No title

The problem background

The “QFD/FMEA interface”

The basis for this paper was originally described by Ginn (1996), who proposed several scenarios for effective application of quality function deployment (QFD). Among these scenarios, was the integration of QFD with other quality tools such as failure mode effects analysis (FMEA) and a quality operating system using teamwork as a glue. There are, however, many difficulties in applying all such systems, particularly complex lengthy team-based customer-driven systems such as QFD and FMEA. However, as the following sections will describe, the individual problems incurred through applying QFD and FMEA are both common and curable, especially when these tools are used in a systematic and supporting role to each other. From the work of Ginn (1996) it was found that QFD and the quality tool of failure mode effects analysis (FMEA) has traditionally been split into two areas of attention; design and process FMEA, supporting the later stages of product development (Aldridge et al., 1990). It has only been recently that the system or concept FMEA has earned any recognition, in the early stages of product development. By contrast, the quality tool of quality function deployment has traditionally been taught as a four phase technique (Hauser and Clausing, 1988; Metherell, 1991; Sullivan, 1986) or a multi-phase technique (Ford Motor Company, 1994a, b; Mill, 1994; Verduyn and Wu, 1995), that in theory supports the whole product development process (American Suppliers Institute, 1992; Ford Motor Company, 1993a, b, c, 1995; Slinger, 1992). In practice many companies tend only to implement QFD in support of the early stages of product development, applying the 80:20 rule (Ford Motor Company, 1994a, b; Goldense, 1993; Termaat et al., 1995), where 80 per cent of the benefit reaped in the first 20 per cent of the process. FMEA is typically used as a problem prevention tool (Dale and Best, 1988), to improve or consolidate the basic customer requirements to avoid negative customer satisfaction, especially at design level, to support Phase 2 QFD (Slinger, 1992). QFD, meanwhile, is typically used for consolidating or improving upon the performance customer requirements to ensure positive customer satisfaction (Clausing, 1994; Sullivan, 1986; Zairi, 1993). The achievement of excitement features that

D.M. Ginn D.V. Jones H. Rahnejat and M. Zairi

The authors D.M. Ginn is Resident Senior Product Engineer at Ford Automotive Operations, Small and Medium Vehicle Centre, Koeln, Germany. D.V. Jones is based at Ford Automotive Operations, Small and Medium Vehicle Centre, Laindon, Essex, UK. H. Rahnejat works in the Department of Mechanical and Manufacturing Engineering, University of Bradford, Bradford, UK. M. Zairi is based at the European Centre for TQM, University of Bradford, Bradford, UK Abstract The intention of this paper is to propose a methodology for interactions between the two quality tools of QFD and FMEA, and place an emphasis on their common features. The paper will also emphasise the value that both tools have when used throughout the product development cycle. An example of the method described will be highlighted within Ford Motor Company that will demonstrate the quality and resource benefits achievable when these two tools are used in conjunction with one another. This example will illustrate how, through the use of crossfunctional and multidisciplined teamwork, QFD and FMEA can be linked into systems engineering and a quality operating system with far-reaching benefits

European Journal of Innovation Management Volume 1 · Number 1 · 1998 · pp. 7– 20 © MCB University Press · ISSN 1460-1060

7

The “QFD/FMEA interface”

European Journal of Innovation Management

D.M. Ginn, D.V. Jones, H. Rahnejat and M. Zairi

Volume 1 · Number 1 · 1998 · 7– 20

surprise and delight customers, can come from any source, but it would be reasonable to state that it is something the customer has not conscientiously verbalised (De Vera et al., 1988; Hamel and Prahalad, 1994; Kano et al., 1995; Martin, 1995; Stewart, 1995), and tends to be in the realm of engineering judgement and experiences to provide through design or technology innovation (Ealey, 1987, 1992). This is often driven by other performance customer “wants”. The problem facing both QFD and FMEA, is that their full potential is not being realised when either tool is restricted to one end or the other of the product development process, as typically occurs with many companies including Ford Motor Company (1994a, b, 1997), upon which this study is focused. Probably the most influential use of FMEA is the opportunity to use it at a concept or system level (Oakland, 1989), while the most effective proof that QFD has delivered customer driven targets through to production process, and manufacturing controls. For FMEA at a system level it is the opportunity to cascade the voice of the customer into the technical specification of a part (Takezawa and Takakashi, 1990). From this initial customer input both technical and perceived function of a component can be clarified with an FMEA (Takezawa and Takakashi, 1990). It is important also to understand the customers’ usage patterns to better understand factors that cause problems (Takezawa and Takakashi, 1990). The customer has no need to appreciate the discrete qualities of a component part. The customer will only be aware of the system and its primary functions. If the customer becomes aware of a component part it is usually as a result of a failure (Singh Soin, 1992). Assuming the whole system functions normally, the customer is not even aware of the existence of many of these components. The traditional approach to FMEA then concentrates on the component parts unseen by the customer and so cannot easily take these needs into account. Typically, a comprehensive level of understanding for all the customer requirements that need to be deployed into the product development process has only been achieved by one quality tool, QFD, (Brown, 1991). QFD works well when tackling a customer level of understanding of a product. From a product standpoint, the customer would recognise motor vehicle attributes such as performance feel, fuel economy, or emissions.

Such key attributes would form the basis for a QFD team to investigate in more detail the critical customer requirements that in turn can be translated into engineering measureables. If this is successful, a QFD team can then deploy to a component design level, often involving a change of team membership and skills appropriate to that level. Within Ford Motor Company there are two schools of thought that exist with regard to the effective deployment of QFD and FMEA together. The first is quick QFD (Ford Motor Company, 1994a, b; Termaat et al., 1995) and the second is the customer-focused engineering. Both applications hold equal merit, but approach the problem with different perspectives. The first approach is arguably the most pragmatic route, applying the 80:20 rule by tackling QFD Phase 0 (total vehicle), or Phase 1 (including design to sub-system) followed by a full FMEA process. The second approach is arguably the ideal long term solution, applying QFD to a full multi-phase route, from Phase 0 (Total Vehicle) through Phases 1 to 4 with a customer feedback and process validation Phase 5, with full support of an FMEA process. The broad similarities include a full deployment of the FMEA process as well as linkages to other quality tools. The first proposal, originating in the USA, is based on the “customer to product quality process” (Ford Motor Company, 1994a, b; 1995; Termaat et al., 1995). This process entails conducting a single total vehicle (or system level) QFD at the front end of the product development cycle, and then placing an emphasis on FMEA to continue the target setting process in conjunction with system design specification process within an overall systems engineering framework currently being adopted in Ford automotive operations (FAO), (Ford Design Institute, 1995; Ford Reliability Guide, 1997; and Ford System Design Handbook, 1993a). The second QFD/FMEA related process proposal developed within Ford Motor Company originating from Europe was called the “Ford customer satisfaction process” (Ford Motor Company, 1994a). This proposal describes a step by step process that has QFD at its core throughout the product development cycle, with the other quality tools, techniques and disciplines including training of people skills as inputs or outputs. This fully integrated approach was known as customer 8

The “QFD/FMEA interface”

European Journal of Innovation Management

D.M. Ginn, D.V. Jones, H. Rahnejat and M. Zairi

Volume 1 · Number 1 · 1998 · 7– 20

focused engineering and was strongly influenced and indeed assisted by the EQUIP (engineering quality improvement programme) office. Although the EQUIP training process has since been absorbed by the newly formed Ford technical education programme (FTEP), many of its techniques to integrate people and technical quality skills remain today. Although the above two approaches to QFD and FMEA within Ford Motor Company offer strong benefits, there still remains a need for a more coherent approach for integrating these two important customer driven quality tools.

process. This scenario it is argued here, is a typical example of the QFD to FMEA transition within the automotive industry including Ford Motor Company. The area of study under discussion aims to reverse the fate of QFD which typically loses both its momentum and deployment into the production phase. It will also reverse the fate of FMEA which typically is not yet taken seriously at a total product concept level and only infrequently at a system level. This study is divided into three sections: (1) A proposal for common links between QFD and FMEA. (2) A model to push FMEA upstream and QFD downstream along the PDC. (3) A case study highlighting how this model is applied in Ford Motor Company.

The problem definition QFD is a good and simple idea (Hauser and Clausing, 1988), but its roots are deep and its application can be complex (Lyman, 1995). This has made it difficult to implement or improve QFD effectively or successfully with any short cuts to reduce time over the whole product development cycle (Lyman, 1995). In some cases, necessitated by the complexity of a product, such as with the automotive industry and illustrated by Ford Motor Company, improvements have produced a QFD longer process by introducing either a Phase 0 Total Vehicle QFD or adding in sub-phases within Phase 1 (Ford Motor Company (1993c, 1994a, b, 1995, 1997). Because of this complexity and the length of time and resources required, the progress from Phase 1 (design requirements) to Phase 2 (parts characteristics) is typically where the QFD process runs into problems. This loss of steam to complete the QFD Phase 1 to Phase 2 transition is usually a result of a loss of enthusiasm, confidence, ideas or resources (including headcount and funds) and invariably raises questions as to the validity of doing a QFD at all (Termaat et al., 1995). If the QFD does not run out of momentum, it may well run into internal “walls” of resistance, through lack of process understanding. The corporate culture may not be well suited to deliver or follow through the QFD process (Clausing, 1994; Termaat et al., 1995). This would lead to teamwork and quality tool processes driven by the customer becoming teamwork and quality tool process driven by the engineer. A typical example of this is when the culture of FMEA teamwork and process takes over completely from the culture of QFD teamwork and

Before progressing the discussion, it is important to just give a brief description of two quality tool techniques of QFD and FMEA.

FMEA, the technique The well known quality tool of FMEA has evolved gradually since its inception in the aerospace industry in the mid-1960s (Barnard, 1996; Savcik, 1981). The latest uses that it is being put to reflect the drive toward upstream quality. The FMEA is now first considered as a system or concept FMEA which is supported by design FMEAs which in turn support process FMEAs. Practice has proved that process FMEAs are more readily incorporated into existing company quality structure for a number of reasons, first the clear benefits are more readily visible. When the customer supplier chain is illustrated as clearly as a production line, it is easy to see how failures impact on the product, customer and subsequent processes (Aldridge et al., 1990). A second reason for more successful implementation of process over design FMEA is that the training of practitioners is more usually done as a coherent section or team, who can discuss real life processes and issues while in a safe and educational training environment. This advantage that process FMEA enjoys can be realised by design FMEA if it is considered in a similar way with respect to the customer/supplier chain. If the principles of project or team based “just-in-time” (JIT) training were also applied in the design environment then still further advantages may be realised. As a link to the QFD technique it is appropriate to summarise 9

The “QFD/FMEA interface”

European Journal of Innovation Management

D.M. Ginn, D.V. Jones, H. Rahnejat and M. Zairi

Volume 1 · Number 1 · 1998 · 7– 20

four key FMEA procedural steps (Takezawa and Takahashi, 1990) as follows: (1) Clarify the function of each system, component or process element. (2) Investigate root cause factors to problems and failure modes correlated to the customer, environment and interacting systems. (3) Study the effects of problems and prioritise causal factors. (4) Explore the significant effects relationships to causes through failure analysis methods and identify appropriate counter measures.

function that in turn provides higher customer satisfaction, (Ealey, 1987; McElroy, 1989). The QFD technique uses matrix diagrams, typically with two axis, x and y, that comprise of two lists, the customer wants and the company’s translation of those wants into technical measureables, (Ford Motor Company, 1993c; Hauser and Clausing, 1988; Hunter and Van Landingham, 1994). The two lists are then compared for relationships and correlations. The customer wants and technical measureables are benchmarked with the current product (or service) with its competitors. From this process a prioritisation of the wants, and technical measureables can be assessed given targets to meet highest customer satisfaction, with as much futuring as can be reasonably extrapolated. The key technical measureables are then cascaded down to the next level of “internal” customers within the company, (American Suppliers Institute, 1992). This next level of internal customer will in turn further translate these technical measureables into more detail, and repeat the process further along the product development cycle, until the final product (or service) is produced. This process traditionally takes four iterations known as Phases 1 to 4, (American Suppliers Institute, 1992; Brown, 1991; Burton, 1995; Metherell, 1991; Sullivan, 1988). Typically Phase 1 is known as the customer design requirements stage, Phase 2 the component (or parts) characteristic stage, Phase 3 the production process stage, and Phase 4 the production control stage (Ford Motor Company, 1993c). As a parallel to FMEA, the QFD Phases 1 through to 4 can be compared to the concept, system, design and process level FMEA stages.

The parallels to QFD include identification of the perceived function by the customer, identification of customer usage patterns, prioritisation of important factors and the selection of measures to explore relationships. Rigby and Barnard (1995) and Slinger (1992) both support this mechanical similarity between QFD and FMEA.

QFD, the technique Like FMEA, the roots of the QFD began in the mid-1960s (Barnard, 1996). The QFD concept began as an academic extension to quality charting within Japan in 1966 with its first industrial application by Mitsubishi Heavy Industries at their shipyards in Kobe, southern Japan (Akao, 1988; Barnard, 1996). The first use of QFD by the automotive industry was also in Japan in 1977 at Toyota. The first widespread interest of QFD within the USA did not occur until 1983, with Ford Motor Company and General Motors learning its benefits in 1984 (Zairi, 1993). It was not until 1987 that QFD was formally taught within Ford Motor Company. The quality tool of QFD has seen many subtle developments and improvements, not least within Ford Motor Company itself, yet the fundamental essence of this technique has remained consistent, although its deployment has seen customisation (Ford Motor Company, 1993c, 1994a, b; 1995, 1997; Kerr and Davison, 1995). The technique itself essentially takes the voice of the customer, in terms of their spoken subjective requirements, and translates them into objective product measureables that can be cascaded down the product development process, or service process (Barnard, 1996; Savcik, 1981; Sullivan, 1986). The end result is a product with improved quality

Similarities and differences of QFD and FEMA In summarising the similarities with QFD and FMEA, both were developed in the mid1960s, and address customer requirements in terms of actual and perceived functions of the product or service. Both techniques require a process of systematic what/how or cause/effect relationships, with both processes assessing the prioritisation of functional requirements through mathematical calculations and actions identified to ensure the recommended targets and relevant actions for further testing are carried out (Barnard, 1996). It will also be argued that both techniques require cross10

The “QFD/FMEA interface”

European Journal of Innovation Management

D.M. Ginn, D.V. Jones, H. Rahnejat and M. Zairi

Volume 1 · Number 1 · 1998 · 7– 20

functional and multidisciplined teamwork to enable their successful implementation. In summarising the differences between QFD and FMEA, however, it is clear there are some fundamental contrasts. The roots of QFD come from an Eastern academic, almost philosophical background to address additive, positive qualities with a long term design planning perspective. By contrast FMEA, developed by Western industry is more of a production-oriented problem solving technique, often with short term perspectives focusing on reductive, basic qualities (Barnard, 1996). Due to the different backgrounds from which QFD and FMEA originated, it is argued that QFD has met with some cultural resistances to its full implementation within the USA and the West (Barnard, 1996). Despite, these differences, it is to the similarities, and to the complementary benefits, through the differences, that this discussion will now focus its attention on combining QFD and FMEA along, what will be referred to as the “performance quality interface”.

Figure 1 is based on the original Kano diagram (see Barnard, 1996 and Kano et al., 1994), but differs by illustrating where QFD and FMEA clearly occupy the opposing quadrants of “unspoken” customer excitement qualities and basic qualities. In the opposing shaded quadrants, however, “spoken” customer things gone wrong and the “spoken” performance qualities of the customer and engineer representing an area where QFD and FMEA share a parallel path along the “performance quality” diagonal. In this scenario, the shaded quadrants represent unrobust technology versus leading edge robust technology, while the unshaded quadrants represent wellestablished robust technology vs. innovative technology that may still require prove out. The innovative technology quadrant is a key step towards the desired state of leading edge robust technology that satisfies the requirements of the customer, engineer, company and legislators. The key focus of this diagram is to illustrate the interface of these two quality tools along the “performance quality” line that holds beneficial implications in four areas of study: (1) The benefit of FMEA as a support to upstream design and planning. (2) The benefit of QFD as a support to downstream problem solving and prevention. (3) How both QFD and FMEA can be linked through teamwork processes. (4) How QFD acts as the guardian to the voice of the customer throughout the PDC and FMEA acts as a guardian of the voice of the engineer throughout the PDC.

The performance quality interface Kano proposed that “excitement” (or attractive) qualities which are linked to adding value to products and services are in fact invisible to the customer until experienced, and as a result are unexpected not-verbalised qualities (Barnard, 1996). Furthermore, Kano suggests that over time these excitement qualities become expected and verbalised “performance” (or must be) qualities, eventually becoming expected, non-verbalised “basic” qualities (Barnard, 1996). Rigby and Barnard (1995) reinforce the assertion by Kano et al. (1994) that there is a need to balance and understand the differences between “attractive” quality and “must be” quality. Kenny (1988) neatly summarises the Kano qualities as “new”, “available” and “required” functions. Using these arguments it can be proposed that QFD occupies the domain of customer “excitement” and “performance” qualities, while FMEA occupies the domain of “basic” qualities. Although direct customer input into QFD can lead directly to “performance” qualities, it is the argument of this study that QFD can prompt innovation, and thus “excitement” quality through resolving complex or conflicting requirements by use of concept selection with new technologies.

The final annotation on this figure shows “time” illustrating the Kano et al. (1994) notion, that as time progresses, what were excitement qualities become basic qualities. For the purpose of this argument, the “time” arrow illustrates the notion that as time progresses what are QFD issues now become FMEA issues later.

A model for the QFD/FMEA interface The beneficial linkages between QFD and FMEA are well documented by many authors, and often include the support of other quality tools and techniques such as Taguchi methods, experimentation, SPC and process management, as discussed by Baker 11

The “QFD/FMEA interface”

European Journal of Innovation Management

D.M. Ginn, D.V. Jones, H. Rahnejat and M. Zairi

Volume 1 · Number 1 · 1998 · 7– 20

Figure 1 The performance quality interface (After Kano, 1984, see Kano et al., 1994)

(Spoken Voice of the Customer)

EXCITEMENT QUALITIES (Unspoken Voice of the Customer) (Innovative Technology)

PERFORMANCE QUALITIES (Leading Edge Robust Technology) QFD

(Spoken Voice of the Engineer)

FMEA BASIC QUALITIES THINGS GONE WRONG (Spoken Customer Complaints) (Un-Robust Technology)

BASIC QUALITIES THINGS GONE RIGHT (Unspoken Voice of the Customer) (Robust Technology)

TIME

robustness techniques, should account for a much greater proportion of the target setting process compared with QFD. It can be argued that QFD adds a focus on the prioritised failure modes from FMEA (Slinger, 1992), particularly in the downstream stages of the product development cycle. Slinger (1992) argues that the mechanics for completing a Phase 3 or 4 QFD house of quality is similar to filling out a process FMEA spread sheet. It is this interaction of the two tools that supports the argument that FMEA can be used as a design and planning tool, with QFD, while QFD can be used as a problem solving tool, with FMEA. An over reliance on either tool, however, may result in a bias towards a reliable but unexciting product, or an unreliable but exciting product. Either scenario will still result in customer dissatisfaction. QFD and FMEA are only two of many quality tools available within a systems engineering framework, but they are the best placed tools to foster expert teams to perpetuate the voice of the customer and engineer throughout the product development cycle. The use of all the other quality tools and techniques are often precipitated by a requirement from a QFD or FMEA team to solve discrete problems or support data driven decisions required for setting QFD and FMEA targets, guidelines or recommendations. There is also no reason why the multidisciplinary teams involved with FMEA and QFD, cannot be one and the same team, or group of sub teams. All that is required is an expert body of personnel within different parts of the company, who share the same overlapping interests and goals. The key link therefore that could bind QFD and FMEA together within a systems engineering framework is teamwork.

(1994); Barnard (1995), Bastable (1995), Clausing (1994), Eade (1995), Kenny (1988), Krause and Ulbrich (1993); Rigby and Couthwaite (1995) and Sater-Black and Iverson (1994). Baker (1994) has written a design verification process (DVP) based around QFD and FMEA to support the new Jaguar V6 and V8 engine development programme for the new generation X100, X200 and X300 series Jaguars co-sponsored by Ford Motor Company. Krause and Ulbrich (1993) also refer to QFD and FMEA within a cascade of other tools to support a full product development cycle, including their use in marketing, product planning, design, process planning, workshop controls, production and in field usage by the customer. Clausing (1994) also describes how, within the product development cycle, an FMEA can add valuable “piece part expectation” detail to the QFD process. Using this evidence, a proposal is constructed below, to show how QFD and FMEA can be formally linked within a teamwork based process using a systems engineering approach to the product development cycle. In Figure 2c, “the target setting interface”, illustrates how the systems engineering process is accountable for all of the total vehicle target setting that is required throughout the product development cycle (PDC). QFD, if taken through to the manufacturing phase, will have seen several iterations of prioritisation, at greater levels of detail. Through prioritisation, however, its total percentage of target setting contribution to the total vehicle may only account for some 5 to 10 per cent of the product. FMEA, however, being used more comprehensively to support systems engineering and product 12

13

Phase 0 QFD

Concept FMEA

Customer Requirements Total Vehicle Pre-Planning

Phase 1 QFD

System FMEA

Customer Requirements for Specific Attribute Level Requirements

Phase 2 QFD

Design FMEA

Component Design Level Requirements

Powertrain Level Planning Powertrain System Engineering Powertrain Design Powertrain Manufacturing Supplier & Purchase Support Phase 0 Phase 1 Phase 2

Phase 3 QFD

Process FMEA

Process Parameters

Phase 3 Phase 4

Phase 4 QFD

DCP

Manufacturing Controls

Process Validation & Product Feedback

Continuous Improvement of both Process & Product

Process Validation & Product Feedback

Volume 1 · Number 1 · 1998 · 7– 20

10 to 15% of the total vehicle target setting process.

Both FMEA within a Systems Engineering framework, and QFD within a Customer Focused Engineering framework will develop targets that have both generic & programme specific application. The overall contribution of both QFD and FMEA may only, however, account for:

100% of the total vehicle target setting process.

Where Systems Engineering is the recipient of all the targets set through QFD, FMEA, Value Management, Experimentation, Reliability & Robustness studies, TOPS 8D problem solving, Process Management & any other target setting tools to give:

This figure shows how the progressive stages of FMEA within a Systems Engineering framework can interface with the progressive phases of QFD, within CFE, and how QFD & FMEA and Systems Engineering & Customer Focused Engineering link up. The two quality tools can be used in unison by either the same team(s) or sequence of team(s) as part of a Systems Engineering/Customer Focused Engineering) exercise to rationalise both human, financial and facility resources. There are hard & soft benefits to this process. ‘Hard’ benefits include enhanced compatibility of target setting & testing procedures. While ’Soft‘ benefits include an enhanced multi-disciplinary team building process. Both these benefits will help the Systems Engineering & Customer Focused Engineering processes to deliver a more robust level of customer satisfaction

Powertrain Cycle Planning & Preliminary Targets Vehicle & Powertrain Specs & System Design Specs, Testing Verification & Sign Off Advance Powertrain Technology Development, Prototyping & Testing Advanced Manufacturing Technical Development & Production Validation Key Suppliers Identified to Support Systems Engineering Process The QFD process shown here reflects the ‘Ford Customer Satisfaction Process Within WCP (World Class Process)’. The emphasis is on cascading prioritised targets from Total Vehicle down to the manufactured product with continuous improvement, with linkages to mainstream Systems engineering, inputs, outputs, and who, does what, when and how clearly identified. In other word, ’Customer Focused Engineering’.

European Journal of Innovation Management

(c) ‘The Target Setting Interface’

QFD WITHIN CUSTOMER FOCUSED ENGINEERING

FMEA WITHIN SYSTEMS ENGINEERING

(b) ‘FMEA/QFD Interface’

QFD WITHIN CUSTOMER FOCUSED ENGINEERING

FMEA WITHIN SYSTEMS ENGINEERING

(a) ‘Systems Engineering/QFD Parallel Process’

QFD WITHIN CUSTOMER FOCUSED ENGINEERING

SYSTEMS ENGINEERING

The “QFD/FMEA interface”

D.M. Ginn, D.V. Jones, H. Rahnejat and M. Zairi

Figure 2 The interaction of QFD and FMEA in a systems engineering process

The “QFD/FMEA interface”

European Journal of Innovation Management

D.M. Ginn, D.V. Jones, H. Rahnejat and M. Zairi

Volume 1 · Number 1 · 1998 · 7– 20

With teamwork as a key process enabler backed by management support, the successful application of both QFD and FMEA would be greatly improved. However, the two tools alone are not enough to support a product development cycle target setting process, without a complete product development cycle infrastructure, such as systems engineering to hook them into mainstream business. The relationship of these two tools with any chosen product development process is clearly symbiotic, and provides any product with enhanced reliability and customer satisfaction.

so they become one along the “performance quality interface”. The convergence of these lines of support is another important step towards the successful combination of QFD and FMEA. In the case study that now follows, the emissions QFD team combined its skills with FMEA sub teams both internally and externally to overcome difficult decisions regarding the technical solutions required, with the help of suppliers.

A QFD/FMEA team case study at Ford Motor Company The interaction of QFD and FMEA within the processes of systems engineering and customer focused engineering within Ford Motor Company, is most closely realised with the emissions QFD team within Vehicle Centre 1 in Europe. The emissions QFD team has become more then just a QFD effort, but an expert forum within the company that has become a “feature” team on all aspects of emissions control. It has also become a coordinating body for QFD, FMEA, Design of Experiments, Taguchi Robustness Studies, and a focal point for the liaison of upstream design processes and downstream production processes with both internal manufacturing areas and external suppliers. The team’s official role is as a co-ordinator of European EEC Stage III and North American LEV Emissions legislation requirements. In reality the emissions QFD team is being driven by no less than four customers. The first customer of emissions control has been the legislative customer. The second customer has been the environmental groups. The third customer is, of course, the purchaser of the vehicles. The fourth customer base is the internal customer/supplier chain (including external suppliers) within Ford Motor Company itself. It is important to recognise there is now an increasing awareness across the automotive industry driven by automotive journals (Ashley, 1996), automotive press, (Harvey, 1995) and quality press, (Cox, 1995; Nuttal, 1995, 1996; Southey, 1995; Times editorial, 1995), that vehicle emissions and its environmental and health impacts is a very real concern to the “total” customer, which is society itself. It is, however, the fourth “internal” customer base that has provided the key driver in bringing QFD and FMEA together within a single team within Ford Motor Company. It could also be argued that by fully satisfying

The role of the suppliers in the QFD/FMEA interface As already stated, because QFD benefits are usually realised in the early stages of product development, so its support for the QFD teams are more forthcoming. However, at the time when support wanes internally within the company, the need for support from external suppliers to the company is at its greatest. This external supplier support is required in the later stages of product development. Typically this support has also suffered a lack of commitment, due to uncertainty with respect to the company’s sourcing strategy. Within Ford Motor Company (1995) there is now a growing emphasis on earlier sourcing commitments with single source suppliers, which will overcome past reticence to join QFD, or FMEA teams internally within the company, or share FMEA material produced by the suppliers. Design FMEAs are usually well supported by suppliers, however, as they have a responsibility under the quality contract with the customer to supply up-to-date FMEAs, and these can most easily and effectively be completed by a team who has ownership of their part in a system FMEA. If a sourcing decision has not been made at the start of a QFD then suppliers will be understandably reluctant to commit time and resource to the task. If commitment to the QFD is usually found in the first phases and to the FMEA in the later stages, then to overcome this it is necessary to bring the upstream support teams closer to the downstream support teams, including the supplier support. This can be visualised by looking at Figure 1, where it is necessary to bring the two parallel dotted arrows, representing the progress of QFD and FMEA, closer together 14

The “QFD/FMEA interface”

European Journal of Innovation Management

D.M. Ginn, D.V. Jones, H. Rahnejat and M. Zairi

Volume 1 · Number 1 · 1998 · 7– 20

the internal customer first, the satisfaction of the other three customer bases, of legislator, pressure groups and end user will follow, at least more smoothly. To achieve this internal customer satisfaction, it is also further argued here that a smooth internal customer to customer process is required. In the case of the emissions QFD, achievement of a smoother internal customer to customer process has been the result of ensuring an expert forum for cross-functional and multi-disciplinary teams that have been empowered to carry out the complex tasks of target setting. The team is also responsible for the prioritisation of technical solutions, and the deployment of these actions throughout the length and breadth of the company and over the length of the product development cycle. The Ford EQUIP (Ford Motor Company, 1993c; Henshall, 1995), has been instrumental in gluing all these cross-functional team skills and multi-disciplinary techniques together within one training programme. This approach to training has a strong resemblance to Adair’s (1986) three overlapping needs of group life that include the training of the individual, the team and technical requirements for the task. EQUIP (Henshall, 1995) includes the quality tools of TOPS 8D, FMEA, process management, experimentation, quality engineering (Taguchi Robustness Studies) and customer focused engineering (QFD-supported engineering), and more recently, to support the robustness and the new systems engineering approach, a seventh quality tool-reliability engineering and systems engineering. EQUIP (Ford Motor Company, 1993c; Henshall, 1995) teach a “customer focused engineering” (CFE) approach that glues all the quality tool and people skill techniques together within a single teambuilding experience appropriate for any task. Within the EQUIP approach QFD is seen as a critical quality tool that threads the whole “CFE” experience together, from start to finish (Henshall, 1995). Also key to the EQUIP “CFE” approach is systems engineering framework, which the emissions QFD team also support by matching its QFD and FMEA targets to the system design specification (SDS) requirements. Systems engineering is now the product development process becoming standardised within the newly globalised Ford 2000 structure of Ford Motor Company. Essentially, systems engineering can be viewed as a “V” process. The process

begins with the “customer wants” that inputs into a process of “what should it do” analysis down through the product development cycle from the vehicle, system, sub-system, and component design. These elements are then reengineered back up to a total vehicle level through a customer correlated design verifications process (Anderson, 1996b). Anderson (1996b) also quotes Jack Paskus (an engineering director within FAO) as stating that systems engineering is an extremely cost effective tool and is about getting the product right first time for the customer, as well making it robust. This emphasises both the importance of systems engineering to Ford Motor Company and reinforces the need to formalise the use of QFD and FMEA within this process. QFD and FMEA have become both essential and focal quality tools supporting the European Stage II, III and IV and US LEV and ULEV (low and ultra low emissions vehicle) Emissions teams within Ford Motor Company. These two tools, in conjunction with Taguchi, experimentation, noise management and value management are helping identify and prioritise the key requirements and robustness issues that represent good value and function throughout the useful vehicle life to all the external and internal customers involved. The emissions QFD team has followed a “cascaded team” model as proposed by Kern (1995). In this cascaded team process, commitment to a common purpose is critical, with the core team initiating various requirements which then require various planning teams, followed by various implementation teams that span across the organisation and product development cycle (Kern, 1995). In support of this argument Figure 3 illustrates how the emissions QFD/FMEA teams interact and deploy their commitments to the whole product development cycle. Figure 3 also identifies all the key sub-team inputs at a system level through to the finished product, and how they all interlink through a matrix management structure to support the other key target setting tools of SDS (system design specifications of systems engineering), and the DVP (design verification process) and SOR (sign off requirements) to ensure a robust product. Also shown are the responsibilities of advanced vehicle technology (AVT), the vehicle centre (VC) and manufacturing throughout the process (including the role of the suppliers). From Figure 3, it can be seen 15

The “QFD/FMEA interface”

European Journal of Innovation Management

D.M. Ginn, D.V. Jones, H. Rahnejat and M. Zairi

Volume 1 · Number 1 · 1998 · 7– 20

Figure 3 Emissions QFD – proforma for proceeding from QFD phases 0 to 4

GENERIC EMISSIONS QFD TEAM

ONGOING QFD PROCESS

PDC GATEWAYS

PHASE 0 PHASE 1 PHASE 1A/B PHASE 2 PHASE 3 PHASE 4

PRODUCT SDS Sub-Sys FMEA

DVP & SOR Design FMEA

SOR Process FMEA

DCP

System Team A System Team B System Team C System Team D System Team E System Team F Component PMT Manufacturing support SDS, DVP & SOR Support PMT AVT Support Content % VC Support Content % Manufacturing Support Content %

70 20 10 Key PMT: SDS: DVP: SOR: AVT: DCP: PDC: VC:

60 30 10

60 30 10

40 40 20

30 50 20

20 50 30

10 40 50

10 30 60

10 20 70

Programme Management Team Systems Design Specification Design Verification Process Sign Off Requirements Advanced Vehicle Technology Dimensional Control Plan Product Development Cycle Vehicle Centre

that the emissions QFD/FMEA expert forum provides a focal role in ensuring all these inputs and outputs communicate effectively and smoothly throughout the whole product development cycle. A specific example where QFD and FMEA have interacted positively within the emissions QFD has been in the area of fast light off technology, which is one of several catalyst strategies. Two technical solutions were considered, the better known electrically heated catalyst (EHC) system, and the more recent exhaust gas ignition (EGI) system (Eade et al., 1995). Through the interaction of QFD, Pugh concept selection, FMEA and value analysis/value engineering study, and experimentation, EGI was chosen over EHC as a company standard for fast light off (FLO)

technology, despite original strong internal and external industry wide pressure to use EHC (Eade et al.,1995). The decision was strongly customer and data driven, with crucial input from both the QFD and FMEA teams working together. Eade et al. (1995) also report that EGI, despite being a new concept, met all its QFD driven customer requirements, both externally and internally. This was also supported by favourable value management studies, good dynamic dynometer test results, good durability testing and performed well during a disaster scenario which was integral to the system and design FMEA for EGI. The EGI system FMEA was initiated by the emissions QFD team (supported by EQUIP) and was Ford Motor Company’s first 16

The “QFD/FMEA interface”

European Journal of Innovation Management

D.M. Ginn, D.V. Jones, H. Rahnejat and M. Zairi

Volume 1 · Number 1 · 1998 · 7– 20

system FMEA. This system FMEA looked at the problem from both a generic perspective, as well as addressing programme specific EGI design FMEA issues. A process FMEA is due to be initiated next for the EGI system. With the EGI providing a vital QFD internal customer requirement of fast light off, with proven fail-safe and durability with the help of FMEA, this system is now receiving a very favourable level of world-wide interest from the vehicle manufacturing industry. Potential external customers to Ford include Jaguar, Porsche and Mercedes. The EGI system and design FMEA teams are also being linked into an exhaust system FMEA project. The exhaust system FMEA is also designated to progress systematically down into design and process FMEA levels. The current system EGI will, in this instance, become a subsystem to the overall exhaust system, and would in this context become a design level FMEA as would any other aftertreatment emissions control item such as a catalyst. Within the context of the whole exhaust system, an example of a process FMEA would be the production process tolerances of a flex coupling link. A diagram of the interrelationships between system, design and process level FMEAs within an exhaust system can be seen on Figure 4. The total exhaust system FMEA will also draw upon the emissions QFD from its data base of external and internal customer wants, from the system level of Phase 1 and from the design level of Phase 2 and finally from the

process of Phase 3. At the system and design levels for both QFD and FMEA, targets set will also be translated into SDS (system design specifications) to support the system engineering approach. From the above example of the fast light off catalyst package and exhaust system, it can be seen how QFD and FMEA can and do work efficiently together with often the same team members supporting both efforts. Their direct links to a systems engineering approach also benefit the acceptance of QFD and FMEA recommendations. A final example of how QFD, FMEA and the other quality tools within Ford Motor Company are being interfaced and linked into systems engineering is the EEC 2000 Stage III and EEC 2002 Stage IV Emissions “quality plan” for Europe. This quality plan was originally based on a quality operating system (QOS) within Ford Motor Company known as the quality criteria process (1995) and described by Anderson (1996a). This “QOS” has since been updated into the Ford reliability guide (1997), but all the basic elements remain the same. QOS processes were conceived in 1986 and have been actively deployed in Ford since 1988 (Anderson, 1996a). A QOS process is a way of doing business in a co-ordinated fashion, that includes the total quality management process of plan, do, check, act (Anderson, 1996). QOS also ensures that everyone is involved in the product quality process from the customers, dealers, engineers, suppliers and producers (Anderson, 1996a). The Ford quality criteria process “QOS” (1995) had a four step cascading process, which has since been condensed into a three phase process within the Ford Reliability Guide (1997). However the only major difference was the integration of steps 1 and 2 to form the new 1st phase, with steps 3 and 4 matching phases 2 and 3. As a result of this relatively minor change to semantics, and the fact that the emissions QFD and quality forum team became (and remain) a high profile pilot of both the quality criteria process and the Ford Reliability Guide, the summary below will focus on the former process steps, known as QC1 to 4 for the sake of clarity. The quality criteria process effectively checks that all the quality data, customer requirements, robustness studies and subsequent actions required to implement overall plan have been completed. In its simplest form, the proforma comprises of four quality criteria steps (QC 1 through to QC 4), (Ford Motor

Figure 4 The exhaust system – FMEA interface

SYSTEM FMEA

DESIGN FMEA DESIGN FMEA (incorporating EGI System FMEA)

Downpipe & Flexible Coupling Assembly

EGI & Catalyst Assembly

DESIGN FMEA

Muffler, Tailpipe & Extention Pipe Assembly

X x mm +/– 0.05 mm

PROCESS FMEA

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The “QFD/FMEA interface”

European Journal of Innovation Management

D.M. Ginn, D.V. Jones, H. Rahnejat and M. Zairi

Volume 1 · Number 1 · 1998 · 7– 20

Company, 1995). These quality criteria are documented at various levels of detail, and are comprised of the following basic steps; QC1: “quality history”, QC2: “customer wants”, QC3: “robustness assessment” and QC4: “design verification process”. The inputs and outputs to these various steps include all the EQUIP taught quality tools, and strongly aligns itself with systems engineering. See Figure 5, for the emissions QFD deployment of this quality plan. In Figure 5 the interactions between QFD and FMEA and systems engineering can be seen and show again how QFD and FMEA can support each other in parallel within a quality operating system supporting systems engineering. The key link point to systems engineering is through the second quality criteria step of QC2, “customer wants” where QFD is the focal quality technique, supported by FMEA, and other key quality techniques. The prime route for the targets, guidelines and recommendations is the systems design specifications, the targets required for systems engineering, as well as the Worldwide Customer Requirements manual and the programme specific target books.

This overall scenario, as described and supported by the Ford Stage III emissions team and their quality plan roadmap, illustrates how the QFD and FMEA quality tools assist the planning and decision making process throughout the product development cycle (PDC). This argument also supports the need for a strong and clearly understood engineering process that unifies all the quality tools with their related inputs and outputs, such as systems engineering, where clear goals are essential.

Conclusions In this scenario, QFD and FMEA are more than just technical tools, but are in practice communication tools, that act as the catalysts to spark off teamwork and in doing so enable a company-wide crossfunctional, multidisciplinary network of teams that share like minded goals that in turn foster a broader total quality management culture. The specific benefit of QFD and FMEA team cross-functionality, is the ability to step outside the organisational structure and look at new product planning and problem solving issues, perhaps more objectively, than organisationally structured teams. The argument above supports the use of both QFD and FMEA as drivers to bring the voice of the customer and voice of the engineer closer together along the “performance quality line” as described in Figure 1. By operating QFD at least up to the point where FMEA starts, or beginning an FMEA at the point where QFD trails off, a seamless handover of both teams and disciplines is enhanced. This in turn will improve design reliability and robustness efforts, with genuine customer driven satisfaction. It would also avoid the dilution or distortion of the true voice of the customer once component specifications are set. It would also reduce the lack of process foresight that may result in a compromised design solution. If both of these tools were brought into direct contact in the early to middle stages of the product development cycle, then improvements would include; to process improvement, long term cost reductions, standardisation of the target setting process, fuller understanding of all the customer quality requirements, more balanced system trade off process, improved product quality and higher customer satisfaction.

Figure 5 Stage III emissions quality plan roadmap

Past & Present Infield & Dealer Quality Data including Relevant 8D’s FMEA’s

Quality History (QC1)

Worldwide Customer Requirements Design Transmittals

Identify Alternatives Value Management Current & Predicted Customer Input Including QFD’s

Customer Wants (QC2)

Robustness Case Studies System Function Definition Relevant 8D’s Design of Experiment

System Design Specifications

Technical Targets

Target Books

Robustness Assessment (QC3) Prioritize Systems FMEA’s

Design Verification Process (QC4)

Testing

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The “QFD/FMEA interface”

European Journal of Innovation Management

D.M. Ginn, D.V. Jones, H. Rahnejat and M. Zairi

Volume 1 · Number 1 · 1998 · 7– 20

As stated already, QFD is the guardian to the voice of the customer (external and internal customers alike), while FMEA is the guardian to the voice of the engineer (internal and external suppliers alike). These two quality tools are tackling the same issue of customer satisfaction, but from different perspectives of positive and negative qualities which need to be taken into account equally. With this scenario, product quality can be both exciting, high performing and robust at the same time.

Coulthwaite, M. (1995), “FMEAs – quality integration”, Quality Today, January 1995, pp. 26-7. Cox, J. (1995), “Asthma children go to court over road fumes,(Drivers’ health in danger)”, The Times, No. 65,335, Wednesday 2 August 1995, p. 4. Dale, M. and Best, C. (1988), “Quality techniques in action”, Automotive Engineer, Vol. 13 No. 4, pp. 44-7. De Vera, D., Glennon, T., Kenny, A.A., Khan, M.A.H. and Mayer, M. (1988), “‘An automotive case study”, Quality Progress, June, pp. 35-8. Eade, D. (1995), “Application of quality function deployment to the development of powertrain systems”, MSc by Research Thesis, Departments of Mechanical Engineering and Management Centre, University of Bradford, December.

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The “QFD/FMEA interface”

European Journal of Innovation Management

D.M. Ginn, D.V. Jones, H. Rahnejat and M. Zairi

Volume 1 · Number 1 · 1998 · 7– 20

Ginn, D.M. (1996), “Effective application of quality function deployment: a flexible proposal for best practice within a changing quality improvement environment to ensure highest customer satisfaction”, MSc by Research Thesis, Departments of Mechanical Engineering and Management Centre, University of Bradford, July.

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Southey, C. (1995), “Europe fails to curb summer smog in cities”, Financial Times, 6 October, p. 4. Stewart, T. (1995), “After all you’ve done for your customer, why are they still NOT HAPPY ?”, Fortune, 11 December, pp. 90-3.

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20

Introduction

Innovation overview and future challenges

This article looks at the process of innovation, and the way in which the pressures on product development, and the resultant innovations in the development process, may act to stifle the introduction of future new ideas.

Brian S. Cumming

Key elements of effective innovation management What is innovation? Many authors have provided definitions for the word “innovation”, and each has its own nuance. In 1968 the Zuckerman Committee defined innovation as “a series of technical, industrial and commercial steps” (Robertson, 1974). In 1969 Marquis defined innovation as “a unit of technological change” and he quoted Schmookler’s definition of technical change as “an enterprise producing goods or services or using a method or input that is new to it” (Marquis, 1969). Important to this definition is the concept that it is only the first enterprise to adopt the change that executes innovation, subsequent adopters are imitators not innovators. In 1973 Tinnesand published the results of a study into the definition of innovation gleaned from a review of 188 publications (Tinnesand, 1973). His findings on the interpretation of the meaning of the word were as follows: • The introduction of a new idea – 36 per cent. • A new idea – 16 per cent. • The introduction of an invention – 14 per cent. • An idea different from existing ideas – 14 per cent. • The introduction of an idea disrupting prevailing behaviour – 11 per cent. • An invention – 9 per cent.

The author Brian S. Cumming is Supervisor in Advanced Powertrain Systems at Ford Motor Company Ltd, Laindon, Basildon, Essex, UK Abstract This article reviews the changing understanding of the word “innovation”. It contains a summary of the critical criteria for innovation to take place, based upon a study of previous researchers’ work in this area. Explores the way in which developments in materials and other technologies have acted to allow innovation to take place. It is argued that materials development is a constant source of new opportunity, and that other advances periodically occur that also support successful change. Micro-electronics is cited as a technology that has become a major enabler to innovation. The pressures on modern industry to achieve improvements to the quality, cost and development time of products are reviewed, and it is postulated that the response to these pressures encourages conservatism in new designs and thus acts to suppress innovation.

In 1985 Kuhn suggested that “creativity forms something from nothing” and that innovation “shapes that something into products and services” (Kuhn, 1985). In 1988 Badawy wrote “creativity brings something new into being” and that “innovation brings something new into use” (Badawy, 1988). In 1988 Urabe wrote “Innovation consists of the generation of a new idea and its implementation into a new product, process, or

European Journal of Innovation Management Volume 1 · Number 1 · 1998 · pp. 21–29 © MCB University Press · ISSN 1460-1060

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Innovation overview and future challenges

European Journal of Innovation Management

Brian S. Cumming

Volume 1 · Number 1 · 1998 · 21–29

service, leading to the dynamic growth of the national economy and the increase of employment as well as the creation of pure profit for the innovative business enterprise” (Urabe, 1988). In 1990 Udwadia defined innovation as “the successful creation, development and introduction of new products, processes or services” (Udwadia, 1990). In 1995 Twiss wrote that “for an invention to become an innovation it must succeed in the marketplace” (Twiss, 1992). In 1996 the CBI/DTI Innovation Unit stated that innovation is “the process of taking new ideas effectively and profitably through to satisfied customers” (DTI, 1996). Thus it can be seen that the definition of the word “innovation” has subtly changed over the last 30 years. In the 1960s and 1970s innovation was thought of as a process, as the introduction of change. Some, apparently, regarded innovation as simply the generation of a new idea. In the Tinnesand data, for example, the second, fourth and sixth categories seem to be very similar, they relate merely to the generation of a new concept, and, when totaled, they represent a sizable 39 per cent of the understanding of the meaning of the term “innovation”. Most authors now agree that the process of idea generation is “creativity”, and although creativity is an important precursor to innovation the two terms are not synonymous. Since the late 1960s the meaning of the term innovation has seemingly been refined. The implication that a new concept had to be brought into use before innovation could be said to have taken place became widely accepted. Latterly, this definition has been refined to include the concept of success. A new concept must be brought into successful use before innovation has taken place. This is reflected in the words “effectively”, “profitably”, and “satisfied customers” used in the Innovation Unit paper. This hardening of the understanding of the word “innovation” to include the concept of successful commercialization is probably a result of the increases in business competitiveness, and the developing customer focus, that have occurred in the last 30 years. Summarizing all of these ideas, perhaps the most succinct definition of innovation that meets current thinking, and covers the broadest range of applications, is that innovation is: 22

The first successful application of a product or process. Managerial and environmental elements required for innovation Many studies have been conducted on the important elements required to achieve the successful application of a new idea, i.e. innovation, and there tends to be broad agreement on the important criteria. Many of these studies include analyses of the creative process that preceeds innovation. This is a logical inclusion since without creativity, innovation can not take place. Using this premise, there are three basic steps to be considered: (1) idea generation; (2) the successful development of that idea into a useable concept; and finally (3) the successful application of that concept. Figure 1 summarizes the factors, gleaned from the literature, that will have a positive effect on each of the three steps. Figure 1 Summary of factors having a positive effect on each of the three steps

Diverse information sources

Risk taking encouraged

Staff with diverse interests

Adequate resources

Supportive management

Good strategic direction

Failures willingly tolerated Freedom to pursue own ideas Success recognised

Birth of initial idea (Creativity)

Free information exchange Brainstorming encouraged Access to external stimuli

Suggestion programmes

Non constraining environment

Patent programmes

Technically competent team

Non conformity tolerated

Challenging environment

Adequate funding

Aligned to company objectives

Adequate manpower

Clear project objectives

Management belief in project

Full time team members

Risk taking encouraged Strong project champion

Successful development

Enthusiastic cooperative team Empowered team

Senior project champion

Use of external expertise

Strong project leader

Users’ needs understood

Good project selection process

Good contact with users

Good Source of project ideas

Meets customer’s needs Value for money

Innovation

Successful application

Thorough development

Out performs current products High quality implementation

Innovation overview and future challenges

European Journal of Innovation Management

Brian S. Cumming

Volume 1 · Number 1 · 1998 · 21–29

In the invention stage, previous researchers have highlighted the importance of correct managerial attitudes and working conditions in facilitating a creative environment. Critical to this are freedom of the employees to think and act according to their own ideas rather than following strict management plans, the encouragement of risk taking, the non-critical acceptance of any failures that result, access to a diverse range of stimuli and ideas, and the recognition of success. The development phase of this process is where the new concept is refined to ensure that it meets all the needs of the end user, in all respects, and that it functions correctly with other parts of the system into which it will be integrated. This is where the details and specifications are derived for the proposed application. The most often quoted issues here are the provision of adequate resources, strong support and direction from the company, the use of appropriate external expertise, good co-operation within the team, and close contact with the end user. The third phase is “successful application”. This is acid test, “will the customer adopt the new concept?” This is the last stage of the process, but it is an area that must be considered early in the development programme. Researchers have highlighted the need to understand exactly what the end user wants at an early stage in the development process, and there are many cases quoted where a failure to understand the customer’s perspective has lead to the failure of a seemingly good idea. This point is well illustrated by Robertson who cites the case of a food processing firm which invested substantial sums into developing a process for the freeze drying of food, only to be overtaken by the increasing use of domestic refrigerators, which provided a more acceptable and convenient method of preserving food. They had failed to take a broad view of what the customer really wanted, at the outset of their development, and became focused solely on one solution, a solution that, in the end, the customer decided was not the correct one. With hindsight it is often easy to see the correct solution, and there is no guarantee that gaining a very good understanding of the customers’ needs will lead to a successful implementation of the product. However, the reverse is almost certainly true, that to fail to understand what the customer wants will

almost certainly work against the success of the project or product. If we are considering innovation that relates to a marketable product, then there are clearly other, marketing-related, factors that play a part in successful adoption. These factors include, for example, effective advertising and the effects of branding. Their omission from Figure 1 should not imply that they are considered to be unimportant; however, these factors do not have a direct bearing on the technical development of a particular new product and have thus been omitted. In other words, how a product should be advertised will not affect the derivation of the design, whereas the end customers’ perspectives of value for money will be central to the development process. Product innovation – controlling factors A useful way to explore the factors that affect innovation is to look at innovation as a process, and to analyze the parameters involved using a “P” diagram. The “P” diagram is a tool designed for the analysis of engineering systems, and it uses the concept of energy flow to focus on the processes within that system. Figure 2 shows the configuration of the “P” diagram. In this diagram, the system is shown as having three factors acting upon it: (1) signal; (2) controls; (3) noise. and it has two potential outputs: (1) response; (2) error. Each of these is defined as follows: • Signal – This is the basic input into the system, the “trigger” that causes the system Figure 2 Configuration of the “P” diagram Noise

Signal

System

Response Error state

Controls

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•

•

•

•

Innovation overview and future challenges

European Journal of Innovation Management

Brian S. Cumming

Volume 1 · Number 1 · 1998 · 21–29

to function. In a simple example this might be the action of switching on a lighting system. Controls – These are the features of the system that are readily open to control. In the lighting system example this could be the power of the bulb, the position of the lamp, and the distance of the lamp from the subject. Noise – These are parameters that can affect the system but over which control is difficult or impossible. For the lighting system this could be variations in the voltage available, the quality of the wiring and connections, and variability in the function of the switch. Response – This is the desired outcome, and in the example this would be the correct level and quality of lighting on the subject. Errors states – These are possible but unwanted outcomes. In the example these could be no light, variable light, uneven light, or light that is too dull or too bright.

development of this idea is compatible with the corporate strategy. The controls are the resources that can be brought into play to turn the idea into an innovation. These include finances, people with the right knowledge and expertise, the right equipment, and a good and well managed plan that brings all of these aspects together. If any of these aspects are inadequate or missing, then the process is more likely to fail. Noises that affect the process include internally applied perturbations such as pressure from the corporation for success, failing confidence in the innovation and attendant waning support from senior people, and concern over the costs of the project. External noises include changes to the environment into which the innovation is targeted. These changes could include competitive actions and changes to the customer wants driven, for example, by changing fashions, legal requirements or political issues. The ideal response is that innovation should result – that the initial concept should be successfully adopted. Potential error states include a product that the customer does not want. This could occur if the product does not meet functional or performance expectations, perhaps because it is too costly to adopt or to operate, or because it has adverse effects upon other important customer needs. Such a condition is likely to arise if, in the initial stages, the customers’ needs are incorrectly or incompletely understood – an error in the input, or when the customers’ needs change during the development – a noise in the system. Another potential error state is that the product is faulty, it fails to achieve its functional objectives. This will occur when the development process is inadequate, and possible influences here are lack of appropriate resources to support a full development of the product, or impatience that forces the product through to the customer before it is ready.

Figure 3 uses the “P” diagram to look at the innovation process in order to highlight the important parameters that can have an influence. The signal or input to the innovation process are the initial idea, a customer want that can be shown to be correctly addressed by this idea, and an understanding that the Figure 3 View of the innovation process via “P” diagram to highlight key parameters

Noise Corporate impatience Re-direction/Instability Changing financial situation Changing market or customer wants New/better competitor product

Signal Original idea Customer want Corporate strategy

Development Process

Controls Funding People Expertise Knowledge Tools Plans

Response Innovation – First successful application of a concept Error state Unwanted product Faulty product

Technology as an enabler for innovation Innovation can be the result of the generation of a new idea, and it is easy to believe that it is always the creation of a new idea that is the spark that drives the innovation process. There are many cases where this is true, the 3M “Post-it-Note” is an often quoted 24

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Volume 1 · Number 1 · 1998 · 21–29

example, and the Pilkington float glass process, and the “Windows” software interface are other good examples of innovations for which the invention of initial concept was the primary trigger to the development of a commercial success. When a new product is brought into being, when a new technical development takes place, we tend to think that we are witnessing the birth of a new idea, but this is not always the case. There are numerous examples of ideas that have been around for many years but have not been developed, or have found only limited use because some factor was missing that would allow those ideas to be fully realized. Very often the missing factor is a technical one. As technology progresses new doors are opened that were previously closed, ideas that were once unfeasible may become practicable. For example, the first helicopter flew in 1936 but Leonardo da Vinci had drawn designs of a very similar machine over 400 years before. The creativity had taken place, but the innovation had to wait for a number of technical enablers to become available.

weapons, and tools such as saws and farming implements. We stopped using materials as labels for later periods in history but those labels could easily be applied. The Steel Age would have started in the mid-1800s when the Bessemer process was invented and the bulk production of steel became possible. Steel can be produced in a number of forms and in these various forms lends itself to a very wide range of applications. Its use for the structure of ships and buildings, fasteners, springs, and cutting tools illustrates both the broad capability of the material and the industries that its development fostered. Aluminum became available in useable quantities early in the twentieth century, and it rapidly found use in applications where a high strength to weight ratio was paramount, classically in the manufacture of aircraft frames and bodies. The Plastic Age would have started around 1920 when the first commercial applications of early plastics were achieved. The term plastic covers such a wide variety of materials that it would be possible to assign various periods in history to the introduction of each important breakthrough. Plastic materials have found application in all walks of life; clothing, furnishing, building, transport, domestic appliances, and packaging are all areas where the application of plastic materials have had a profound effect, generally replacing a more traditional material with one that has strength, resilience, self colour, and light weight. An important stage in the “plastic age” is marked by the advent of plastic composites. The development of glass, carbon, and other fibres, for inclusion into a plastic matrix, has produced materials with extremely high strength to weight performance, coupled with an ability to produce complex shapes. Such a list of materials would not be complete without a mention of ceramics and metal composites. Ceramics and metal composites are providing designers with tough, wearresistant, lightweight materials that are often capable of working at very high temperatures, and for which there are no, more conventional, alternatives. Each new material development allowed innovations to take place, and many of those innovations had been “ideas in waiting” for a

Materials development as an “enabler” There is one technical enabler that has been at the heart of innovation for thousands of years and that is the development of materials. Indeed this factor is so important to the progress of mankind that certain periods in our history are named after the new material that became available at that time. In the Stone Age, tools were developed from naturally occurring stones and flints. Knives, axes, hammers and scraping tools were produced that allowed the people of those times to be more effective at hunting, preparing food, making clothing, building shelters, and defending themselves. The Bronze Age saw the combination of copper and tin to produce a relatively hard material that could be cast and worked into a variety of tools and utensils. This material was used for knives, swords, spearheads, shields and armour, for storage and cooking vessels, and for the manufacture of sculptures and ornaments. The Iron Age was initiated by the discovery of the means to process iron ore into iron, a material that was much harder than bronze, opening the way for the development of much more durable cutting edges, more effective 25

Innovation overview and future challenges

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Volume 1 · Number 1 · 1998 · 21–29

number of years. A perfect example of this is the concept of manpower flight. Human-powered flight has been a dream of mankind for centuries, and many attempts have been made to achieve this goal, and many lives have been lost in the process. Very limited successes started to occur from the early 1900s but it was not until 1977 that the Gossamer Condor finally succeeded in achieving this difficult challenge, and claimed the elusive “Kremer Prize”. The reason that it had to wait until 1977 before this could be achieved is largely a question of materials development. The success of the Gossamer Condor was reliant upon the use of very thin wall aluminum tubing for the frame and a Mylar skin. The challenge of manpower flight centres around power to weight ratio, and the entire aircraft weighed only 32kg even though it had a wing span of almost 30m (Reay, 1977). Without access to appropriate materials the project would have failed, as so many had proved before. Another good example is the internal combustion engine. This device relies for its function upon a number of different materials with certain specific properties. Examples of these are castings of iron and aluminum, steel forgings, steel springs, high strength steels for valves and valve seats, and aluminum alloys for the pistons. Without such materials the realization of the concept would not be possible. Before leaving this subject it is important to note that the pace of materials development has been accelerating, and this a characteristic that has been observed in many other fields of technology.

the electrical technology available. The idea of being able to communicate freely, without the restrictions of a physical connection, is clearly a very attractive one, but 50 years ago the limitations were so severe that their use was constrained to only the most demanding applications, such as military use. The advent of microelectronics enabled this concept to become commonplace. The cost, weight, size and performance of this concept ceased to be inhibitors, the desirability of the concept of the freedom of communication was still present (arguably more so than ever before) and thus the innovation of the mobile phone was assured. Perhaps the most important capability that microelectronics has provided is that of very powerful control technology, and this capability has far-reaching effects. This is well illustrated by an examination of its effects in the automotive industry. Every modern car has an electronic system controlling its engine. The amount of fuel that is delivered, the timing of the spark to ignite that fuel, the air flow into the engine, the speed of the engine, and other important parameters are monitored or controlled by electronic means. Twenty years ago this was all under mechanical control, and although the basic control processes were similar, the accuracy and speed of response was missing. Microelectronics have enabled the application of better emissions control systems and, as a result, modern engines are significantly cleaner and more efficient that the previous mechanically controlled systems. Electronic controls have enabled known technology to compete for new applications. The crankcase scavenged two-stroke engine, for example, was invented in the late 1800s just about the same time as the four-stroke engine. The two-stroke engine has found successful application in many areas, particularly where power to weight ratio are important. But the nature of its combustion system leads to the loss of unburned fuel into the exhaust. The impact of this is that the fuel economy, exhaust emissions and exhaust noise characteristics of this engine are inferior to the four stroke alternative. These characteristics meant that, in automotive applications, where these performance features are more important than the power to weight ratio benefits, the two stroke engine has not been successfully used, and the four stroke engine is the norm. In the mid 1980s that

Other enabling technologies Alongside the ever-present phenomenon of materials development, other technical developments bloom and create additional opportunities for innovation of their own. A recent and very powerful example of this is the advent of microelectronics. This technology has allowed innovation to take place on an enormous scale, and it has done this in a number of ways. By replacing known electrical concepts with smaller and more efficient designs, this technology has made known ideas much more practical. Mobile phones, for example, were available over 50 years ago (as radio telephones), the idea is not new, but their then bulk, weight and performance were limited by 26

Innovation overview and future challenges

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Brian S. Cumming

Volume 1 · Number 1 · 1998 · 21–29

balance was changed by the development of a direct injection system for the two stroke engine. This system removed all of the negative features of the previous two stroke design and maintained much of the beneficial power to weight ratio characteristic. The injection system was basically a mechanical system, and its design could have been envisaged many years earlier, but there would have been little point in doing so for the system is reliant upon very accurate control and only electronics could provide this. It was a concept awaiting a technical enabler, in this case a fast control system derived by use of microelectronics.

er product lead time can be achieved by reducing the scope of the design and development process, but again product quality may suffer as a result. The quality of a product could potentially be improved by increasing the amount of time spent in the development stage but clear impacts of this would be to increase the lead time and cost of the product. In a competitive market it is not acceptable to sacrifice any one of these needs, all are important and the competitive challenge is to meet all three. The manufacturer who does this better than his competitors has the edge.

Changes to the product development process

Process innovation In a competitive market place, three critical parameters in the business equation are quality, cost and timing. Where: • Quality is the ability of a product to meet the customers’ expectations. • Cost is the fully accounted cost of manufacturing the product. This cost will, in a competitive market, determine the profit that the manufacturer will make, and is thus it is fundamental to the success of the business. • Timing is the lead time of the product, or the amount of time taken to get the new product designed, developed, manufactured and into the market.

Part of the strategy to meet the potentially competing needs of quality, cost and timing, has been innovation in the product development process. New approaches have been applied to allow the development process to be completed with high levels of quality, but in a shorter timeframes and at lower cost. Traditionally the development process for a new product involves a number of iterations of the design, procure, build, test and analyze cycle. The output of one cycle becoming the input to the next. Several iterations of this process may be required before a marketable product is achieved. Current thinking seeks to reduce the number of iterations of this process, ideally to one, thus reducing the time and cost of bringing the new product to market. Quality could be a hidden benefit of this approach since the protracted nature of the old process encouraged working practices that lead to a quality loss. Examples of this are varying levels of prototype parts, production level parts different from those tested, and the knowledge that there are several design iterations to follow, which can encourage designers and engineers to experiment. It is the advent of the ubiquitous computer that has enabled this process innovation. There are four facets to the use of computers that are enabling changes in the engineering process to take place: (1) Computer-aided design (CAD) – The use of computers to develop the design details; replacing the traditional drawing board. (2) Computer-aided manufacturing (CAM) – The use of computers to control machine tools thus providing a flexible approach to part manufacture.

All are important and, on first consideration, within a given process, each potentially works against achieving the others, as illustrated in Figure 4. For example, a reduction in cost can be achieved by the specification of cheaper materials, but this might result in substandard performance and thus a loss of quality. Short-

Figure 4 Three critical parameters

Improving quality

Reduced lead time

Reduced cost

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Innovation overview and future challenges

European Journal of Innovation Management

Brian S. Cumming

Volume 1 · Number 1 · 1998 · 21–29

(3) Computer-aided engineering (CAE) – The use of computers to model the performance of a component or system and thus to eliminate much of the requirements for physical test. (4) Information management – The use of computers to store information and thus to enable the organization to build effectively on past experience, and to share data between different parts of the organization.

The rationale for this proposal is that shorter development lead times encourage more conservative design approaches; it is easier to deliver familiar technology than it is to develop new technology. There is a lot less learning to do, and less unexpected issues will appear to thwart the development process. The issue here is how far existing knowledge and experience is to be extrapolated. Working within known boundaries of design provides for the lowest level of risk in the development of the new product. As the designer moves away from the familiar, into the unfamiliar, so the risk increases, and it does so rapidly. Increasing risk implies lower product quality or extended development time and cost, both potentially incurred in order to resolve the new issues that are likely to arise. This issue is reinforced when product is being developed using aggressive development plans which rely upon the use of computer simulation and modeling as a basis for the engineering. Computer simulations are being used to replace the protracted process of physical design and test iteration, with the aim of having a final, single, physical design confirmation test phase, prior to production. Thus, as computer simulations are known to rapidly become unreliable as one moves away from familiar ground even more conservatism is encouraged. This trend to conservatism is reinforced by three other factors: • the ever increasing expectation by customers for quality and reliability; • the fact that any newly introduced product will have an initially higher cost than when it is mature; and • fear of litigation, especially in North America.

These four elements, CAD, CAM, CAE, and integrated information management, individually provide for substantial benefits in terms of enabling efficient design, but the greatest potential is to be realized by combining the elements into one entity, as illustrated in Figure 5. The data that are used in the CAD, CAM and CAE files all set out to define the nature of the component or assembly to which they relate. They define its shape, the materials used and how it relates to its surroundings. Clearly, the most efficient solution is to have one, common, data source and to use this for all the purposes of CAD, M & E.

Could process innovations stifle product innovation? Process innovation is being applied to provide a route to the production of better products, quicker and at lower cost. However, it may well be that an undesired side effect is to stifle product innovation.

Figure 5 Combining elements into a single entity

Customer requirements Cost information

Cost information

Warranty data

CAM Tool paths, clearances and production FMEAs

Legal requirements CAD Dimensions, tolerances, and materials

Competitor benchmarking

Conclusions

Design guides

Integrated information management

Material specifications

Problem resolutions

In summary, innovation has been the most important shaping force in the history of mankind. This shaping force has been fuelled and driven by the creativity of the human mind and, in general, constrained by technical blocks. The technical blocks are freed when appropriate enablers are discovered and thus allow the innovation to take place.

CAE Part and system performance models Test data

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European Journal of Innovation Management

Brian S. Cumming

Volume 1 · Number 1 · 1998 · 21–29

will result in a new period of conservatism that will have the effect of stifling product innovation, the very phenomenon that brought these changes into play in the first place.

A constant enabler has been that of materials. Materials development is as old as mankind and is still key to our progress. History has seen the appearance of other, supporting, enablers of which the current example, that of microelectronics, is without doubt the most significant to date. Innovations open new windows of opportunity and process innovations are no exception. Currently, in the manufacturing industry, process innovation is being applied to allow the potentially conflicting needs of quality, cost and timing to be achieved concurrently. Indeed it can be argued that, with the correct approach to development, these three important goals become mutually supporting; an effective design and development process providing a good design with high confidence in a short span and hence at lower cost. An innovation (a novel approach to the design and development process) has provided a new operation environment that results in new relationship between features that have historically been seen to be in conflict. However, each new operational environment brings its own new constraints and this analysis contends that the new environment created by the use of the computer to improve the engineering environment, reinforced by increasing customer expectations and concerns about introduction cost and litigation,

References Badawy, M.K. (1988), “How to prevent creativity mismanagement”, IEEE Engineering Management Review, Vol. 16 No. 2, p. 63. DTI (1996), Innovation the Best Practice – The Executive Summary, DTI. Kuhn, R.L. (1985), Frontiers in Creative and Innovative Management, Ballinger, Cambridge, MA. Marquis, D.G. (1969), “The anatomy of successful innovations”, Innovation , November. Reay, D.A. (1977), The History of Man-powered Flight, Pergamon Press, New York, NY, p. 341. Robertson, R. (1974), “Innovation management”, Management Decision Monograph, Vol. 12 No. 6, p. 332. Tinnesand, B. (1973), “Towards a general theory of innovation”, PhD Thesis, University of Wisconsin, Madison, WI, p. 258. Twiss, B. (1992), Managing Technological Innovation, Pitman, London. Udwadia, F.E. (1990), “Creativity and innovation in organizations”, Technological Forecasting and Social Change, Vol. 38 No. 1, p. 66. Urabe, K. (1988), Innovation and Management, Walter de Gruyter, New York, NY, p. 3.

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Introduction

Culture and climate for innovation

Virtually all companies talk about innovation, and the importance of “doing” innovation, many actually try to “do it”, and only a few actually succeed in doing it. The reality is that innovation, for the most part, frightens organisations because it is inevitably linked to risk. Many companies pay lip service to the power and benefits of innovation. To a large extent most remain averse to the aggressive investment and commitment that innovation demands. Instead they dabble in innovation and creativity. Even though innovation is debated in senior level meetings as being the lifeblood of the company, and occasional resources and R&D funds are thrown at it, often the commitment usually ends there. However, becoming innovative demands more than debate and resources; it requires an organisational culture that constantly guides organisational members to strive for innovation and a climate that is conducive to creativity. Innovation is holistic in nature. It covers the entire range of activities necessary to provide value to customers and a satisfactory return to the business. As Buckler (1997) suggests, innovation “is an environment, a culture – almost spiritual force – that exists in a company” and drives value creation. Innovation maybe viewed as three fairly distinct phases which are often viewed to be sequential but in reality are iterative and often run concurrently. The first is the idea generation phase which is typically the fuzzy front end. A lot of the ideas from this stage typically do not proceed onto the second stage, because often numerous problems show up, ranging from feasibility to compatibility with strategic direction. At the second stage most frequently encountered is the structured methodology phase which typically consists of some type of stage-gate system. Most large companies deploy some variation of a structured methodology. The stage-gate system consists of hoops which the new idea must pass in order to demonstrate its feasibility and compatibility with the organisation’s objectives. The third stage is commercialisation. This phase consists of actually making the idea an operational feasibility. In others words, the product is produced so as to allow extraction of value from all that has been created in the earlier phases. Although innovation cannot be touched, heard, tasted or seen it can be felt. It is

Pervaiz K. Ahmed

The author Pervaiz K. Ahmed is Unilever Lecturer in Innovation Management at the University of Bradford, Bradford, UK Abstract Notes that many companies pay “lip service” to the idea of innovation and stresses that becoming innovative requires an organisational culture which nurtures innovation and is conducive to creativity. Considers the nature of organisational climate and of organisational culture, focusing on factors which make for an effective organisational culture. Looks at the interplay between various organisational factors and innovation and suggests elements which promote innovation. Concludes that the most innovative companies of the future will be those which have created appropriate cultures and climates.

European Journal of Innovation Management Volume 1 · Number 1 · 1998 · pp. 30–43 © MCB University Press · ISSN 1460-1060

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Culture and climate for innovation

European Journal of Innovation Management

Pervaiz K. Ahmed

Volume 1 · Number 1 · 1998 · 30–43

probably best described as a pervasive attitude that allows business to see beyond the present and create the future. In short, innovation is the engine of change and in today’s fiercely competitive environment resisting change is dangerous. Companies cannot protect themselves from change regardless of their excellence or the vastness of their current resource basin. Change, while it brings uncertainty and risk, also creates opportunity. The key driver of the organisation’s ability to change is innovation. However, simply deciding that the organisation has to be innovative is not sufficient. That decision must be backed by actions that create an environment in which people are so comfortable with innovation that they create it. Culture is a primary determinant of innovation. Possession of positive cultural characteristics provides the organisation with necessary ingredients to innovate. Culture has multiple elements which can serve to enhance or inhibit the tendency to innovate. Moreover the culture of innovation needs to be matched against the appropriate organisational context. To examine culture in isolation is a mistake, and to simply identify one type of culture and propose it as the panacea to an organisation’s lack of innovation is to compound that mistake.

is indicative of the way the business runs itself on a daily and routine basis. In one sense it is the encapsulation of the organisation’s true priorities. Humans are active observers of the environment in which they live. They shape the environment and are shaped by the environment in which they exist and from which they infer organisational priorities. From this understanding they align themselves to achieve their own particular ends. At times these personal ends may coincide with those of the organisation or they may conflict. Understanding and perceptions of the environment act as guiding mechanisms. The practices and procedures that come to define these perceptions are labelled climate. Scheider et al. (1996) define four dimensions of climate: (1) Nature of interpersonal relationships • is there trust or mistrust?; • are relationships reciprocal and based on collaboration, or are they competitive?; • does the organisation socialise newcomers and support them to perform, or does it allow them to achieve and assimilate simply by independent effort?; • do the individuals feel valued by the company? (2) Nature of hierarchy • are decisions made centrally or through consensus and participation?; • is there a spirit of teamwork or is work more or less individualistic?; • are there any special privileges accorded to certain individuals, such as management staff? (3) Nature of work • is work challenging or boring?; • are jobs tightly defined and produce routines or do they provide flexibility?; • are sufficient resources provided to undertake the tasks for which individuals are given responsibility? (4) Focus of support and rewards • what aspects of performance are appraised and rewarded?; • what projects and actions/behaviours get supported?; • is getting the work done (quantity) or getting the work right (quality) rewarded?; • on what basis are people hired?

Innovation cultures and innovation climates Visiting companies like 3M, HewlettPackard, Sony, Honda, The Body Shop, one is left with a feeling that is not often encountered in ordinary companies. This “feeling” often defies definition yet despite its intangibility contains organisational concreteness as real as the machinery on the shop-floor. This feeling usually is found rooted in the prevailing psyche of each organisation. A company like 3M feels dynamic while some of its counterparts feel rather staid and unexciting. The feel of the organisation reflects both its climate and culture. The term climate historically stems/originates from organisational theorists such as Kurt Lewin (leadership styles create social climates), Douglas Mcgregor (theory X and Y) , who used the term to refer to social climate, and organisational climate respectively. The climate of the organisation is inferred by its members through the organisation’s practices, procedures and rewards systems deployed and 31

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Volume 1 · Number 1 · 1998 · 30–43

The parameters listed above help to define climate. It is primarily from these sources that employees draw inferences about the organisational environment in which they reside and understand the priorities accorded to certain goals that the organisation espouses. Closely allied to the concept of climate is culture. Organisational culture refers to deeply held beliefs and values. Culture is therefore, in a sense, a reflection of climate, but operates at a deeper level. Whereas climate is observable in the practices and policies of the organisation, the beliefs and values of culture are not visible at that level but exist as cognitive schema which govern behaviour and actions to given environmental stimuli. To illustrate the inter-linkage, 3M has the practice of setting aside a certain amount of time for employees to do creative work on their own initiatives. To support this, specific seed funding is provided, and the individuals are encouraged to share and involve and become involved in each other’s projects. These practices and support (climate) make individuals believe that senior management values innovation (culture). Culture thus appears to stem from the interpretations that employees give to their experience of organisational reality (why things are the way they are and the how and why of organisational priorities.) If the notion of innovation culture is to be useful, it is important to be clear about what we mean by the term. Failure to specify it clearly leads to confusion and misunderstanding. The question, what is innovation culture, is pertinent yet complex. The reason for this is partly to do with the way the concept of culture has evolved and partly to do with the inherent complexity within the concept itself. It is perhaps important to remember that the concept of corporate culture has developed from anthropological attempts to understand whole societies. The term, over time, came to be used to other social groupings, ranging from whole nations, corporations, departments and even teams within businesses. There are a multitude of definitions of culture but most suggest culture is the pattern of arrangement or behaviour adopted by a group (society, corporation, or team) as the accepted way of solving problems. As such, culture includes all the institutionalised ways and the implicit beliefs, norms, values and premises which underline and govern behaviour.

Furthermore, culture can be thought of as having two components: explicit or implicit. The distinction between explicit and implicit components of culture is important in that it allows a better understanding of how to analyse and manage it. Explicit culture represents the typical patterns of behaviour by the people and the distinctive artefacts that they produce and live within. Implicit component of culture refers to a values, beliefs, norms and premises which underline and determine, the observed patterns of behaviour (i.e. those expressed within explicit culture). The distinction is necessary because it serves to highlight that it is easier to manipulate explicit aspects when trying to fashion organisational change. For example, in trying to make the company customer oriented it may be possible to elicit certain actions and behaviours from employees through relatively simple training in customer satisfaction techniques but not necessarily effect any change in implicit culture. A change in implicit culture would necessitate altering the value set of the individual members to the extent that it became an unconscious norm of action, rather than guided by procedural or other organisational control routines. The degree and extent to which this happens is dependent on the strength of the culture. The strength of culture depends primarily on two things: (1) Pervasiveness of the norms beliefs and behaviours in the explicit culture (the proportion of members holding strongly to specific beliefs and standards of behaviours). (2) Match between the implicit and explicit aspects of culture. Another way of looking at culture is in terms of cultural norms. Creating culture through use of words is however seldom enough. Essentially norms vary along two dimensions (O’ Reilly, 1989): (1) The intensity: amount of approval/disapproval attached to an expectation. (2) Crystallisation: prevalence with which the norm is shared. For instance when analysing an organisation’s culture it may be that certain values are held widely but with no intensity, e.g. everyone understands what top management wants, but there is no strong approval/disapproval. By way of contrast, it may be that a given norm such as innovation, is positively valued 32

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in one group (marketing and R&D) and negatively valued by another (say manufacturing). There is intensity but no crystallisation. It is only when there exist both intensity and consensus that strong cultures exist. This is why it is difficult to develop or change culture. Strong cultures score highly on each of the above attributes. Moreover, really strong cultures work at the implicit level and exert a greater degree of control over people’s behaviour and beliefs. Strong cultures can be beneficial as well as harmful, depending on the circumstances in which the organisation finds itself. The value of strong cultures is that by virtue of deeply-held assumptions and beliefs the organisation is able to facilitate behaviours in accordance to organisational principles. A company that can create strong culture has employees who believe in its products, its customers, and its processes. However, organisations need also to be wary of a strong culture. As well as being a strength, it can in circumstances be a hindrance. To effectively use culture over the long term, organisations need to also possess certain values and assumptions about accepting change. These values must be driven by the strategic direction in which the company is moving. Without these a strong culture can be a barrier to recognising the need for change, and being able to reconstitute itself even if the need is recognised. Supporting this apparently contradictory facet of culture, Denison (1990), in a longitudinal study found evidence that suggests incoherent and weak cultures at one point in time were associated with greater organisational effectiveness in the future, and that some strong cultures eventually led to decline in corporate performance. Clearly, balance and understanding of context is important. Cultures with strong drive for innovation and change can lead to problems when market circumstances and customer requirements demand predictability and conforming to specifications. John Scully’s rescue of Apple Computers from the innovative but less predictable culture created by Steve Jobs is a good example of the weakness of a strong culture. Generally we can say that because culture can directly affect behaviour it can help a company to prosper. An innovative culture can make it easy for senior management to implement innovation strategies and plans.. The key benefit is that often it can do things that simple use of formal systems, procedures

or authority cannot. Moreover, given the nature of culture and climate, it is clear that senior managers play a critical role in shaping culture, since they are able to give priority to innovation, as well as make efforts, in terms of rewards for instance, to guard against complacency. Employees take the priorities set by what management values, and use these to guide their actions. The challenge for management then is to make sure that the employees make the right type of attributions, since any mismatches or miscommunication quite easily leads to confusion and chaos.

Organisational culture and effectiveness Having examined the issue of defining culture, it is necessary to check the attributes that make for its effectiveness. The topic of culture and effectiveness is of central importance, yet the area is beset by a formidable set of research problems. According to Denison and Mishra (1995), any theory of cultural effectiveness must encompass a broad range of phenomena extending from core assumptions to visible artefacts, and from social structures to individual meaning. In addition, the theory must also address culture as symbolic representations of past attempts at adaptation and survival, as well as a set of limiting or enabling conditions for future adaptation. Even though attempts at integration have been made there is still very limited consensus regarding a universal theory, and a great deal of scepticism exists about whether culture can ever be “measured” in a way that allows one organisation to be compared with another. Empirical evidence: culture effectiveness The empirical work on organisational culture can be traced back early to the work of classical organisation theorists such as Burns and Stalker (1961), Lawrence and Lorsh (1967), Likert (1961). In more recent times a vast base of popular literature on the subject was started by writers such as Peters and Waterman (1982) in espousing a theory of excellence, which purports to identify cultural characteristics of successful companies. Numerous studies have produced evidence which highlights the importance of culture to organisational performance and effectiveness. To cite a handful of exemplary studies, Wilkins and Ouchi (1983) discuss the concept of “clan organisation and explore the hypothetical conditions under which clans would be 33

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Volume 1 · Number 1 · 1998 · 30–43

more efficient organisational forms. Gordon (1985) highlighted that high and low performing companies in the banking and utilities industries had different culture profiles. Kotter and Heskett (1992) present an analysis of the relationship between strong cultures, adaptive cultures and effectiveness. Most recently Deshpande et al. (1993) link culture types to innovativeness. Deshpande et al., using a synthesis of over 100 previous studies in organisational behaviour, sociology and anthropology, define four generic culture types: market culture, adhocracy culture, clan culture and hierarchical culture. Their study appears to suggest that a certain variety of cultures are more able to enhance innovativeness than other types. Market and adhocracy cultures score highly for high performance companies, exhibiting a statistically significant relationship. A study by Goran Ekvall (1993) in Sweden further supports the link between culture and innovativeness. More generally, Dennison and Mishra (1995) identify four cultural traits and values that are associated with cultural effectiveness. These are briefly defined below: (1) Involvement is a cultural trait which is positively related to effectiveness. Involvement of a large number of participants appears to be linked with effectiveness by virtue of providing a collective definition of behaviours, systems, and meanings in a way that calls for individual conformity. Typically this involvement is gained through integration around a small number of key values. This characteristic is popularly recognised as a strong culture. Involvement and participation create a sense of ownership and responsibility. Out of this ownership grows a greater commitment to the organisation and a growing capacity to operate under conditions of ambiguity. (2) Consistency is a cultural trait that is positively related to effectiveness. Consistency has both positive and negative organisational consequences. The positive influence of consistency is that it provides integration and co-ordination. The negative aspect is that highly consistent cultures are often the most resistant to change and adaptation. The concept of consistency allows us to explain the existence of sub-cultures within an organisation. Sources of integration range from a limited set of rules about when and how to agree and disagree, all the way to a unitary culture with

high conformity and little or no dissent. Nonetheless in each case the degree of consistency of the system is a salient trait of the organisation’s culture. (3) Adaptability, or the capacity for internal change in response to external conditions, is a cultural trait that is positively related to effectiveness. Effective organisations must develop norms and beliefs that support their capacity to receive and interpret signals from their environment and translate them into cognitive, behavioural and structural changes. When consistency becomes detached from the external environment, firms will often develop into insular bureaucracies, and are unlikely to be adaptable. (4) Sense of mission or long term vision is a cultural trait that is positively related to effectiveness. Interestingly this contrasts with the adaptability notion, in that it emphasises the stability of an organisation’s central purpose and de-emphasises its capacity for situational adaptability and change. A mission appears to provide two major influences on the organisation’s functioning. First, a mission provides purpose and meaning, and a host of non-economic reasons why the organisation’s work is important. Second, a sense of mission defines the appropriate course of action for the organisation and its members. Both of these factors reflect and amplify the key values of the organisation. Denison and Mishra (1995) propose that for effectiveness, organisations need to reconcile all four of these traits. The four traits together serve to acknowledge two contrasts: the contrast between internal integration and external adaptation, and the contrast between change and stability. Involvement and consistency have as their focus the dynamics of internal integration, while mission and adaptability address the dynamics of external adaptation. This focus is consistent with Schein’s (1985) observation that culture is developed as an organisation learns to cope with the dual problems of external adaptation and internal integration. In addition, involvement and adaptability describe traits related to an organisation’s capacity to change, while the consistency and mission are more likely to contribute to the organisation’s capacity to remain stable and predictable over time. 34

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The individual and innovation culture

• • • • • • • •

People play a role in organisational culture. Organisations need to consider the type of employees that can most effectively drive innovation. From a diverse range of research (psychology to management) it has been found that a core of reasonably stable personality traits characterise creative individuals. A select few of these are listed:

• • • •

Personality traits for innovation • high valuation of aesthetic qualities in experience • broad interests • attraction to complexity • high energy • independence of judgement • intuition • self-confidence • ability to accommodate opposites • firm sense of self as creative (Baron and Harrington, 1981) • persistence • curiosity • energy • intellectual honesty (Amabile 1988) • internal locus of control (reflective/introspective) (Woodman and Schoenfeldt, 1990)

associative fluency fluency of expression figural fluency ideational fluency speech fluency word fluency practical ideational fluency originality (Carrol, 1985) fluency flexibility originality elaboration (Guildford, 1983)

Personal motivational factors affecting innovation At the individual level numerous motivationrelated factors have been identified as drivers of creative production. The key ones are presented below: Intrinsic versus extrinsic motivation Intrinsic motivation is a key driver of creativity (Amabile, 1990; Baron and Harrington, 1981). In fact extrinsic interventions such as rewards and evaluations appear to adversely affect innovation motivation because they appear to redirect attention from “experimenting” to following rules or technicalities of performing a specific task. Furthermore, apprehension about evaluation appears to divert attention away from the innovation because individuals become reluctant to take risks since these risks may be negatively evaluated. Contrarily, in order to be creative, individuals need freedom to take risks, play with ideas and expand the range of considerations from which solutions may emerge.

Although there appears to be general agreement that personality is related to creativity, attempts to try and use this inventory type of approach in an organisational setting as predictor of creative accomplishments is fraught with dangers, and is hardly likely to be any more useful than attempts at picking good leaders through the use of trait theory approaches. Nevertheless it does highlight the need to focus on individual actors, and to try and nurture such characteristics or at least bring them out, if necessary, in an organisational setting..

Challenging individuals Open ended, non-structured tasks engender higher creativity than narrow jobs. This occurs by virtue of the fact that people respond positively when they are challenged and provided sufficient scope to generate novel solutions. It appears that it is not the individual who lacks creative potential but it is the organisational expectations that exert a primary debilitating effect upon the individual’s inclination to innovate (Shalley and Oldham, 1985).

Cognitive factors and innovation Cognitive factors also appear to be associated with the ability to innovate. Research appears to indicate a number of cognitive factors are associated with creativity. For example, medical psychology indicates differences in cognitive processing, ascribing left cerebral cortex to rational thinking, and the right brain to intuition. Cognitive parameters affecting idea production are given below:

Skills and knowledge Creativity is affected by relevant skills such as expertise, technical skills, talent etc. However such domain-related skills can have both 35

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Volume 1 · Number 1 · 1998 · 30–43

positive as well as negative consequences. Positively, knowledge enhances the possibility of creating new understanding. Negatively, high domain-relevant skills may narrow the search heuristics to learnt routines and thereby constrain fundamentally new perspectives. This can lead to functional “fixedness”. At a more macro-level Schneider et al. (1996) suggest that organisations may attract and select persons with matching styles. Organisational culture, as well as other aspects of the organisation, may be difficult to change because people who are attracted to the organisation may be resistant to accepting new cognitive styles. When a change is forced, those persons attracted by the old organisation may leave because they no longer match the newly accepted cognitive style. Among other things, this culture-cognitive style match suggests that organisational conditions (including training programs) supportive of creativity will be effective only to the extent that the potential and current organisational members know of and prefer these conditions.

• outward looking; willingness to take on external ideas; • flexibility with respect to changing needs; • non-hierarchical; • information flow downwards as well as upwards. Mechanistic structures hinder innovation • rigid departmental separation and functional specialisation; • hierarchical; • bureaucratic; • many rules and set procedures; • formal reporting; • long decision chains and slow decision making; • little individual freedom of action; • communication via the written word; • much information flow upwards; directives flow downwards.

Cultural norms for innovation Bearing in mind that the external context impacts heavily upon innovation and reciprocally, the intrinsic creativity inherent in the organisation defines its ability to adapt to, and even shape the environment, we can ask how can culture promote innovation? Indeed does culture hinder or enhance the process of creativity and innovation? The answer is that it simply depends on the norms that are widely held by the organisation. If the right types of norms are held and are widely shared then culture can activate creativity. Just as easily, if the wrong culture exists, no matter the effort and good intention of individuals trying to promote innovation, few ideas are likely to be forthcoming . A variety of research (Andrew, 1996; Filipczak, 1997; Judge et al., 1997; O’Reilly, 1989; Picken and Dess, 1997; Pinchot and Pinchot, 1996; Schneider et al., 1996; Warner et al., 1997), appear to point to the same set of critical norms involved in promoting and implementing innovation and creativity. Norms that promote innovation are presented below.

Structure and innovation Although most research appears to agree that innovation is influenced by social processes, research in this area thus far has taken a back seat to research on individual differences and antecedents. Generally it can be said that innovation is enhanced by organic structures rather than mechanistic structures. Innovation is increased by the use of highly participative structures and cultures (e.g. high performance-high commitment work systems (Burnside, 1990). For instance, an idea champion must be made to feel part of the total innovation; at the very least he/she must be allowed to follow the progress of the innovation. This builds involvement via ownership and enhances attachment and commitment at the organisational level. There is also a strong case here to let the individual lead the project in a total sense from beginning to end. Organic structures promote innovation • freedom from rules; • participative and informal; • many views aired and considered; • face to face communication; little red tape; • inter-disciplinary teams; breaking down departmental barriers; • emphasis on creative interaction and aims;

Challenge and belief in action The degree of which employees are involved in daily operations and the degree of “stretch” required. Key attributes: • don’t be obsessed with precision; 36

• • • • • • •

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Debates The degree to which employees feel free to debate issues actively, and the degree to which minority views are expressed readily and listened to with an open mind. Key attributes: • expect and accept conflict; • accept criticism; • don’t be too sensitive.

emphasis on results; meet your commitments; anxiety about timeliness; value getting things done; hard work is expected and appreciated; eagerness to get things done; cut through bureaucracy.

Freedom and risk-taking The degree to which the individuals are given latitude in defining and executing their own work. Key attributes: • freedom to experiment; • challenge the status quo; • expectation that innovation is part of your job; • freedom to try things and fail; • acceptance of mistakes; • allow discussion of dumb ideas; • no punishment for mistakes.

Cross-functional interaction and freedom The degree to which interaction across functions is facilitated and encouraged. Key attributes: • move people around; • teamwork; • manage interdependencies; • flexibility in jobs, budgets, functional areas. Myths and stories The degree to which success stories are designed and celebrated. Key attributes: • symbolism and action; • build and disseminate stories and myths.

Dynamism and future orientation The degree to which the organisation is active and forward looking. Key attributes: • forget the past; • willingness not to focus on the short term; • drive to improve; • positive attitudes towards change; • positive attitudes toward the environment; • empower people; • emphasis on quality.

Leadership commitment and involvement The extent to which leadership exhibits real commitment and leads by example and actions rather than just empty exhortation. Key attributes: • senior management commitment; • walk the talk; • declaration in mission/vision.

External orientation The degree to which the organisation is sensitive to customers and external environment. Key attributes: • adopt customers perspective; • build relationships with all external interfaces (supplier, distributors).

Awards and rewards The manner in which successes (and failures) are celebrated are rewarded. Key attributes: • ideas are valued; • top management attention and support; • respect for beginning ideas; • celebration of accomplishments e.g. awards; • suggestions are implemented; • encouragement.

Trusts and openness The degree of emotional safety that employees experience in their working relationships. When there is high trust, new ideas surface easily. Key attributes: • open communication and share communication; • listen better; • open access; • accept criticism; • encourage lateral thinking; • intellectual honesty.

Innovation time and training The amount of time and training employees are given to develop new ideas and new possibilities and the way in which new ideas are received and treated. Key attributes: • built-in resource slack ; 37

• • • • • • • • •

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funds budgets; time; opportunities; promotions; tools; infrastructure e.g. rooms, equipment etc; continuous training; encourage lateral thinking; encourage skills development.

work toward a common end (Collins and Porras, 1991). Despite these concerns , Ledford et al. (1994) suggest that if correctly formulated and expressed, philosophy statements can provide three advantages. First, the statements can be used to guide behaviours and decision making. Second, philosophy statements express organisational culture, which can help employees interpret ambiguous stimuli. Third, they may contribute to organisational performance by motivating employees or inspiring feelings of commitment. Importantly it is worth bearing in mind that the statement does not have to move mountains to make a cumulative difference in firm performance. If the individual employees become just a little bit more dedicated to innovation, exert just a little bit more effort towards creativity goals, care a just a little bit more about their work, then the statement may produce a positive return on the investment needed to create it. So what makes a statement effective? According to Ledford et al. (1994), an effective statement consists of four basic guiding principles to bring a statement to life: (1) Make it a compelling statement. Avoid boring details and routine descriptions. (2) Install an effective communication and implementation process. (3) Creates strong linkage between the philosophy and the systems governing behaviour. (4) Have an ongoing process of affirmation and renewal.

Corporate identification and unity The extent to which employees identify with the company, its philosophy, its products and customers. Key attributes: • sense of pride; • willingness to share the credit; • sense of ownership; • eliminate mixed messages; • shared vision and common direction; • build consensus; • mutual respect and trust; • concern for the whole organisation. Organisational structure: autonomy and flexibility The degree to which the structure facilitates innovation activities. Key attributes: • decision making responsibility at lower levels; • decentralised procedures; • freedom to act; • expectation of action; • belief the individual can have an impact; • delegation; • quick, flexible decision making, minimise bureaucracy.

Leadership and innovation culture Leading edge organisations consistently innovate, and do so with courage. It is the task of organisational leaders to provide the culture and climate that nurtures and acknowledges innovation at every level. Notwithstanding the fact that leadership is critically important, it is nevertheless insufficient on its own to build a culture of continuous improvement and innovation. To build a culture of innovation, many innovation champions must be identified, recruited, developed, trained, encouraged and acknowledged throughout the organisation. In order to build a successful and sustainable culture of innovation, leadership needs to accomplish two broad tasks. First leaders need to be acutely sensitive to their

Corporate missions, philosophy statements and innovation culture Having a clear corporate philosophy enables individuals to co-ordinate their activities to achieve common purposes, even in the absence of direction from their managers (Ouchi, 1983). One effect of corporate statements is their influence in creating a strong culture capable of appropriately guiding behaviours and actions. However there is also a degree of doubt as to whether statements of credo have any value in driving the organisation forward. Most statements encountered often are of little value because they fail to grab people’s attention or motivate them to 38

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environment and acutely aware of the impact that they themselves have on those around them. This sensitivity enables them to provide an important human perspective to the task at hand and is critical because it is only within this awareness that the leader can begin to bridge the gap between “leaderspeak” and the real world of organisational culture. The second factor is the ability of leaders to accept and deal with ambiguity. Innovation cannot occur without ambiguity, and organisations and individuals that are not able to tolerate ambiguity in the work place environment and relationships reproduce only routine actions. Innovative structures for example cannot have all attendant problems worked out in advance. Leaders need to build a deep appreciation of this fact, otherwise there will be a tendency to create cultures of blame. Tolerance of ambiguity allows space for risk taking, and exploration of alternative solution spaces which do not always produce business results. This hedges against constant deployment of tried and tested routines for all occasions. Tom Peters comes close to the mark in highlighting that most successful managers have an unusual ability to resolve paradox, to translate conflicts and tensions into excitement, high commitment and superior performance. Characteristics that distinguish highly innovative firms against less innovative companies are as follows: • Top management commits both financial and emotional support to innovation, and they promote innovation through champions and advocates for innovation. • Top management has to ensure that realistic and accurate assessments of the markets are made for the planned innovation. Highly innovative firms are close to the end users, and are accurately able to assess potential demand. • Top management ensures that innovation projects get the necessary support from all levels of the organisation. • Top management ensures that structured methodology/systems are set in place so that each innovation goes through a careful screening process prior to actual implementation.

effectively seed a climate conducive to innovation. It is important to note that it is not sufficient to only emphasise one or few practices. Climates are created by numerous elements coming together to reinforce employee perceptions. Weaknesses or contradictions, even along single dimensions, can quite easily debilitate efforts. For example, if rewards are not structured for innovation but are given for efficient performance of routine operations, then no matter how seductive the other cues and perceptions are, employees are likely to respond with caution and uncertainty. This is particularly the case because perceptions of the climate are made on aggregates of experience. Additionally, management create climate not by what they say but by their actions. It is through visible actions over time rather than through simple statements that employees begin to cement perceptions. It is only when employees see things happening around them, and to things that push them towards innovation, that they begin to internalise the values of innovation. At innovative companies, the whole system of organisational function is geared-up to emphasise innovation (who gets hired, how they are rewarded, how the organisation is designed and laid out, what processes are given priority and resource back-up, and so on).

Leadership, innovation and empowerment Empowering people to innovate is one of the most effective ways for leaders to mobilise the energies of people to be creative. Combined with leadership support and commitment, empowerment gives people freedom to take responsibility for innovation. Empowerment in the presence of strong cultures that guide actions and behaviour produces both energy and enthusiasm for consistent work towards an innovative goal. Employees themselves are able to devise ways that allow them to innovate and accomplish their tasks. The only serious problem with empowerment occurs when it is provided in an organisation without a strong value system capable of driving activities in a unified and aligned manner to the super-ordinate goals of the organisation. In these conditions, empowerment is little less than abdication of responsibility, and when responsibility and power is pushed downwards, chaos typically ensues.

The above suggests that senior management play a pivotal role in enhancing or hindering organisational innovation. If senior management are able to install all of the above types of procedures and practices then they 39

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Volume 1 · Number 1 · 1998 · 30–43

Even with empowerment, innovative actions can be incapacitated. Often people encounter organisational barriers which inhibit innovation. Some typical organisational barriers encountered are listed below: • self-imposed barriers; • unwarranted assumptions; • one correct answer thinking; • failing to challenge the obvious; • pressure to conform; • fear of looking foolish.

They need also to understand the penalties if inefficiencies creep into aspects of their task. In this way, understanding of risk provides clear definition of the priority and space for innovative actions. Without knowing that risk tolerance exists within the organisation, employees tend not to be willing to try and innovate, or engage in activities that are a departure from tradition. The best way for leaders to define the action space, is not to be so precise as to discourage innovation, but to stipulate a broad direction which is consistent and clear. This means that as leaders they must be capable of accepting ambiguity, and able to place trust in employees’ ability to stretch out to goals rather than prescribe details of specific actions which stifle and smother creative actions.

Killer phrases also abound, a few of which are listed below: • “it will cost too much”; • “we have never done things that way”; • “if it’s that good, why hasn’t someone thought of it before?”; • “has it been done somewhere else?”; • “yes, but …” • “it can’t be done that way”; • “it’s impossible”; etc.

Structure involvement Involvement is not something that just occurs on its own. Senior management need to design into their organisations ways of buying involvement. Involvement requires emotional encouragement, as well as an infrastructure to create possibilities of involvement. Organisational design and layout can be used to create a physical environment to enhance interaction. Awards and special recognition schemes are other mechanisms to encourage “buy-in” into innovation as a philosophy and way of organisational life. Establishing specific mechanisms for structured involvement such as quality circles is yet another device to encourage active participation into the programme. Without direct structures to induce innovation, leadership commitment to innovation remains an empty exhortation and produces empty results.

Actions that need to be addressed in order for the empowerment to contribute to innovation are listed below: Establish meaningful “actions” boundary For employees to be creative and innovative they need to understand the primacy of the innovation agenda, and need to understand how far they are being empowered to achieve these ends. Successful companies need to draw “actions” boundary through a process of explicitly defining the domain of action and the priority, and the level of responsibility and empowerment provided to reach these ends. Most often such transmission occurs through mission and vision statements. Devised correctly, these statements can act as powerful enablers. Incorrectly, they can be just as powerful disablers breeding cynicism and discontent.

Accountability A very common problem in empowered innovation is that everyone is encouraged to participate in cross-functional process involvement, to an extent that almost everybody loses track of who is accountable for what. The result of unrestricted and uncontrolled empowerment is chaos. As new processes are put in place then new forms of behavioural guidance must be provided and must be accompanied by redefinitions of responsibility. While empowerment, on the surface, looks like an unstructured process, in reality it is anything but that. It is in fact a clear definition of domains in which the individuals are allowed to exert creative discretion, and the responsibility that they must

Define risk tolerance Employees need to know the level of risks that they can take safely. This helps them to define the space within which they are allowed to act in an empowered manner, and the occasions when they need to approach organisational ratification for engaging in actions. For example, employees need to understand how much time they can spend on their pet projects, and how much effort they need to ensure that their “routine” operations are not made sub-optimal. 40

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execute while engaging in their total task as employees of the organisation.

innovative companies behave as focused communities whereas less innovative companies units behave more like traditional bureaucratic departments. They suggest four managerial practices that influence the making of such goal-directed communities.

Action orientation rather than bureaucracy orientation To ensure that innovation occurs, leaders must ensure that there are no bureaucratic bottlenecks which suffocate attempts at innovation. One primary culprit of this is overly bureaucratic procedures for rubber-stamping approval or reporting requirements. Faced with such obstacles, a lot of employee initiatives fail. In fact a large proportion of suggestion schemes appear to fail not because there is a lack of ideas but because of the protocols, and the failure of the protocols to process with sufficient speed either a favourable or unfavourable response. Employee innovativeness is not always the stumbling block – often it is the organisational processes and structures which are so burdensome and unwieldy that they create high level of unresponsiveness. Through leadership commitment to re-engineer out unfruitful elements of bureaucracy, processes and structure can lay the foundation for a climate of innovation.

Balanced autonomy Autonomy is defined as having control over means as well as the ends of one’s work. This concept appears to be one of central importance. There are two types of autonomy: • strategic autonomy: the freedom to set one’s own agenda; • operational autonomy: the freedom to attack a problem, once it has been set by the organisation, in ways that are determined by the individual self. Operational autonomy encourages a sense of the individual and promotes entrepreneurial spirit, whereas strategic autonomy is more to do with the level of alignment with organisational goals. It appears that firms that are most innovative emphasise operational autonomy but retain strategic autonomy for top management. Top management appear to specify ultimate goals to be attained but thereafter provide freedom to allow individuals to be creative in the ways they achieve goals. Giving strategic autonomy, in the sense of allowing individuals a large degree of freedom to determine their destiny, ultimately leads to less innovation. The results of strategic autonomy are an absence of guidelines and focus in effort. In contrast, having too little operational autonomy also has the effect of creating imbalance. Here the roadmaps become too rigidly specified, and control drives out innovative flair, leading eventually to bureaucratic atmospheres. What works best is a balance between operational and strategic autonomy.

Characteristics of innovation climates and cultures Despite the interest in the field of innovation, much of the research evidence concerning management practices about innovation cultures and creative climate remains unsystematic and anecdotal. As mentioned earlier, the importance of culture has been emphasised by organisational theorists such as Burns and Stalker (1961), who present a case for organic structures as opposed to mechanistic structures. In popular literature, Peters and Waterman (1982), similarly present arguments which suggest that in order to facilitate innovation, work environments must be simultaneously tight and loose. Burlgeman and Sayles (1986) highlight the dependency of innovation with the development and maintenance of an appropriate context within which innovation can occur. Judge et al. (1997) in presenting findings from a study of R&D units compare cultures and climates between innovative and less-innovative firms and argue that the key distinguishing factor between innovative and less innovative firms is the ability of management to create a sense of community in the workplace. Highly

Personalised recognition Rewarding individuals for their contribution to the organisation is widely used by corporations. However, while recognition can take many forms there is a common distinction: rewards can be either extrinsic or intrinsic. Extrinsic rewards are things such as pay increases, bonuses and shares and stock options. Intrinsic rewards are those that are based on internal feelings of accomplishment by the recipient. For example, being personally thanked by the CEO, or being recognised 41

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Volume 1 · Number 1 · 1998 · 30–43

by the peer group, being awarded an award or trophy. Innovative companies appear to rely heavily on personalised intrinsic awards, both for individuals as well as groups. Less innovative companies tend to place almost exclusive emphasis on extrinsic awards. It appears that when individuals are motivated more by intrinsic desires than extrinsic desires then there is greater creative thought and action. Nevertheless, it has to be stated that extrinsic rewards have to be present at a base level in order to ensure that individuals are at least comfortable with their salary. Beyond the base salary thresholds it appears that innovation is primarily driven by self-esteem level rather than external monetary rewards. It appears that extrinsic rewards often yield only temporary compliance. Extrinsic rewards promote competitive behaviours which disrupt workplace relationships, inhibit openness and learning, discourage risk-taking, and can effectively undermine interest in work itself. When extrinsic rewards are used, individuals tend to channel their energies in trying to get the extrinsic reward rather than unleash their creative potential.

Continuity of slack Slack is the cushion of resources which allows an organisation to adapt to internal and external pressures. Slack has been correlated positively to innovation. Judge et al. (1997) note that it is not just the existence of slack but the existence of slack over time that appears to have positive impact upon innovation. They find less innovative firms have slack but these firms appear to have experienced significant disruptions or discontinuities of slack in their past or were expecting disruptions in the future. Therefore innovativeness seems to be linked with both experience and expectations of slack resources. It can be hypothesised that slack, and future expectations of uninterrupted slack, provide scope for the organisation and its members to take risks that they would not take under conditions of no slack, or interruptions in slack. Organisationally, this would appear to indicate the need for generating a base-line stock of slack in a variety of critical resources (such as time and seed funding for new projects).

Conclusion In attempting to build an enduring company, it is vitally important to understand the key role of the soft side of the organisation in innovation. Companies like IBM and Apple saw their fortunes overturned because of their inability to focus upon innovation, and more importantly to understand the importance of culture and climate in innovation. Apple Computers, after the departure of Steve Jobs, encountered dramatic failure despite its focus upon innovation. One of the reasons for this, was that its leaders narrowly focused their total efforts in trying to come up with the next great innovation. Instead, their time would have been better spent designing and creating an environment that would be able to create innovations of the future. Companies aspiring towards innovative goals need to learn from the examples of highly successful companies like 3M, The Body Shop whose leaders spend their energy and effort in building organisational cultures and climates which perpetually create innovation. In accepting this viewpoint, the key question in innovation begins to change from the traditional issue of focusing effort on the next great innovation to one which asks whether you are creating an environment that stimulates innovation. Are you simply focusing on your product portfolio or are you focused on

Integrated socio-technical system Highly innovative companies appear to place equal emphasis on the technical side as well as the social side of the organisation. In other words, they look to nurture not only technical abilities and expertise but also promote a sense of sharing and togetherness. Fostering group cohesiveness requires paying attention to the recruitment process to ensure social “fit” beyond technical expertise, and also about carefully integrating new individuals through a well-designed socialisation programme. Less innovative firms on the other hand appear to be more concerned with explicit, aggressive individual goals. Less innovative firms tend to create environments of independence, whereas innovative ones create environments of co-operation. Highly innovative companies also appear to place much more reasonable goal expectations, and try not to overload individuals with projects. The prevalent belief being that too many projects spread effort too thinly, leading individuals to step from the surface of one to the next. These conditions create time pressures which militate strongly against innovativeness. 42

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building a culture that cannot be copied? Are you busy inventing a narrow base of products, or are you experimenting with creating innovativeness? Without doubt the most innovative companies of the future will be dominated by those that do not simply focus energies upon product and technical innovation, but those who have managed to build enduring environments of human communities striving towards innovation through the creation of appropriate cultures and climate. This will be the energy of renewal and the drive to a successful future.

Ekvall Goran (1993), “Creativity in project work: a longitudinal study of a product development project”, Creativity and Innovation Management, March, pp. 17-26. Gordon, (1985), “The relationship between corporate culture to industry sector and corporate performance”, in Kilman, R.H., Saxton, M.J., Serpa, R. and asscoc. (Eds), Gaining Control of Corporate Culture, Jossey-Bass, San Francisco, CA. Guildford, J.P. (1983), “Transformation abilities or functions”, Journal of Creative Behaviour”, Vol. 17, pp. 75-83. Judge, W.Q., Fryxell, G.E. and Dooley, R.S. (1997), “The new task of R&D, management: creating goal directed communities for innovation”, California Management Review, Vol. 39 No. 3, Spring, pp. 72-84.

References Amabile, T.M. (1988), “A model of creativity and innovation in organisations”, in Straw, B.M. and Cummings, L.L. (Eds), Research in Organisational Behaviour, Vol. 10, pp. 123-67, JAI Press, Greenwich, CT.

Kotter, J.P. and Heskett, J.L. (1992), Corporate Culture and Performance, Free Press, New York, NY. Lawrence, P.R. and Lorsch, J. (1967), Organisation and Environment: Managing Differentiation and Integration, Harvard University, Boston, MA.

Amabile T.M. (1990), “Within you, without you: the social psychology of creativity and beyond”, in Runco, M.A. and Albert, R.S. (Eds), Theories of Creativity, pp. 6191, Sage, Newbury Park, CA.

Likert, R.L. (1961), New Patterns of Management, McGraw-Hill, New York, NY.

Andrew, C.A. (1996), “The peopleware paradigm”, Hospital Materials Management, Vol. 18 No. 1, pp. 47-60.

Ledford, .G.E., Wendnhof, J.R. and Strahley, J.T. (1994), “Realising a corporate philosophy”, Organisational Dynamics, pp. 5-19.

Barron, F.B. and Harrington, D.M. (1981), “Creativity, intelligence, and personality”, Annual review of Psychology, Vol. 32, pp. 439-76.

O’Reilly, C.O. (1989), “Corporations, culture and commitment: motivation and social control in large organisations”, California Management Review, Summer, pp. 9-25.

Buckler, S.A. (1997), “The spiritual nature of innovation”, Research-Technology Management, March-April, pp. 43-7.

Ouchi, W. (1983), Theory Z: How American Business can meet the Japanese Challenge, Addison-Wesley, Reading, MA.

Burgleman, R.A. and Sayles, L.R. (1986), Inside Corporate Innovation: Strategy, Structure and Managerial Skills, Free Press, New York, NY.

Peters, T. and Waterman, R. (1982), In Search of Excellence: Lessons from America’s Best Run Companies, Warner Books, New York, NY.

Burns, T. and Stalker, G.M. (1961), The Management of Innovation, Tavistock Publications, London.

Pinchot, E. and Pinchot, G. (1996), “Seeding a climate for innovation”, Executive Excellence, June, pp. 17-18.

Burnside, R.M. (1990), “Improving corporate climates for creativity”, in West, M.A. and Farr, J.L. (Eds), Innovation and Creativity at Work, Wiley, Chichester, pp. 265-84.

Shalley, C.E. and Oldham, G.R. (1985), “Effects of goal difficulty and expected evaluation on intrinsic motivation: a laboratory study”, Academy of Management Journal, Vol. 28, pp. 628-40.

Bruner, M. (1996), “Adopting an organisational culture of continual change”, CMA Magazine, September 1996.

Schein, E.H. (1985) Organisational Culture and Leadership, Jossey Bass, San Francisco, CA.

Carroll, J.B. (1985), “Domains of cognitive ability”, paper presented at the meeting of American Association for the Advancement of Science, Los Angeles.

Schneider, B., Gunnarson, S.K. and Niles-Jolly, K. (1996), “Creating the climate and culture of success”, Organisational Dynamics, pp. 17-29.

Collins, J.C. and Porras, J.I. (1991), “Organisational vision and visionary organisations”, California Management Review, Vol. 34, pp. 30-52.

Schneider, B., Brief, A.P. and Guzzo, R.A. (1996), “Creating a climate and culture for sustainable change”, Organisational Dynamics, Spring, pp. 7-19.

Denison, D.R. (1990), Corporate Culture and Organisational Effectiveness, Wiley & Sons, New York, NY.

Wilkins, A. and Ouchi, W. (1983), Efficient cultures: exploring the relationship between culture and organisational performance”, Administrative Science Quarterly, Vol. 28 No. 60, pp. 468-98.

Denison, D.R. and Mishra, A.K. (1995), “Toward a theory of organisational culture and effectiveness”, Organisation Science, Vol. 6 No. 2, pp. 204-23. Deshpande, R., Farley, J.U. and Webster, F.E. (1993), “Corporate culture, customer orientation and innovativeness in Japanese firms: a quadrad analysis”, Journal of Marketing, Vol. 57, pp. 23-7.

Woodman, R.W. and Schoenfeldt, L.F. (1990), “An interactionist model of creative behavior”, Journal of Creative Behaviour, Vol. 24, pp. 279-90.

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Innovation can be risky but can design help us to reduce this risk ? If industrial companies do not innovate they are liable to fall behind competitors in an increasingly diverse if not saturated global market place. Consequently this subject has received a good deal of attention and research which has explored the need to overcome inherent perceptual barriers to change within industrial companies (Boonstra, 1997), or gain control of the business environment (Daft, 1995). However design as a tool in successful innovation has often assumed a low profile if managers are unclear about its value. At the same time, companies under increasing pressure from rival organisations may find their operating environment inconducive to innovation and the creativity inherent in design (Bartlett and Goshal, 1995). Furthermore, the control and prediction of markets is exacerbated by a volatile world economy, constant changes in consumer demand (Jobber, 1995), uncertain political climates (Stoner et al., 1995), as well as growing ecological concern about the impact of industry and consumer societies upon the ecological environment (Kotler and Armstrong, 1996). Add to this scenario the dynamics of rapid technological change and convergence of information and communication technologies (Freeman, 1997), so that it becomes increasingly difficult to develop well designed and appropriate new products to meet the complex needs of today’s business and socio-economic environment. In order to survive in this complex working environment, companies need to be flexible and responsive to change, but at the same time achieve high levels of productivity and efficiency, presenting them with something of a dilemma. In fact Abernathy (1978) first recognised this productivity/innovation dilemma where, on the one hand there is a desire and real need for efficiency in order to achieve maximum benefit from existing products, while on the other there is some urgency to innovate and change in response to new legislation, changes in consumer demand and new technological opportunities. But innovation and change is likely to increase risk and uncertainty in the short term, thereby reducing efficiency and productivity for the company, even though there may be benefits in the long term if the innovation proves a success. Clearly much depends on the need to reduce the level of uncertainty within the company

Managing innovation by design – how a new design typology may facilitate the product development process in industrial companies and provide a competitive advantage Myfanwy Trueman

The author Myfanwy Trueman is Heinz Lecturer in Marketing at Bradford University Management Centre, Bradford, UK Abstract Notes the importance of innovation with regard to competitiveness but points out that innovation and change management are synonymous with risk. This research presents a new design typology which is accessible to managers and can be built into corporate strategy – allowing a facility for controlling and managing innovation.

European Journal of Innovation Management Volume 1 · Number 1 · 1998 · pp. 44–56 © MCB University Press · ISSN 1460-1060

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Managing innovation by design

European Journal of Innovation Management

Myfanwy Trueman

Volume 1 · Number 1 · 1998 · 44–56

and it’s operating environment if future innovations are to be successful. However, despite a good deal of research into innovation and the management of change (King and Anderson, 1995) there is still a good deal of debate about the whole area of innovation, invention and new product development in practice, particularly at the front end of the process (Khurana and Rosenthal, 1997). This is not to suggest that there is “one best way” to innovate, but rather that there may be some tools and a rationale which could extend opportunities as well as reducing to some extent the risk associated with creating and developing new products. In fact most recognise two categories of innovation: (1) the incremental improvement of an existing product; and (2) the radical invention which is new to the market place.

predominantly incremental change. This shift has become transparent through the announcement of a $130 billion investment in the Japanese 1996 research effort and represents a new arena for industrial competition (Dawkins, 1996). Ironically this shift has come at a time when Western countries have realigned to match the former Japanese preoccupation with incremental “innovation” and customer care- rather than the more radical notion of “invention”.

Design perspective Whether innovations are incremental or radical, there is a constant need to reduce uncertainty, increase efficiency and utilise any potential advantage to be gained from assets such as design. But precisely which tools are available to assist companies in their bid to produce successful new products and survive intense global competition ? This research explores a design perspective since it has been argued that at most design holds the key to successful; industrial competition (Fujimoto, 1990), and has been described by some as the only remaining tool since it offers the facility of product differentiation (Wasserman, 1990). At the very least design can be built into a competitive strategy (Walsh et al., 1992), or at most it can pervade the entire company as a corporate culture, affecting standards, quality and performance throughout the organisation (Fairhead, 1988; Forbes, 1989). However problems can arise in adopting a design strategy since, although most companies would agree that design is generally “a good thing”, and recent work has shown that companies with a high design profile can outperform their competitors in the world stock markets (Aldersley-Williams, 1996), there is still much misunderstanding and debate about the meaning and value of design in practice. In fact, Lorenz (1995) argues that designers and consultants have failed to develop a clear typology of design attributes, making the potential benefits difficult to perceive and apply. Many companies see design purely in terms of aesthetics, often as a superficial afterthought at the end of the product development process, while others view design as synonymous with creativity and the inception of new ideas or products (Service et al., 1989). Some see design at the core or fulcrum of the entire development process (Pugh, 1986), focusing on the facility of design to

Not surprisingly, the radical innovation carries with it a higher risk and uncertainty, where the more new dimensions involved, such as new product, new technology and new market, the greater the risk (Langrish and Cheung, 1990). In fact most successful new products fall into the “incremental” category of innovation. It is much less risky to improve upon something with which you are familiar. Yet despite all this, a large proportion of new products fail. One indicator of the importance attached to the need for successful innovation may be gauged by the extent to which companies and governments invest in R&D, and to compare this with performance league tables. It may not be surprising to note that Japanese and Korean countries have invested most over the past decade (Lasserre, 1995), although much of this has focused upon research into incremental rather than radical innovation. Such a policy has paid strong dividends if the GDP of those countries is measured against that of industrial rivals. On the other hand, until the end of the “Cold War”, the main focus of Western governments such as the USA, Soviet Union and Europe has been upon defence spending, with relatively little spent upon R&D and design in the civil sector. However, recently there has been a paradigm shift by the Japanese MITI (Ministry of Information and Technical Innovation) towards the notion of “invention” and “ideas research”, which indicates a change in focus towards “radical innovation” rather than 45

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interpret, integrate and communicate new ideas both within the company and in relations with suppliers and customers. In terms of manufacture, the design, or re-design of a product can produce tangible savings in materials and in production time, and finally most would recognise the value of design in advertising to launch and promote a new product or service.

development and nature of new products, although it may not be clear how this is done. Nor is it clear whether all aspects of design are applicable throughout the development process or that some design attributes are more significant at a particular point in the procedure. In fact how can the use of design in its many forms be associated with successful product and company performance, and what kind of measures are appropriate in evaluating the success or failure of new products and services? Furthermore, does the use of design in developing radically new innovations differ significantly from that which may be used to make an incremental improvement on an existing product? In an attempt to answer some of these questions, research at Bradford University has examined how the process of design is used to interpret, communicate and promote new products from inception, idea development and feasibility testing to production and launch. At the same time, a wide range of these design attributes have been collated and developed into a new typology and model of the innovation process.

Definitions of design and innovation Definitions of design and innovation are closely related. Although there is no single definition of either, most of the design research community appear to agree that design should be seen and better understood as a process rather than a product, which is merely the outcome of that process (Archer, 1985). To this end and in the context of design in industrial competition, the following definition has been adopted based upon previous work at the London Business School and Boston Design Institute. Design is planning, decision making and the management of activities which determine the function and characteristics of a finished product or process (adapted from Gorb, 1988 and Lawrence, 1988)

Design attributes and how they can shape and control the innovation process

On the other hand, research into innovation usually makes a distinction between putting ideas into successful practice (innovation), and the generation of new ideas and products which may not necessarily have an immediate commercial or industrial application (invention). At the same time, research into innovation may be closely related to the management of change since in many cases, putting new ideas into practice or developing a new product, by definition will necessitate a number of changes which, in order to be effective must be managed successfully. Although it is recognised that there are many definitions, this research has adopted that of “technological innovation” developed by the Organisation of Economic Co-operation and Development (OECD) Frascati Manual (1981) since much of innovation today is likely to involve some kind of technological content either within the product itself or throughout the development and production processes.

To gain a clearer understanding of the relationship between design and innovation, this research examines key design attributes in the context of new product development. Key design attributes are as follows: • competitive tool; • differentiate products; • product identity; • brand creation; • product styling; • aesthetics; • product quality; • added value; • idea generation; • idea communication; • interpret ideas; • integrate ideas; • reduce complexity; • reduce time to market; • corporate culture; • strategic activity.

Technological innovation is the transformation of an idea into a new or improved saleable product or operational process in industry or commerce (OECD, 1981).

From a literature survey and previous research at Bradford, it is clear that there are many interpretations of the way in which design can be used in the innovation process

From this it may be seen that design can be used to shape and control the direction, 46

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and that some design attributes may be in more prominent use as products become more clearly defined. For example, the use of design to generate ideas may be most evident at the inception or “concept stage” of new products, but it may also play a key role in problem solving throughout the process. On the other hand, product differentiation and identity may become more apparent in “product planning” and “feasibility testing” rather than at the concept stage. It is also logical to focus upon advertising and promotion at the launch stage, but this does not preclude promotional considerations at an early point in product development. However some attributes such as interpreting, integrating and communicating ideas may be of critical importance throughout the project. Much of these considerations point to a combination of dynamics from: • the iterative nature of the design and development process (Archer, 1985; Lansdown, 1987); • reviews of that process in order to reduce time to market and be more effective (Takeuchi and Nonaka 1986); and • the marketing concept of augmented products which reflects the need to consider many aspects surrounding the product (Levitt, 1983).

have been carefully chosen to accommodate Fujimoto’s notion of usability, producability and appropriateness alongside the need meet consumer demand, but also to incorporate and expand new technologies. At the same time it makes reference to the multidimensional design connections advocated by Lorenz (1995) where industrial design, (his interpretation of innovation), operates within a framework of “marketing” and “strategy” on the one hand, and “product engineering” and “process engineering” on the other. Here value forms the starting point for new projects since research has shown (Kotler and Armstrong, 1996) that the perceived value of products and services is central to the price customers are prepared to pay for quality and reliability, reflecting a confidence in the product as well as the company. At the same time, recent work has shown the importance of matching customer perceptions with those of the company (Bowman and Faulkner, 1994). To this end, design has a facility for “adding value” to products (Walsh et al., 1992), with attributes such as “quality” and “standards”, “aesthetics” and “styling”, all making a significant contribution to this notion. In fact the Bradford study of 108 UK companies, found a strong relationship between quality, reliability, and improved ROC (return on capital investment) on the one hand and profit margins on the other. This notion of value and quality can pervade throughout the company by developing a corporate, design inspired culture such as that achieved by Marks and Spencer, BMW and IKEA. Once the “value” goals have been established, companies have to ensure that an appropriate image is projected in order to reinforce the notions of quality and confidence. At this point design attributes such as “product differentiation”, “diversification”, “identity” and “brand creation” become all important (Schmitt et al., 1995). In this context the Bradford research found a correlation between an improved image and an increase in sales growth, as well in the contribution to company turnover made by new products. In fact value, image and customer confidence are so closely related that if a company’s image is affected by poor practice, then it’s sales are likely to fall as a consequence. A good example of this is Shell which was damaged by mishandling the decommissioning of the Brent Spar oil rig. By contrast Marks and

Not surprisingly Clark and Fujimoto (1990) put these dynamics together in the notion of “product integrity”, in an attempt to reduce uncertainty and risk in this multi-variable environment. Integrity is made up of the “usability”, “producability” and “appropriateness” of products if they are to be successful in the market place. Product integrity may also need to strike a balance between “user pull”, (consumer needs) and “technology push”, (new technological opportunities) so that companies can adopt a proactive rather than reactive strategy (Freeman, 1997). To this end, this research would argue that design attributes and a new typology may be of practical use in developing and promoting such integrity since it offers a framework and system of prioritisation for some key variables associated with innovation (Table I). These variables have been grouped within four dimensions of product innovation from value and image, to process and production (VIPP typology) (see also Figure 1 for a VIPP hierarchical framework). The dimensions 47

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Table I Attributes grouped according to VIPP typology

Design attributes

Focus at product level

Focus at corporate level

Value (starting point) Product styling Aesthetics Quality Standards Added Value

Product styling Aesthetics Quality Standards Added value

1. Corporate culture and identity (Total design commitment at all levels) Develop a culture of design standards and quality that pervades the company Adds perceived Value to products and customer confidence in company (Image). (ref. Dumas and Mintzberg, 1995 “Infuse” Level)

Image (reinforces value) Product differentiation Product diversification Product identity Brand creation Corporate identity Corporate culture

Product differentiation Product diversification Product identity Brand creation (Corporate identity) (Corporate culture)

2. Strategic activity (Top level design commitment) Build design attributes into corporate strategy Examine where and how design can enhance current and future company Image and strategy (ref. Lorenz, 1995.80, “Strategic Design”)

Generate new ideas Idea communication Interpret ideas Integrate ideas Promote products

3. Fulcrum for new projects (Full design focus at project level) Use design as a fulcrum for new product development. Design not only shapes and directs new products but also interprets, integrates and communicates new ideas at each stage of the development Process (ref. Lorenz, 1995 “Design Policy”)

Reduce complexity Use new technology and materials Reduce production time

4. Strategic tool (Some commitment at product level) Design as a tool in new product development. Where and how design attributes can be used to improve the Process and Production of new products, may facilitate teamwork (ref. Lorenz, 1995 “Design policy”)

Process Update products Generate new ideas Communicate ideas Interpret ideas Integrate ideas Interface (between managers, project team, production, customers) Promote, advertise products Production Reduce complexity Reduce production costs Reduce production time Use new technology Use new materials Recycle products and materials

5. Limited use (Small commitment at product level) Design attributes used in very limited way in Process and/or Production of new products (ref. Lorenz, 1995 “Shallow design”)

Spencer speedily removed all sandwiches from it’s food hall at the hint of a possible case of contamination and McDonald’s quickly withdrew British beef from the menu at the height of the BSE scare. Reputations may be built painstakingly over time but quickly lost,

leading to a poor image in the short and possibly long term. Once value and image are in place, the process of innovation can proceed in earnest, where they can be used as a yardstick against the “generation”, “interpretation” and 48

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Finally, at production level, design attributes focus upon a facility for the reduction in “complexity”, “materials”, “production costs” and “production time”. The Bradford research found an association between raising the company design profile and a reduced time to market. In this case, external design consultants were seen to be a strong influence. Production time was also reduced if new technologies were used at the front end of new projects as well, to speed up the production process. Naturally efficiency in production depends a great deal on ironing out problems beforehand and to this end, design has the facility for reducing complexity which can enhance a smooth production, as well as saving time and materials.

Figure 1 VIPP hierarchical framework (C) Trueman 1996

VALUE IMAGE PROCESS PRODUCTION

performance

attitudes

“integration” of ideas. At this point design can be used as a “fulcrum” for new projects, playing a key role in the shaping and directing of new products and services, as well as communicating and formulating the results. This stage is often viewed as the core or “front end” of innovation (Dougherty and Bowman, 1995), and of crucial importance since decisions made here can have profound implications for resources and production as well as potential success or failure in the market place (Walsh et al., 1992). But the nature and management of the process itself has profound implications if companies are to launch new products ahead of competitors thereby gaining a distinct advantage (Brown and Lattin, 1994). It is therefore not surprising that the development process has received considerable attention over the past two decades, and that research at Bradford found that a review of this process to be associated with a reduced time to market with attributes such as “market feedback”, “senior management commitment to design” and “use of multi disciplinary teams”. But it is of no use to be first in the market place with an “inappropriate”, illconceived product which does not sell, which prompted much of the Japanese research into a system which extends the development process as much as possible to promote the “right first time” and “zero faults” philosophies. This approach is set against an increasingly speedy production using the newest technologies and makes much use of concepts such as “concurrent” or “simultaneous engineering”. Examples of process review may be seen at a number of large Japanese companies such as Sony and Nissan, but also in European corporations such BMW and Hewlett Packard in the USA.

How can design be associated with product and company performance? Two exploratory case studies into deliberately contrasting SMEs In order to test the typology and model, research at Bradford University has carried out some exploratory research into the approach towards innovation taken by two deliberately contrasting companies. At one end of the spectrum is Company A which has developed new multimedia information and communications systems and is at the forefront of leading edge technology (sunrise). By contrast, Company B is an old, long established firm which produces contract wooden framed seating for the healthcare industry (sunset). The latter has considered innovations such as a new “recliner” or “recovery chair” for use in daycare centres and a new line of chrome metal frame office furniture aimed at the executive market. Both of these SMEs have about 200 employees but the turnover for Company B has been steady over the past five years at about £7-8 million per annum with profits between half or £1million, whereas Company A has fluctuated widely from £19million to £8million and has made a loss rather than profit with a debt which appeared to grow at about £1million per annum but slowed down in 1996 with a rationalisation of company strategy and personnel. These losses are largely due to the enormous sustained investment in research and development, keeping pace with the latest technological developments, even though there was an attempt to stabilize the situation with the floatation of the company on the UK Stock 49

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Market in 1993. Both companies have city centre locations, and both have particular problems in developing new products because of dramatic changes in their business and marketing environments.

“appropriateness” has not been met. But strong links in the form of joint ventures with suppliers with well-known brand names have gone some way to reduce uncertainty, to some extent increasing customer confidence as well as perceived product value. For example, long established brand names such as British Telecom (BT) supply the ISDN lines for these products and Hewlett Packard is now involved in a joint research venture.

Company A In some respects the element of risk is greater for Company A since it is a new company developing custom-built new technological innovations in new markets. At the same time to recoup the enormous cost of investment is becoming increasingly difficult since the relatively expensive, tailor-made products offered by this company have been seriously challenged by some competitors’ “off the shelf” products which are now relatively cheap. As a result, this could be considered a “high risk” venture, with a strategy described by Iansiti (1995) as “shooting the rapids”. If the VIPP typology is applied to Company A it would appear that there is a strong “external” focus upon promoting the image of the company and its new products (see Figure 2), possibly influenced by the fact that it has been developed by an organisation which has its roots in advertising. However this organisation has not clearly identified the product value attributes before moving onto the next innovation. In other words, a preoccupation of keeping pace with the speed of technological change has led to a lack of attention to market research, as well as the temptation to address perhaps too many markets simultaneously. Consequently, as the nature of products have changed, the main benefits have not been communicated to clearly identified market sectors, nor does it appear that sufficient attention has been paid to the current needs of those sectors. In this respect the notion of Fujimoto’s (1990) product

Process and production in Company A However, this company has now reached a stage where process and production need urgent attention in order to make efficiency gains. Both require standardisation across the range of products to bring down very large “overhead” costs and improve profit margins within which the company must operate. These measures would also allow a reduction in time to market, since a number of contracts have been lost through extended deadlines, as well as an increasingly uncompetitive product price. Such factors show a weakness which positions the company at an imbalance, on the wrong side of Abernathy’s productivity/ technology dilemma – the development process has become inefficient – and does not meet Fujimoto’s criteria for product “producability”. Consequently, the company is currently undergoing a period of consolidation and may be able to build upon its experience gained from nearly a decade of working in multimedia (see Figure 3). To this end they may examine the way in which their customers’ needs, perceived values and work patterns have changed and match this with company perceived values and procedures. For example, the first CD-ROM-based system launched in 1989 was deliberately set up with a “user friendly interface” and promoted for those working in the construction industry so that they could “work in a traditional way”. It was priced realistically for technology at that time (£2,765) so as to be affordable by small practices. The cost of this might be set against the estimated time per week (say 15 hours) and per year that architects or other construction workers might spend in getting hold of information. To this may be added the cost of journals, floor space and the management of “hard copy” magazines and promotional literature. However, to abandon the traditional reference sources requires a considerable “act of faith”, as well as a certain element of new practice. Potential

Figure 2 Main VIPP focus of Company A

• Sunrise industry • New company VALUE

• New markets

IMAGE

• New technology • High profile

PROCESS

• PLC • New products

PRODUCTION

• High risk

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(2) the company gains further credibility from its association with British Telecom.

Figure 3 Company A financial profile

20,000 15,000 10,000 5,000 0 –5,000

93 Key

94

95

96

As far as perceived value is concerned, the new “advantage” multi-media system has been developed and promoted in a very different manner. Rather than working in a “traditional way”, people are actively encouraged to grasp the opportunities for change and competitive advantage afforded by new technology. A measure of the initial success of this new system was seen by a floatation of the company on the Stock Exchange in 1993, using a new company name and image to reflect the nature of the business. The new “online” system more accurately embraces the concept of “multimedia” since it includes a video facility as well as sound and an integrated telephone link. In fact at the time of the floatation of the company the consultants Padiachy and Norris (1994) considered that “the company’s core asset is the vision to see new applications for ISDN technology”. But their investment recommendations, which compares eight companies in this field, warn that “As new entrants appear, the technology will become universally available. The importance of technology is largely in the first mover advantage of establishing a strong customer base”, but in terms of management and culture the “ability to move fast in new markets will be a key differentiating issue and a potential hurdle for larger companies”. In their view, Company A was in a strong position to take advantage of the technology having the flexibility of a smaller company. But since the launch, the need to establish a strong customer base has become a major stumbling block (Trueman and Jobber, 1995).

1988 Introduce new CD rom product to construction industry. But hit by UK recession 1992 Strategic alliances with BT, BSI and Hewlett Packard. 1993 Stock Market floatation (sp.60p), new company name and new online product (high risk innovation and environment) 1994 share price 210p 1996 Strategic review with new intranet management product 1997 Restructure company and shed some staff (sp 17p)

Turnover Profit/loss

users have to be certain that the new information source is reliable, comprehensive and up to date (Higgins, 1985). Nevertheless these first systems received quite a bit of attention and may well have formed a sound customer base if the product launch into the construction industry had not coincided with the UK recession which affected this industrial sector more than most ! New strategy and technology Consequently this company has had to change its new product strategy and review target markets. At the same time, the explosion of on-line systems prompted the company to re-examine the limitations of a CDROM technology, even though new advances meant that more information could be compressed onto two rather than the 12 discs required for the first model. The disadvantage is that however compact these discs, they still needed monthly or quarterly updating. Information is only as recent as the latest discs and may be up to three months out of date! As a result the decision was made to develop an online system which could link up to a host computer. The promotional material describes this as “the digital version of all the colour images and video programs which would have traditionally been on paper or tape”. Now information can be updated on a daily if not hourly basis. It has also led to the joint venture with British Telecom since the new system would use BT ISDN lines. This had two advantages: (1) British Telecom now promotes the new multi-media online system as a user of ISDN; and

Outpacing competitors and the need for technological change However, although new markets are constantly being explored, the company is beginning to lose out from the speed of technological change on the one hand and a large reduction in “off-the-shelf” products on the other. In short, this company has demonstrated the characteristic of a company which, according to Kanter (1984) thrives on change and has the “vision” to see new applications for ISDN technology, but is now in danger of losing out to competitors who may have concentrated on niche market applications. It has been in a fortunate position to be able to afford a large scale R&D effort and has worked hard to develop a new image and get established in new markets, but now urgently needs to 51

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consolidate its position and financial performance (see Figure 3). More recently there has been a focus upon process and production with a rationalisation in the range of bespoke systems and a new approach towards the production of standard parts. However the analysis of product perceived value on the part of the customer has been slow to get established. Company A has also been reviewing its mode of operation in the light of poor performance on the Stock Market where confidence in shares has reached an all time low of 17p from a launch price of 60p and a record high of 120p during the first six months. However, this fresh look at company strategy has taken the form of a consultant’s report and shedding of staff, rather than a participative review in collaboration with employees.

Figure 4 Company B financial profile 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0

’90 ’92 ’94 Key Turnover Profit

’95

1989 Core business to supply contract furniture to NHS but new company name and launches into new market (hotel and leisure). 1990 BS5750 award, but NHS deregulates healthecare. 1993 Feasibility study of new recliner chair for healthcare. 1994 Cease domestic furniture. Research chrome-frame executive office furniture. 1996 launch new chrome furniture in new exec market. (Increase risk). 1997 Install new IT system and maintain NHS customer base with wooden frame furniture.

a more participative style of leadership and is instigating something of a cultural change. Since the established market in domestic furniture had become increasingly competitive, the company became more dependant on contracts to supply furniture to the National Health Service. However, with de-regulation of healthcare supplies in the 1990s, it has entered a new, volatile market environment where intense competition from UK and overseas competitors has placed the company in a more vulnerable and uncertain position. A small market had developed in the hotel and leisure industry but this was also affected by the UK recession so that the core business still relies on the supply of wooden framed seating to established contacts in healthcare. Developing new products is important if not vital to the future stability of the company but presents high risk in terms of limited investment capabilities. Furthermore, any new departures may be difficult for a company which is steeped in traditional practice rather than adjusting to the management of change. This is illustrated by a cautious approach into the feasibility of diversification into “recliner chairs” for the now de-regulated healthcare industry and a new departure into chrome framed executive office seating.

Company B Alternatively, Company B may be described as having a predominantly internal focus on process and production, this is reinforced with the current preoccupation of installing a new comprehensive Information Technology and Communications (ITC) system to handle all the requirements of the organisation. This does not mean that image has not been considered, in fact a new corporate identity was adopted in the 1980s and another is planned to meet the Millennium. But this company policy is to consolidate process and production before moving on to image. Both companies have neglected value, a situation which has been exacerbated by a weakness in market research in each case. However, Company B has increased the risk factor with its tentative move into a new market (office furniture), using new technology (chrome framed furniture). Although it does have a clearly defined customer base for its main business in healthcare, it has yet to get established in the executive office furniture market (see Figure 4). But in contrast to Company A, the new business is still within the furniture industry and it’s realm of competence. In terms of similarity, both companies have had rather autocratic styles of leadership and in each case the “trigger” for innovation was “top down” rather than “bottom up” and not reinforced by rigorous market research. The furniture company has recently altered its approach towards employees with the arrival of a new director, who has generated

Process and production in Company B Most new products are incremental extensions to existing ranges and taking between two and six months to develop. The current product range consists of over 600 items but there is concern that this is now too many, precipitating a need to reduce the range and focus on best selling lines. In other words, the company may need to systematically remove 52

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less profitable items, as well as developing new innovations. To address these needs a “product review committee” has recently been set up with a brief to focus on issues such as price and design sensitivity. However, an efficient means for control, analysis and evaluation is only just being put into place with the installation of the new ITC system since it will be able to handle all company needs from inventory, accounts and wages to production and design. The efficiency requirements from the new system are to: • reduce bottlenecks in production; • make better use of manpower across the company particularly in terms of new projects; and • decrease the need for expensive storage space.

procurement and supplies, which although de-regulated, still needs to address a host of variables including standards, regulatory control, safety, clinical, ergonomic, financial and aesthetic requirements. Companies have to deal not only with the National Health Service and Regional Supplies Departments, but also the supplies representative from each hospital or health centre. Beyond these main players are hospital managers, surgeons and physicians, nurses and other medical staff, cleaners and, of course, the patients. Each has a different perception about the requirements and value of furniture for health care. For example, the supplies departments may consider balancing budgets and ensuring that official safety regulations are met, the hospital manager may view not only finance but patient throughput since four patient “chairs” can occupy the space taken by one hospital bed. The surgeon may examine a chair in terms of safety if patients are recovering from an anaesthetic, while an occupational therapist views a chair as an instrument for healing, “something which patients get well from” (Trueman, 1995). On the other hand, nurses may consider patients’ comfort and issues such as the weight of the chair if it has to be moved, the seat height in relation to an adjoining table, and whether or not it matches the overall colour scheme of a new or refurbished room. Finally, the cleaners may be faced with hygiene and the need for “wipe clean” surfaces, while the patients themselves consider not only comfort but chair position (Is it in a good, secure vantage point?) and self esteem (Does it look respectable, attractive?). No one is likely to feel happy to use a chair which is dowdy or damaged in some way. At the same time there is a move towards the development of hospital furniture which has a domestic, friendly appearance, away from the clinical “functional” products of the 1950s and 1960s. In this respect it could be argued that the patient’s perceived value of a chair could supersede that of all other parties. Meanwhile deregulation has opened up the market to competitors so that the company needs to review all its procedures to ensure that the productivity and efficiency measures gained from the new IPC system are equal to, if not better than, its new rivals. At the same time the company will need to re-position and re-assess it’s image to ensure that it matches

This will enhance the general efficiency and productivity of the company so that it can more quickly respond to customer needs, replacing previous systems which were incompatible, inefficient and time consuming. As the finance director explained “we have lost the advantage of the new technology installed ten years ago when we were the only company with advanced technology in this market – now all our competitors have caught up”. Until this new system is fully installed, the company cannot easily carry out a comparative analysis of successful products or determine the feasibility of proposed innovations. Figure 5 shows the VIPP focus of Company B. Problems associated with innovation in healthcare But developing new products for healthcare is particularly difficult because there are many levels of interest to be considered. Each has its own agenda and perceived value as to what constitutes an appropriate product. This is because of the complex process of Figure 5 VIPP focus of Company B

• Sunset industry • Established company • Existing markets

VALUE

• New technology

IMAGE

• Low profile • Family company

PROCESS

• Incremental products • Medium/high risk

PRODUCTION

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Summary and conclusions

the aspirations of all those concerned in the new healthcare industry. Consequently, the company is now in a more vulnerable position since rapid changes in the healthcare market threaten to destabilize the customer base. These changes have been brought about by technological developments in medicine, restructuring of practices, and demographic trends, as well as new competition. At the same time the company is anxious to maintain its workforce and “inhouse expertise”. The need to innovate is considered to be a priority so that the need to diversify has become more acute, and has inspired the tentative move towards high quality chrome framed office furniture. This does represent a higher risk in terms of product innovation (metal rather than wood technology), and a new market for the company, but is being developed along existing lines in the factory so that the operating overhead costs are at present under control. If this new departure proves successful, then the appropriate production processes will be upgraded to run on separate, more efficient, lines.

Sony’s Akio Morita (1992) stresses that the innovation process begins with a mandate that must be set at the highest level of the corporation by identifying goals and priorities; and once identified, these must be communicated all the way down the line. Certainly these companies do not lack motivation and their directors do not lack vision. However they are typical of most SMEs today which are faced with an increasingly complex business environment which is constantly changing, and intense competition. If they do not manage to address the process of innovation at a number of different levels, they are unlikely to be successful in the long term. Although they may be concerned with the development of very different products, many of the problems they face are surprisingly similar For example, both were faced with the need to re-examine their use of new technology since they had lost the competitive edge gained from investments made about ten years ago. Similarly, both companies recognised a need to rationalise the product range in order to meet requirements for efficiency in production and a reduced time to market, even though the approach taken was different in each case. Furthermore, senior managers in both companies were able to relate to the VIPP model at strategic as well as project level. In other words, they consider issues such as the value and image of the company, as well as the individual product. But if all four dimensions of the model have to be addressed in equal measure for successful innovation, Company A’s radical innovation appears all the more “risky” with an undue focus upon “image” to the neglect of “value”, “process” and “production”, although it is now seeking to address problems relating to “process” and “production” in a bid to redress poor performance on the stock market. By contrast, Company B is able to shift focus across three dimensions of “image”, “process” and “production” on a more regular basis, within a cycle of about ten years. Both companies had neglected product value, in terms of customer perception, partly through a weakness in the area of market research. In the case of Company B, this has been addressed by the creation of a new marketing post, although in terms of quality and standards, this company has considered these attributes with its accreditation of BS5750

Market research, IT and perceived value The company has also recruited some new employees who may influence innovation on the one hand and efficiency on the other, even though the size of the company presents some problems since they cannot afford to offer “top range” salaries to attract “high flier” graduates. A new market research post has been created for a young graduate who is being trained to assume responsibility in this area. In this way, innovations in the future are more likely to be driven by market needs rather than sales dominated – as was the case in the past. At the same time, an IT specialist is now in post who has been appointed on a slightly higher grade than most employees. He has the responsibility of supervising the installation and running of the new, expensive ITC system. These recent developments are an indication of a major cultural change for Company B, as well as a small change of attitude towards innovation. Once the process and production review are completed, the focus will shift back towards image, since a new corporate identity is planned for the year 2000. At the same time a new approach towards new products and their perceived value is likely to arise from the new appointment in marketing. 54

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Concluding statements

and ISO9000. However in Company A, the notion of perceived product value and market research has become blurred by a preoccupation with advertising and image. But although neither company appears to have fully addressed the notion of perceived product value, both now show signs of moving in this direction. These case studies are illuminating and may suggest that a change of attitudes towards the use of design at different levels of the innovation process is likely to facilitate the control and development of successful new products, thereby making some reduction to risk and uncertainty. However, it is not clear how much design attributes contribute to the development of new products or at which level they could, or should, make the greatest contribution, since this exploratory research has focused upon the examination of current and past practice rather than testing a prescriptive model. At the same time it is recognised that dimensions such as perceived value may alter over time as variables change. For example, the relatively cheap price and increased sophistication of technology today compared with that on offer ten or even five years ago, will have altered customer perception of value, even if this change has not been reviewed by the company. This research would argue that such a phenomenon heightens the need for a strong design input to new technological developments since evidence of quality, standards and reliability in new products will allow companies to command a higher sale price than inferior competing products at any one time. It is clear that further work needs to be done in order to map out these design attributes and to examine their current and potential role in successful innovation, with the possibility of action research to test the model, typology and performance measures. However, the response to the notion of the VIPP model at this stage has been encouraging as a first step towards demystifying the design process and providing a working tool for innovation management. It interprets a range of design attributes in an explicit manner so that they are more likely to be more accessible to hard-pressed SMEs. Companies which regularly address the four levels of this framework would appear to be in a stronger position to compete in the world market place.

Two SMEs working in very different industries have surprisingly similar problems in keeping up to date with the latest technology and managing their innovation strategies in the face of intense competition and complex, rapidly changing business and market environments, even though these problems manifest themselves in different ways. If the VIPP (value, image, process, production) design typology is applied to these companies it is apparent that both have not properly addressed value, and that Company A has become preoccupied with its image and may be described as “externally focused”. Conversely, Company B has had a major upheaval in order to address process and production and has a tendency towards an “internal focus”, although there are plans to re-examine image in the near future. The VIPP typology is a step towards demystifying the process of design and may go some way to facilitating hard-pressed companies in the development of “radical” as well as “incremental” new products in an increasingly competitive business environment. By examining the current and potential use of design attributes at each level of the development process, it may be possible to reduce risk and uncertainty, thereby increasing the likelihood of launching successful new products.

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