NPD as a sustainable work process in a dynamic business environment

NPD as a sustainable work process in a dynamic business environment Tommy Olin1 and A.B. (Rami) Shani2 1

Ericsson Microwave Systems AB, SE-431 84 Mo¨lndal, Sweden, and The Fenix Research Program, Chalmers University of Technology, SE-412 96 Go¨teborg, Sweden. [email protected] 2 California Polytechnic University, Orfalea College of Business, Management Area, San Luis Obispo, CA 93407, USA, and the Fenix Research Program, Stockholm School of Economics, SE-11383 Stockholm, Sweden. [email protected]

New technologies are having a widespread impact on new product development (NPD) projects. In the telecommunication industry, companies are forced to integrate ‘old’ and ‘new’ ways of working with the utilization of unknown technologies. There is an emerging need to develop sustainable work systems. This paper investigates the complex relationship between NPD and the sustainability of the work systems in which it is organized. A proposed framework for analysis is followed by an examination of a specific NPD project at Ericsson.

Introduction Tensions cannot be eliminated between sustainability, new product development processes and performance because of their very nature. Understanding the dynamics between them is crucial for the long-term success of the firm (Docherty et al., 2002; p. 221)

T

he revolutions of new technologies are changing the dynamics of the workplace. Companies in the emerging telecommunication business environment are forced to continuously explore the utilization of new and unknown technologies in their new product development units. New organizational forms, processes, and

activities are being designed and implemented in order to cope with the environmental and technological trends. At the same time, business performance and sustainability are not only affected by the changes, but are also a source of major concern at the individual, organizational, and societal levels. Sustainability, in the context of new product development (NPD), is viewed as the organizational ability to continuously regenerate resources, improve quality of work life, achieve a high degree of system flexibility that allows for continuous change and development of human, technological and work processes, and to improve business processes and outcomes (Docherty et al., 2002). Thus, at a basic level, meeting the increasing demands on NPD units to deliver

R&D Management 33, 1, 2003. r Blackwell Publishing Ltd, 2003. Published by Blackwell Publishing Ltd, 9600 Garsington Road, Oxford, OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA.

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Tommy Olin and A.B. (Rami)Shani improved products at a faster rate and pace create major tension with the emerging need to develop sustainable work systems. For many businesses and industries, NPD is now the single most important factor for success or failure. The increased demands to cope with complex and rapid changes in the environment foster work intensity that is difficult to sustain (Kira, 2002). At the same time, social and technological subsystems within an organization will be affected when the environmental context changes (Pasmore, 1988). These changes must be managed to ensure that they will contribute to a sustainable and successful NPD process (Lovelace et al., 2001). Thus, increasing our understanding of the complex dynamics between NPD work and sustainability is critical. The intent of this paper is to explore the complex dynamics between NPD and sustainability. Following a brief review of the NPD and sustainability literature we advance a framework, the foundation of which can be found in strategic management and sociotechnical system theories. The framework is utilized to describe and examine the Asterix Project at Ericsson1. The paper concludes with a discussion that focuses on the potential merit of the proposed framework, the creation of actionable knowledge, designing for flexibility and sustainability in NPD units, dynamic capability in NPD, and managing sustainability in the NPD work systems.

NPD The literature on NPD is vast and seems to be anchored in a variety of disciplines and theoretical perspectives – strategy, organization theory and design, organization behavior, marketing, operation management, sociology of organizations and engineering design (Krishnan and Ulrich, 2001). The NPD process has been characterized as complex to organize and manage. NPD is inherently an orderly and disorderly process. In fact, the management of NPD in R&D and engineering work organizations has been characterized as maintaining a balance between order and disorder (Pasmore, 1988). A recent study contrasted traditional vs. flexible approaches in NPD and advocated the transition to a flexible NPD approach for developing products on ‘Internet time’. In this context, ‘internet time’ means 2

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being able to respond to environmental future evolutions in markets and/or technologies that are occurring rapidly (Iansiti and MacCormack, 1997; MacCormack et al., 2001). The traditional R&D processes are highly structured, with a variety of models that range from specific stages to specific gates, all of which represent a hierarchy of design decisions. A future product is designed, developed, transferred to production, and rolled out to the market in clearly articulated, sequential phases. Such processes usually begin with the identification of users’ needs and an assessment of the various technological possibilities. Then, a detailed set of product specifications is created and, once approved by senior management, set in stone. At that point, attention shifts to implementation as a functionally integrated team translates the concepts into reality. If the up-front work has been done correctly, inherently expensive changes to the specifications are kept to a minimum. The number of engineering changes is often used as a measure of a project’s effectiveness (Schilling and Hill, 1998). Greater numbers of changes correspond to more inferior effort. Where technology, product features and competitive conditions are predictable, or evolve slowly, a traditional development process works well. In contrast, the flexible NPD approach delays any final commitments to design configuration. The concept phase and implementation phase, thus, overlap instead of following each other sequentially. By accepting the need for and reducing the cost of change, e.g. introducing a learning process to the implementation phase, companies are able to respond to new information that arises during the course of a new product’s development. Systematic changes in project definition and basic direction are managed proactively, while designers begin this process with no precise idea of how it will end. Adopting the flexible approach, and introducing a learning process to the implementation phase, will probably have implications for techniques and tools used (technological subsystem). This also will have an impact on the profile and competence of the engineers (social subsystem). The relations between the environmental context and the social and technological subsystems, therefore, need to be studied in order to get a more efficient NPD process. Silicon Valley firms that are presently driving much of the innovation in software and related r Blackwell Publishing Ltd 2003

Sustaining NPD in a dynamic environment computer technology seem to have nurtured an alternative NPD process. The visions for new products develop through scouting and search behavior by many organizational players – not simply the vision of a single entrepreneur or executive. ‘It is the constant search and exchange of ideas in forums throughout the organization and across organizations that makes innovation ‘everyone’s’ business in the Valley’ (Delbecq and Weiss, 2000). There are simple processes for approval of feasibility studies and slack resources available to support such studies. For many of the leading companies, the approval of feasibility studies is a very non-bureaucratic review process that encourages and enables, rather than complicates and obstructs. Firms have learned that it is important to support exploration of new ideas. Furthermore, some CEOs emphasize that it is important to allow and invest in the product development ideas that are contrary to the companies’ current visions (Delbecq and Weiss, 2000). How will the NPD processes and the outcome be affected when the management system is changed to make innovation ‘everyone’s’ business? In order to secure the long-term business profitability, we need to know more about the relations between the management system, the NPD phases and processes, and how these changes will affect the outcome and business result. Recently, there have been several literature review articles on product development (Brown and Eisenhardt, 1995; Griffin and Hauser, 1996; Balachandra and Friar, 1997; Krishnan and Ulrich, 2001), each focusing on a different aspect: Brown and Eisenhardt (1995) propose a comprehensive model of factors affecting the success of product development projects; Griffin and Hauser (1996) explore the R&D-marketing interface; Balachandra and Friar (1997) adopt a contingent approach; while Krishnan and Ulrich (2001) present a broad review, encompassing marketing, operations management, and engineering design, which focuses on product development project within a single firm. However, most authors do not make any distinction between implementation projects and innovation projects, i.e. a development project where the prerequisites are known versus projects where conditions are unknown and need to be explored during the actual product development process. Influenced by Brown and Eisenhardt (1995), Verona (1999), in a recent study, advocates a r Blackwell Publishing Ltd 2003

resource-based view of product development. According to the resource-based view of the firm, the presence of different organizational capabilities positively affects the outcomes of the product development process. As such, the researchers proposed a resource-based model of product development in which agents influence technological, external integrative, internal integrative and marketing capabilities which, in turn, affect both process efficiency and product effectiveness. Based on Verona’s reasoning, a framework that could add to our understanding of how to design NPD processes to respond better to new, competitive situations, should consider resources, capabilities, and competencies as critical elements. During the 1990s, considerable attention has also been given to knowledge management and knowledge creation during the NPD process. Improving knowledge management, in order to integrate fragmented and distributed knowledge sources, has become a critical ingredient for success in the knowledge creation process. Recently, Nonaka and Konno (1998) introduced the Japanese concept of ba, which roughly translates into ‘space’, to argue that knowledge creation is embedded in ba. Ba can be thought of as a shared space for emerging relationships. This space can be physical (e.g., office, dispersed business space), virtual (e.g., e-mail, teleconference), mental (e.g., shared experiences, ideas, ideals), or any combination of them. What differentiates ba from ordinary human interaction is the concept of knowledge creation. Ba provides a platform for advancing individual and/or collective knowledge. It is from such a platform that a transcendental perspective integrates all information needed (p.40, italics in original). Yet, the increasing emphasis on knowledge creation as an integral part of NPD seems to increase work intensity.

Intensity and sustainability in NPD work systems Our review of the literature reveals that, while increasing attention is being given to the role of the context, design configurations, resources, R&D Management 33, 1, 2003

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Tommy Olin and A.B. (Rami)Shani knowledge management and physical space, little is given to sustainability. NPD work has been characterized as ‘an intensive work’ that tends to drain resources (Lewis et al., 2002). Intensive work systems have major consequences at the individual, unit and organizational levels. At the individual level, work intensity emerges from an imbalance between an individual’s resources and work demands, the individual’s needs and work opportunities. This eventually leads to the consumption of psychological and physical resources, the potential to work and derive happiness from the work. The emotional and psychological erosion is a process that leads from initial exhaustion to cynicism and detachment from work and ultimately ends up in ineffectiveness (Maslach and Leiter, 1997). Consequently, the erosion at the individual level leads to serious negative consequences at the work group, unit and organizational levels. The negative consequences of work intensity at the organizational level relates to both an individual’s behavior and actions deriving from his/her exhaustion, as well as to the collective downward spiral of a social system. Thus, rather than striving to fulfill their primary tasks and goals, individuals and groups tend to turn inward and concentrate on defenses meant to collectively constrain experiences and anxieties. Kira (2002) argues, for example, that in intensive work systems, productive and creative ways to operate are replaced by rituals and irrational norms. While the understanding of complex emotional and cognitive relations between people and their work is beyond the scope of this manuscript, it is critical to note that imbalances must be addressed to achieve a sustainable work system (Kompier and Cooper, 1999). In the context of NPD work, we view sustainability as the firm’s strategic and design choices, about the continuous investment in the development of resources (i.e., human capital), design configurations, processes and outcomes that yield long-term success. Therefore, there is a need to develop a framework that takes into account the strategic nature of NPD, the design configurations of the work, its outcomes and sustainability. Strategic management, coupled with sociotechnical system thinking, provides a basic language and analytical framework that can advance the exploration of the relationship between NPD and sustainability. 4

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In a recent study, MacCormack et al. (2001) argue that the field lacks a holistic, integrative, theoretically based framework. Their study of 29 NPD projects illustrated the need for a guiding conceptual framework. Shani and Sena (2001) conducted a study that focused on sustainability issues of NPD projects in a software development firm. They recognized the need for interdisciplinary conceptual integration of contextual factors, management system factors, the NPD process and outcomes, and system sustainability. The holistic foundation of sociotechnical system thinking, coupled with a strategic-based view of the firm, provide an arena for an interdisciplinary theoretical integration around the theme of sustainability of NPD work systems.

Towards an alternative framework MacCormack et al. (2001) argue that, given the complex nature of the flexible NPD process, a guiding framework that allows for a more flexible development process is needed. The difficulty to quantify costs and benefits of new technologies, the emerging notions of ‘Internet time’ and the system-wide implications of the new technologies, indicate that standard approaches may not be appropriate for guiding and appraising the potential of new work forms in NPD. This paper proposes an approach that integrates two theoretical traditions: sociotechnical system theory and the economic/strategic resource-based view theory. The continuous challenge around resources and resource allocation lends itself to the utilization of the economic/strategic resource-based view theory. The sociotechnical system theory was chosen due to its emphasis on the balance between technological and social elements of work in the context of the environmental systems. This approach recognizes and integrates the strategic and sociotechnical character of the NPD process, and applies the principles of sociotechnical system and strategic analyses to key decisions. The sociotechnical system theory addresses issues that are associated with the mapping of environmental forces and dominant players who influence change (the institutional theorists’ emphasis), the mapping of resource patterns, change and evolution of organizational forms, processes and sustainability (the organizational transformar Blackwell Publishing Ltd 2003

Sustaining NPD in a dynamic environment tion and strategy theorists’ emphasis) and the NPD process and outcomes (the management and organization sciences’ emphasis). At the most basic level, the sociotechnical systems perspective considers every organization to be made up of a social subsystem (all that is about humans in the context of work) using the tools, techniques and knowledge (the technological subsystem) to produce a product or service valued by the business environmental context (Pasmore, 1988; Taylor and Felton, 1993; Trist, 1982). The degree to which the design of the technological subsystem, social subsystem, and the environmental context are integrated determines how successful and competitive the organization will be (Pava, 1986; Shani et al., 1992). Thus, while every organization is perceived as a sociotechnical system, not every organization is designed using sociotechnical system design principles, methods, processes and philosophy (Hanna, 1988; Adler and Docherty, 1998). The flexibility that is built into this perspective is one of the key reasons that the economic performance of firms designed according to sociotechnical system design principles are significantly better than comparable organizations of conventional design (Hanna, 1988; Van Eijnatten, 1994; Pasmore, 2001). The framework advanced in this paper identifies five clusters that affect system sustainability in NPD work environment. The framework is especially useful when one is attempting to understand why NPD efforts result in specific outcomes, and to plan changes that lead to improved results. Figure 1 illustrates system sustainability as an outcome that is influenced by how well the five clusters balance (or fit) with one another. It also depicts the cause-and-effect chain that produces business sustainability. We use the term sustainability to encompass business Environmental Context Social Subsystem

Technological Subsystem Management Systems

results and system flexibility, as well as regeneration and development of human capital. The business environmental context cluster is comprised of elements and forces in the market place in which the firm competes. The social subsystem cluster refers to the persons who work in the organization and all that is human about their presence. As such, individual attitudes and beliefs, competencies and skills, relationships between group members, relationships between supervisors and subordinates, relationships between groups, cultures, traditions, past experiences, assumptions, values, rites, rituals, work habits and practices, and emergent role systems are all an integral part of the social cluster. The technological subsystem cluster refers to the tools, techniques, devices, artifacts, technological methods, configurations, procedures and knowledge used by the organizational members to acquire input, transform input into output, and provide output or services to clients or customers. The management systems cluster refers to managerial processes that attempt to link the environmental, technological, and social subsystems, such as task focused teams and integration driven design. In the context of NPD, a task-focused team is defined as a number of persons, relieved from their ordinary duties, working together on a specific task. Integration driven design is defined as a process where the development work is driven by the objective of integrating the whole product as early as possible, rather than trying to finish the development of all parts before putting the whole product together. The management system provides the context within which NPD efforts are designed, developed, and carried out. The NPD phases, processes and outcomes cluster refers to project phases and product quality, etc. System sustainability refers to system flexibility (human, technological and work processes), sustainability of business results (i.e. traditional economic performance indicators), reproduction, regeneration and development of human resources, quality of working life, and business change processes for renewal and learning.

NPD phases, processes and outcomes

Research method System Sustainability

Figure 1. NPD on ‘Internet time’: towards an alternative roadmap. r Blackwell Publishing Ltd 2003

The preceding overview of some of the main studies and results in the field of NPD indicates the importance of both a continuous investigaR&D Management 33, 1, 2003

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Tommy Olin and A.B. (Rami)Shani tion and the generation of new actionable knowledge in the NPD environment. Taking our point of departure in the current studies reported in the literature, we followed up by an in-depth examination of a specific NPD project at Ericsson. According to Yin (1994), case studies are preferred when how or why questions are being posed, when the investigator has little control over the events, and when the focus is on contemporary phenomena with limited real-life context. In the first place, our study aims to answer the questions of how sustainability can be obtained in strained NPD projects, and because we cannot expect to have any control over the events in an industrial NPD project, we considered the case study approach most suitable for our study. As one of the authors was one of the project managers of the examined project, the study can also be viewed as a self-ethnography study (Alvesson, 1999). A research approach was used where the generation of new knowledge and improved understanding take place by comparing observed data with the existing body of knowledge. As our aim is to eventually develop an integrative framework, a detailed definition of hypotheses to be tested makes little sense at the outset of the study. To provide a better understanding of the background, we aimed at describing the environmental context, social subsystem, technological subsystem and the management system through qualitative data. The data is based on in-depth interviews, documents and literature. Project documentation (process descriptions, project reports, project specification and assignment specifications), in combination with interviews, was also used to capture the NPD process and its outcomes. Interviews, inquiries and comparison to praxis/normal cases were used to describe the system sustainability. The gathering of data was limited to qualitative data. In connection with the conclusion of the project, eleven, randomly selected project members were interviewed and asked to complete a comprehensive, written protocol. The data were analyzed by the researchers and summarized in a preliminary report. The result from these interviews and inquiries were then used as a catalyst for discussions at workshops during the coming year where academics and practitioners shared data, developed a shared interpretation of the 6

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data, and provided additional insight. These workshops resulted in a refined understanding of the case and its contribution to sustainability for the organization. In the next section, we will provide a description of the Asterix Project at Ericsson while utilizing the proposed, comprehensive framework.

The asterix case Environmental context The telecom industry has been changing rapidly during the past decade. Although the market is growing very rapidly, the competition among the suppliers is extremely high. Every move made by one supplier is met by a countermove from the others. Two of the major suppliers are Ericsson and Nokia. Nokia’s announcement that they would present the world’s smallest radio base station for GSM (Global System for Mobile Communications)2 at a telecom fair was the trigger for Ericsson to start the development of a similar product. A radio base station is the part in the mobile system that connects, via radio signals through the air, to the user’s mobile phone. It is also connected to a switch that transfers the call either to another radio base station (if the call is made to/from another mobile phone), or to the stationary phone network (if the call is made to/from a stationary phone). Nokia’s product, the micro base station, measures less than 35 l. and weighs less than 40 kg, with only one transceiver at 5watt output power. Ericsson’s response to Nokia was to build, as quickly as possible, a demonstrator to exhibit at the same fair. The demonstrator had to be smaller and lighter, and feature something that Nokia’s micro base station did not have. Ericsson chose to equip their micro base station with two transceivers instead of one (i.e. serving twice as many simultaneously calls), but with less output power per transceiver (i.e. shorter range). The new concept, micro base stations for GSM, created, surprisingly, great interest from leading telecom operators, which forced Ericsson to immediately start an NPD project. The work had to begin from scratch, since the initial demonstrator did not meet all the requirements of GSM standard or legal requirements for radio r Blackwell Publishing Ltd 2003

Sustaining NPD in a dynamic environment equipment. Matching Nokia’s date for product release implied a ‘mission impossible’. A normal development process would result in a time delay of half a year. To be able to finish on time, the development team at Ericsson had to find new ways of working to reduce lead-time.

Social subsystem Almost all human resources at the department for development of GSM base stations at Ericsson were spent working on existent products or products soon to be released. Therefore, a main project manager, with experience only in prestudies and feasibility-studies, was appointed. A division at another company within the Ericsson group was invited to participate in the development project. This division had previous experience of base station development for the Japanese market, as well as experience in designing compact outdoor equipment. The invited division had to create a new organizational unit, recruit new personnel, learn a new system (GSM), and collaborate with a new company culture. They also grew out of their premises; hence a new office was needed. Although this proved to be a real challenge, it created a pioneer spirit, making it fun and exciting to work in the project while contributing to the quality of work life. The project team was then distributed to three different Ericsson companies at five locations, 150–900 km apart. The various companies and long distances made matters such as communication, information flow, and working towards the same goal critical.

Technological subsystem All documents and drawings were stored in a common database located at one of the project’s geographical locations. For fast communication and distribution of documents and information, an electronic mail system called Memo was used. Drawings were not used for description of the mechanical and industrial design. Instead, threedimensional models were built in computers and saved as numerical files. These files were then transferred to the toolmaker for downloading into his numerically controlled machines. The only drawings made up were the place drawings r Blackwell Publishing Ltd 2003

used at the manufacturing plant for assembling the final product. Ericsson uses a project management method called PROPS3 for NPD projects. This model provides a common project view and terminology within the company. There is also a stage-gate system called the Tollgate model, which ensures that projects are initiated and accomplished in a business-oriented manner instead of a technicaloriented manner, i.e., it is not just feasible to develop the product, but it will also generate profit. PROPS also include many important activities and concepts for a quality system, for example, configuration management, audits and reviews.

Management systems The assignment was to develop a small, light, and industrially designed radio base station. The micro base station should complement existing macro base stations, which were large and heavy, and required a specially built footprint to be installed. The micro base station should be easy for one person to install on a wall or a pole. The main focus was to reduce site costs to ensure customer profitability of micro cell networks. Some ordinary requirements of the macro base station functionality, such as output power and number of channels, were relaxed. On the other hand, the new product should be less than 33 l. and weigh less that 30 kg, compared to a macro base station of 400 l. and 200 kg. Integration driven development (IDD) constituted the basis for the approach used in the Asterix project. Rather than trying to describe every interface in advance, and attempting to develop every part or sub product independent of each other, the approach was based on an ongoing effort to integrate all parts as quickly as possible. The alternative approach of describing accurately every interface of a system in advance was considered impossible. The IDD approach aimed to discover errors and mistakes as early as possible, allowing ample time for corrections. As such, the IDD approach provided small victories at regular intervals; victories creating a positive atmosphere and go-ahead spirit that kept up the pace in the project. The system alert was a forum where, above all, technical decisions were made. It consisted of R&D Management 33, 1, 2003

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Tommy Olin and A.B. (Rami)Shani members from each subproject and subsystem within the project. The system alert was not a place for long discussions, rather, for short presentations and decisions. The system alert had frequent meetings and when the intensity was high, meetings were held almost daily. One of the objectives by the system alert was to illustrate the degree of management interest. The system alert was not dependent on people being physically in one place, but was conducted via telephone meetings. The project newspaper was a one-page informational letter containing the latest news of interest for the project. It included problems or progress in the development, information and reports from the market, competitors, production or any test or verification performed within the project. It could also include general information about new routines, or a reminder of what had been agreed upon. The project newspaper was published by the project management and served as a mouthpiece. The stand-up meetings once a week were, aside from the project newspaper, the most important forum for keeping the project members informed about the project. The average meeting lasted a quarter of an hour and the project manager held the meeting, often inviting people from outside the project. A common set of values was defined early in the execution phase, as the need for a set of values to be shared by every project member became obvious. A set of shared values was compiled through discussions and reviews at seminars. Keeping the project-shared values valid required a continuous process throughout the whole project. The values included the following:  Openness and respect are prestige words within Asterix;  If one sub project fails, we have all failed;  Never disgrace a colleague;  Active information sharing and information seeking;  The receiver of a delivery is the one who owns the problem if the delivery gets delayed;  Deliver on what you have agreed;  It is fun to work in the Asterix project. The set of values created the context for collaborative work. By making every problem visible to everyone, all members of the project realized the challenge and tried to help each other 8

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as needed. As such, no one became the scapegoat. It was clear to everyone in the project that a hero does not just mind his own business, but is someone who helps others. This openness made it fun to work, even if there were difficult problems to deal with.

NPD phases, processes and outcomes At Ericsson, every project starts with a pre-study, followed by a feasibility study to evaluate different alternatives and to guarantee the business profitability for the product. This usually implies parallel work of different implementation alternatives. Asterix took a short cut and chose to go for only one alternative from the beginning, to save lead-time, which turned out to be very successful. Two months before the official start of the execution phase of the project, the first draft was good enough to convince the sponsor to allow an expense of several million SEK in diecast tools. Early in the definition phase, a dozen senior designers met for three days to draw the first draft. It was extremely important as the work for designing the die cast tools had to be ready early. Their mission was to present a first draft of the micro base station. The outcome was a paper and plastic 1:1 model of the final product that showed the proportions of the micro base station, including positions and sizes of all parts. To give everyone in the project a good picture of the final product, the outcome from the gathering was used to visualize the final product and overall goal. The mock-up made it very easy to explain thoughts and suggestions. Several plastic mock-ups were built and distributed throughout the project. Having mock-ups at each site made it easy to discuss problems and solutions over the phone. The mock-ups also made it possible for every new member of the team to quickly get a good picture of the final product. The plastic mock-up also made the project more understandable for people outside the project, and gave the project higher priority within the company. Also, almost all design work could start in advance, as every designer knew the size, functionality, and performance of his/her part of the product. r Blackwell Publishing Ltd 2003

Sustaining NPD in a dynamic environment Timing, attraction, and trust are three words that describe the recruitment process. The shut down of another project provided some initial resources to launch the new project. The fact that a new organizational unit was built made the project attractive, as it gave opportunities for people to embark on a new endeavor. A new organization also offered a pioneer atmosphere, which attracted many people. The management put a lot of trust in all project members, even those newly graduated from university. The best example of this was the hardware verification sub project. The manager, recruited from another Ericsson company, had vast experience. A second person, recruited internally, had experience from building and managing verification labs. Excluding these two persons, all others were recruited as university graduates. The Asterix project can be characterized as a project in which an accelerated-pace of integration took on new meaning. From the very beginning, the plan was to have several milestones where progress of the project was checked by an integration of all available parts for the time being (see Figure 2). The drive for an accelerated pace of integration increased work intensity to a new level. For example, to achieve TTM (Time To Market), the first castings had to be delivered seven months after the start. Through the normal process, it would take six months to design the die cast tools and another six months to produce them; hence, a new process had to be found. Instead of a single major delivery date, several delivery dates were set. An exception to normal practice was that as little as possible should be fixed at every delivery. Instead of having an output drive, by trying to deliver as much as possible at every stage, an input pull was used by letting the receiver define what was necessary to deliver.

As the toolmaker was very skillful, he quickly understood the needs, shared his ideas, and helped the team avoid many mistakes. This close and collaborative way of working continued until the time when the cast tool had to be hardened. When the first casting was delivered only a few weeks later than planned, the president of the foundry said: I really didn’t believe in this. I didn’t think that it was possible to design and produce a die cast tool of this size in just seven months. This must be the world record. The Asterix project managed to keep the time schedule, succeeding to keep the critical goal of TTM (Time To Market). Ericsson was one of the first telecom suppliers to include a micro base station in their product portfolio, which led to a large market share. This, in combination with relatively high margins in the beginning, led to a break-even point during the first year. After that, the product continued to do well in the market and the same product unit has successfully launched its successors. Regeneration and development of human resources were considerable. Being that a new organization was built, and all resources had to be recruited from other organizations, internally or externally, almost all project members were unfamiliar with either the company culture or the area of base stations. Many of the engineers also came directly from university, without prior experience in the industry or from a development project. However, the Asterix project succeeded to couple a few experienced engineers with the less experienced engineers in each team. Despite the fact that most of the project members were either very inexperienced or unfamiliar with the type of products, they gained

First die-cast cabinet delivered to the project

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First micro base station delivered to a customer Performance model Pre-serial model Serial model

Figure 2. Time Schedule for developing the new micro base station. r Blackwell Publishing Ltd 2003

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Tommy Olin and A.B. (Rami)Shani substantial knowledge in a relatively shorter timeframe than what was common in the company. The best example is the HW verification team. Not only did they manage to build a new verification lab and verify the product on time, but they also improved the verification routines gradually and have, to date, successfully reduced the verification time by one third. The team questioned the established routines and introduced more efficient internal processes and new routines for handling external partners, such as certification houses. A substantial number of project participants have been promoted to positions outside the product unit, thereby diffusing experience, knowledge, tools and methods to other parts of the company. For example, the new HW verification model was introduced as a business change process for renewal and learning in many other organizations within Ericsson.

Discussion All organizations can be understood from a sociotechnical systems perspective, but not all organizations are designed using the sociotechnical systems theory or design principles. The project members of the Asterix project were not familiar with STS theory. However, they used many components of the theory to control changes in the social and technological subsystems affected by changes in the environmental context. While analyzing the Asterix case, the STS theory provided lenses through which new insights were generated. Managing NPD in an environment in which future evolutions are hard to predict, and in which evolutions occur rapidly, presents many challenges. As such, the emerging NPD work place and dynamics must be of a special nature that is based on a delicate balance between order and disorder, intensity and sustainable work. Many issues can be discussed in this last section of the manuscript due to the richness of the case. Yet, due to space limitations, we have chosen to focus on five issues: the relevance of the proposed alternative framework; actionable knowledge creation practices; designing for flexibility in NPD systems; dynamic capabilities in the NPD process, and managing for sustainability in NPD work systems. 10

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Relevance of the proposed alternative framework The most obvious challenge is whether the proposed framework makes a contribution to the existing body of knowledge and practice on flexible NPD process. MacCormack et al. (2001) argue that the field lacks a holistic, integrative, theoretically based framework. Shani and Sena (2001) recognized the need for interdisciplinary, conceptual integration of contextual factors, management system factors, the NPD process and outcomes, and system sustainability. The description of the Asterix NPD project illustrated some of the interdisciplinary integration issues around sustainability. For example, the quick mapping of the environmental factors, the realization of the competitive threat, the fast assembly of resources, and the development of integration mechanisms are a good illustration of the interdisciplinary nature of integration. Instead of letting changes in the environmental context alone affect the social and technological subsystems in an uncontrollable way, the management team gradually changed the NPD process to affect the system in a controlled manner. Furthermore, the broad spectrum of the categorization scheme of the STS-based framework allowed the emergence of specific critical variables (i.e., feasibility study, visualization, and system flexibility) and of the road map to examine the Asterix project in a holistic fashion. From the case description, we can see that the development was more of an architectural innovation (Henderson and Clark, 1990) than a modular innovation, i.e. the different parts of the product were not affected very much, but were combined and integrated in a totally new way. Architectural innovation may cause problems for established companies, due to the way knowledge is organized in these organizations (Henderson and Clark, 1990). An established organization setting out to build new architectural knowledge must change its orientation from one of refinement within a stable architecture to one of active search for new solutions a constantly changing context. As long as the dominant design remains stable, an organization can segment and specialize its knowledge and reply on standard operating procedures to design and r Blackwell Publishing Ltd 2003

Sustaining NPD in a dynamic environment develop products. Architectural innovation, in contrast, places a premium on exploration in design and the assimilation of new knowledge. According to Henderson and Clark (1990), a fundamentally different approach, in which exploration and knowledge creation is prioritized, is needed to succeed with architectural innovation. Perhaps the fact that the established GSM organization was unable to develop the new product, and a new unit had to be built up, actually facilitated the work as the new unit did not have any preconceived opinions nor work routines.

Actionable knowledge creation The concept of usable or actionable knowledge is knowledge that can be used to produce action while, at the same time, contributing to a theory of action (Argyris et al., 1985, p. ix). Actionable knowledge creation may very well be done while solving practical problems. It seems to be an area that is attracting practitioners and scholars alike (Adler and Shani, 2001). In the context of NPD, and the increasing pressures to develop new ways of thinking about shortening development cycles, actionable knowledge creation needs to be revisited. Knowledge resides within the minds of individuals. Enabling mechanisms, such as ba, are likely to foster knowledge creation and the transformation of the knowledge created into action (actionable knowledge). The mock-up, made from the outcome of the early gathering of senior designers, contributed substantially to form ba as it helped everyone build a shared space for emerging relationships and knowledge creation (Nonaka and Konno, 1998). The proposed alternative framework provides a roadmap that highlights the importance of knowledge management as a key and integral management system process. Furthermore, the example from Ericsson illustrated that the emphasis on the creation of actionable knowledge helped the project move forward at a high and unprecedented speed.

Designing for flexibility in NPD systems Designing for flexibility is important when the environment is highly turbulent and detailed product specifications are impossible to obtain at early phases. As product specifications may r Blackwell Publishing Ltd 2003

only be feasible at later product design stages, it would seem, in these cases, that feedback planning is necessary. Verganti (1997) argues that a firm can plan ahead (i.e. feed-forward) to be flexible, such that late innovations and changes can be incorporated with minimal cost and time impact. Planned flexibility, then, is a synergy of feedback and feed-forward techniques. In the case description of the Asterix NPD project, we can see how the integration driven development (as a part of the management system in the proposed alternative framework) entails a design process that not only discovers errors, but also aims at late changes in the development process, as the product has to be designed in a way that allows integration of all parts before they are completed. The close collaboration with the die-cast toolmaker contributed to a new development process for the mechanical unit. Instead of completing the design work before starting the development of the tool (such that a detailed product specification is set in stone), they seized a more flexible approach, often finalizing the design at later stages. By delaying decisions, the risk of having to change the decision decreases as the knowledge needed to make the decision probably increases with time.

Dynamic capabilities in the NPD process Teece et al. (1997) point to whether a firm’s competitive advantage is eroded depends on the stability of market demands, and the ease of replicability (expanding internally) and imitatability (replication by competitors). In short, identifying new opportunities, and organizing effectively and efficiently to embrace them, are fundamental to private wealth creation. The example of the micro base station is an illustration of the importance of business intelligence and the ability to adopt competitors’ development work. In combination with the ability to build up a new development unit, we can see how Ericsson gained business success from being one of the first telecom suppliers to include the micro base station in their product portfolio. Keeping up with competitors and early introductions of new product concepts may be one result of dynamic capabilities that contribute to sustainability of the NPD. R&D Management 33, 1, 2003

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Tommy Olin and A.B. (Rami)Shani The lack of a heavy weight project manager, which according to Brown and Eisenhardt, (1995), correlates to successful projects, did not seem to have much influence. Perhaps there is a difference between implementation projects and innovation projects, where the former is more dependent on a powerful leader and the latter is more dependent on curiosity and the ability to find new solutions to many problems.

Managing for sustainability in NPD work systems The managerial challenge rests in the design and management of NPD such that sustainability can be achieved. This requires a large-scale involvement of the knowledge workers from the outset. At the Asterix project, the recruitment process stressed the expectations of total involvement in the work and participation in decision-making. Individuals were provided with opportunities and platforms to share experiences and to gain from the experience of others. People were given control of the design process and continuous improvement of the process. We can see that the Asterix project and its outcome contributed substantially in several ways to the long-term sustainability for the GSM organization within Ericsson. Business results, i.e. traditional economic performance indicators, increasing a system’s capability and flexibility to develop new products, regeneration and development of human resources, quality of working life for the employees and business change processes for renewal and learning are some areas that were influenced by the project and its outcome. Project members achieved a high quality of work life largely due to the frontier spirit, openness, regeneration and development of knowledge. The success of meeting all the frequent milestones strengthened the team’s morale. The team’s strength and the conception that every milestone should be used as an opportunity for celebration and social activities contributed considerably to the quality of work life. The most obvious contribution to the longterm sustainability of the GSM organization was the HW verification sub project’s remodeling of their work. This subproject consisted of only two experienced and some non-experienced engineers. Having ideas and curiosity allowed them to successfully remodel the HW verification process 12

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and reduce the lead-time considerably. Not only were their own activities affected, but also the activities carried out by third party certification houses.

Conclusion The quest to improve the NPD process continues to gain momentum in the fields of engineering design, marketing and management. The vast body of literature that has been published on product development and design documents the interest. For example, the most recent review of research articles is based on over two hundred citations (Krishnan and Ulrich, 2001). Yet, while the cross-functional product development research is increasing, the field lacks a coherent comprehensive guiding framework. This manuscript makes a modest attempt at such a framework. The proposed framework is anchored in a sociotechnical system theory and economic/strategic resource-based view theory. The nature of the proposed framework provides an opportunity to examine current NPD practices, as well as to identify new research opportunities. The proposed framework was utilized to examine the Ericsson’s Asterix NPD project and sustainability. A careful review of the literature reveals that no academic research can be found on the issue of sustainability in the context of NPD, nor about the tensions between the emerging NPD processes and sustainability. Yet, sustainability and organizational mechanisms that foster sustainability may be critical factors in explaining the long-term success in NPD. The lack of research on sustainability, and the possible interplay or cause-and-effect relationships between NPD and sustainability, may reflect an inherent difficulty in empirical measurement and testing. However, it is perceived as an area that can contribute substantially to our understanding of NPD and the firm’s long-term performance.

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