Inter-departmental collaboration: within new product development processes

Heerdink, E.M.T. (2011) Inter-departmental collaboration: within new product development processes.

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Abstract:Innovation is seen as very important by businesses all over the world. A crucial part of innovation is new product development (NPD). Inter-departmental collaboration is recognized as an important factor influencing NPD. However, inter-departmental collaboration seems to have costs and benefits that vary with conditions. An established firm in the purification industry, Acme, puts lots of effort in NPD projects. Especially Acme Alkmaar is performing many projects varying from incremental to radical innovations. The management of Acme Alkmaar indicates that the inter-departmental collaboration within some of these projects it not optimal. They want to know exactly where they have problems with collaboration and what causes these problems, so that they could effectively shape inter-departmental collaboration within their NPD process. The main research question that will be answered in this thesis therefore is: “How should Acme Alkmaar improve the effectiveness of inter-departmental collaboration within their NPD process?” Based on scientific research upon NPD processes, aspects of inter-departmental collaboration and project performance, a theoretical framework is composed. From that point, the research is split-up in two parts: (1) a portfolio analysis and (2) an in-depth case study with a cross-case analysis. Within the portfolio analysis the characteristics of inter-departmental collaboration, innovativeness, size and performance of the NPD project portfolio of Acme Alkmaar are described. This is done by studying documentation of 25 projects and by a questionnaire that is distributed among all R&D employees. The main findings are:  Acme Alkmaar switched their focus in the years 2008-2010 from incremental to radical projects. This is good for the long term performance of the company, but a risk for the short-term performance because the portfolio becomes clustered around high-breakthrough projects.  The number of projects continuously increases. This brings the risk that the innovation capacity becomes over committed. Key individual contributors are assigned to too many projects and managers do not have the necessary time to follow-up the projects.  In relation to the total amount of hours spent on projects per year, the projects become smaller in the years from 2008 till 2010. There is one (radical) project outstanding in size; project RD.3009. On this project, by far the most hours are spent every year  Most projects perform well according to the respondents. Incremental projects seem to perform better than radical projects but that is not significantly proven.  Inter-departmental collaboration takes place in more than half of all projects.  Inter-departmental collaboration does not hamper operational performance at Acme Alkmaar and inter-departmental collaboration is an important factor for the overall performance of the NPD projects (obtained from presentation Dries Faems, Acme 24-5-2011). Four specific NPD projects are selected for the in-depth case study on the basis of this portfolio analysis. The case study describes the current organization of inter-departmental collaboration within NPD processes at Acme Alkmaar and the way in which it could be more effective. The cases are studied upon the factors that are described in the theoretical framework. The information to describe this part is conducted from semi-structured interviews held with employees from different departments, by using [VII] ‘ Inter-departmental Collaboration within NPD processes’ At Acme Alkmaar the results of the portfolio analysis, by studying documentation and by observation. The departments involved in this research are: Research and Development (R&D), Marketing, Sales, Product Management (PM), Production Improvement and Implementation (PI&I), Engineering and Manufacturing. At the end of this case study, the four NPD projects are compared in a cross-case analysis on differences and similarities concerning the NPD process, different aspects of inter-departmental collaboration and operational project performance. The purpose of this case study and cross-case analysis was to find out how Acme Alkmaar can improve the effectiveness of inter-departmental collaboration within their NPD processes, taken into account multiple factors and influences. Different patterns in the NPD process and underlying causes are elaborated which led to a list of four ‘systematic mistakes’ in the organization of NPD processes at Acme Alkmaar. These systematic mistakes are: 1. The organization is too fragmented which leads to all kind of inefficiencies regarding to project team composition and the decisions making within the NPD process (especially in radical projects). 2. It is not known how to compose a project team and who should be stakeholders and when they should be informed/involved. For that reason composing a project team happens fully ad hoc and depends on the skills of the project leader. 3. There is lack of formalization within the projects, which has a negative influence on the information transfer within a project team and therefore on project performance. 4. There are two organizational constraints: accessibility restrictions and different budgets for every department. These constraints hamper inter-departmental collaboration within NPD processes. On the basis of this case study an answer can be given on the main research question of this research. It can be concluded that the effectiveness of inter-departmental collaboration within NPD processes at Acme Alkmaar can be improved by solving the systematic mistakes in the organization of NPD projects. To solve the systematic mistakes, the following recommendations are drawn: (an extensive elaboration of the recommendations can be found on page 82-85): 1. Restructure the Acme Alkmaar organization, so that the amount of departments and managers, and subsequently the size of the PDR, decreases. This can be done by taken departments together by discipline and let the managers of the main disciplines take all the decisions. 2. Use a protocol for composing a project team, so that the project teams fit the project. There must be made a difference in project teams for radical and incremental projects, even as ‘water’ and ‘beverage’ projects. Besides the involvement of the stakeholders needs to be set. The protocol for composing a project team can be found in appendix C. 3. Make formalization of a project mandatory and let the management ensure compliance. The management needs to communicate to all project teams that frequently scheduled meetings, a project plan including goals and a business case are mandatory. [VIII] ‘ Inter-departmental Collaboration within NPD processes’ At Acme Alkmaar 4. a) Partly remove accessibility restrictions. Members of a project team should be able to view data from other departments in their project team. To keep the information as protected and secret as possible and to make the inter-departmental collaboration more effective, the access to R&D data can be restricted to project teams that collaborate with R&D. b) Consider allocating budgets on a project basis. It is difficult to recommend how budgets need to be set at Acme Alkmaar because this part is not studied in depth. There are however several indications that inter-departmental collaboration is hampered or even fails because of budget problems. Therefore the management needs to consider budget allocation on a project basis. Implementing these changes will have consequences for Acme Alkmaar. The management as well as many employees need to get used to a different way of working (see page 85-86 for the specific consequences). This research has several implications for theory: (1) the results of this study are in line with the view of Song and Xie (2000) who stated that inter-departmental collaboration may not work in every situation. However, the organization of inter-departmental collaboration can be optimized, so that positive effects will be maximized a negative effect minimized. (2) During this research it became clear that the effectiveness of inter-departmental collaboration depends on multiple factors and is not necessarily assigned to the innovativeness of the project. (3) The results do confirm that there are different effects of collaboration between different departments, as pointed out earlier by Brettel et al. (2011), Swink and Song, (2007), Olson et al. (2001). (4) In line with the conclusions of Cuijpers et al. (2007) the overall effect of inter-departmental collaboration on Acme’s innovation performance appears to be positive. (5). One of the results is that inter-departmental collaboration, a cross-functional structure, is desired in all projects, which is in contrast with the findings of de Visser et al. (2010) whose results suggest that companies should apply a functional structure for incremental projects and a cross-functional structure for radical projects. (6) Where other authors used a firm-level assessment to study inter-departmental collaboration, this research conducted a cross-functional in-depth analysis on the project level and (7) the case study and cross-case analysis on the basis of the theoretical framework that is developed in this research, provides a supplementary to the existing literature about the effectiveness of inter-departmental collaboration. For as far as known, qualitative research to improve the effectiveness of inter-departmental collaboration within NPD process is not done before. Despite the contributions of this study, it is important to reflect upon its limitations that lead to directions for future research. In this study, the focus lays on projects in which inter-departmental collaboration took place. For that reason it is not studied if projects where no inter-departmental collaboration took place should collaborate to be more successful. Besides that, the study only focused on projects within Acme Alkmaar. For that reason it is not studied how other (successful) companies organize inter-departmental collaboration within NPD processes. A comparison with projects of other companies would be an interesting test to see where Acme Alkmaar stands at this moment, but it would also provide a broader insight in the effect of inter-departmental collaboration on project performance. An in-depth research to the way in which the organization can be best structured or how budgets need to be set exactly is not performed in this study. Scholars are encouraged to (1) study all the options for [IX] ‘ Inter-departmental Collaboration within NPD processes’ At Acme Alkmaar restructuring the organization, so that the amount of departments and managers decrease, (2) study all the options for appropriate budget allocation, so that inter-departmental collaboration is not hampered, (3) and to implement the best option of both at Acme Alkmaar. Following this study, a logical next question becomes whether the implementation of the solutions to the systematic mistakes at Acme Alkmaar indeed have led to more effective inter-departmental collaboration and therewith increased project performance. Future research is needed to find out if other factors (environment, partners and/or institutes) possible influence project performance as well.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Business Administration MSc (60644)
Link to this item:http://purl.utwente.nl/essays/62654
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