Study of R&D process management in knowledge development

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STOCKHOLM, SWEDEN 2015

Study of R&D process management of knowledge development

ANGÉLICA V. GONZÁLEZ ARCOS

KTH ROYAL INSTITUTE OF TECHNOLOGY INDUSTRIAL ENGINEERING AND MANAGEMENT

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Study of R&D process management in knowledge development

ANGÉLICA V. GONZÁLEZ ARCOS

Master Thesis

Stockholm, Sweden 2015

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SWEDEN Academic thesis, which with permission of KTH The Royal Institute of Technology, is presented in public examination for the degree of Master of Science in Project Management and Operational Development. Monday, 24 August. 10:00 at Kungl Tekniska Högskolan, Mariekällgatan 3, Södertälje Faculty supervisor: Lic. Sven Antvik, PMP certified & IPMA first assessor Sandvik Coromant supervisor: Dr. Anna Hulting-Stigenberg, Principal R&D Expert, External research.

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Abstract

Innovation and knowledge development in global R&D organisations play an important role in today’s definition of corporate success and stability. Transformational offers are seen as the main responsible for creation of customers and discovery of new markets, positioning organisations in good competitive advantage. For this reason a well established management processes in global R&D organisations are of great importance, particularly the involvement of strategic management in early phases of knowledge development mean potential improvements in terms of strategic alignment and financial growth.

The aim of this study is to analyse new ways of working that would strengthen fundamental research activities, yielding innovation and corporate knowledge. This study includes a combination of qualitative and quantitative data and the study was performed in a single case company, with global R&D businesses.

Keywords: R&D management, KPIs, portfolio management, resource balance, process management, project management, knowledge development, technology development, selection criteria, technology readiness, strategy implementation, agile, stage-gate, hybrid process model.

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Acknowledgements

This thesis was made possible thanks to Marco Zwinkels who gave me the opportunity to carry out this master thesis at Sandvik Coromant. Special thanks to my supervisor at Sandvik Coromant, Anna Hultin-Stigenberg for her guidance, support and advice on the content of this thesis, as well as for sharing her experiences on "real world" matters. I would also like to thank Anna Hornström, Håkan Carlqvist, Johanna Strömgren and Sven Antvik who gave support guidance during this year of parallel PhD and Master studies.

Thanks to Per Gustafson, Markus Rodmar, Anna Karlsson and Mari- anne Sjölund Olsson for interesting discussions, tips and experiences. Many thanks to Åke Östlund and Helen Blomqvist for the laboratory guided tours, which gave me practical understanding of the fundamental research activities at the Västberga site. Thanks to Dulce Cadario and to the "Loppar group" for making my time at Coromant more enjoyable and inspiring.

I would also like to thank Ann-Charlotte Larsson former manager at Alstom-Power, and Takayuki Shimizu from JMAC Scandinavia for their ad- vices and guidelines on management techniques and methodologies. Thanks to all the people that kindly accepted my invitation for interview. You have made this report possible and have patiently taught and share your enthu- siasm and passion for science, research, cemented carbide and the world of grades and inserts.

My warmest acknowledgement to my family and friends who are al- ways there to give me your support and love.

Angélica V. González Arcos Stockholm, August 2015

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Acronyms

KD Knowledge development. 29

KDP Knowledge development projects. viii, 23, 31, 34, 35, 36, 37, 38, 40, 45, 55, 56

NPD New product development. 3, 14, 56

PDP Product development project. viii, 23, 31, 32, 37, 38, 39 SGM Steering group meetings. 32, 33, 36, 37, 38, 40, 41, 55 SOD Specification of demands. 34, 55

List of Figures

2.1 The standard 5 stage. 5-Stage-gate process Cooper (1990) . . . . 9 2.2 Technology development project (Cooper, 2007) . . . 9 2.3 Technology development project. Adapted from (Kahn & Prod-

uct Development & Management Association, 2013) . . . 11 2.4 Scrum interactions (Cprime, 2015) . . . 13 2.5 Hybrid model (Cooper, 2014) . . . 15 2.6 Risk assessment presented by George S. Day (Day, 2007) . . . . 19 3.1 Roles of the interviewees . . . 24

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4.1 KDP status and lead times (Months). Source: Project Office . . . 35

4.2 Results from survey on the frequency of hand-over from Knowl- edge development projects (KDP) to Product development project (PDP). Results correspond to 23 valid answers of 25 respondents. Values from 1 to 6 represent the likert scale values described in Section3.3.1 . . . 39

4.3 Knowledge development road . . . 40

4.4 Handover of knowledge development. Adapted from Cooper (Cooper, 2007) . . . 41

4.5 Results of survey with 23 respondents on the organisation perspectives of working outside the core area. The frequency is measure in a likert scale from 1: strongly disagree to 6: strongly agree . . . 44

4.6 Innovation matrix in the case organisation extracted from interviewees perspectives . . . 46

4.7 Innovation ambitions . . . 48

4.8 Results of survey with 20 respondents from 3 organisation perspectives. The proportion allocated was measure in a likert scale from 1: low to 6: high . . . 50

C.1 Frequency of working outside core areas . . . 71

C.2 Knowledge development resource normal distribution . . . 72

C.3 Handover from KDP to PDP normal distribution . . . 72

C.4 Handover from KDP to PDP normal distribution . . . 73

C.5 Knowledge development resource allocation . . . 74

C.6 KDP resource allocation, perspectives . . . 74

D.1 Position of projects in matrix, described further by Day (2007) . 76

List of Tables

3.1 Example of the triangulation matrix used in analysis . . . 27

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List of Tables ix

4.1 Description of project selection criteria found in the case organisation, Pros and cons adapted from (Wicht & Szajnfarber, 2014) 38 4.2 Gaps in the present way of working . . . 43 4.3 Suggested performance indicators . . . 52 E.1 Project selection methods: description byWicht & Szajnfarber

(2014) . . . 78

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List of Figures vii

List of Tables viii

Contents x

1 Introduction 1

1.1 Challenges in managing technology development . . . 2

1.2 Aim of thesis and research scope . . . 2

1.3 Limitations . . . 3

2 Process management of knowledge development 5 2.1 Dualistic view of R&D . . . 5

2.2 Process management . . . 6

2.3 Technology development projects . . . 6

2.4 Project management models . . . 7

2.4.1 Stage-gate . . . 8

2.4.2 Agile . . . 12

2.4.3 Hybrid . . . 14

2.5 Project portfolio management . . . 15

2.5.1 Resource allocation . . . 16

2.5.2 Innovation portfolio risk management . . . 18

2.6 Research questions . . . 20

3 Research approach and methodology 21 3.1 Research strategy . . . 21

3.2 Description of the case organisation . . . 22

3.2.1 Research setting . . . 22

3.2.2 Problem identification . . . 23

3.3 Data . . . 24

3.3.1 Data collection . . . 24 x

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CONTENTS xi

3.4 Study triangulation . . . 25

3.4.1 Qualitative data: Interviews . . . 26

3.4.2 Quantitative data: Surveys . . . 27

3.5 Validity and reliability . . . 27

3.6 Ethical considerations . . . 28

4 Case and survey analysis 29 4.1 Exploration: The fundamental research . . . 29

4.1.1 Strategic Networks . . . 31

4.2 Project management . . . 32

4.2.1 Project execution . . . 33

4.2.2 Project selection criteria . . . 37

4.2.3 Customised project model . . . 39

4.3 Portfolio management . . . 42

4.3.1 Innovation strategies . . . 44

4.3.2 Organisation strategy . . . 46

4.3.3 The right balance . . . 48

4.3.4 Risk & uncertainties . . . 50

4.4 Performance indicators . . . 51

5 Conclusions 53 5.1 Achievement of research aim and objectives . . . 53

5.2 Suggestions for future work . . . 57

References 59

Appendices 62

A Interview Guides 63

B Surveys 67

C Quantitative results 71

D Positioning of projects in risk Matrix 75

E Project selection methods 77

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Chapter 1

Introduction

Science and technology are nowadays key drivers for success and profit in global organisations. As globalisation continues, competition among technological companies has increased, market expectations are higher, and the constant change of organisations make the ability to innovate a key profit factor in today’s companies (Nagji & Tuff, 2012). In fact, billions of dollars are invested annually in innovation and technical development by large companies, (Case & Hackett, 2014), to ensure a successful management of the R&D business, resulting in attracting future clients and establishment as an industrial authority.

Successful process management of technology development ensures understanding of the technological needs, determination of the gaps in development or acquisition of technology, and the identification of opportunities for future expansion (Akhilesh, 2014). These activities are usually structured in matrix organisations, and more recently in network organisations that allow a clear understanding of R&D units’ workflow (de Bruijn et al., 2010).

In today’s projectized organisations, most R&D activities are carried out in form of projects with strict deadlines and goals, with various project models in which sometimes creativity and innovation can be undervalued and diminished by the weight of the company (Nagji & Tuff, 2012; Cooper, 2007). In addition, technology development processes become more ineffi- cient in organisations that hope innovations will come from core areas and stand-alone efforts that compete for resources, attention and recognition (Akhilesh, 2014; Cooper, 2013).

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1.1 Challenges in managing technology development

There have been many initiatives to increase performance and efficiency in R&D activities, such as implementation of lean methodologies and total management programs. However, the use of such tools and methods may impact the early-stage of new developed products and technologies. This is shown in the increased amount of product development projects focused on incremental improvements and modifications of previous products in the last decade, and therefore showing a lack of strategic resources for innovative products, focusing on short-term perspectives and gains (Akbar

& Tzokas, 2013; Cooper, 2013).

In addition, organisations’ processes directly influence the implementation of ways of working that promote knowledge and technology development. Thus, flexible processes that enable balance between the needed innovative work and the more operational development of the organisation are required (Nagji & Tuff, 2012; Grönlund et al., 2010).

Development of breakthrough products and expert knowledge is followed by uncertainty and high costs, which represent one of the biggest challenge in portfolio management of R&D organisations. Portfolio management allows executives to make R&D investment decisions (Cooper, 2013; Fragola et al., 2010), taking into account the customer needs and trends to fulfil the long-term goals of the organisation. The project portfolio of fundamental research may include technology development projects de- livering new knowledge, new technologies, new capability or a technical platform, as defined by R. Cooper (Cooper, 2007). They can be defined as projects in the early stages of technology readiness, from 1 to 5, and they represent the future breakthrough products, important for the long-term growth and profit. For this reason, most technology managers have to be able to make a clear assessment of the risks and technology readiness at the right time in the process life cycle (Mankins, 2009b).

1.2 Aim of thesis and research scope

The above described challenges define the aim of this thesis, which is to identify tools and methodologies that will help to strengthen R&D process management of knowledge and technology development. In particular, the identification of methodologies to increase the success rate of knowledge development projects in an R&D organisation which is integrated by prod-

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1.3. LIMITATIONS 3

uct management and fundamental research.

In particular, this thesis seeks to identify optimal ways of working at the early-stages of technology development as well as to identify practical guidelines and criteria used in its portfolio management.

1.3 Limitations

The work presented in this thesis has certain limitations. Initially the scope of the thesis is an analysis of the present and possible alternative ways of working in early phases of technology development projects and therefore the implementation of such methodologies is excluded from this study. In addition, the research is mainly based on one large corporation and therefore the results of this study cannot be compared to dynamics presented in small companies and/or start-ups. The theoretical framework of this study is based on technological projects and the strategical management methodologies used in such projects, this excludes other perspectives of New product development (NPD) such as idea management, production, commercialisation, between others. It is therefore contextualised within the

"fuzzy-front end" of NPD.

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Chapter 2

Process management of knowledge development

This chapter presents the theory in management of early-phase technological projects, taking into account the different processes and initiatives suggested for special projects involved in R&D divisions with dual perspectives. The last part of this chapter focuses on challenges of process management and key tools in project portfolio management of technology development projects.

2.1 Dualistic view of R&D

Nowadays companies must deliver high-value products within stricter time- lines and at low prices to be competitive and achieve the financial goals of the organisation. Out of eagerness to maximise financial profit, in the last decade an increased number of organisations have highlighted the need to implement successful production management processes in R&D, such as Lean, Six-Sigma, between others, to accomplish highly efficient processes in the development of new products. The efficiency gain has been evident, but such processes are not intended to effectively achieve innovative products. Therefore, the increasing demand for new and innovative products, provoked a change in the way of working of R&D, evolving to network organisations that enable internal cooperation and innovation.

Thus, the present R&D organisations face a double function-firstly, the ability to deliver new products efficiently at a low price, and secondly, the delivery of innovative products and exploratory knowledge, adding maxi-

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mum value to the customer.

This is what is known as ambidexterity, which is the capability to have a double function, in fundamental research, flexibility, risk taking and discovery, needed for new products (Emerging business), and the refinement, efficiency and optimisation of current product portfolio (Existing business) (Stetler, 2015).

2.2 Process management

Process management involves a set of management methods to increase efficiency, effectiveness and quality through practices and programs such total quality management, six-sigma, ISO 9000, and lean, to name some of the existing ones (Benner & Tushman, 2002; Bauer & Leker, 2013; Jedl- itschka et al., 2010). The implementation of such practices often includes the mapping, improving and adhering to processes. Even though the use of such practices in manufacture processes has shown proven benefits, and is in fact one of the 20th century management developments, the use of such practices in R&D has not been found consistent with the promised financial benefits, and it is therefore important to consider contingency ef- fects for short and long-term outcomes (European Institute for Technology and Innovation Management , 2003; Benner & Tushman, 2002). Several authors have also studied the relationship of such practices with technology development and innovation, and it is still unclear. Benner and Tushman (Benner & Tushman, 2003) argued that process management practices re- ducing variance in organisation routines and influencing selection of innovations enhance incremental innovation at the expense of transformational innovations.

For this reason, innovation and technological development requires flexible processes that enable both innovation and efficiency, there is a need for reconceptualisation of processes used in the present ambidextrous R&D organisations (Ng et al., 2015). One of the aims of this thesis is the study of optimal traits of process management that can make technology development projects more effective and efficient.

2.3 Technology development projects

By definition, technology is understood as the art of science, Everett M.

Rogers, defined technology as "the design for instrumental action that re- duces the uncertainty in the cause-effect relationships involved in achiev-

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2.4. PROJECT MANAGEMENT MODELS 7

ing a desired outcome" (Rogers, 2010). For this reason, technology involves the delivery of both tangible products and knowledge platforms about processes and methods.

Technology development projects are characterised by running fundamental research, science, basic research, and technology platforms projects which will lead to new product development (Cooper, 2013).

The tendency in the last 15 years has been to move to technical projects in R&D aimed for short-term goals with limited resources in order to generate product updates, and modifications driven by the process management methodologies described in Section 2.2. This shift towards more conserva- tive approaches have been promoted by the need of risk reduction. Man- agement of risks is coupled with allocation of resources in the "sure-bet"

projects, within the core-area of the organisation (Cooper, 2007).

Thus, optimal strategic management and leadership is needed to handle a balance technology development projects portfolio to both increase innovation and optimal risk taking decisions, aligned with business strategy.

2.4 Project management models

The project management model is a description of all activities and docu- ments generated in the different phases of a project. Its main purpose is to ensure a business-focused and efficient project management, resulting in high-quality project performance and shortened project lead-time (Engi- neering et al., 2011; Amit & Zott, 2012).

The following are the general phases that a project model includes, according to the project management standards (Engineering et al., 2011; Eriks- son Project Management Institute, 1999).

• A pre-study is responsible to assess that a business idea is technically and commercially viable, that will contain the expected and unex- pected requirements and needs of the customer. The business perspective of a pre-study is then to understand the risks and opportunities related to an idea and its alignment with the business strategy.

• The feasibility study is used to define the strategy of the project, set project goals, and plans for an optimal project execution and closure.

• Execution, the project is executed and it is handed over to the customer or receiver. In general it assures that the project is carried out to fulfil the requirements of customers and the organisation.

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• The closure is then a phase in which the experiences during the project are documented and lessons learned are communicated to the organisation. Therefore, this phase is key in providing learning experiences to the organisation and contributing to competence development for future projects.

In order to increase control and reduce risk, several initiatives or project models have been developed to fit the multiple organisation and project activities in different industrial sectors. In the following sections, three types of project models will be presented which have been used for technology development projects.

2.4.1 Stage-gate

The traditional stage-gate process was initially developed by Cooper, in the 1980’s to successfully design, implement and internalise idea-to-launch innovation processes for commercialisation. The implementation of this model lays within the area of new product development processes (Cooper, 2008). It consists of a number of predetermined stages and gates. The stages are composed of a set of requirements and best-practice activities needed for handing over the project to the next stage. Stages are also seen as a clear and defined set of goals with a certain purpose to be executed correctly.

Figure 2.1 shows the several steps suggested in an stage-gate process, aimed at traditional product development process (Business units) where well- defined projects with a set of stablished requirements and deadlines are used (Cooper, 2008).

The gates are usually meetings used to control quality, assess the technology readiness of the project, must meet criteria, and go/kill decision check points. In addition, a final decision is taken for delimiting an action plan for the next phase (Cooper, 2011).

Technology development stage-gate

The technology development stage-gate model initiates with an idea screen gate to proceed to a scoping or preliminary investigation of each project. A quick search and investigation is performed to result in a lower number of projects that will move on to stage 2 in which a business case is developed.

However, in technology development projects, the commercial perspective is not well stablished and defined for new products, particularly during the early stages of experimentation. Moreover, other requirements and

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Figure 2.1: The standard 5 stage. 5-Stage-gate process Cooper (1990)

analyses are needed, such as the customer benefit analysis, market analysis and others. Such analyses are not well fitted with technology development projects that aimed for new products in unknown markets and customers. Consequently, a new stage-gate model was developed by Cooper in which 3 to 4 stages can be used instead to support fundamental research dynamics, technology, and knowledge development. Technology development projects are characterised by high-risk and uncertainties leading to low technical success rate. Figure 2.2 shows the process steps adopted in many company’s projects undertaking fundamental research.

Figure 2.2: Technology development project (Cooper, 2007)

The main difference with respect to the standard 5 stages model is the in- clusion of the discovery stage for which innovation management is needed

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for idea generation processes as well as a support throughout the whole process. In addition, requirements such as business case and commercial analysis are removed from the model, in order to focus on the definition of the product properties and development of new knowledge.

This is to say that in the traditional 5 stage gate process all the gates are known, and all users can have access to clear goals and outcomes, while in the 4 stage gate model, all the gate requirements are unknown and they should be generated after each stage (Kahn & Product Development &

Management Association, 2013). In addition, the number of gates is an estimate at the beginning, and the stages only know what they should do next, not how it will turn out. It is also important to mention that even though technology projects are shaped in the form of stage series, it is expected to accept changes in deliverables due to technical limitations, scientific lim- its or different approaches needed. The selection criteria is modified since most of the go/kill criteria (such as net present value, and return values) used in the traditional stage model, will in most cases, kill new concepts due to high risk and uncertainties. Therefore in the new model, the selection criteria is composed by check list aim at assessing the likelihood of technical successes, the strategic alignment and impact, and the ways in which this technology could be delivered.

In this particular case, the different gates can be compared to the technology readiness levels used to assess the maturity of a new technology or invention (Mankins, 2009b). Cooper describes in his book (Cooper, 2011) the different gates and stages present in technology development projects and herein is presented a summary of them.

In general terms, during the discovery phase, it is assessed if the idea deserves any effort to be developed. In stage 1, theoretical investigations are performed and literature search is presented, this stage may not take more than 2 weeks and the activities included should result in a clear view of resources needed and possible competitive alternatives. In gate 2, it is discussed whether the idea merits technical or laboratory analysis or not.

In this gate, no commercial implications are requested since there are still uncertainties to solve. Stage 2 should last 3 to 4 months with one or two people working with experimental analysis, partnership networks and resource gaps. In gate 3, a more rigorous assessment is perform as it is the firs strong commitment to continue with in depth studies. The review committee in gate 3 may be composed by the CTP or VP R&D, senior R&D people, business development and heads of business units involved. An early involvement of future product owners is essential for the agility of

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the process. Gate 4 is presented as a gate opener to other new product de-

Figure 2.3: Technology development project. Adapted from (Kahn & Product Develop- ment & Management Association, 2013)

velopment processes aimed at designing producing and commercialising a new product. In this gate the results of technical analysis will be reviewed to determine the value, scope and application of new technology.

Figure 2.3 shows different elements needed in a technology development process. All technology processes are initiated by a project charter where the general requirements and scope are stablished. The technology review committee is mainly formed by technical representatives with some business and marketing personnel. Structured planning is based on the use of technology development scales, as well as performance tables so all members have a clear view of the technology being developed as well as the risk that it entails. Furthermore, the technology team consists of sci- entists and engineers doing the development work. The final element is the process owner who plays a coaching role throughout the whole process, ensuring that best practice methodologies are in use for continuous improvements (Kahn & Product Development & Management Association, 2013; Cooper, 2007).

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2.4.2 Agile

"Agile" is a collective term for methodologies (and practices) that have emerged over the past two decades to increase the relevance, quality, flexibility and business value of software solutions (Cooke, 2012). In order to accomplish the above, agile methodologies are adaptive, meaning that they wel- come change, in technology and requirements, by responding to feedback.

Fowler (Fowler, 2001) stated that an adaptive process is one that can give control over unpredictability. During the whole process, all activities are people-oriented, and hold the slogan of "people are more important than any process". In an agile method, people are the main drivers for success in the project. Therefore, the process in an agile method supports the development team. Furthermore, agile methods focus on face-to-face communication within the team and with the customer .

The agile manifesto containing the values and mindsets covered by agile methodologies are the following:

1. Satisfying "customers" through early and continuous delivery of valuable work

2. Breaking big work down into smaller components that can be completed quickly

3. Recognising that the best work emerges from self-organising teams 4. Providing motivated individuals with the environment and support

they need and trust them to get the job done

5. Creating processes that promote sustainable efforts 6. Maintaining a constant pace for completed work

7. Welcoming changing requirements, even late in a project

8. Assembling the project team and business owners on a daily basis throughout the project

9. At regular intervals, having the team reflect upon how to become more effective, then tuning and adjusting behaviour accordingly 10. Measuring progress by the amount of completed work.

11. Continually seeking excellence.

12. Harnessing change for competitive advantage.

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Scrum

Scrum provides a framework for business areas to identify and prioritise the work required. It is also used to increase teams commitment to the subset of priority items they believe can be delivered in each two to four- week iteration (or "sprint") (Cooke, 2012). Figure 2.4 depicts a summary of the scrum process and its implementation in Agile.

Figure 2.4: Scrum interactions (Cprime, 2015)

The main ideas behind the success of Scrum are two actions carried out at each sprint:

• The sprint planning meeting: takes place at the beginning of each sprint; this is where the product owner, scrum master and scrum team review, rank the highest priority items within the project, identified by the product owner, and agree on the sub-activities that it will imply.

• The sprint review, held at the end of each sprint, includes a demonstration of work completed in that sprint and a retrospective review of the work undertaken to enable continuous improvement for sub- sequent iterations. Scrum also encourages project teams to engage in daily stand-up meetings, short update sessions held each morning that enable the team to quickly review required work and address any hurdles.

The progress of the Scrum Team’s work is communicated to stakeholders through monitoring and measurement tools, such as the executive dash- board: a report that summarises the work within (and across) agile teams for easy progress monitoring across the department. The product backlog

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is a reporting tool that enables both stakeholders and project teams to mon- itor the progress of work against the agreed business requirements (Fowler, 2001).

According to Cooke (Cooke, 2012), agile methodology for project management involves:

• Technology generated in time-boxed iterations.

• Focusing on the highest business-value technical features in each iteration.

• Interacting directly with business users to confirm on-going technical usability, quality, relevance and business value throughout the process.

2.4.3 Hybrid

In the efforts to optimise process management in technology development projects, several authors have suggested the integration of benefits from both agile and stage-gate processes in a dynamic and creative process (Karl- ström & Runeson, 2006; Cooper, 2014). They can be seen as complementary to each other in the different phases of the NPD process.

According to Cooper (Cooper, 2014), a hybrid model agile/stage gate, shown in Figure 2.5, should outperform technology development stage- gate model with increased agility and discipline. In particular in those companies that develop both software and hardware. The use of agile in stage-gate is seen as a micro-planning tool in project management of the different stages involved in development and technical evaluation.

In fact at least three studies were found in which the use of a hybrid process was analysed in companies such as ABB (Asea Brown Boveri), EMW (Ericsson Microwave Systems), HP (Hewlett-Packard), Pharma, Toys, and other companies, have adopted hybrid models in their R&D units (Karl- ström & Runeson, 2006; Sommer et al., 2015; MacCormack et al., 2012), in which the performance outcomes have been increased substantially after its implementation.

In the cases described above the development of a hybrid models were initiated by the CEOs, most often during a crisis situation, adapting a top- down implementation. In the study of Sommer et al. (Sommer et al., 2015) some companies decided to modify their stage-gate model, by adding a

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2.5. PROJECT PORTFOLIO MANAGEMENT 15

Figure 2.5: Hybrid model (Cooper, 2014)

new gate. This change did not bring positive improvements since the company was still getting overruns and delays. The main reason for that is the absence of a cultural change, not driven by the stage-gate model. On the contrary, Agile methodologies include values, acceptance to change and knowledge sharing.

2.5 Project portfolio management

In previous sections, it was mentioned that one of the biggest challenge of process management is portfolio management. Therefore in this section the most important challenges in this area are discussed and the key tools used for reaching balanced project portfolio in R&D are described.

Initially portfolio management is formally defined as a dynamic decision process, in which multiple projects are simultaneously active. This process is also responsible for evaluation, selection and prioritisation of existing projects as well as future projects. Decisions are taken in different circumstances, e.g. periodic reviews of total portfolio, go/kill decisions of individual projects, and during the development of new product strategy as well as during strategic resource allocation decisions.

Two main challenges are the selection of the right projects and the resources that should be allocated within the project portfolio of technology development projects. Regarding the selection criteria, traditionally methods such as financial estimates, marketing and expected sales have been

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used as selection tools, however such tools cannot be directly applied given its high level of uncertainties and risks resulting in undervalued ideas and initiatives that could have potential for transformational innovation (Nagji

& Tuff, 2012).

For this reason such methodologies should be flexible taking into account the context in which the projects are been developed as well as the market and technology familiarity (Van Der Duin et al., 2014).

2.5.1 Resource allocation

Allocation of resources is a hot topic, if not the most argued, within strategic management. This issue comes up for discussion several times per year with no clearly defined answer. A well balanced portfolio is seen as a sign of success in terms of market competition, growth and efficiency.

Project methods

Project methods are used to select the best projects from a group of initiatives. In the review by Wicht and Szajnfarber (Wicht & Szajnfarber, 2014) on the selection methods used in R&D division at NASA, they assess the applicability of the following type of methods that they classified as:

• Non-quantitative

• Scoring

• Comparative

• Cash-flow methods

Non-quantitative methods are based on subjective opinion from the review committee to select which project to fund. Three main models have been found. The "genius award" method is based on the past success rate of the researcher, hindering new approaches and development of young researchers (Nagji & Tuff, 2012; Wicht & Szajnfarber, 2014). Another perspective is the benefit for the whole organisation as the "robustness" method which selects cross-cutting and high-value projects that are likely to generate the most profit for the entire organisation. The major advantage of these methods is its simplicity and easy application. However their main drawback is the lack of transparency.

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Scoring methods select projects based on a set of pre-establish criteria.

The project with the highest score will be founded. This methods is widely used and accepted by scientific community, the main advantage is that they are measurable, transparent, and traceable methods. However, it is not completely excepted of bias and certain degree of subjectivity.

Comparative methods compare several projects to each other to end up with a ranking system that will arrive to a prioritisation list. Lastly economic methods (Cost-benefit, NPV, ROI, IRR) are in charge to describe properties of the project in terms of economic profit in a certain period of time. This method is very difficult to apply in fundamental research in which exploration and knowledge development are the main objective(Wicht

& Szajnfarber, 2014).

There are no single methods that can be applied to give the best choice, in fact an overlap of several of this methods will give a better perspective.

One of the best ranked methods in their study was the scoring method in combination of some quantitative approaches.

Portfolio methods

Portfolio methods are aimed at selecting a set of complementary projects, rather than isolated good projects. Some of the goals in this area are value maximisation, development of a balanced portfolio, and definition of a strategic direction aligned with the business visions and to achieve the right number of projects. They are all very challenging for most executives and several approaches have to be taken according to the nature of the portfolio and the company innovation strategy, regarding new development projects.

The implementation of the strategy is shown in the actual allocation of certain amount of money into specific activities (Wicht & Szajnfarber, 2014;

Cooper et al., 2001; ?). The balance in project portfolio can be compared to the needed balance in a stocks portfolio with the right amount to stable companies and certain amount in high-risk stock, which will yield higher benefit.

• Qualitative

• Quantitative

• Optimisation

Qualitative methods, such as road-mapping, strategic bucketing, and heuristics, are the most often used in industry due to its simplicity. Quan-

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titative methods are based on financial concepts, for this same reason they are difficult to implement in an R&D organisation. However, in business units, they are widely implemented to certain degree of success. Lastly optimisation portfolio methods aim at finding optimal combinations of research projects within certain constrains. They are based on programming methods (Wicht & Szajnfarber, 2014; Hutchison-Krupat & Kavadias, 2015).

One of the most used and popular methods in fundamental research organisations are financial methods, strategic bucketing, bubble diagrams or portfolio maps, and scoring methods. Financial methods, if often used, very seldom represent the reality of the portfolio as most of the data available is incorrect. However, strategic (qualitative) methods are more effective and efficient in fundamental based research organisations. For in- stance, strategic bucketing, a top-down approach for resource allocation, divides research funding into fixed allocations (Buckets) prior the selection of projects (Wicht & Szajnfarber, 2014; Chao, 2008). An example is to split basic and applied research, so basic research is not disadvantaged by com- peting against other projects (Cooper et al., 2001). In addition, bubble diagrams such as the risk/return chart are among the most practiced methods to assess the probability of success and failure of products.

2.5.2 Innovation portfolio risk management

As previously discussed, innovative products do make a difference eco- nomically and competitively in an organisation and it is something organisations have strived for in last decade. Innovative products depend on the level of risk and challenges the company wants to take (Amit & Zott, 2012).

In addition, several authors agree on that decision making greatly af- fects the innovation level of an organisation. Generally, it can be defined three main levels of innovation, the enhancement to core areas, adjacent opportunities and ventures into transformational areas (Rogers, 2010).

The decision making situation is then directly related to risk management of the innovation portfolio. For that purpose, the organisation first has to establish an innovation strategy, using tools such as the innovation matrix, also known as the Ansoff’s matrix earlier used to help allocation of resources among growth ideas. The balanced selection of these type of ideas/projects will enhance productivity and financial benefits in both short and long terms.

There are several tools that can be used, described below the innovation portfolio risk matrix, shown in Figure 2.6, the "real-win-worth it" (RWW)

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screen described by George S. Day (Day, 2007) and technology readiness levels (TRL).

The matrix is seen as a tool to have a clear picture of where the projects fall in terms of strategy alignment and risk levels. The matrix is built up using a scoring system and calibration of risk to help estimate the success and failure rates based on how unfamiliar the project is to the organisation (x axes) and technology familiarity (y axes). The size of the bubbles represent the potential future revenue, within a time frame, and the expected costs for development depending on discussion.

Figure 2.6: Risk assessment presented by George S. Day (Day, 2007)

Every member of the review committee uses a scoring system independently and arguments its answers which will then be used as coordinates for the matrix. The score system can be based on a score card, such as the one suggested by Cooper (Cooper, 2007) based on five main areas: business strategy fit, strategic leverages, probability of technical success, probability of commercial success, and reward in terms of payback period and profitability. Other suggestions made by George S. Day (Day, 2007), are based on the different ambitions for an intended market and the degree of product application.

It is worth mentioning that the probability of distributions are not appli- cable for fast-moving customer goods. Additionally, the market is related to customers and not to geographic location. As a final remark, it is important

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to know that in his paper George S. Day (Day, 2007) does not distinguish between new to the company and new to the market as they are seen as overlaps to each other.

Technology readiness levels

Once the project has been initiated, additional tools often used in the subse- quent gates to assessment the maturity and viability of the technology are the technology readiness levels (TRL), which have been extensively used to assess and communicate the maturity of a technology development. It is composed by nine levels of development which are generally described as follows according to Mankins (Mankins, 2009b):

• 1-3 Research: Basic investigations, little to no experimental proof-of- concept, active research and design initiated.

• 3-5 Demonstration: Construction of a proof-of-concept, testing in different applications, rigorous testing.

• 5-7 Development: Simulations in environments that are as close to real situations. Functional prototypes, testing in real situations.

• 7-9 Commercialisation: Technology is qualified for working conditions and it is ready for integration with existing technology. First real operation.

2.6 Research questions

The research presented in this thesis aims at answering the following questions:

1. The main research question aims at answering how to strengthen the ways of working in knowledge development platforms. It is therefore needed to answer the following sub-questions.

What is the rate of success in fundamental research projects?. What is the uncertainty and the definition of risk levels?

How can be the resources allocated to have a certain balance within the fundamental research projects portfolio ?

How can the performance of fundamental research projects be measured?

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Chapter 3

Research approach and methodology

This chapter gives an overview of the research methodology used in this thesis. It provides information on the data gathering as well as its validity and reliability. As final remark, ethical issues are considered.

3.1 Research strategy

The study was conducted in form of a case study in a single company, Sand- vik Coromant product management and R&D. The selection of a case study has been reported as beneficial to gain in-depth understanding complex internal dynamics in a defined single case under study. The single case should then be studied its natural context and with a variety of methods (Johans- son, 2007).

The ontology used in this study is based on both constructivism and objectivism. Constructivism is characterised by the definition of phenomena existence independently of the researcher and objectivism defines a certain phenomena that is continuously developed by a researcher (Adams et al., 2014).

In the first methodology, constructivism, the epistemology used to develop a true is based on social interaction, this is through an interpretivism approach where an inductive methodology is initiated from observation and related to theory. In this study it is referred to qualitative information acquired trough face to face interviews and assessed by relationships to a thorough literature review (Campbell, 2000).

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In the second methodology, objectivism, the epistemology is based on positivism in which the main aim is to discover truth or reality in the case study. In this case a deductive approach is taken in which general information is related to specific processes within the case study and it is carried out by quantitative methods such as surveys, previous reports in which data is interpreted and related to certain phenomena.

3.2 Description of the case organisation

The main case company is the Swedish company Sandvik Coromant and the study was mainly performed within the division of technology platforms, part of Product management and R&D with about 600 employees.

Coromant is a developer and manufacturer of metal cutting technologies, eg: turning, threading, milling, drilling between others. Sandvik Coro- mant is part of the business area of Machining Solutions within the Sandvik Group with representation in over 130 countries, the annual investment in R&D is 3 billion SEK and has about 60 research centres globally. Sand- vik machining solutions has about 8.000 employees and has annual sales of 30.900 MSEK, the biggest contribution within all business areas of the Sandvik group.

3.2.1 Research setting

Sandvik Coromant is a market leader in metal cutting technologies and its strategy is to increase profitability and productivity in their products and service offering by understanding their customers’s demands and processes.

Increasing market competition has caused Sandvik Coromant to launch several initiatives aimed at increasing efficiency and balance within the short and long term strategic goals. For this reason, several change programs have been implemented in order to tackle reduced sales volumes.

The initiatives have driven several reorganisations in the last 5 years, being the present organisation structure in form of matrix with both functional and line management. The functional management is structured according to the physical parts of the tools when they are constructed completely.

The process model used in the company is based on the Stage-Gate model developed by Cooper (Cooper, 1990) and detail information and documentation about project implementation is well stablished.

Coromant R&D activities are defined by 6 principles: the voice of the

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3.2. DESCRIPTION OF THE CASE ORGANISATION 23

customer, front-end loading, broad approach, development teams KDP- PDP, and the learning organisation.

The last info-pack was presented in May 2015, and about that time the author initiated the present master thesis project, as part of the master pro- gram in Project Management and Operational Development. The master student was located in the company site in Västberga within the Technol- ogy Platforms division and made weekly visits to the main site in Sand- viken. This close interaction with the company allowed an in-depth understanding of the daily routines and dynamics of the groups located in both sites, also having communication and feedback from managers and team members. Simultaneously, the student was registered during the entire project to the school of Industrial Engineering and Management at KTH Royal Institute of Technology. Other companies such as the IT company 3, Alstom-Power, and the Japanese consulting firm JMAC, contributed with their perspectives on technology development projects.

3.2.2 Problem identification

In the last organisation report, the expectations for sales growth, price/value ratio and market growth were below the planed expectations. The order in- take was decreasing for most countries. These issues have raised significant concern throughout the whole organisation, calling for careful control of resources, a better balance in resource allocation, with focus on new ideas, aimed for strategic long-term gains. Part of the initiatives taken to identify internal sources of the above challenges were the analysis of the current project portfolio as well as the project execution within the organisation by the McKinsey & Company consultancy firm during 2014, its final report was released in May 2015.

As previously mentioned, Coromant is the market leader of metal cutting technologies and an increased competitive threat has shown the lack of market understanding and poor innovation management.

Part of the causes for these results are the structure and execution of KDPs, aimed for fundamental understanding and to serve as knowledge platforms for PDPs.

For these reasons, within the technology platforms at Product Man- agement and R&D at Sandvik Coromant, a process of rediscovering new ways of working for fundamental research projects was initiated. The ini- tial aim of this study is the identification of best practices within the process management of fundamental research projects, which can be contextualised

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within the TRL 1 to 5, and particularly in the low TRL to increase efficiency and productivity.

3.3 Data

In this report several sources of information were used, initially primary data was acquired in the form of semi-structure interviews and surveys within the case company. Secondary data was collected in the form of a thorough literature review using keywords such as process management, resource allocation, portfolio management and technology development. In addition to data from company reports, previous management studies and, bench marking analysis in which a former manager from Alstom-Power and consultants from JMAC were approached to gain insights from their experience on fundamental research project portfolio management.

The study’s stakeholders were chosen taking into account their role perspective and its contribution to development of fundamental research within Product management and R&D, shown in Figure 3.1.

Figure 3.1: Roles of the interviewees

3.3.1 Data collection

In-depth interviews were performed in a semi-structured fashion to gain insights on the stakeholders perception on fundamental research outcomes within the case company. In total, 30 interviews were performed within the following departments: Product areas (Milling and Turning), Technol- ogy Platforms, Business & Applications, and Digital and Intelligent manu-

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3.4. STUDY TRIANGULATION 25

facturing, as shown in Figure 3.2. Interviews were conducted at different locations, in Sandviken, Västberga, and Sheffield.

Questions were focused on knowledge development activities and therefore within TRL 1 and 5. The interviews were approximately one hour long with one researcher interviewing. Some notes were taken during the interview, but the main form of documentation was the sound recording intended for transcription as part of the data analysis.

Survey

Two surveys were constructed, one for stakeholders with expert perspectives and a second one for strategical management perspectives. Each survey was structured in form of Likert items, ranging from 1 to 6, being 1:

Strongly disagree, 2:Mildly disagree, 3: disagree, 4: agree, 5 mildly agree and 6: strongly agree. The surveys were used at the end of each interviews and the interviewee was asked to argument his/her answer.

Company reports

Complimentary information was taken in form of company report such as the last info-pack, a technical training book, and sections of the McKinsey study performed early this years in the R&D divisions.

Figure 3.2: Departments involved in the study

3.4 Study triangulation

In the analysis of the present study it was used, data, environment, theory and methodological triangulation techniques. By data triangulation,

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is understood as the use of several stakeholders answering to same questions in each group of stakeholders. As mentioned before, a total of 30 interviews were conducted, being 14 research experts, 14 strategical managers and 2 innovation experts. Environment triangulation was performed as three main company locations were involved in the interviews and surveys. A methodological triangulation is then stablished by analysis of results taking into account several sources of information, as was described previously (Section 3.3).

3.4.1 Qualitative data: Interviews

The analysis process followed in this thesis is initiated by description of data collected in the interviews and surveys. The process followed by the application of a functional categorisation fashion in which no filters were initially stablished to data found in the transcripts. This process was carried out by reading line by line all audio transcripts, and the codification was performed until no new data was found, reaching a theoretical category saturation. Subsequently, relationships within the codes were performed to later on generate general categories and subcategories. The categorisation/classification process enhanced the generation of concepts, giving place to a conceptual level of analysis.

1. Audio transcription

2. Identification of categories 3. Coding in subcategories

4. Allocation of content according to the triangulation matrix

5. Horizontal conclusive summary for each category and subcategory in the matrix

The relationship of concepts was performed by identifying the circumstances/context that surrounded the answers to interviews and surveys. In addition, the

consequences associated to these circumstances and their interaction within the different stakeholder groups, theoretical framework and reports, reflect- ing the different process conditions present in the case company. The identified categories were organised as is shown in Table 3.1.

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3.5. VALIDITY AND RELIABILITY 27

Table 3.1: Example of the triangulation matrix used in analysis

``^Categories````````

Source

Interviews Survey Literature Reports Location Summary

1. Knowledge development

• Ambidexterity

• Exploration view

• Building blocks

• Idea to project

• Execusion

• KD/KDP 2. Gaps in WOW

• Planning

• Adaptation

• Change

• Bureocracy Content not available due to confidentiality

• Strategy

• Midsets & Behaviours 3. Innovation management

• Core areas

• Outcomes

• Networks

• Experience

• Knowledge sharing 4. Project management

• Project model

5. Strategy implementation 6. Portfolio management 7. Success factors 8. Performance indicators

3.4.2 Quantitative data: Surveys

Results from surveys were analysed using the IBM SPSS statistics software.

The data was coded and analysed using non-parametric methods. Comple- mentary information on results and analysis is given in Appendix C.

3.5 Validity and reliability

The reliability of a study evaluates to which extent experiments or other measuring procedure yields the same results on repeated trials. It is therefore a measure of the tendency towards consistency of results given by repeated measurements. Validity is in general applied to a measuring device that does what it is intended to do. It is therefore an assessment of the use or application (Thyer, 2001).

The validity and reliability of the quantitative analyses presented in this report have been assessed by the Crobach’s alpha method, which is widely

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used to evaluate the reliability of statistical analysis such as surveys in form of Likert scales. The analysis was performed for each group of Likert item in the surveys resented in Appendix B. Giving the large spread and the lack of answers in some questions the Crobach’s alpha presented values between 0.4 to 0.7, which are above the acceptance validity limit. However, giving the various level of expertise and application areas, the answers from surveys cannot be taken as a generalisation of a particular group. For this reason, the respondents were asked to give arguments on their answers so that context was given.

On the other hand, validity and reliability of qualitative data was reach through data triangulation with several data sources and 30 interviewees included in the study. Thus giving wide perspectives and relationships with both theory and within the interviewees groups and locations.

3.6 Ethical considerations

Ethical consideration are important in any research context, to assure the integrity and transparency of results. In this study, ethical factors were considered before, during and after undergoing interviews and surveys. Be- fore the interviews an information document was sent to the interviewee in order to give him/her the possibility to prepare on the content/topic of the interview. However, interview question were not given in advance to reduce preconceived/prepared answers that could add bias to answers (Richards & Schwartz, 2002).

Confidentiality issues were also discussed both in the information document sent before the interviews and at the beginning of the interview, so that respondents would have the confidence to answer openly to sensitive information needed for analysis.

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Chapter 4

Case and survey analysis

This chapter presents the compilation of observations and analysis of the data in relation to the theory presented in Chapter 2. The research concen- trates on two groups of stakeholders: expert staff within division of technology platforms, and the second group consisted of line and product unit managers, both from Västberga and Sandviken. The gathering of empirical data for this research is based on a case study at Sandvik Coromant Prod- uct Management and R&D, previously described in Section 3.2, to allow an analysis of real issues within the context of the organisations’ developments, self-perceptions, and aspirations in which the context of this study is implemented. It should be appreciated that global R&D organisations are complex and that the context given of the case company is not an attempt to explain Coromant nor describe fully its operation or culture, but merely to place the study in context. The surveys and the interview guides for experts, managers and directors can be found in Appendix A and B, as well as the quantitative analysis of the surveys in Appendix C.

4.1 Exploration: The fundamental research

For most of the interviewees, the concept of exploratory knowledge is understood as a hypothesis driven knowledge development, originated from an idea with certain degree of theoretical fundament which initially has not defined goals and procedures for how to be performed. Knowledge development (KD) contributes to fundamental (exploratory) understanding, searching for solutions. Other respondents have defined it as the work and development that will replace the existing concepts. In this respect the main objective of the exploratory work is to fill knowledge gaps in the present

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production process.

"In my world exploratory knowledge is what it will replace our current offer. It is not a step by step definition of what we sell today, if we make a typewriter, what would be the next step. In our case could be 3D printing, laser machining, that is the exploratory knowledge in my area. What will replace us?, later on we will be replaced, everything is replace at the end"

The exploratory knowledge generally starts with many ideas, taking a broad perspective within the six R&D values of Coromant. This approach is needed since at the end of the process, approximately 1 out of 100 ideas would be implemented in the final product after a serial of testing-improvement loops needed for a final product. Exploratory knowledge is therefore characterised by experimentation and performance evaluation of a certain ma- terial, geometry, chemical composition, etc. This process can last months or even years and will require many different ideas and their evolutions.

KD activities have an iterative nature and the main challenge in the organisation is to connect exploratory knowledge development with production processes. The above descriptions are well in line with the nature of technology development projects, introduced in Section 2.3.

On the other hand, testing ideas are not the only factor to consider. De- spite the fact that a trial and error approximation will give us knowledge, it will not suffice for the development of meaningful knowledge platforms.

However, in the present project structure at Coromant, KD activities are not formally included in the stage-gate process, and they are carried out under a KDP umbrella or as a side activity within the developing team members. Consequently, very few resources are allocated for fundamental research, and they are lacking rules and governing principles which hinder proper performance, delivery, and building corporate knowledge learnings, ultimately knowledge platforms. Nevertheless these situations are not general for all parts of the organisation, as there are cases in which permission is not expected from management to evaluate new ideas and it is, on the contrary, openly allowed and supported, as is shown in the following comments.

"If I get 100 ideas I will get done 5, and if most of them I do without asking about it. It is the safest way now. If you ask then you will be turned off. However if you do things without asking then you will get

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4.1. EXPLORATION: THE FUNDAMENTAL RESEARCH 31

the prototypes but they will not be tested, it is a hard environment for ideas"

"People ask for permission before doing anything. Here we just do it. We have a saying that "it is easier to ask forgiveness than permission". We test ideas without permission unless it is a lot of expenditure required. Management allows to do what researchers want, as long as scientist are careful and have good non-disclosure agreements, if working with someone externally"

In a more mature stage in knowledge development, KDP are responsible for development of knowledge building blocks (Knowledge platforms) used in different product units, milling, drilling, turning and solid round tools which carry out PDP. These building blocks are groups of concepts within research areas needed by the product units in order to develop and improve tools, services and applications.

4.1.1 Strategic Networks

Networking is a key factor for fundamental research projects, in which both internal and external partnerships and cooperations take place. In Coro- mant, external cooperation is highly valued in the form of representation in international associations, research centres, universities and customers.

In addition, it is a way to cope with low internal resources for exploratory activities. According to Grönlund et al (Grönlund et al., 2010), open innovation is a new trend in innovation in order to maximise return from new product development. Most of the exploratory work is based in partnerships making used of knowledge exchange from academia and industrial partners. On the other hand, internal cooperation is one of the drivers for new ideas and their further development.

"Here we do not have time really to do that, for testing and understanding, we might have time for test but not for understanding because you have to move on"

Internal networks are used to make the testing process easier, as well as for marketing new ideas or concepts. This is important to rise management interest in the seek for resources and testing time. Internal network is also important as part of a synergy process in which combined expertise increases project success. Internal cooperation should be based on trust

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and confidence in the other party’s expertise and knowledge. Previous experience also helps to increase researcher’s network which then can make easier their work.

4.2 Project management

This section analyses project management methodologies in the departments of study in terms of fulfilment of the organisation project management guidelines, e.g. project model, as well as by the frequency of knowledge hand-over to PDP. Aspects such as budget and time have been previously analysed in the McKinsey study.

In Coromant Product Management and R&D, a well-established stage- gate model is implemented, particularly from TRL 3 when more information can be compiled in a knowledge initiative. The presentation of a knowledge initiative to a review committee, the Steering group meetings (SGM) in charge of project selection and resource prioritisation, initiates the formal knowledge development process within the organisation. This structure of knowledge and product development, including review committees, team members, process owner and a project charter in form of knowledge initiative, can be linked to the project management structure of technology development projects described by Cooper, and presented in the literature review in Section 2.4.1. Even though the basic structure is the same, the requirements and processes performed in the current Coromant structure are close to the traditional 5 stage-gate model (Section 2.4.1), taking into account the opinions of the interviewees on this topic as well as the project manual.

The current knowledge initiative format includes the purpose of the investigation and the profit that the company may gain by developing a certain idea. However, the market and financial perspectives at this early stages are not reliable due to lack of information about market perspective and possible revenue, as is reflected from the interviews.

"When it comes to KDP, they are often originated from the identification of a need and then you have to validate the value of fulfilling this need and that is the business case. In some areas the need is ob- viously identified in a product, we would like to develop this product, and for that we need to develop this technology or this process, then you initiate a KDP initiative or a PDP initiative to fulfil that need"

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4.2. PROJECT MANAGEMENT 33

According to Cooper (Cooper, 2007), a more flexible knowledge initiative should be implemented where not financial assessment, and business case is requested, as is described in the 4-Stage-Gate model for fundamental research activities, introduced in Section 2.4.1. In relation to the literature on resource allocation (Section 2.5.1), Wicht and Szajnfarber (Wicht

& Szajnfarber, 2014) have also described the use of a business case in the exploratory phase as irrelevant and poorly constructed, giving great uncertainty of the data used in this kind of analyses.

In addition, researchers need not only to promote their ideas to the steering groups, but also to potential stakeholders and users of the idea. Com- munication of the knowledge initiative and get as much people on board as possible is the most important, as some expert opinions have shown:

"So you may need very good marketing inside the company, and that many people can understand the technology so that they can support the technology. The technical management and communication skills are the most important factors"

" To motivate the prioritisation of a project you need to explain why it is valuable for Coromant in our future business. Then you need to understand the organisation in a way, but we have been in many reorganisations..., so people in a decisions position are changing all the time"

It is therefore implying the key role that technical management and leadership skills play within team members and SGMs. Interviewees have also described the benefits of the SGMs, giving the process certain structure and guidance; however, due to several re-organisations there is no continuity of the people under decision-making positions, adding to the instability and confusion surrounding the process.

4.2.1 Project execution

The level of execution of the current project model is very low within knowledge development activities, taking into account that it does not represent the flow of activities performed in fundamental research, it does not account uncertainties present at these stages, and the lack of information such as industrialisation and second field testing, stock building etc. A general observation is that the closer the interviewees are to product development, the more positive view of the project model the interviewees had. Another