Transitions in construction

Transitions in construction

Whatever you thought, think again.

Clients and supplier-led innovation

ResearchPosted by Dan Engström Fri, November 18, 2011 23:24:33

Way back when I still referred to systems-building as industrial thinking, ie about three weeks ago, I had the fairly daft idea that working internally (Department of the Interior if you will) would be sufficient. I thought that if we look at the market needs in general, we could successfully develop processes and products to suit that market. The idea was that though it would be innovative and a paradigm shift from market-pull to supplier-push but it would work. Well, deconstructing the concept of systems building changed all that. Those of you that read my post on systems building might remember the tentative three building-blocks of systems building: Processes, Products and Procurement. I called it Business model in the earlier post but it is really about procurement. Procurement. Pro-Cure-Ment. That’s Foreign Office stuff. It hit me like a ton of bricks: Our innovations will mean nothing if procurement does not allow for innovations devised by suppliers like my Department of the Interior buddies. It’s not rocket science this, I know. It's fairly obvious stuff, but as an industry researcher I do have some food for thought here.

It turns out that we’re not alone in being frustrated over briefs that won’t allow us to bring out the best of our company’s creativity and experience. Empirical evidence makes a strong case (ie it’s happening all the time) for the project logic being ill suited for clients to take decisions that allow for supplier-led innovation. And guess what? In March, I can prove it. Or at least, I know who can.

First let me state that what I am not saying. I am not saying that we do not innovate in our line of business. Because we do. All the time. Anyone who has used the Molly wall plug above (the one to the right) which requires three tools will appreciate the Driva plug (left), which requires only one tool; your power screwdriver. No drilling, no pliers, no screwing that long screw out only to then immediately screw it all the way back in. That is indeed an innovation. But it is in the small scale. What we’re looking for in this discussion is the capability of clients to implement innovations that affect the brief, on a systems scale. What can we expect when we enter the new paradigm of systems building and offer a product? What happens when the client is to take decisions concerning that? Before today, I couldn’t really tell you.

Well, we’re in luck. Let me tell you about my day and I’ll walk you through what I mean. At Luleå University of Technology, there is a tradition which I find very useful: the pie seminar. Most academic institutions probably have something similar. At a pie seminar, a group of peers and supervisors throw academic pies (comments, criticism, praise) at a doctoral candidate a few months before he/she defends their thesis. What you do is, you read the draft thesis and the papers and find the strengths and weaknesses and put them up for assessment and discussion in a seminar. The candidate gets a good assessment of the draft and the group gets to calibrate what type of material we consider constitutes good research.

Today, I had the privilege of being main pie thrower at the brilliant theoretician Susanne Engström. Her area of research is the construction clients’ role as decision-makers when it comes to implementing supplier-led innovation. Yeppur, the area I realised I need to learn more about. What a coincidence. In short, Susanne has looked at the mechanisms behind decisions for or against products that contractors offer. Like the sports facility I wrote about in an earlier post.

Susanne has worked with the theory of information processing and interpretation. She added interviews and case studies from systems building projects and is now in the process of documenting the work and the conclusions she has drawn. That’s where the pie seminar comes in. It provides her with a compass for the final few months.

Susanne points to a whole set of mechanisms by which we can understand clients decision-making for supplier-led innovation. For example, she explains and distingushes between lacking information (uncertainty) and interpreting information wrong (equivocality). I will not precede Susanne’s conclusions, but it will come as no surprise to anyone that in the project-based logic, new ideas have a hard time of it. For one thing, innovations can be expected to be valued in the old mindset. Research Susanne points to shows that this is what happens when you lack information; you use rules of thumb, which in this case are not applicable. That’s one reason for the status quo bias. Another reason that Susanne points to is the concept of anticipated regret. The consequences perceived from failing with an innovation are seen as more serious than the ones from failing with a proven solution. No IT manager will expect to get fired for choosing to invest in buying proprietary software with licenses, over adapting existing Open Source software – irrespective of the merits of the two choices. Again, empirical evidence supports this. I've been there, and it's likely that so have you. I picture how the discussion went.

“OK, so this tender suggests we … eh … hang on … here it is … that we buy their product which is half the expected price but with … erm … the following limitations to the brief … eh … Listen, John, I’m not sure I am confortable with contractors discussing the brief in their tenders.”

Right about now is when Better safe than sorry kicks in and spoils your day.

Let me give you one final brief glimpse of Susanne’s material, namely her description of the client she is studying. A simple sketch on a piece of paper made it all clear to me. Most of us will recognize this. Because clients are just like the rest of us. Really. On the level.

Above is the sketch that Susanne drew today from her own understanding of her material. Don’t hold it against her, it’s only a rough sketch she drew as we were talking, after I asked her to describe the client. I find the thoughts behind this sketch fascinating whatever Susanne decides to do with it. Bear with me here and I’ll explain why.

In this matrix, the horizontal axis is divided into individuals and organizations. The vertical axis is divided into project logic and systems building, aka process logic. This matrix shows four distinct positions, with clear demarcations between them. If you work at a big company, you will see the pattern. It’s all to do with the way we deal with information. Let me just give you two examples of the use of this mind-map to explain our reality. Individuals innovate in projects (bottom left) but the company has a hard time transferring the knowledge into the organization position (bottom right) to turn the individuals’ learning into organizational learning. The process thinking of a company (top right) may promote innovation but have a hard time reaching the local offices where projects are run (bottom right). Managers have a hard time reaching operative staff. There is no reason to suppose that this structure would not work just as well to explain the mechanisms for your clients as it does for your company. Or mine.

Susanne will defend her thesis at Luleå University of Technology in March 2012.

Images: Top: the Molly and the Driva wall plugs. Bottom: sketch pad. Both by Dan Engström, Creative Commons by-nc-sa. Middle: pie at Rackspace Q4 2007 Kickoff by picado photography, Flickr Creative Commons.

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