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Procedia CIRP 60 (2017) 374 – 379
Abstract
Due to the recent drop in oil prices and high environmental dynamism, organizations delivering in affected markets need to
identify ways to reduce time to market (TtM) and cost of non-quality (CONQ) of their commercialization processes, in addition
to pursuing and developing new markets. In order to survive over time, organizations need to manage knowledge for both
exploitation and exploration, utilizing existing competencies and acquiring new ones. This paper discusses the study of a
multinational organization’s commercialization process of two large and complex projects and their R&T/D (research and
technology/ development) and NPI (new product introduction) processes. The two projects are chosen as they represent two ends
of a continuum scale of exploration and exploitation. The first project relies primarily on new knowledge, capabilities and skills
and the second on existing ones. The data is collected through an exploratory case study based on observation of a two-day value
stream mapping (VSM) workshop conducted for each of the projects. In addition to the case study, the analysis in the article is
based on archive data such as emails, hour bookings from the organization’s ERP-system, technological and financial reports,
presentation material, and internal and external announcements. This article’s novelty is derived from the depth of the insights
provided in the case and the rich and detailed data gathered. The findings provide a review of the operational challenges and best
practices for reducing TtM and CONQ of the commercialization process in the context of advanced manufacturing.
© 2017 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license
© 2017 The Authors. Published by Elsevier B.V.
(http://creativecommons.org/licenses/by-nc-nd/4.0/).
Peer-review
Peer-review under
under responsibility
responsibility of the scientific
of the scientific committeecommittee of theDesign
of the 27th CIRP 27th CIRP Design Conference.
Conference
Keywords: Commercialization; exploration; exploitation; value stream mapping; advanced manufacturing; NPI
2212-8271 © 2017 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license
(http://creativecommons.org/licenses/by-nc-nd/4.0/).
Peer-review under responsibility of the scientific committee of the 27th CIRP Design Conference
doi:10.1016/j.procir.2017.01.039
Oda Ellingsen / Procedia CIRP 60 (2017) 374 – 379 375
New
performed by the same unit without specializing contains the Alliance
challenge of integration and transition. Brown and Eisenhardt Acquisition
[18] gave evidence that some companies were able to manage
Known
such challenge and others were not. The third approach is Internal Alliance
contextual separation, shifting from exploration and
exploitation, when the context requires the specific activity Known New
[14]. The challenge in such approach is that it requires skilled
and diverse individuals, in order to cope with the challenge of Exploit Technology
shifting between exploration and exploitation, and answering Fig. 1. Strategic orientation adapted from (Lavie et al., 2010)
contradicting requirements at different units. There is also a
question, whether one individual can possess both such Fig. 1 is based on Lavie et al. and their distinction of
divergent skill sets. The fourth approach is domain separation, different modes of operation; internal, alliance and merger,
specializing in exploration or exploitation and balance is and acquisition. The model describes how organizations can
achieved across domains. The challenging part of such make use of alliances to acquire new knowledge, when the
approach is the assumption that domains are not capabilities needed are new and the technology is known or
interdependent and the managerial challenge of assessing when the technology needed is new and the capabilities are
whether to explore or exploit in any given domain. Hence, known; or exploit known technologies to create new
there is no magic solution to balance exploration and capabilities or exploit existing capabilities to create new
exploitation and the most challenging part is not to separate technologies. Organizations should exploit internally when
exploration and exploitation, but rather to reconnect them. both the capabilities and the technology are known. Also,
The environmental operational conditions of a company will when organizations seek knowledge that require both new
determine the correct approach. capabilities and new technology the merger and acquisition
Balance can also be achieved across different modes of mode should be pursued.
operation, like internal organization mode where Understanding the consequences of exploration and
organizations explore and exploit in-house [13], alliance exploitation is important as they affect firm performance. He
mode where organizations seek collaboration with alliance and Wong [24] were the first to empirically test the direct
partners [9, 19, 20] and acquisition mode where organizations performance implications of the balancing hypothesis in terms
acquires firms holding complementary and related knowledge of growth rates. They found a trade-off in competing for
[21, 22]. Balance within organizational modes are challenged scarce resources and a positive effect on growth rates. Their
by conflicting routines, because exploration and exploitation study implies a limitation to the ambidextrous organization
involve different processes [15]. Rothaermel & Deeds [20] are derived from unmanageable tensions when exploration and
the first to apply and empirically test the exploration and exploitation are pushed to extreme levels. A dynamic balance
exploitation framework in the context of alliances. They point would allow and correspond to different balance points
found empirical evidence of a positive effect from an in the individual NPI projects and its different processes and
integrated product development path leading from exploration contexts. Jansen et al. [25] found that unit ambidexterity is
alliances, through products in development and exploitation more likely to increase performance when there are less
alliances, to products in the market. Unlike prior works, their centralized units, less unit resource interdependencies, and
study acknowledges the fact that exploration and exploitation more resource munificence. Lavie et al. [14] found a negative
can occur both within and through alliances. They also focus association with equal proportion of exploration and
on the dynamic aspect and demonstrate that exploration and exploitation within domains and a positive one for balance
exploitation are both consequential and interdependent, across domains and recommended specialization.
meaning that the positive effect of balance can be achieved
over time. In this way, the outcomes of exploration can be 3.Value stream mapping as a tool for efficient learning
exploited in later stages as well. However, their assumption of
operationalization of variables as the sum of alliances and The precursor section has discussed how organizations
products also represents an opportunity to provide more in- need to both create profitable growth and long-term survival.
depth insight of how such transition is solved in practice. This is achieved by reaching some form of balance between
Lavie and Drori [23] studied a similar issue—the knowledge exploration and exploitation. A decisive part in the process of
creation (scientific publications) and application (progress in transitioning from NPI to a fully commercialized product is
the commercialization of actual products based on the the ability to leverage and exploit new or existing knowledge,
publications). They found that the association between the providing efficient learning processes. VSM is a tool to
internal and external resources (collaboration) is collinear, increase a firm’s efficiency, and is typically used to identify
implying that too little or too much collaboration has a the transformation of information flow of raw material into
negative association and that internal resources mitigate both the finished product or service of a value, customers are
the negative and positive effects. willing to pay for [26, 27].
Oda Ellingsen / Procedia CIRP 60 (2017) 374 – 379 377
VSM is most commonly applied in manufacturing During spring 2015, the company performed a two-day
processes and plant layout optimization. Rother and Shook VSM workshop for each of the two projects with the objective
define a value stream as “all the actions (both value added to understand the NPI cycle in support of ongoing business-
and non-value added) currently required to bring a product wide strategic program. The workshops had participants from
through the main flows essential to every product: (1) the the following functions: senior executives; project managers;
production flows from raw material into the arms of the R&T; R&D; manufacturing; engineering; quality; purchasing;
customer, and (2) the design flow from concept to launch”. In and service. In total, there were 17 participants in the two
this way they also imply that VSM can be applied to a process workshops. At the time of the workshops, the NPI projects
from concept design to launch or commercialized product. had been ongoing respectively, 6y, and 8y and 4m.
Benefits of VSM are that it enables visualization of the
entire process, identifies flow decision, links between 4.2.Value stream mapping as a tool for reviewing NPI
operations and provides an as-is and to-be state map [27, 28].
Hines and Rich [29] outlined seven VSM tools and found that Within Rolls-Royce, there is an established practice to
managers reported that VSM was beneficial in eliminating perform VSM of different processes to identify bottle-necks
waste, focusing on key issues, and would continue to be and points of improvements. Using VSM is recognized as a
important in the coming years. Braglia et al. [30] applied tool to improve the efficiency and effectiveness of
VSM to complex production systems and conducted a case manufacturing and logistical processes. However, reviewing
study to assess the validity of their proposed methodology and more flexible and dynamic processes holds some novelty
found that it is beneficial in handling complexity. VSM not within the field of advanced manufacturing. The Marine
only highlights process inefficiencies, but also serves as an division has only recently applied VSM to its NPI processes.
excellent form of guidance regarding improvement areas for The leader of the workshop had experience from performing
organizations, hence providing efficient learning opportunities such type of workshop on NPI process from the Aerospace
[31]. division of Rolls-Royce. The VSM follows established phases
and routines. Initially, the workshop leader held lectures on
4.Methodology VSM as a Lean based-philosophy tool and Six Sigma
methodology aimed at eliminating waste and reducing TtM
4.1.Research design and CONQ. The specific methodology used in this case was
the SIPOC tool, which is an abbreviation for what a team
This study performs an exploratory case study of a should identify and evaluate during the VSM process. The S
multinational organization’s ongoing industrialization of two represents the supplier, I the inputs, P the processes, O the
NPI projects. The case company Rolls-Royce Marine (RRM) outputs, and C the customers. Subsequently, all the central
is located in Norway and has operations in over 50 countries. actors and functions in the NPI projects were invited to the
It delivers complex products and integrated systems to the workshop drawing up the timeline of the project with all
marine industry worldwide. Since organizations hold critical high level events and relevant outputs and
operational knowledge difficult to detect by solely reviewing information. The customers of each event and process were
the literature, this calls for case studies [32]. By studying and identified, and the processes inputs were also stated in
attempting to bridge theory and practice, the aim is to make a addition to its suppliers.
contribution to both domains, as argued by Van de Ven [33]. In the analytical phase of this VSM, the informant’s
As seen in the literature, there are several discussions and information was matched with archive data and finally, a
solutions on how organizations manage the balance of complete map of the value stream was provided together with
exploration and exploitation. However, less is known a report with internally oriented communication of the results
regarding how the balance processes develop over time and including bottle-necks, points of improvement, lessons
how companies manage the transition from exploration to learned, and best practices. This study’s analysis is based on
exploitation, from an operational perspective. The observations and field notes from participation in the two
multinational case company performs both exploration and VSM workshops and semi-structured interviews pertaining to
exploitation, internally and externally. For this case, two NPI central functions in the two projects. The author of this article
projects are chosen to give in-depth insights on the processes had no prior knowledge about the two projects, disregarding
and developments over time. The first NPI project is the the information provided in the invitation for the workshops.
permanent magnet tunnel thruster 1600 and 2000 (PMTT) and The analysis for the internally oriented report was based on
the scope of this project was to industrialize the permanent archive data such as, hour booking in the company’s ERP-
magnet (PM) technology for a range of 5 thrusters and it system; technology and financial business reviews;
relied on developing new capabilities, skills and knowledge. presentation material; announcements; applications; and other
The project was launched in January 2007 and the PM relevant technological reports. For this article’s study, an
technology was understood as proven technology. The second independent analysis was conducted based on the field
NPI project was the product E26, a new hydraulic valve observations and notes, the interviews, the internal report, and
function for several winch motors. The project was launched access to the organization’s archive data. The statements
in May 2009 and relied on known capabilities, skills and presented account the author’s interpretation, and do not
technology. The two cases were selected to project necessarily represent the organization’s views and
commonalities and divergence between the two NPI projects. perspective.
378 Oda Ellingsen / Procedia CIRP 60 (2017) 374 – 379
5.Findings and discussion physical layout. The R&D unit had limited skills in advanced
electrical systems. This challenge was solved by allying with
The main findings in this study is that interface between a partner with expertise in this field (alliance orientation). As
R&T and R&D becomes challenging when both the with the PMTT project, the E26 did not have the required fast
technology and product (capability) in new, e.g. evaluating make and development infrastructure, nevertheless both units
the maturity of technology, defining responsibilities related to were able to define successful solutions, providing valuable
demonstration and proof of concept, and defining early phase new knowledge for the company. The total value stream lead
requirements. R&T has the responsibility of validating time calculated was 6 years. Value adding time was found to
technological concepts (which includes; design concepts, final be 2 years and 6 months and waiting time was 3 years and 6
design and prototype definition and sourcing) and R&D has months. Important findings are the benefits of continuous risk
the responsibility of developing, introducing and assessment and maturity level assessment, reviewing lessons
commercializing the product (which includes: prototype build, learned, and establishing product ownership. In both NPI
prototype testing, installation and commissioning, manuals projects, there was identified a need for fast make and
definition and design optimization, and operational trial). development infrastructure. The importance of clarifying
The analysis of the PMTT project indicates that product launch, core functions, people and skills required to
challenges of transitioning from exploration to exploitation deliver a fully commercialized NPI became clear, highlighting
were related to three separate levels in the organization: the challenge of transitioning and integrating exploration and
interface between units, program management and exploitation. To summarize, the key delaying factors causing
governance, and overarching product strategy. In the early lack of value were:
development phase of the PMTT the two units encountered • Unclear interface between R&T and R&D.
different issues and separately received new funding to • Lack of sufficiently holistic; governance and program
resolve the issues. Since the two units operated independently, management, and product strategy.
this led to parallel activities and duplicate solutions. At the • Lack of established development/ fast make infrastructure
program management and governance level the two units had • Lack of specific commercial knowledge
at times conflicting performance measurements, thus missing • Lack of distinct separation of exploration from exploitation
sufficient initiatives to develop one common solution,
The best practices and valuable new knowledge are:
optimizing according to separate unit performance
• Successfully proven PM technology on PM TT1600 and
measurement. Requirements ensuring successful
2000; outlined a technological platform for the PM TT
industrialization were made in early phases when uncertainty
family range; a new supply chain to supply
were high resulting in several major changes, leading to
industrialization of PM has been established.
inexpedient allocation of resources and funding. The
• E26 project team has provided a successful design and
importance of including key functions, such as purchasing,
validation of a new control system for the E26 valve family
planning and control, in early stages became evident to secure
within the planned budget target. And a new infrastructure
product quality and reducing rework.
for fast make has been identified.
An overarching product strategy ensures that the
developments are in line with the company´s wider portfolio The debate in literature has been regarding how to provide
of business cases and introduction of similar and the correct balance and the implications of the balance.
complementary technologies. Such optimization will ensure However, little attention has been given to the management of
sufficient new functions (exploration) and correct unit cost the transition phase from exploration to exploitation from an
(exploitation). Since requirements (both from technological operational perspective, and complex organizational
and customer’s perspectives) evolve over time, re-assessing structures. This study provides insight into such processes and
the requirements continusly throughout the industrializing the factors contributing to lack of value in terms of CONQ
process will help improve optimization of product strategy. and long lead time. Secondly, the literature argues that
Integrating the marketing unit in early phases provide exploration and exploitation require distinctly different skill
valuable background knowledge for their production of sets, and this study provides additional insight into the
marketing material. interface between units. The results show that the exploitative
The total value stream lead time calculated was 8 years case, based on existing capabilities and new technology, made
and 4 months. Value adding cycle time was found to be 4 use of alliance orientation to achieve balance, and the
years and 11 months. Waiting time was 3 years and 5 months. explorative one used case acquisition orientation. This is in
The interface issues accounted for 71% of the non-value line with the framework based on Lavie et al.’s [14]
adding time. In 2013, the case company acquired a PM distinctions. It also supports that organizations should
technology provider (acquisition orientation). The analysis of emphasize one over the other and specialize across domains,
the E26 project, which had the objectives to develop a new related to the task characteristics. Finally, studying two
valve, revealed that introducing a new product that can be different types of innovation projects in-depth from NPI to
viewed as an exploitative activity also entailed explorative commercialized, within the same organization, has facilitated
activities, which became a challenge for the R&D unit a review of the challenges of transition from exploration to
processes, and the companies integrated product and process exploitation. This extends the understanding of the difficulties
readiness (IPPR). The key novelty of the final product is an providing insights into why some, or under which conditions,
advanced electronic system and a new mechanical and firms are able to achieve balance in line with Brown and
Oda Ellingsen / Procedia CIRP 60 (2017) 374 – 379 379
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I would like to express my gratitude and thank all the
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