The Intensive Innovation Strategy Context: The Design Revolution Beyond Development Projects

The Intensive Innovation Strategy Context: The "Design Revolution" Beyond Development Projects

After focusing on product development processes, the ongoing "design revolution" reaches a new and more radical step in the 1990s. The performance achieved by development programs, as measured by the yardsticks of quality, cost, and leadtimes, is not sufficient to ensure competitiveness if the resulting products are not genuinely and radically innovative. K. Eisenhardt and B. Tabrizi (1995) and Brown (1997) found, when looking at the information technology sector, a new model for the innovative enterprise that explodes the traditional dichotomy between continuous, marginal innovation on the one hand, and rare, singular breakthroughs on the other. In this context, the boundary line between research and development becomes less clear. A similar statement can be made in the rather different contexts of mature industries like automobile (Weil 1999) or household equipment industry (Chapel 1996). In upstream industries like chemical and steel, the importance of innovation in French firms' strategies also grew considerably in the 1990s (Charue-Duboc 1998; Lenfle 2001) from the effect of two combined causes: on the customers' side, the accelerating pace of the more or less radical redesign of end products downstream is increasing the opportunities for the substitution of raw materials as part of the never-ending search for better compromises; on the competitors' side, firms from emerging countries get more and more aggressive on commodities markets as they catch up the occidental technological know-how.

Hatchuel (1998) formalized the principles of the "Design-Oriented Organization", which associate knowledge and product development management. On the same line, we (Ben Mammoud-Jouini 1998; Benghozi 2000) have identified the three processes that are at the heart of intensive, innovation-based strategies (see Figure 1).

Figure 1: The Three Components of Design Systems in Innovation-Based Strategies

• The company's strategy: How does it integrate innovation into its strategy? Is innovation a main or a secondary lever for action? Can signs of the dynamics defining the priority granted innovation be seen in changes in budgets allocated to it? How does the company guide the key processes for product innovation defined below? Are explicit structures in place for the management of portfolios of groups of skills and projects? And so on.

• The process whereby key skills are developed for input into the innovation process: not only research, but also learning processes within product development programs.

• The process whereby those skills are coordinated in product development management.

Project management is of course a key component of this design system. Figure 2 shows how advanced project management contributes to this global design system of the firm, as it was introduced in the firms in the 1980s and beginning of the 1990s for developing new products (Clark 1992; Midler 1993).

Figure 2: The Deployment of the Design System across Projects and Non-Project Areas

But the transition is still uncompleted within the two other levels (one and two). The importance of knowledge management is increasingly more evident as competitive advantage in product markets comes from more and more radically innovative products with development projects now being a shared competency among firms. At the same time, reducing lead-time and costs in development projects creates a situation where radical innovation and learning are rarely accepted by project managers, because of the resulting risks. Traditionally, depending on their activity, firms developed more on a knowledge-based pattern (typically pharmaceutical and chemical sector) or on the product development side (automobile). What is new now is the necessity to combine the two processes to succeed in creating a track of successive radical and valuable innovations.

How can we make project management fit into these new challenges? We will focus on four points that call for deep revisions in the classical project management paradigm:

• Managing learning and solidarity within risky projects

• From demand-pull projects to design-push projects

• From product projects to platform or knowledge projects

• Managing the learning externalities in project portfolios.