From Product Projects to Platform and Knowledge Projects
From Product Projects to Platform and Knowledge Projects
The third consequence of the ongoing "design revolution" we will discuss is the re-focussing on research and preliminary project design after the focus in the '90s on product development
(Ciavaldini 1996; Cusumano 1998; Midler 1995; Charue-Duboc 2001). In line with the argument developed in the precedent paragraph, the idea is to develop an innovative "generic solution, proven concepts, platform investments" (Kesseler 1998) or a "semi-product" (Weil 1999; Lemasson and Weil 1999) that will be finalized and incorporated in a family of future product developments.
Managing such projects raises difficult and new problems because of the characteristics of the nature of the target (Lenfle 2000):
One of the major levels for
in project management is the clear identification of the goal that must be reached at the end of the project. In platform projects, the definition of the result is abstract and fuzzy, compared to the "clear" reality of the launching of a new product. In a way, such a project is by definition not finished. An excessive
raises the risk of a very contingent solution, which would be contradictory to the objective of
the concept to a large range of different products and markets.
Another difficult problem is the long-
nature of such predevelopment projects. This type of project often faces what we call a "hidden urgency" (Lenfle 2000). The effective commercial launching of derived products is far ahead in time. It is often more than ten years for an innovative component or technology in the car business and more than twelve
for a break-through concept in pharmaceutics. But irreversibility is created long before, at the beginning of the product development where matured solutions are required and the patents obtained.
The evaluation of importance of such platform projects also suffers a decision-modeling conceptual problem. Their value comes from an option-value reasoning (Kogut 1994), which is less developed and
in firms than the classical return on investment for product projects. Many economic works on real option themes insist on the systematic, bias favoring, short-term investment linked to oversimplified financial calculations.
Last but not least, such projects support a level of risk, which is significantly higher than a product development product. "Properly" closing or
an exploration track is important know-how for managing such projects. Never-ending up front exploration is one of the classical burdens of research departments, resulting in a detrimental resource scattering. But the classical myths about project management tend to assimilate a project stop with a failure of the project manager, and then do not
The Emphasis on Portfolio Management: Cross-Learning and Real-Option Market
innovation strategies call for a renewed interest in portfolio management logic as a specific level of analysis to take into account. In the 1990s, modern development project management as "heavy weight project structures" (Clark 1991)
integration and valuation of existing knowledge and energies into projects. The major challenge for
innovation strategies is to move from
on single projects, to global management of bunches and series of projects along innovation trajectories (Ben Mahmoud-Jouini 2000) or lineage (Hatchuel 1999) of products. The increase of risk level for each isolated project is another argument for focussing on portfolio management, as
in the pharmaceutics (Cooper 1998; Sharpe 1998). Last but not least, the increased allocation of resources to R&D and the strategic importance of innovative performance create new constraints in terms of communication on R&D projects portfolios.
This perspective emphasizes the multiple interdependencies and potential
of project processes, whereas the single management project view considers only the cash results obtained at the end of the projects. Such an approach focuses on:
Reconsidering the evaluation of individual projects with respect to the global portfolio, in terms of global risk and profit profile, continuity, and smoothness of expected
as consumption of spare resources.
Organizing the cross-project learning of technological aspects and market opportunities (Ayas 1997; Charue-Duboc 1999).
Considering the possibility of "trading", buying, or selling projects (
or partly) at different stages in their development. The relevant business model is modified to take into account the management of the R&D portfolio.
That last perspective forces us to reconsider the traditional vision of the R&D portfolio as a "funnel" to an image that we might describe as a "porous funnel" (Bayart 1999), leaving room for trading with other firms as shown in Figure 4.
The R&D Process: From "Conventional Funnel" Metaphor to "Porous Funnel"
The decisional framework for R&D management in porous funnel mode is significantly different from that associated with the conventional funnel, as Table 1 shows.
Comparison on the Decisional Frameworks of "Conventional Funnel" R&D and "Porous Funnel" R&D
Conventional Funnel Situation
Porous Funnel Situation
Resource allocation is based on sharing out a fixed overall budget (zero-sum game between projects)
The overall budget varies according to the decisions reached (nonzero-sum game)
Projects are evaluated according to defined corporate norms
Each project has an inter-firm trade value that may
from its value for the originating company
Gaining value from the project is based on the expertise of downstream sales personnel
Gaining value from the project is an ongoing activity from the outset and is based on R&D expertise
In that perspective, conventional analysis of project portfolios in a risk/attractiveness "bubble-diagrams" graphic (Cooper 1998) has to be reconsidered because the same project may be positioned at two very different locations, as is shown in Figure 5.
The Representation of Various Scenarios Associated with the Same Project in a "Bubble Diagram" Representation on Conventional Type
In Figure 5, at bottom right, the representation picturing internal development implies high risk and investment, while
large profits in the event of success. At top left is the assessment of the same project if value is
from it during development by means of a trade with another
firm. Specifically, the risk and the investment are smaller (because return on the project is immediate and simultaneous with the trade, and the other firm will complete the development), but the profit in the event of success is obviously lower (sale price plus royalties on any future sales for example).
Such an emphasis on a global portfolio management issue is not to be interpreted as a coming back to functional structures that pre-existed to the development of project management structures. It has to be
, on the contrary, as a new step in order to take into account, and if possible conciliate, the temporary and durable identities of the modern business society.
To conclude, the four above points raise important problems when the traditional project management approach is being implemented to support intensive innovation strategies. In this communication, we have indicated tracks to address these problems by referring to organizational and business
. Analysis of such issues appears a fruitful opportunity for
theoretical exchanges as for cooperation between scholars and
. The creation of research networks such as the International Research Network on Organizing by Projects (IRNOP) and PRAMECO help as the research currently under way with major European firms try to materialize this opportunity (A French research network on analyzing the ongoing transitions in R&D practices and
. It gathers researchers who share an interactive methodology in various scientific fields: organization and management, engineering, sociology, ergonomics, and cognitive psychology).