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Using learning networks to help improve manufacturing competitiveness

Using learning networks to help improve manufacturing competitiveness

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Technovation 19 (1999) 373\u2013381
www.elsevier.com/locate/technovation
Using learning networks to help improve manufacturing
competitiveness
John Bessant*, David Francis
Centre for Research in Innovation Management, University of Brighton, Brighton, UK
Abstract

Innovation which requires the acquisition of new or improved technologies involves a technical and managerial learning process and it raises the policy question of how best to encourage and enable relevant learning. The absence or lack of experience in this domain is a particular problem for smaller \ufb01rms (SMEs) and for enterprises in economies in transition\u2014such as in the countries of the former Soviet Union or in eastern Europe. Successful technology transfer requires considerable management expertise as well as the availability of suitable solutions. This paper reports on one experimental approach used on a pilot basis in Romania to facilitate the absorption of \u2018new\u2019 manufacturing practices, which involves the development of \u2018learning networks\u2019 as an aid to this process.\u00a9 1999 Elsevier Science Ltd. All rights reserved.

Keywords:Learning; Manufacturing; SMEs; Soviet Union; Technological; Transfer
1. Introduction

Technological change is essential to the survival and growth of individual \ufb01rms and to the development of national competitiveness. However, organizational research and accumulated experience demonstrate that simply generating new ideas is not the same as making effective use of them\u2014the classical divide between \u2018invention\u2019 and \u2018innovation\u2019. This problem of tech- nology transfer is of considerable relevance to policy- makers and has led to an extensive range of policy meas- ures aimed at trying to \u2018close the gap\u2019 between avail- ability and actual use of new technology (Dodgson and Bessant, 1996).

Managing technological change presents a series of demanding challenges, of which four are particularly important. Firstly, it is not easy for a management team to have suf\ufb01cient understanding of potential techno- logies to take an informed judgement about which are likely to be appropriate. Secondly, investment in new or different technologies can be considerable and require major commitments of resources. Thirdly, there is a need to manage a learning and unlearning process. Lastly, the

* Corresponding author: E-mail: john6@mistral.co.uk
0166-4972/99/$ - see front matter\u00a9 1999 Elsevier Science Ltd. All rights reserved.
PII: S0166-4972(99)00025-5

acquisition of technologies is not the same as implemen- tation\u2014there have been many cases where the potential of a technology has not been exploited by a \ufb01rm.

Few \ufb01rms generate their own basic technologies. In most cases technologies are transferred into the \ufb01rm. Many dif\ufb01culties arise because technology transfer is not a simple transaction. Among many factors which render technology transfer complex and dif\ufb01cult to manage are:

\u00bcInnovation is not an event but an extended process

within an extended time line, which involves con- sideration of technological knowledge and \ufb01nance, marketing, human resources, strategic positioning, etc.

\u00bcTransactions in innovation are not always on the basis

of one \ufb01rm to another but often involve many \ufb01rms and may proceed through intermediaries. In particular small/medium-sized enterprises (SMEs) often require the aid of some form of \u2018bridging\u2019 agent or institution (Carlsson and Jacobsson, 1993).

\u00bcTechnology is a complex and multi-dimensional

\u2018commodity\u2019 involving both embodied and intangible knowledge, much of which may remain in tacit form. For example, a new manufacturing process involves hardware, software and knowledge about how to use it effectively.

\u00bcTechnologies are dynamic and develop in terms of
374
J. Bessant, D. Francis / Technovation 19 (1999) 373\u2013381

their functionality\u2014often with bewildering speed. It is necessary for frequent re-appraisals of technological progress and trajectory to be undertaken.

\u00bcInformation about innovations and enabling techno-

logies is not freely and widely available, especially for SMEs who may lack awareness and access to relevant channels of communication.

\u00bcUsers are often unable to articulate their needs or

de\ufb01ne problems rather than symptoms\u2014thus they risk being unable to specify which technologies they require for transfer, or acquire inappropriate techno- logies.

\u00bcTraditional models of technology transfer assume that

cost is the main factor accounting for diffusion. But studies of innovation adoption suggest that other fac- tors in\ufb02uence the adoption decision and that the role of subjective perception on the part of the adopter is important (Rogers, 1984).

\u00bcAs Voss points out, much of the innovation literature

neglects the question of implementation\u2014yet the transfer of complex new ideas into successful practice is often an extended process involving considerable learning and adaptation. (Voss, 1986; Leonard-Bar- ton, 1988).

These issues suggest strongly that successful tech- nology transfer requires considerable management expertise as well as the availability of suitable solutions. The absence or lack of experience in this domain is a particular problem for SMEs and for enterprises in econ- omies in transition\u2014such as in the countries of the for- mer Soviet Union or in eastern Europe.

Innovation which requires the acquisition of new or improved technologies involves a technical and mana- gerial learning process and it raises the policy question of how best to encourage and enable relevant learning. This paper reports on one experimental approach used on a pilot basis in Romania, which involves the develop- ment of \u2018learning networks\u2019 as an aid to this process.

2. Context for the project

It is worth brie\ufb02y reviewing the context in which this project took place. Romania, along with many eastern European economies is involved in a dif\ufb01cult transition process towards adopting market-based economics. Institutions are in a state of \ufb02ux, with many being forced to close while others suffer dramatic cuts. For those that remain, there is a major task of recon\ufb01guration, a process which involves not only scaling down and decentraliz- ation but, also, profound rethinking of the business prin- ciples under which they are organized and operate. Of particular relevance to our discussion are the following characteristics:

\u00bcManufacturing industry is, in general, very weak with

inappropriate capacity, outdated plant and processes and with an orientation towards large-scale mass pro- duction which is out of line with the world market trends towards global standards and micro-market customization with an emphasis on non-price factors.

\u00bcThere is a very low awareness of the importance of

marketing. The techniques of systematic market research are almost entirely absent. Moreover, there are inadequate funds for developing marketing skills and strategies.

\u00bcThe historic separation of R & D into institutes and

away from the operation of individual \ufb01rms has left companies without an internal dynamic and an unbal- anced set of \ufb01rm-level capabilities.

\u00bcManufacturing management is underdeveloped and

steeped in a tradition of \u2018command and control\u2019, appropriate for output-oriented mass production. In order to implement some of the \u2018new\u2019 manufacturing philosophies such as \u2018total quality management\u2019, \u2018just-in-time\u2019 production and cellular manufacturing there is a need to move towards alternative models of organization based on teamwork and decentralization. In other words, there is a requirement for re-tooling not only the physical plant and equipment but also the mental frameworks which underpin manufacturing organization and management.

\u00bcThe availability of the \u2018new\u2019 manufacturing techno-

logies, which include not only physical equipment but also such mental models, is limited and largely based on high-cost, short-term external consulting projects. Within Romania, the technology support infrastruc- ture (research institutes, universities, etc.) is suffering from transitional problems of a similar nature and lacks awareness or knowledge about many of the \u2018new\u2019 manufacturing technologies within the context of increasingly globalizing industrial change drivers.

The implications for Romanian manufacturing indus- try are that to develop a competitive approach consider- able learning will be needed along a number of dimen- sions. Table 1 summarizes some of the key challenges.

The prescription for moving to the right hand side of this table is well known and widely proven. Experiences in Japan, and more recently across the Western world, have demonstrated the potential of the new approaches to manufacturing. Also, it is now understood that much of the change does not necessarily involve high capital investment (Bessant, 1991; Kaplinsky, 1994; Schon- berger, 1995). For example, the \u2018lean\u2019 revolution owes much more to rethinking production organization and management than investment in new equipment (Womack and Jones, 1997).

For Romania, the challenge is to acquire technologies that are relevant, build on potential areas of strength, affordable and capable of being implemented. Even if a technology is available and proven, it will need to be

375
J. Bessant, D. Francis / Technovation 19 (1999) 373\u2013381
Table 1
Emergent challenges in developing manufacturing competitiveness
\u2018Old\u2019 manufacturing model
\u2018New\u2019 manufacturing model
Customized, \ufb02exible production (with a high degree of intrinsic
Mass production as dominant logic
quality) as dominant logic
Non-price factors\u2014quality, innovation, delivery, variety, design\u2014
Price is key factor
become increasingly important
Demand is homogeneous
Demand is fragmented and markets segmented
Scale economy based on large lot production
Economies of scope, based on small lot high \ufb02exibility production
Hierarchical command and control organization
Decentralized, team-based organization
Standard and quota oriented
Continuous improvement (CI)
Demand planned\u2014make to stock
Customer focused and order driven
Supply chains operate on arms-length and adversarial basis
Co-operative networks and high trust relations

absorbed and implemented within a particular context. This will involve managerial and technological learn- ing\u2014in acquiring new concepts, in experimenting with new approaches and in capturing and internalizing the knowledge gained. The remainder of this paper considers the underlying challenges behind developing such learn- ing and how the process might be underpinned by organized inter-\ufb01rm learning networks.

3. Learning matters\u2026

Learning of this kind is not a unique problem\u2014it is a truism that all organizations need to learn and change if they are to survive. Work by de Gies and others has drawn attention to the importance of developing learning capabilities and embedding them within the organization (de Gies, 1996). Survival is seen less as the adoption of one speci\ufb01c solution than a continuing process of match- ing needs and means by learning. Recognition of this need has led to growing emphasis on the concept of \u2018learning organizations\u2019 and on the mechanisms through which this capability can be developed (Leonard-Barton, 1988; Senge, 1990). One aspect is the possibility of gain- ing traction and support for the learning process through working with others in what we term \u2018learning net- works\u2019. Before we look at this it is useful to consider some basic ideas about organizations and how they learn.

4. How organizations learn

There is much discussion of learning in organizations, but we can draw out a number of common themes, including the following. First, learning can be viewed as a cyclical process (see Fig. 1), involving a combination of experience, re\ufb02ection, concept formation and exper- imentation (Kolb and Fry, 1975). Acquiring new com- petence in manufacturing will require activity in all four

Fig. 1. Kolb\u2019s cycle of experiential learning.
of the phases. This does not happen by accident\u2014the
learning process needs to be managed.

Full learning takes place only when the cycle is com- pleted\u2014thus much effort and activity in one or more quadrants may not lead to learning that is transform- ational. Commonly, organizations are preoccupied with experiment rather than re\ufb02ection\u2014but a lack of critical review (re\ufb02ection) may result in inappropriate and wasted efforts, or in reinforcing old approaches.

It is also important to recognize that learning is not automatic\u2014there must be motivation to enter the cycle. A problem in the Romanian context is the lack of exter- nal stimulus to change\u2014until recently the economy functioned in closed fashion and market-led signals about the need and direction of change were not received.

Firms often fail to learn because they are isolated and lack support for key stages in the process. Evidence sug- gests that learning can be supported by structures, pro- cedures, etc. to facilitate the operation of the learning cycle\u2014for example, through the use of external facili- tation.

A particular problem with learning about new techno- logies is that much of the knowledge which needs to be absorbed is not available in codi\ufb01ed form. Since effec- tive learning involves both tacit and formal components a key task is to capture and codify\u2014to make learning

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