such as Dennett (1995) and Pinker (1998) have argued how memes are communicated from a philosophical perspective, and Blackmore (1999) has provided an articulate and detailed psychological insight, cognitive psychology and information processing theory in particular may have something to add to this controversial and ambiguous body of knowledge to explain why some memes are so successful while others fail to be replicated.

Meme fitness

From behaviourism to a cognitive understanding (and back?)

Williams (2000) quotes Heylighen's (1995) explanation of meme success, which he describes in terms of the meme's fitness, in that it must compete with other memes. Heylighen claims that a meme's fitness depends largely on two criteria: first, how easy it is for the host to learn the meme, requiring a genetic and cultural disposition to do so, and second, how ``contagious'' the meme is, in that the host can be induced to repeat or pass on the meme. The former should not be confused with expedience or simplicity. Early Christians were prepared to suffer torture and death to accept and pass on the Christianity meme. Similarly, after Albert Einstein explained his first Theory of Relativity, the new theory was quickly disseminated around the globe, leading to a rapid revolution in scientific progress. The work of Einstein and his peers introduced a whole new scientific meme to surmount the limitations imposed by Newtonian physics. And yet even today most people have difficulty understanding exactly what Einstein was talking about.

Behaviourism dominated psychology, particularly in the USA for the first half of the twentieth century. The cognitive revolution from the 1950s onward has seen the downfall of certain behaviourist assumptions. One of those assumptions held that the external environment was a major (if not the only) determinant of behaviour. The cognitive perspective has demonstrated that behaviour can stem from internally represented thoughts and that some of our thinking is influenced by the structure of the brain. Buss (1999) relates the findings of a number of researchers demonstrating that humans as well as animals are predisposed towards learning some things more easily than others (see Bandura, 1977; Robertson, 1999). For example, a fear of snakes could be easily communicated to people who had never seen a snake, while a fear of cars or electrical wires was extremely difficult to communicate (Seligman and Hager, 1972). In a similar vein, Jackendoff (1993) has argued that our language instinct, vision, and some aspects of our ability to

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interact socially and culturally may be genetically encoded and supported by innate brain specialisations, rather than being the product of our environment. Buss (1999) suggests that much of this is due to the nature of our evolutionary history. Those who did not learn to avoid dangerous animals, heights, poisons, etc. did not live long enough to recreate, and therefore failed to develop a line of descendents. Those who did learn to avoid dangers, lived longer, procreated, and their descendants inherited the same cognitive hardwiring that is now said to aid particular learning abilities. Buss (1999, p. 29) explains that with the downfall of many of the radical behaviourist assumptions, attempting to understand what was happening inside the head gained respectability once again after a period of denying inner cognitive states. Much of the in-the-head research that followed has been spread throughout the cognitive sciences. But the cognitive sciences still have many detractors who are critical of attempts to study and represent cognitive processes and particularly conscious awareness (Dreyfus, 1972; Flanagan, 1992[1]; Gelernter, 1994; Penrose, 1989), although it should be stressed that much of the criticism is directed at cognitive psychology and some of its researchers working with artificial intelligence (AI) research and the computer metaphor for mind. While there are arguments concerning the definition of the term meme, there is an even greater level of controversy regarding the concept of memes as a means of describing mental representations and the method of their communication. Searle (1998) ridicules the entire meme concept on the basis of two arguments. He does not agree with Dawkin's original analogy between memes and genes. He argues that imitation is a conscious process, which contradicts Charles Darwin's point that there was no predetermined blueprint for life. Therefore he claims that the transmission of ideas through imitation is nothing like the transmission of genes through reproduction (Searle, 1998, p. 105). Searle's second issue with the concept of memes is rooted in the conflict between behaviourism and cognitive science. He claims that the philosopher Daniel Dennett is a behaviourist in that he denies the existence of inner mental states and inner feelings, which he attributes to ``a huge collection of memes or

meme-effects on the brain'' (Dennett, 1991, p. 210). If Searle's criticism is correct, it may have disturbing implications for those who disagree with the behaviourist paradigm or meme, which is rooted in a disbelief of anything that cannot be scientifically explained, such as consciousness. Dennett's view of consciousness appears to lay the foundation for Blackmore's (1999) view of the mind and her suggestion of how we might live our lives in a more successful manner: We can carry on our lives as most people do, under the illusion that there is a persistent conscious self inside who is in charge, who is responsible for my actions and who makes me me. Or we can live as human beings, body, brain, and memes, living out our lives as a complex interplay of replicators and environment, in the knowledge that that is all there is. Then we are no longer victims of the selfish selfplex. In this sense we can be truly free ± not because we can rebel against the tyranny of the selfish replicators but because we know that there is no one to rebel (Blackmore, 1999, p. 246).

It is possible that Searle's arguments may be tainted by his seemingly immense dislike for Dennett's philosophical views, but it could also be that meme theory as advocated by Blackmore may be nothing less than an attempt to return to the behaviourist perspective by denying the existence of a conscious state and denying aspects of our ability to internally represent ideas and feelings. It is not intended to debate these issues further but there are some implications if Searle is correct. What Blackmore appears to be suggesting is that we currently live under an illusion that we are in possession of a conscious awareness and that, to improve our lives, we should admit that the concept of a conscious awareness is false. She argues that the best way to improve the quality of our lives is to accept what the behaviourists have known and declared for decades, that we are not conscious, and that we are simply biological machines that carry and replicate memes. If this is a correct interpretation of Blackmore's views and intentions, this author does not share such views. The concept of memes provides a useful explanation for describing the successful communication of ideas and culture between people. Memes should not be interpreted as an alternative means for explaining away the phenomenon of conscious awareness. Memes should not be

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seen as a tool for the exclusive use of behaviourists in their fight with supporters of a belief in conscious awareness. Memetics as a concept is too valuable to become a casualty of the ongoing war between behaviourist and cognitive factions. So how does this relate to the topic of memes and why some are more successful than others?

Explanations of meme fitness in a business context de Jong (1999), attempting to explain why some memes survive in organisations while others do not, concludes that a meme's replication power is in part dependent upon the success and power of the actor (person) responsible for replicating the meme. So, as with the gene, successful adaptations or replications continue to reproduce while the unsuccessful do not. Dawkins (1998, p. 304) has a simpler outlook; he claims that those memes that spread do so because they are good at spreading, they are not necessarily ``good'' or ``bad''; they simply spread for the sake of spreading. Vos and Kelleher (2001) discuss the way that some concepts in business, such as support for mergers and acquisitions, even when proven to be largely unsuccessful, still have an ability to be a dominant choice among strategic thinkers. The authors appear to conclude that success for a meme depends partially on whether replication will increase the power of those who act as replicators, and whether or not the act of meme copying will lead to greater replicative capacity. So, for example, if one firm takes over another, the memes driving the predator or purchaser firm (considered to be the better adapted and therefore more evolutionarily successful) will then be replicated throughout the newly acquired firm. In fact, according to Vos and Kelleher (2001) most mergers and acquisitions fail. The act of attempted meme replication is therefore in the longer term unsuccessful, but as with genes in the evolutionary sense, a meme's act of reproduction is driven blindly. For genes there is no plan beyond fulfilling the need to reproduce, it is argued that this is similar for memes, as long as the mind that reproduces the meme is in a dominant position, such as is the case when one firm takes over another, the

substance of the dominant meme will be replicated. Pech (2003) has speculated that surf-wear producer Rip Curl's success can in part be attributed to the company's management of three memes, which are delivered in the form of the company's culture, marketing campaigns, and product image. The first is a producer meme that focuses on the development of a culture characterised by quality, passion, and innovation and which is directed exclusively at the firm's employees. Such a culture demands continuing innovation to ensure quality and to secure first-mover advantage. The second is a niche market meme that focuses on providing specialist products for surfers, and the third is a mass-market meme that helps to satisfy consumers' need for social belonging, as well as satisfying their need to manage the pressure of normative influence in their lives. In this example, memes drive memes. Rip Curl communicates fashion and sporting memes that delight consumers and the consumer satisfies his or her fashion awareness by wearing the Rip Curl logo. And so the surf-wear fashion meme is replicated. The Rip Curl image meme is also replicated, largely at the expense of competitor image memes such as Billabong and O'Neill, and vice versa. While all surf-wear companies replicate the fashion meme associated with surf-wear, each battles with the others to establish greater replication power of the meme/s associated with their firm in the marketplace. The above example requires more explanation than the dual factors of power distribution and the desire to replicate, to answer the question of why some memes are more successful than others. Dawkins' explanation when he states that those memes that spread do so because they are good at spreading is unsatisfactory. Little can be learned from such a statement and it certainly will not help if we want to learn how to manage memes in order to influence markets, beliefs, and fashions. To understand the persuasive and subsequent replicating power of memes and why some memes are more successful than others, requires more than an analysis of the content of the actual memes involved. The information processing structure of the mind must also be understood.

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Hardwiring ± an ontogenetic explanation A meme can be viewed as a flow of information. Earlier it was mentioned that the brains of many creatures are hardwired and that they therefore learn some things more easily than others. It was also pointed out that many aspects of cognition could be explained in information processing terms. Is it possible that some memes are more popular or have a greater level of fitness than others because they conform more readily to the brain's hardwiring, particularly the hardwiring we associate with the language and learning processes? If the answer is yes, then there is an ontogenetic explanation for meme success. Some memes are more successful than others because some aspect of their content or message readily conforms to the mind's structure, which has developed from a combination of genetic and environmental influences. Information processing theory can explain how human cognitive development impacts on meme fitness. Tooby and Cosmides (1992, p. 64) declare that the cognitive revolution is more or less now equated with information processing. A typical model in information processing may attempt to detect and map information flows from the initial reception of data on the senses, to information identification processes and comparisons with existing/stored data, seeking of further information for collaboration, clarification, confirmation, and finally through to the resulting decision making process. Smith (1996) applies the term superposed to describe the manner in which a representation or schema (or a meme) is spread over a neural network. Such a cognitive representation is often derived from previous knowledge and experience, but it is also fluid and dynamic in that the neural network will alter with added experience or even simply through further accessing. McClelland et al. (McClelland and Rumelhart, 1986, p. 31) prefer to describe accessing of a representation (remembering something) as being re-created or evoked rather than being searched for (or accessed). They explain that the patterns themselves are not stored in the brain as such, rather, what are stored are the connection strengths between units that allow these patterns to be

re-created. Smith adds that a re-creation will often be imperfect and subject to influence from other knowledge (such as schemas and scripts), but that this characteristic is typical of actual human memory performance (Smith, 1996, p. 896). In information processing terms, memes can be described as stimuli entering the neural system; the stimuli or information are encoded, manipulated, and then stored. Lezak (1995) refers to information storage of immediate memory as being maintained in reverberating neural circuits. The laying down of more permanent memories requires semipermanent changes in neural cell structures or chemistry, and this often occurs after some form of reinforcement of the memory or event. In the case of successful memes, there is a desire or compulsion to retrieve, access, or evoke the memetic memory in order to repeat or promulgate it. Two factors that may influence a meme's success at replication may concern acceptability and memorability. What makes a meme acceptable or memorable? McInerney and McInerney (1998) explain that short-term memory, which operates in the earlier part of the information processing system, processes new information more readily when it is related to already existing schemes of knowledge. A teacher, to facilitate greater acceptance and understanding of new information, uses this approach with students by activating prior knowledge of a topic before introducing the new information. This is why learning is often easier when the lessons are presented in a systematic, well-organised format. It is generally agreed that human minds have been shaped over a long evolutionary history (Tooby and Cosmides, 1992). The mind has adapted to a variety of evolutionary pressures, growing larger and more complex in the process. Wills (1994) refers to the brain as a sponge for knowledge and argues that although humans may only have been speaking coherent languages for about 40,000 years, the physical and mental machinery needed to invent such languages must have been in place a considerable time before that. This begs the question, why did abilities such as language develop in a mechanism that seeks to conserve energy and has no concept of future requirements? Why put something resembling surplus mental capacity into the cognitive apparatus of our early ancestors?

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In simplified terms, memes are generally comprised of words that form patterns and thereby produce mental representations. Clark (1997) argues that language may be an evolved artifact that exploits some natural biases of the brain resulting in a tendency toward various phonetic and grammatical ``rules''. He claims that the evolution of language may be the result of a symbiotic relationship between the users and the evolved language. Language may have sparked some aspects of brain development (Calvin, 1996)[2] but brain structure may also have influenced the development of natural languages. It could be suggested that much of our cultural richness can be attributed to a compromise between environmental, social, and neuropsychological pressures. Challenging circumstances forced our early ancestors to compete for mates, for food, for their very survival. Status and power were key determinants for achieving some sense of control over circumstances and events (Ridley, 1999) and greater sexual reproduction (Buss and Barnes, 1986). According to Buss (1999), other factors associated with control and reproductive success included ambition, industriousness, dependability, athletic prowess, good health, attractiveness (more commonly something that men find desirable in women), a preference for love, and a willingness to invest in children. The higher reproductive success of people displaying these desirable traits may over many millennia have resulted in a cognitive hardwiring facilitating learning associated with such particular traits. It may be argued that the evolutionary pressures of selection and adaptation cannot possibly influence human learning about the works of Shakespeare or astronomy, but that would be an erroneous assumption. The works of Shakespeare are centred on our language instinct; astronomy addresses issues of inquisitiveness, the appeal of mystery, and by pursuing a career in astronomy, astronomers may be demonstrating industriousness and dependability, sought-after qualities in the mate selection process. An understanding of evolutionary fitness and subsequent factors that have influenced cognitive hardwiring should be useful for decision makers working in advertising, fashion, music, or any other industry

dependent on the sale or delivery of products, ideas, services, and other meme-dependent ``merchandise''. Such an understanding may help to better manage the fit between the promotion of a particular meme and the potential of its cognitive acceptability. This does not suggest a preference for evolutionary over revolutionary change. It does not suggest a preference for maintaining the status quo or for the revival of old ways. It is not an attempt to convince readers to adopt a Luddite mentality. It is however suggesting that before attempts are made to influence others' thinking through the development of a new meme, whether in an attempt to change a fashion or to introduce a new advertising jingle, such an attempt might be more successful if developed in light of existing knowledge of human cognitive hardwiring. Such hardwiring describes human mental adaptations resulting from evolutionary pressures. Humphrey (1984) explains that when intellectual prowess is correlated with social success, and if social success means high biological fitness, then any heritable trait that increases the ability of an individual to outwit his or her fellows will soon spread through the gene pool. With increasing cognitive fluidity over our later evolutionary development it would have become increasingly important to select for memetic capability, not only in demonstrating an ability to communicate memes, but also in demonstrating an ability to understand their content and meaning and to be able to learn to adapt and alter memes to meet changing needs. The change from hunting and gathering to farming and urbanisation by our ancestors could be viewed as a huge memetic shift from one where people wandered across vast stretches of countryside following the migration patterns of animals, to one where people remained rooted to one area where they could grow domesticated crops. Once they stopped wandering they were forced to learn to confront new problems of health and sanitation, increasingly complex social issues, ownership disputes, and issues of governance and security. New memes describing better techniques in irrigation, planting, and harvesting were communicated at an increasingly rapid pace. Cultural complexity increased more rapidly with the advance of urbanisation. It is speculated that many cultural aspects have been founded upon

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compatibility factors with the brain's hardwiring rather than vice versa, as the structure of the brain was already well cemented during this period in human history. Cultures were designed to suit the needs of our ancestors' circumstances as well as the structures of their brains. Long ago memes may have been solely associated with survival issues, but they soon widened their scope to include cultural matters, which would have included regulation of trade and business practices as well as religious observations. Such a widening focus in the content and variety of memes would have created pressure for increasingly complex language abilities. The foundations and explanations for these abilities lie buried deep within our past, but it is argued that the mind continues to recognise patterns that conform to that distant developmental period. Today an astute business operator, searching for greater profits, may create new trends and fashions that emerge out of existing memes. Examples include the movie industry where scriptwriters often tap into the basis for popular traditional memes such as fear, curiosity, conflict, romance, or humour. Another astute business operator may develop a concept that appears to result in the spawning of a completely new meme or set of memes. The commercialisation of desktop computing spawned new memes in the fields of entertainment, thereby opening up new product and market possibilities that have produced computer and video games, it gave open access to a global communication network spawning further new memes in areas for investment such as the belief in rapid wealth generation by owning high technology shares. While these business developments have in some instances produced completely new terms and a new means for articulating new information, a recognisable evolutionary pattern of development can still be traced back through our past. The increasingly rapid pace with which the mind is bombarded with a growing number of memes causes an impression of turbulence and growing uncertainty. Memes can now be communicated more quickly and in greater numbers than ever before, increasing the competitive environment in which we operate. Even though innovation is critical for gaining competitive advantage in such a seemingly turbulent and unpredictable world,

it is suggested that the memes that succeed are those that are rooted in our past when evolutionary pressures were responsible for enlarging and shaping our remarkable brains.

Conclusion Meme fitness or one meme's ability to replicate at the expense of others can be explained by its degree of compatibility with one or more of the four following criteria: (1) Fitness can be explained in terms of a meme's compatibility with the brain's hardwiring, which is largely the result of evolutionary pressures and subsequent adaptations. (2) Fitness can also be explained by the ease with which a meme can be replicated, although this should not be confused with simplicity as a factor for explaining meme fitness. (3) Fitness may be explained by a meme's ability to provide for or meet the needs of the people it encounters. For example, distant ancestors profited by passing on new hunting and tool making skills. This knowledge brought prestige and power, and as a consequence, the possibility of greater reproductive success. Using a more contemporary example, in some countries it is dangerous to confess the ``wrong'' religion or political view, thus facilitating the fitness of the meme associated with the more acceptable view, which provides power and influence for a select group of people, thus ensuring their success as well as the success of the acceptable meme. (4) Fitness can also be explained by an accidental or involuntary lodging of a meme or part of a meme in the neural network. This may occur because one or more of a meme's components act as instinctive triggering devices. Sometimes a tune, a verse, or a thought repetitively and irritatingly lodges itself in our minds. The evolved mind, like a finely woven reverberating net, unwittingly captures all types of memes. These memes are then encoded and the neural network resonates with these mental representations because the neural circuitry may at times be unable to distinguish between useful and useless stimuli once certain hardwired cognitive

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triggers have been activated. Some information may be encoded and evoked unintentionally because it is comprised of one or more triggers that have compatibility with the mind's hardwiring. In this scenario it could be argued that we are more prone to instinctive responses than we may have thought possible. The above criteria for describing meme fitness have numerous applications for business decision makers. It has been argued that meme fitness or success is dependent upon its compatibility with the mind's hardwiring. This does not suggest that the human mind is designed to resist innovation, quite the opposite. But it does suggest that product innovations will be more readily accepted if they are marketed in parallel with a meme that is compatible with cognitive adaptations from our lengthy evolutionary history. This explains the success of advertising that exploits sex, power, health, security, and status perceptions. These and other meme triggers are hardwired into the mind and are therefore more easily encoded, manipulated, and evoked. It is argued that a successful innovation, whether it takes the form of a new sporting fashion, a new piece of equipment for the space industry, or a new flavour in soft drink, should be more acceptable to consumers and stakeholders if accompanied with a mind-compatible meme. An understanding of the literature describing human evolutionary development may be beneficial when developing new products and/or new memes to ensure that there is an acceptable fit between the past, the hardwiring of the mind, and our ambitions for managing and shaping the future.

Notes 1 Flanagan appears to ridicule cognitive psychologists because he claims that they attempt to describe the workings of the mind while paying little significant attention to consciousness. One particular group he terms young connectionist upstarts (Flanagan, 1992, p. 5). 2 Calvin is more specific in attributing human intelligence to the development of langage by inferring that it is the syntactic languuage capability which is responsible for the spectacular abilities of the human species (Calvin, 1996, p. 63).

References Bandura, A. (1977), Social Learning Theory, Prentice-Hall, Englewood Cliffs, NJ. Blackmore, S. (1998), ``Imitation and the definition of a meme'', Journal of Memetics ± Evolutionary Models of Information Transmission, Vol. 2, available at: http://jom-emit.cfpm.org/1998/vol2/blackmore_s. html Blackmore, S. (1999), The Meme Machine, Oxford University Press, Oxford. Bloom, H. (2000), Global Brain: The Evolution of Mass Mind from the Big Bang to the 21st Century, John Wiley & Sons, New York, NY. Boyd, R. and Richerson, P.J. (2000), ``Meme theory oversimplifies how culture changes'', Scientific American, Vol. 283 No. 4, October, pp. 70-1. Buss, D.M. (1999), Evolutionary Psychology: The New Science of the Mind, Allyn and Bacon, Needham Heights, MA. Buss, D.M. and Barnes, M.F. (1986), ``Preferences in human mate selection'', Journal of Personality and Social Psychology, Vol. 50, pp. 559-70. Calvin, W.H. (1996), How Brains Think: Evolving Intelligence, Then and Now, Weidenfeld & Nicolson, London. Clark, A. (1997), Being There: Putting Brain, Body, and World Together Again, Bradford Books, Cambridge, MA. Dawkins, R. (1976), The Selfish Gene, Oxford University Press, Oxford. Dawkins, R. (1998), Unweaving the Rainbow, Penguin, London. Deacon, T. (1997), The Symbolic Species, W.W. Norton, London. de Jong, M. (1999), ``Survival of the institutionally fittest concepts'', Journal of Memetics ± Evolutionary Models of Information Transmission, Vol. 3, available at: http://jom-emit.cfpm.org/1999/vol3/ de_jong_m.html Dennett, D. (1991), Consciousness Explained, Little Brown, Boston, MA. Dennett, D. (1995), Darwin's Dangerous Idea, Penguin, London. Dreyfus, H. (1972), What Computers Can't Do, Harper & Row, New York, NY. Flanagan, O. (1992), Consciousness Reconsidered, Bradford Books, MIT Press, Cambridge, MA. Gelernter, D. (1994), The Muse in the Machine: Computers and Creative Thought, Fourth Estate, London. Heylighen, F. (1995), ``Memetic selection criteria'', available at: http://pespmcl.vub.ac.be/MEMSELC. html Humphrey, N. (1984), Consciousness Regained, Oxford University Press, Oxford. Jackendoff, R. (1993), Patterns in the Mind: Language and Human Nature, Harvester Wheatsheaf, Exeter. Lezak, M.D. (1995), Neuropsychological Assessment, 3rd ed., Oxford University Press, New York, NY. McClelland, J.L. and Rumelhart, D.E. (1986), ``Parallel distributed processing: explorations in the microstructure of cognition'', in Psychological and Biological Models, Vol. 2, Bradford Book, MIT Press, Cambridge, MA.

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McInerney, D.M. and McInerney, V. (1998), Educational Psychology: Constructuring Learning, 2nd ed., Prentice-Hall, Sydney. Pech, R.J. (2003), ``Memetics and innovation: profit through balanced meme management'', European Journal of Innovation Management, Vol. 6 No. 2. Penrose, R. (1989), The Emperor's New Mind: Concerning Computers, Minds, and the Laws of Physics, Oxford University Press, New York, NY. Pinker, S. (1998), How the Mind Works, Penguin, London. Plotkin, H. (1997), Evolution in Mind: An Introduction to Evolutionary Psychology, Penguin, London. Ridley, M. (1999), Genome: The Autobiography of a Species in 23 Chapters, Fourth Estate, London. Robertson, I. (1999), Mind Sculpture: Your Brain's Untapped Potential, Bantam Press, London. Rose, N. (1998), ``Controversies in meme theory'', Journal of Memetics ± Evolutionary Models of Information Transmission, Vol. 1, available at: http://jom-cfpm. org/1998/vol2/rose_n.html Searle, J.R. (1998), The Mystery of Consciousness, Granta Books, London. Seligman, M. and Hager, J. (1972), Biological Boundaries of Learning, Appleton-Century-Crofts, New York, NY. Smith, E.R. (1996), ``What do connectionism and social psychology offer each other?'', Journal of

Personality and Social Psychology, May, Vol. 70 No. 5, pp. 893-912. Tooby, J. and Cosmides, L. (1992), ``Psychological foundations of culture'', in Barkow, J, Cosmides, L. and Tooby, J. (Eds), The Adapted Mind, Oxford University Press, New York, NY. Vos, E. and Kelleher, B. (2001), ``Mergers and takeovers: a memetic approach'', Journal of Memetics ± Evolutionary Models of Information Transmission, Vol. 5, available at: http://jom-emit.cfpm.org/2001/ vol5/vos_e&kelleher_b.html Williams, R. (2000), ``The business of memes: memetic possibilities for marketing and management'', Management Decision, Vol. 38 No. 4, pp. 272-9. Wills, C. (1994), The Runaway Brain: The Evolution of Human Uniqueness, HarperCollins, London.

Further reading Christ, G. (1991), ``Toward a model of attention and cognition, using a parallel distributed processing approach, part 2: the sweeping model'', The Journal Of Mind And Behavior, Vol. 12 No. 3, Summer, pp. 347-66.

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Introduction

The need for a new product development framework for engineer-to-order products Abd. Rahman Abdul Rahim and Mohd. Shariff Nabi Baksh The authors Abd. Rahman Abdul Rahim is a Lecturer and Mohd. Shariff Nabi Baksh is a Professor, both in the Mechanical Engineering Faculty, Universiti Teknologi Malaysia, Johor, Malaysia. Keywords New products, Manufacturing systems Abstract New product development (NPD) is the cornerstone of manufacturing companies. An engineer-to-order (ETO) company can achieve its business objectives by reducing design iterations and rework, recognizing customer's requirements up-front and building quality into design and manufacturing. This paper discusses differences between ETO and make-to-stock (MTS) companies and justifies the need for a separate framework for ETO in NPD. Four frameworks from published literature were analyzed and it was found that the frameworks were not suitable for ETO companies due to the differences in operations and product design activities. This paper proposes a set of requirements for establishing a design and manufacture framework specifically for ETO companies. The framework can aid design and manufacturing engineers to plan their work to include customers, suppliers, consultants, contractors and manufacturing concern during the design stage. The framework requirements can serve as a foundation of further work to be carried out in this area. Electronic access The Emerald Research Register for this journal is available at http://www.emeraldinsight.com/researchregister The current issue and full text archive of this journal is available at http://www.emeraldinsight.com/1460-1060.htm

European Journal of Innovation Management Volume 6 . Number 3 . 2003 . pp. 182-196 # MCB UP Limited . ISSN 1460-1060 DOI 10.1108/14601060310486253

New product development (NPD) is vital in determining the economic success of manufacturing companies (Hollins and Pugh, 1990; Jensen and Harmsen, 2001; Ulrich and Eppinger, 2000). Companies must continuously strive to develop new products to satisfy the needs of the market as well as to compete with other companies. NPD is the key to becoming a market leader and emphasis must be given to the product design effort so that overall cost as well as design and development time can be reduced to the minimum. By building in quality during product design, later engineering changes, production time and overall cost can be reduced. By considering all manufacturing concerns upstream and products designed to meet customer requirements, quality problems can be reduced later in the manufacturing cycle. Cost escalation in manufacturing is the result of many important factors, most of which can be directly attributable to design and sourcing decisions at the early development stages of the product (Mughal and Osborne, 1995). Very seldom are real manufacturing data integrated into design ± although 80 per cent of the manufacturing costs are fixed at the design stage (Peters and Leuven, 1994). Through design and manufacturing integration at the early stage of NPD, difficult manufacturing processes can be avoided. Traditionally, design and manufacture have been executed in serial order and the consequences of design decisions on subsequent processes such as manufacturing become apparent only during process planning (van Houten, 1992). At this stage, considerable work would already have been carried out and any engineering change to the design will lengthen the NPD process. In sequential design phases, communication and cooperation between upstream and downstream phases are limited, which further results in large feedback loops, more design iterations, uneven workloads, inefficient use of resources, and therefore lengthy development cycles and high design and development cost (Ahmadi et al., 2001). Sequential design de-emphasizes the need for cross-functional teamwork which can result in communication breakdown. In some companies, the design process is carried out in an ad hoc manner, where most of the activities are not recorded and properly

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documented. Sometimes, each engineer has his or her own method of designing products and this can create substantial variation in the design process leading to complications during manufacturing stage. To overcome sequential product development, concurrent engineering has been introduced to avoid problems with serial design and manufacture to speed up the NPD process (Handfield, 1994; Keys et al., 1992; Sohlenius, 1992; Sprague et al., 1991). A key to a successful NPD effort is to minimize those unnecessary iterations throughout the process chains (Krause et al., 1993). The disadvantages of serial design and promotion of concurrent engineering have been described in length by many authors (e.g. Funk, 1997; Prasad and Fujun, 1998; Veness et al., 1996). Manufacturing companies can be classified along a continuum: . make-to-stock (MTS); . make-to-order (MTO); . assemble-to-order (ATO); and . engineer-to-order (ETO). MTS companies are usually associated with high volume production and for other classifications the production volumes are either low or medium. The characteristics of companies in the low-volume industries (i.e. organization, products, markets and so forth), their competitive environments and their range of strategic and operational choices are both complex and diverse (Maffin and Braiden, 2001). The broad differences between ETO and MTS companies warrants a separate approach in NPD. Most of the NPD works so far, are concentrated on MTS products (e.g. Maffin and Braiden, 2001; Nagamachi, 1999; Peters et al., 1999; Twigg, 1998; Wiedemann and Jantzen, 1999). The literature addressing the needs of companies which produce in response to customer's orders is astonishingly modest (Amaro et al., 1999). The frameworks for linking customization to broader manufacturing, marketing and organizational issues are lacking (Spring and Darlymple, 2000). Bozarth and Chapman (1996) demonstrated how differences between ETO, MTO, ATO and MTS manufacturers result in the need to use different approaches to implement time-based competition. Given the general characteristics of the low-volume industries and the diverse range of factors which are unique to any one company, companies may find that approaches suitable for MTS are not

easily implemented in their own context (Maffin and Braiden, 2001). Furthermore, in the ETO environment different products are being developed simultaneously at different stages for different customers with different requirements which will further complicate the NPD process. Duplicating methods successfully applied in MTS may not necessarily yield the same benefits for ETO. ETO companies which carry out pure customization, due to the nature of their operations must design a new product every time there is a customer order. A generic framework or model needs to be developed to suit the diverse requirements of ETO companies. The structure of the framework should address certain requirements that will meet the unique needs of the users in the ETO environment. NPD for ETO products should be approached accordingly from different perspectives due to many operational differences. This paper postulates that a new framework for design and manufacture needs to be developed for ETO companies to speed NPD process. The differences between ETO and MTS companies are explained. NPD frameworks in the literature are discussed, followed by the need for a design and manufacture framework for ETO. The requirements of the design and manufacture framework for ETO are then presented. Finally, conclusions and future work are discussed.

Differences between ETO and MTS companies There are many differences between ETO and MTS operations. This section presents the differences identified through literature review as well as exploratory case studies in four ETO and four MTS companies. Literature review Characteristics of ETO are discussed by various authors such (e.g. Amaro et al., 1999; Bozarth and Chapman, 1996; KaÈrkkaÈinen et al., 2001; Lampel and Mintzberg, 1996; Porter et al., 1999; Samadhi and Hoang, 1995; Wallace and Sackett, 1996). Amaro et al. (1999) classified ETO as non-MTS. In this paper, the classification by Amaro et al. (1999) will be used where ETO is categorized under pure customization. The operations of ETO companies are uniquely different from

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MTS producers. In pure customization, the product is developed from scratch based on the individual need of each customer. For ETO, the product is produced initially on a one-off basis and the design and manufacturing process as well as the sequence of operations are most likely dissimilar from one product to another. Repeat order is possible for certain products and the same design and fabrication process will be used. ETO products tend to be highly specialized capital goods and sometimes can be very complex, highly technical in nature and have high added value. Production output is very low and revenue is not based on unit sales volume but on high profit margin. Customer requirements are very specific, technical and precise. Occasionally, strict regulatory requirements and design codes have to be adhered to. The most important requirement is usually the functional requirement as compared to aesthetics or trends which are common for consumer goods. Product specifications are sometimes jointly developed with the customer, contractor and supplier. Most of the products produced are capital equipment types of products, such as machinery, equipment, plant, power generator or oil exploration rig mainly for industrial customers to be used in downstream operations. For MTS products, the quantity produced is usually large and the target market is usually the end customer. Products are produced based on forecast and inventories are kept to prevent shortage. Prototype production is a norm before actual production is carried out. Sometimes, test marketing is used before the product is mass produced and distributed on a national, regional or global basis. To further delineate the differences between ETO and MTS companies, indicative exploratory studies in four ETO and four MTS companies located in various industrial estates in Johore, Malaysia were conducted (see Appendix). Interview surveys were carried out with engineers and technical staffs of the companies. Information was also obtained through company literature and documents as well as shopfloor observation. Empirical evidence from case studies From the case studies, the significant differences between ETO and MTS are highlighted and elaborated. It was noted that each one of the ETO companies in the study

is actually specializing in certain types of trade of related products. Each company is specializing in specific areas such as off-shore oil platform, leisure yacht, material handling system and mould and die. The specialization is probably due to constraint in technical know how, experience, skills, capacity, production equipment, parts procurement or product design. The differences found in the study are divided into two major categories namely operations and product design. Differences in operations There are many differences in the nature of operations between ETO and MTS. Table I highlights the differences between ETO and MTS in terms of operations. Production volume for ETO can be as low as a batch of one to a few identical units depending on the order from the customers. There is significant interaction between customers and ETO companies especially during the design stage. The interaction begins when the customer starts enquiring about the product. Formulation of specifications and agreement on the concept and details engineering design are vital in meeting product requirements. Customers must approve every design change before manufacturing. It was noted that cost control was emphasized more in product design for ETO as compared to MTS where the focus is on cost reduction during manufacturing. Customer requirements for ETO are very specific and technical in nature. The assembly work is mainly manual in ETO. For MTS most of the processes are either mechanized, semi automatic or fully automatic. Product change is frequent for ETO and most of the time there are a few products being developed simultaneously at different stages of design and assembly. Most ETO companies can produce products with different technical requirements from the customers. In Malaysia, approval from a regulatory body must be obtained for products such as pressure vessels or motorized lifting equipment for safety reasons. Flexibility in production is the key to success in ETO operations. Organization structure for ETO is mainly based on cross-functional teams. One team will usually be responsible for one project from design to delivery. However, team members can always be switched in between projects depending on priorities set by the management. For MTS companies, the structure is mainly based on function.

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Table I Differences between ETO and MTS in terms of operation Criteria

ETO

MTS

Production volume Interaction between customer and manufacturer Organization structure Technical competency Cost control Customer requirements Assembly Work methods Type of operation Labour skill Labour flexibility Product change Inventory Equipment type Types of customer Use of auxiliary support Pilot run Production planning Major production activity Customer negotiating power in terms of price, delivery date and product performance Type of inspection Use SPC and sampling techniques

Batch of one to very low volume Intense Team or matrix based Essential for all team members During design Very specific Mainly manual Not routine Labour intensive Specialized skills High Frequent Little inventory General purpose Industrial customers Yes No Dynamic and sometimes chaotic Assembly

Medium to high volume Little or no interaction Function based Depend on function During manufacture General to most customers Mainly mechanized and automated Routine, established methods Capital intensive Little or no specialized skills required Low Quite stable Normally high inventory Dedicated equipment Usually general public Generally no Yes Generally stable Manufacturing and assembly

High 100 per cent No

Low Sample Yes

Most of the team members are technically conversant in their work throughout the project. Since the production volume is very small, no prototype is produced at ETO companies. Production planning for ETO uses project management techniques that range from simple tools such as a Gantt chart to a more complex computerized project management software. Project planning in ETO is very dynamic especially if there are a few non-identical projects running simultaneously. In contrast, material requirements planning and other softwares are often used in production planning at MTS companies where production is more stabilized and predictable. For ETO companies, production lead time starts when a confirmed order is placed and ends when delivery, installation and commissioning is carried out. Due to these differences, all problems encountered and solutions proposed in ETO must be approached differently from the MTS company by considering all the operations factors. Differences in product design Table II shows the differences between ETO and MTS in terms of product design. Design for ETO products in a purely customization context is usually exclusive to one particular

customer. Frequency of design is high in ETO companies as each product requires its own design. Design codes and standards are strictly adhered to, especially those relating to safety and reliability. Due to low production volume, effort and design cost per product is high as compared to MTS where the production volume is high. The chance for design rework during manufacture is low in ETO because the production cycle is only for one product. In an MTS company, design improvement is constantly carried out during manufacture due to long production runs. Since the technical requirements from the customer in an ETO company are very specific, there are not many design options available as compared to MTS company. Design constraint is mostly limited to the number of components or parts available off the shelf. An ETO company will most likely forecasts what skills and capacities to have as compared to MTS company which forecast what product to make, in what quantity and when to deliver the product. Design dependency on similar products is high in ETO companies although sometimes completely new designs are required. In reality, each ETO company actually specializes in one particular product or related types of

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Table II Differences between ETO and MTS in terms of product design Criteria

ETO

MTS

Design Frequency of design Use of design codes and standards Effort and cost in design per product Chance of design rework and improvement during manufacture Design of prototype Design options Tooling requirement

Usually exclusive to one customer Very frequent Yes High

General market Low to frequent Generally no Low

Low No Few Limited Limited to availability of off the shelf components or parts

High Yes Many Many

Constraint in design Involvement of manufacturing engineers in design Design dependency on similar product Prototype Customer input during design Customer approve design Product test and commissioning Customer's technical knowledge of the product Certainty of customer requirement Product complexity Product size Customer requirements Interpretation of customer requirements Supplier involvement in design Contractor involvement in design Dry run/pilot run Market research Product launch Market Product life cycle Compliance with legal requirements Documentation requirement by customers

No limitation

Always Rare High Low No prototype Use prototype Customers usually give input during design Customer rarely involved during the design process Yes No Usually at customer site At manufacturing site High Low High Low High Low Generally big Small and medium size Specific and technical Vague and non-technical Direct Indirect Seldom Rare Seldom Rare No Yes Minimum Extensive No Yes Pull Push Long Short Always Rare Extensive Minimum

products. Each company also has its own core technical competency. The involvement of manufacturing engineers during the design stage is significant in an ETO as compared to an MTS company. Customer input during design is highly visible and necessary as the company has to comply with strict engineering requirements and design standards. The relationships usually last until handover of the product to the customer. Customer's technical knowledge of the product is high for an ETO as compared to an MTS company. Interpretation of customer requirements is more direct and certain. Product size is generally big and quite complex in nature. The ETO product life cycle is usually longer than that for an MTS products. A project in ETO company is rarely abandoned once the customer has confirmed

the order. This is probably due to the agreement or contract that has been signed which have legal and financial implications. In an MTS company, NPD project abandonment is not uncommon and an NPD go/kill decision is made at the end of every project phase during design review. In an ETO company, the decision making during design review is most likely on design changes or modifications.

NPD frameworks in the literature Most of the NPD frameworks from the literature are meant for an MTS company. The design framework or models proposed for an MTS company are not suitable to be applied by an ETO company due to various differences discussed in the previous section.

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Very little attention is given to an ETO company that produces products on a low volume basis especially in terms of an NPD framework. Most of the works on ETO in the literature are in machine design and the content is quite technical in nature (e.g. Agerman, 1991; Ito et al., 1989; Siegert et al., 1997; Takeuchi et al., 1989). There is no discussion about the framework used in developing the products. So far the NPD framework for ETO is not adequately addressed and the process used most likely is derived from an MTS framework. The following section discusses selective works carried out in NPD.

company that wants to apply it. The framework does not show the use of current technology such as CAD/CAM during the process. Concurrency is not emphasized and it seems that there could be significant iteration back and forth between each phase of the model. The front end of the model which starts from market needs activity indicates that the model is meant for MTS production. The involvement of accounting is only at the final stage of marketing and sales which is typical for an MTS company. For an ETO company, the involvement of accounting is early in the design stage to estimate the production cost.

Framework by Pugh Pugh (1991), proposed a design core model as shown in Figure 1. The framework is quite technical in nature. The framework starts from identifying market needs and ends with marketing and sales which is very common for MTS companies. The framework is mainly meant for the designers due to the technical aspects and emphasis on the design flow. Technical areas such as solid mechanics, kinematics, electronics and control are included in the framework which are mostly relevant to the design engineers. The framework does not show the kinds of tools and techniques to be used at various stages of the model which can be a setback to a

Framework by Boothroyd et al. Boothroyd et al. (1994) presented a framework or typical steps in concurrent engineering a shown in Figure 2. The steps proposed are biased towards the use of design for manufacture/assembly (DFMA) techniques, while the NPD process should also make use of other tools such as failure mode and effect analysis (FMEA), quality function deployment (QFD), fault tree analysis (FTA), Taguchi methods and other techniques. This framework is also meant for MTS because there is one step for making the prototype right before production. The steps proposed are simplified because it started from a design concept assuming that customer requirements

Figure 1 Total design activity framework

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Figure 2 Framework in concurrent engineering using DFMA techniques

had been captured earlier. The steps are heavy on technique but lack other issues such as human interface, technology as well as techniques for monitoring the whole project. Emphasis on minimum manufacturing cost reflects that the use of the framework is for MTS. The framework proposed is meant for designers and disregards other parties involved in the project. Framework by Peters et al. Peters et al. (1999) proposed a generic framework for the management of the NPD process as shown in Figure 3. This framework is the most comprehensive to date where the coverage is much wider and includes tools and techniques, process summary as well as facilitation issues. However, this framework is not suitable for an ETO product because the process starts with the generation of ideas during the pre-design/development stage. In an ETO product, the process starts with customer enquiry and project bidding. Although QFD is included, only QFD (1) is proposed for use in the framework. Theoretically, all four houses of quality in QFD can be used sparingly with other tools from determining customer requirements to product realization. NPD processes in the model seems to be carried out in sequential order rather than parallel and this event can de-emphasize the application of the concurrent engineering concept.

Quality tools and techniques are recommended for use, but the framework does not specify which one to use at different stages of the NPD. The framework also does not highlight the relationship between manufacturers and other interested parties. This is the only framework that proposed the use of design-of-experiment (DOE) in the design and pre-production/validation stage. The application of DOE techniques for ETO and MTS products should not be at the same stage of the project. For an ETO product such as machinery, DOE techniques can only be applied after the product has been assembled and tested to determine the optimum parameter for the process. DOE is carried out on the product in an ETO company, while in an MTS company DOE is carried out on the production process. The framework does not show input requirements of the NPD process which is necessary during the design stage. FMEA technique can actually be applied not only during the concept and design stage but also in pre-production validation and actual production through process FMEA. For an ETO product, the model should start earlier than the concept stage and the use of tools and techniques is extended further to include the post-company stage. Framework by Ulrich and Eppinger Ulrich and Eppinger (2000) proposed a generic product development process which consists of six phases as shown in Figure 4. The structured approach can help designers to plan and execute their tasks accordingly. However, the generic framework proposed is mostly suited for MTS companies because in Phase 5, there is a process for production ramp-up. For an ETO product that is produced in a batch of one or a very low volume, there is no production ramp-up process. For an MTS company, it is a common practice to do production ramp-up after the prototype or pilot product has been tested and refined. Process improvement is usually carried out during the ramp-up period. The proposed development process is targeted for designers because it includes all the steps involved in product design and manufacture but excludes other parties such as purchasing, marketing or maintenance from the process. From Figure 4, it seems that all the processes are carried out in sequential order even though some of them

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Figure 3 Generic framework of the management of the NPD process

Figure 4 Generic product development framework

can be executed in parallel. The framework did not include what tools to be used at which stage and did not show other factors such as technology and customer input that are necessary for the success of any NPD project. The framework is incomplete and not suitable for ETO companies even though it is very simple and easy to understand.

Summary of the frameworks The four frameworks discussed above are found to be most suitable for MTS companies. A summary of the frameworks is shown in Table III. The common features of the frameworks which make them not suitable for ETO are: . do not include other parties in the process (e.g. customer, supplier, contractor); . do not show after assembly or manufacturing activities such as delivery, commissioning and hand over to the customer which is common for an ETO product; . do not to show concurrency between activities; . targeted for designers and manufacturers and leave out other parties; . do not show the use of concurrent engineering tools and techniques in detail at different project stages; and . flow of activities represent MTS operations. The framework by Pugh (1991) is quite technical in nature and is generally meant for designers. Pugh's model is more complete and covers many issues but it lacks other soft issues such as human interfacing and the use of concurrent engineering tools. The framework proposed by Boothroyd et al.

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Table III Summary of previous frameworks in NPD

Author

Target Target organization audience

Design and development process Tools applied

Pugh (1991) Boothroyd et al. (1994) Peters et al. (1999)

MTS MTS MTS

Technical Technical Technical and management

Yes Yes Yes

Ulrich and Eppinger (2000)

MTS

Technical

Yes

(1994) makes use of DFM and DFA in design. This framework, however does not include other tools such as QFD and FMEA which can make the design process more effective. The framework proposed by Peters et al. (1999) seems to be the most comprehensive but it is mainly suitable for MTS organization. The framework does not provide additional information as to how to use concurrent engineering tools in an ETO environment. The framework by Ulrich and Eppinger (2000) is too simplistic and incomplete to guide ETO companies. The model is very fundamental and excludes many factors such as human interface, the use of enabling technology and philosophy adopted. The framework is based on design methodology and there is no comment on tools and techniques to be used. Relationships with customers and other parties are not shown in all frameworks. All frameworks are not comprehensive enough for ETO products which start from customer inquiry all the way to commissioning and hand over. Apart from technical input to the framework, other issues such as cross-functional team, teamworking, techniques and tools to use, communication and interaction with customer, supplier, contractor and other service providers should also be considered. For an ETO company, the process will end with delivery, commissioning and hand over to customers. After sales service and support should also be considered even at the initial design stage. Another factor that is also unique for some of the ETO products is that some preparation at the customer site should be carried out before the product is delivered. For example, some machinery such as an injection moulding machine requires pneumatic lines, a three-phase power supply, a cooling tower and a very strong and stable foundation to place the machine. This has to be planned in parallel with the NPD process. ETO companies under normal circumstances

No DFMA QFD, FMEA, DFA/DFM, CA, DOE, quality tools No

do not carry out market research to identify customer's needs as compared to MTS companies. In an ETO company, the activity starts with the bidding process. At the same time, an ETO company should also consider capacity preparation. Production planning and scheduling is very much dependent on resource availability. Once the tender is awarded, only then can other activities start. All the frameworks do not show concurrency among activities. This graphical feature is necessary to indicate that some if not all activities can be conducted in parallel to reduce NPD time. Due to the above issues and recognition that ETO operations are uniquely different from MTS, a new framework for ETO products needs to be developed.

The need for a design and manufacture framework for ETO There is a need for an NPD framework for ETO, given the differences between ETO and MTS operations and shortcomings of the existing frameworks to address the problems in NPD for ETO products. A framework can help integrate design and manufacturing activities and should consist of all the elements that will make a design project successful. The framework can link and tie up all important elements together and act as a foundation for further works to be carried out. A workable framework for ETO should be able to formalize design and manufacturing activities to include up front requirements of customers, authorities and other stakeholders. Hence, design rework can be reduced and design process can be speeded up. Through formalizing of the NPD process, all parties can assume more responsibility rather than focusing on their own interests. Without the structured framework, the activities will have no direction and can be difficult to monitor. The formal framework can also ensure that

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every individual in an ETO organization carries out their work by following a standard technique. By linking every function in the organization through their contribution to each project, teamworking can be fostered. The framework can assist in downstream planning and act as a master plan that will guide the operational plan to achieve the objective. The framework can also be used as a roadmap for other related activities. Process monitoring can be much easier and any backtracking or iteration can be minimized by modifying the framework for the next project. Without a formal framework, design and manufacture is carried out in an unstructured and ad hoc manner. There will certainly be plenty of unwanted iterations that can cause delay and inflate the manufacturing cost. If properly applied, the framework can assist the design documentation process which is part of the ISO 9000 and QS 9000 requirements. There are some major customers that require an ETO company to be certified to ISO 9000 or QS 9000. For example, big oil and gas production companies require that platform fabricators be certified to ISO 9001 as a qualifier for project bidding. By having the framework, the documentation process can be formalized and monitored more effectively. Documentation review after the completion of each phase of the framework can be done along with documentation audit. The framework will facilitate record keeping, retrieval and traceability. A framework can provide benefits not only to design and manufacturing engineers, but also to other parties such as the management, customer, supplier, contractor and other functions in the organization. The success of design and manufacture of an ETO product depends on every function in the organization. With a framework, all parties concerned will know their role and contribution to the project. The framework can also be used as a teaching aid to new employees or when a new contractor is appointed.

Requirements of an NPD framework for ETO This section discusses the requirements of an NPD framework for ETO. Table IV highlights framework requirements and respective framework specifications for NPD

in ETO organizations. The requirements are derived from literature review and case studies discussed in previous sections. Some, if not all of the requirements and specifications can be used as guidelines in formulating the said framework. Levels of framework Figure 5 shows an example of different levels of framework that an ETO company can use. The framework ideally should consist of a conceptual framework and an operational framework. The conceptual framework is the crystallization of ideas in abstract form into a written form which reflects the ideas, various interactive elements and their relationships. The conceptual framework is actually a basic foundation of further works to be carried out. The conceptual framework should address the entire issues in the design and development process and act as a master plan for downstream activities. The operational framework is the derivative of the conceptual framework. At this level, the framework should be more detailed and practical in nature and self explanatory. The operational framework is normally divided into phases to make it more manageable. The use of a formal operational framework for product design can eliminate future problems in manufacturing, operations and maintenance. Procedures and process flowcharts can be derived from the operational framework. The last level is the project management network. This is where the detailed planning of each one of the activities together with time frame, task responsibility and detailed costing are carried out. Generic and not prescriptive The conceptual framework should be generic enough to be applied in any NPD process. However, the operational framework and techniques used can vary between one project to another depending on customer requirements and types of projects involved. Indicate clear direction of design goals The framework should possess this important characteristic. It should be able to give a clear picture of the design goals to the project team. Clear direction of design goals can make project team members focus towards their work and not get distracted by other things. Resources and effort can be directed towards achieving the project objectives. Due to rapid

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Table IV Framework requirements and framework specifications Framework requirement

Framework specification

Levels of framework Generic and not prescriptive

Framework divided into different levels to ease implementation Not too prescriptive like a cook book, should be able to be applied in many normal instances Indicate clear direction design goals Simple, straight forward, easy to understand, not expensive to implement, minimum time for implementation Easy-to-follow approach Smooth flow of the phases, reduce reverse flow, easy to follow Aid in documentation process Indicate important documentation requirement and document history Key characteristics of design process Indicate the activities of design process Facilitate communication among functions and third parties Involvement of marketing, purchasing, sales, after sales service, design, manufacturing, maintenance, suppliers, contractors, customers and service providers Simple and practical plan for implementation Simple and easy to understand without detailed explanation, self explanatory Serve as a control mechanism Structured plan with review and milestone, checklist to avoid omission Integrate concurrent engineering tools Integrate QFD, FMEA and DFA tools. Indicate when to use such tools Include human interface Human factors such as cross-functional team, teamworking, co-location, training

requirements, customers usually request certain documents such as operations and maintenance manuals during delivery. A good documentation process can assist in identifying error during design and manufacture.

Figure 5 Levels of NPD framework for ETO

and unpredictable product changes in an ETO company, design goals can sometimes be mixed up and confusing. Easy-to-follow approach The framework should consists of steps to be followed in order to achieve the design goals. A step-by-step approach should ensure that the framework is easy to implement, can be used as a training tool as well as for documentation purposes. Depending on the stage of the project, the step-by-step approach can either be carried out in sequential or parallel format. Not all activities can be carried out in parallel due to resource constraints or logical sequence of the activities. Aid in design documentation process The structured approach taken by the framework should ease the design documentation and recording process without omitting any detail. Database and design history should be easily traced, accessed and retrieved. By applying the framework, design documentation and traceability can be carried out easily. Apart from project documentation

Present key characteristics of the design process All key characteristics of the design process should be included in the framework. This is vital for the designers to plan their works accordingly. The completion of each process should be followed by a review and used as a milestone. The framework should be supported by a set of procedures that are easily followed. This will ease the design planning and monitoring at each stage of the NPD process. Facilitate communication among various functions in the organization Since there will be substantial interaction among various parties during the project, the framework should address this issue. The communication aspect is vital in determining the smooth flow of information from one party to another. All parties can see their contributions and the roles that they have to play towards the success of the project. Without smooth flow of information (such as design changes or changes in customer requirements), the downstream NPD process will result in plenty of unwanted iterations and rework. Demonstrating a simple and practical plan for implementation The operational framework should be simple and practical so that it can be carried out

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successfully without much difficulty. A complex framework will make some people shy away from using and applying it to their work. Complexity can also cause confusion among various team members and functions within the organization. A simple to use framework would encourage more participation and avoid resistance among project team members. Serving as a control mechanism The framework should also serve as a checklist to avoid omission of certain critical activities. The control mechanism is similar to the stage-gate approach where all important activities are reviewed at each project milestone. Important decision making should be made after each review. Integrate concurrent engineering tools into the process The use of concurrent engineering techniques in the framework should include integration of the tools and techniques which are normally used in isolation. The use of different tools at different stages of NPD should be addressed. This can guide design and manufacturing engineers in the use of suitable tools during each stage of the NPD. The structured approach of concurrent engineering tools such as QFD, FMEA and DFA/DFM can ensure that future problems in manufacturing and operations can be avoided. Include human interface Soft issues such as teamworking, training, co-location and cross-functional teams must be included in the framework. It is the humans who actually make the framework a success or otherwise. There is some research that is too focused on design and neglects the human factors and on the other hand there is research that is too biased on human factors and neglects the design process. The proposed framework must address both issues at the appropriate level of balance.

implementing concurrent engineering. The generic NPD framework developed for an MTS product is inadequate in addressing the differences in ETO and MTS operations. Rather than adopting the generic model or framework proposed for an MTS, ETO company needs to use a new set of framework that reflect its needs and business operations. Differences between ETO and MTS identified further emphasized the need for a dedicated NPD framework for an ETO company. The framework should address the issue of concurrent engineering as this will help in speeding up design and manufacturing as well as reducing iterations and backtracking between activities. The NPD framework for an ETO company is critical in ensuring that the product can be delivered on time, especially for new products that need to be developed from scratch. The number of designs as well as the intensity of designs activity will make the framework very valuable during the project planning as well as the implementation stage. Due to the unique operations of ETO, there are certain features that should be included in the framework. Some of the features that the framework must have include: . covers all aspect of design conception to product delivery and handover; . clear link and shows relationship among all activities and processes; . shows all elements that will determine the success of ETO operations; . easy to understand and straight forward structure; . not too prescriptive in nature; . act as roadmap for project planning; and . specify the tools and techniques to be applied at each phase of the framework. Future work will attempt to develop a framework that is suitable and applicable to an ETO company that will include the features mentioned above. The framework to be developed could be modified by an ETO company to suit different requirements of each individual project and apply suitable tools for product design and development.

Conclusions and future work This paper has discussed the need for and presented the requirements of an NPD framework for an ETO company. An ETO company, due to its nature of operations that constantly requires new design for every product, is in greater need of an NPD framework that will assist them in

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Appendix. ETO and MTS company background This appendix presents the background of the companies selected for the case study. The information is obtained in a single or multiple visits. Follow-up questions through e-mail, telephone call and face-to-face conversation were carried out after each visit. The results of the study are summarized in the main paper. A brief explanation on the activity and operations of the company is presented.

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ETO companies Four ETO companies were visited during the case study. Brief descriptions of company background and operations are presented. Company A Company A is a wholly owned American company manufacturing leisure yachts for export markets. It has about 350 workers. Customers can place orders through a sales agent appointed by the company. Once the order is confirmed, the design office will complete the detailed design of the yacht. The customer can choose the hull shape from a range of standard designs. Only the interior design and layout of the yacht can be fully customized according to customer needs. Advice is given on certain requirements that affect stability and safety of the yacht. Some examples of common customer requirements are wine rack, certain surface finish of the wood, book rack, single bed or double bed, kitchen, living room and other types of interior furnishings. Design and manufacture of the interior furnishing is completely done in-house. Most of the raw materials which are not available locally, are imported from overseas. Customers can also choose from a range of engines from various manufacturers for their yacht. Production is run based on functional or job shop production except during the final stage where a project type of layout is used. There are not many dedicated machines and most of the equipment used comprises hand tools and power tools. Good skill in carpentry is required for the woodwork as most rejects cannot be reworked. Monthly production output is about four to five yachts. The retail price of the yacht ranges from RM1.2-2.0m each. Company B Company B is a wholly owned German company producing conveyors. There are 50 employees working for the company. Each product is customized according to customer requirements. The width, length, height, type of conveyor and conveyor speed are determined by the customer. The complete engineering design of the conveyor is done by Company B and most of the parts for the conveyor are purchased parts. Detailed design is carried out upon order confirmation from the customer. Prior to shipment, the complete conveyor is assembled. After assembly and testing, certain parts of the conveyor need to be disassembled for shipping purposes. Highly skilled workers such as welders and machinist are employed. Product design is done fully in-

house as the design is not very complex in nature. Customers for the conveyors range from manufacturing companies to airports and warehouses. Most designs depend on past experience with previous project and existing engineering design databases. Company C Company C is a locally owned engineering company involved in the business of ship building, ship repair and engineering works. There are about 2,000 full-time employees working for the company. Most of the fabrication works are subcontracted to third parties. Since the operations of the company are too big, the study is focused on the engineering division. The engineering division is involved in manufacturing plants and pressure vessels for various manufacturing industries as well as constructing jacket and topside oil platform. The products come in various sizes and capacity. Design is done according to stringent safety codes and standards. Concept and detail design is done by a third party consultant appointed by the customer. There is a substantial interaction between the client, consultant, contractors, suppliers and the fabrication company. Design iteration and rework is time consuming as the consultant designers are located almost 400km away from the fabricator. The concept and detailed design can sometimes take up to a year to complete for complex products such as the platform topside. The design department only does fabrication design. Project type layout is used and most parts are purchased parts. The fabrication works mostly involve welding work. Most of the fabrication works are subcontracted to the contractors that use the fabrication design of the company. There is a plan in the future for the company to do the concept and detailed design of the product and pass the fabrication design to the contractors. This company use CAD software for engineering drawing, CAE software for piping design and engineering analysis and project management software for project planning. Most of the previous designs are stored in a database for future use. Manufacturing engineers are sometimes involved in product design. Few projects from different customers are carried out simultaneously. Project duration and cost depend on the type of fabrication work, scope of work and complexity of the product.

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Company D Company D is a production workshop in a local training institution. Apart from training the students, the workshop also accepts jobs from outside companies to make moulds for the plastic injection moulding process. There are about ten technical staff employed in the workshop. Each mould is designed according to customer requirements such as number of cavities, surface finish and mould size. The detailed engineering requirements such as the cooling channel and the location of the sprue and gate is determined by the workshop. In many instances, the customer just provides the sample of the finished product that needs to be moulded. The workshop is required to design, machine and test the mould. All the design, machining, fitting and testing of the mould is done in-house. Heat treatment of the mould is contracted to another company. Due to resource constraints, design and fabrication is carried out on a first come first served basis in sequential order. MTS companies Four MTS companies were visited during the study. The information was obtained through interview and discussion with production engineers of respected companies. Company E Company E is a wholly owned French company producing clay roof tiles for the high end market. The product is sold locally as well as exported overseas. The company employs about 100 workers working in three shifts. The basic process is the same for all products. The basic ingredients are similar for all tiles except for glazing when different colours are used depending on market forecast. The product is designed by engineers from the parent company and mould fabrication is contracted to a local company. The whole process is highly mechanized and all material handling uses conveyor systems. The production run is long without any product change. All the machines are special purpose machines that can only perform a single function. Company F Company F is a joint venture between Malaysian, Singaporean and Taiwanese investors. The company employs about 400 workers. This company produces wall as well as floor tiles. The design of the tiles is carried out by the R&D department and the tiles will be tested in the laboratory before going to mass production. Most of the design work is

on the aesthetic part or pattern on the face of the tile. The base material of the tile is standard and the process is a continuous process. Depending on customer requirements, some of the homogeneous tiles can be polished to give a very glossy surface. All machines are dedicated machines and product layout is used. Material handling used is of the conveyor type. The production schedule is based on forecast in the construction sector which is highly dependent on the general condition of the economy. Company G Company G is a Japanese company producing car audio and home audio for the export and domestic market. Most major designs of high end products are carried out in Japan. The company employs about 2,500 workers. A newly established R&D department carries out minor design modification as well as some new design for car audio. Most of the design works are carried out by Japanese engineers with local engineers helping out. Concept and circuit design is fully done in-house. Most of the new designs are improvements of previous designs with a few additional features. The prototype of the design is manufactured and tested at the manufacturing plant before it is mass-produced. Most of the plastic and metal parts are purchased from local vendors. Most of the operations in the assembly lines are done manually. The company subcontracted some assembly operations to other companies if the production schedule is too high. Production engineers are also in charge of designing new jigs and fixtures for the production line. Jigs fabrication is done by the contractor. Company H Company H is a Singapore-based company producing food stuffs such as 3-in-1 coffee, noodles and canned drinks. The company employs about 100 workers. Most of the processes are highly automated and the production rate is very high. The machines are dedicated machines with a single function. All materiasl handling in the production uses conveyor belts. The finished goods are sold directly to the retailers or wholesalers. Production planning is fairly stable. Large inventories of raw materials are kept to prevent shortages as most of the raw materials are imported. The food recipe comes from the parent company in Singapore. Most of the machineries are imported from overseas.

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