strategies; project portfolio management; lineage management; automotive industry ..... Director for International Operations sent me photos of the moment when we ... the Solenza in 2003 as training projects in preparing the new Logan model.
Implementing a Low-end Disruption Strategy Through Multiproject Lineage Management: The Logan Case1 Christophe Midler ABSTRACT This paper analyzes how multiproject management can build up and develop a low-end disruptive strategy. It is based on a deep longitudinal analysis of a case within the automotive industry, namely the Logan case developed by the Renault group. The results bring new insights into both the multiproject management and innovation strategy fields. On the project organizing side, it characterizes the complex and in some way ambiguous relations between the firm governance and the pilot project initiating the disruptive strategy. It formalizes project-lineage management as a way to expand the initial move into a diversified range of products and a multi-continent deployment, while keeping the key specificities of the pilot project. On the innovation strategy side, it demonstrates how disruptive strategy and organizational ambidexterity research fields can benefit from input from the project organizing domain.
KEYWORDS: low-end disruptions; innovation strategies; implementation of innovation strategies; project portfolio management; lineage management; automotive industry
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Published in (2013) Project Management Journal vol 44 issue 5 oct pp 24-35.
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INTRODUCTION On the empirical side, the importance of project management as key capability for implementing innovation strategies is evident. On the academic side, in the fields of organization and strategy, the notion of innovation has dramatically been growing in importance over the past decades, yet the project concept is still almost invisible in this stream. The omnipresent reference to March’s (1991) seminal “exploitation vs. exploration” contradiction, the “organizational ambidexterity” stream (O’Reilly, 2004), and the “dynamic capability” (Teece & Pisano 1994) stream develop general and rather abstract notions to characterizing the role of innovation in the firm’s dynamics. Moreover, the concepts for structural and contextual ambidexterity focus on the issue of coexistence of exploration and exploitation in an organization, but they neglect the problem of the transition from exploration to exploitation, which is very difficult and risky in the case of radical, disruptive innovations. One purpose of this article is to demonstrate how the project organizing academic stream could enlight this academic literature with rigorous and operational analytical concepts. The project organizing field has proposed patterns to analyze how projects and permanent organizations interact within innovation trajectories: from a firm’s strategy formulation to the creation of pilot projects, from project-to-project learning, and from project-to-permanent organization capitalization. If those patterns seem convincing, many processes need to be scrutinized theoretically and empirically to understand how such dialectic can proceed and what obstacles need to be overcome: How do pilot projects emerge within the organization? To meet its innovative challenges, what is the trade- off between learning and unlearning from the permanent organization that the pilot project has to achieve? How can the initial
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pilot project inspire others, considering inter-project learning is known as a key difficult issue? How can the permanent firm learn from this successive project track?. We will focus on these questions in this article in an inductive way, on the basis of a deep case study conducted by the author in cooperation with two colleagues (Jullien et al., 2013). The case, which takes place in the automotive industry, exemplifies a typical low-end disruptive strategy as defined by Christensen (1997). The initial vision was to attack the emerging country automotive markets with a 5000€ new car (about US$6000 at that time), a price that was 30% cheaper than all cars proposed by established car manufacturers in the world during that period. The case exemplifies many interesting characteristics that shed light on the role of multiproject management in a radical innovation move of a firm.
First, the strategy was conducted within an established firm of the automotive sector, the Renault group. The authors generally agree that disruptive innovation strategies are very difficult to implement in established firms and are generally implemented by newcomers and outsiders. The case then illustrates how heavyweight project management (Clark & Fujimoto, 1991) organizing can be an important capability in an ambidextrous organizational perspective. Second, the case’s brilliant and unexpected success is not only the result of the achievement of the initial pilot project, but much more the consequence of a sequence of following projects. Those projects built on the initial move through a diversified but cumulative and coherent deployment that generated spectacular revenues as assets for the firm. The analysis of this multiproject sequence will permit to characterization the cross-project management that succeeded to combine this diversified expansion while keeping the “spirit” of the initial project. We will characterize this specific multiproject management as “project-lineage
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management,” as opposed, for example, to “project-portfolio management” (Cooper et al., 1997; Fernez-Walch, & Triomphe, 2004). . This paper is based on a deep longitudinal analysis of the case, which took place between 1995 and 2011. The study was conducted in two phases. The first phase, held between 2005 and 2007, focused on the ex-post analysis of the initial pilot project, the Logan project. The second phase took place in 2010 and 2011 and focused on the analysis of the deployment of the lineage and development of the new “entry” division. In the first section, we present our theoretical background and research questions. The second section will present the methodology. The third section will present the case in historical logic—from the initiation of the strategic move to the implementation of the initial pilot project. The fourth section will come back to the lessons learned from this case, in the fields of innovation strategy and project organizing.
Theoretical Background and Research Questions The academic project organizing field has characterized the links between projects and the permanent organization departments in terms of learning and unlearning organizational processes. Ben Mahmoud-Jouini et al. (2000)
proposed a general model to articulate innovation
strategy, new product projects, and permanent departments of firms: strategy stimulates innovative projects that value, on the one hand existing knowledgs developed in permanent research as the marketing department of the firm; on the other hand, they build new knowledge that can be capitalized on in permanent departments through cross-projects and permanent firm learning processes. Along the same lines, Brady and Davis (2004)
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characterized the sequence by which pilot projects, other projects, and permanent departments interact to build up such new practices and knowledge from the specific context and target of the project, share this new knowledge within the project portfolio, and capitalize on it in permanent structures of the firm. Many authors have focused on the initial step in this sequence—the innovative pilot projects. Gemünden et al. (2005) show that in the case of radical innovation projects, it is important that projects receive social autonomy and are co-located, but structural autonomy (i.e., that such projects are structurally under the umbrella of a special permanent unit), does not contribute to project and innovation success. Salomo et al. (2007) showed that clear processes and goals are only helpful for low degrees of innovativeness; for high degrees of innovativeness they hinder project learning and result in lower project and innovation success. Gemünden et al. (2007) found that inward-oriented key roles of innovators, such as power process and expert promotor, show a negative interaction effect with innovativeness (i.e., the higher the technological innovativeness, the more negative are the impacts of these inward-oriented roles). On the other hand, the outward- oriented innovator roles, such as technological gatekeeper, relationship promotor, and the project manager who works closely with customers and suppliers demonstrate a positive interaction effect with innovativeness. Engwal (2003) has pointed out the importance of connecting the project with its context. Imaï et al. (1985) insisted that such innovative projects can be important means to unlearning existing best practices of the firm, a condition for implementing innovative strategic moves. Imaï et al. (1985) and Clark and Fujimoto (1991) formalized a model of project management, “the heavyweight project management model,” which is considered a panacea to managing new product development in mature industries. Patanakul, Chen, and Lynn (2012) have explored under which circumstances autonomous teams are the best choice for new product development. Based on a large sample study of NPD projects, they demonstrate that
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autonomous teams are more effective in addressing projects with high technology novelty or radical disruptive innovation. Lenfle (2008) argues that a distinction should be made between the various types of design situations for which different types of projects are suited. Lenfle identifies the management methods suited to the most innovative projects (i.e., exploration projects for which neither technologies nor customer requirements are known at the start of the project). He shows how these situations shake up traditional project management models and proposes five management principles adapted to this new situation. As pilot projects had been rather extensively studied, the emergence of such projects and the link with the firm’s strategies is far less analyzed. We will focus on this initial step in this communication. Compared with analyses of pilot projects, the project-to-project sequence is less studied. C. S. Fernez-Walch and Triomphe (2004) showed how different multiproject approaches reveal different types of integration between projects and the permanent organization. Cooper’s (1997) classic project portfolio stream adopts a static approach to linking strategy and projects. Strategy formulation appears as a preliminary step to project portfolio management. Projets are screened and managed through strategic lenses but the feedback of projects to a strategic vision is not explicit in the approach. Projects interact as competing for scarce resources allocated by the permanent organization, not by cross-project learning. Other authors, such as Prencipe and Tell (2001) and Soderlund and Tell (2011) focused on interproject and organization-project learning as key strategic capabilities for the firm. Chapel (1997), Le Masson et al. (2009), Silberzhan, and Midler (2008) have analyzed the dialectic process between strategy formulation and project sequencing in the context of a high tech start-up in its emerging phase. Cross-project learning efficiency appears as the key driver of the firm’s strategy. Silberzhan and Midler (2008) propose the “project lineage management” concept to characterize the cross-project capitalization process and characterize the difference with Cooper’s project portfolio approach. Project lineage management appears in this context
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as an important capability of the firm’s strategic agility. The concept of project lineage management was introduced in the context of a start-up. Is it still relevant for established organizations in a context generally studied by Cooper and his colleagues? That question will be the focus of this article. We will study the sequence from formulation of an innovative strategy to initiation of pilot project. We will then focus on multi-projects lineage management in the context of an established firm, the Renault automotive group.
Methodology This communication is based on a long term interactive research within Renault that allowed for the longitudinal study of a complete strategic innovation move—from initial formulation to implementation. The first phase, conducted between 2005 and 2006, was devoted to an ex-post analysis of the Logan project, through a masters’ thesis program supervised by the author when the Logan project director left upon the project’s completion (Baudino & Chahbi, 2006). The second phase, between 2010 and 2011, was conducted by the author with two other colleagues. The scope of this second research was enlarged to the perimeter of the whole Dacia “entry” line of car models, which had meanwhile been deployed from the Logan plateform to five different products: Logan (a sedan), MCV (an estate version), Sandero (a hatchback), Duster (a cross over), Loggy (a mini-van). The entire project team (approximately 15 people) was interviewed in the first phase. More than 40 managers were interviewed in the second phase—from the CEO and the two successive program directors, to all functional managers (engineering, purchasing, marketing, sales, production plants, logistics, costs, and human resources) in charge of the entry product line and in the various regions where the program was being deployed (Central and Eastern Europe, Western Europe, India, Maghreb, South and Central America, and South Africa). Interviews where recorded and those of the main actors where transcribed, validated by the 7
authors, and published in the research book, The Logan Epic: New Trajectories for Innovation (Jullien, Lung, & Midler, 2013). We had access to the internal documents and data produced
on the scope. Regular meetings with the program director helped to focus the research on key points and gather the data to analyze them. A final review addressed the confidentiality issue. Very few points were discussed, and essentially involved the product cost series that had to be expressed only in the percentage of the first project base, or the non disclosure of the operational margin of the program. Additional information was gathered in a doctoral thesis on the history of the renewal of the Dacia factory at Pistesti (Debrosse, 2007).
The Logan Epic The case history can be analyzed in three phases. The first phase shows how the pilot project emerged from the strategic vision. The second phase is the implementation of the pilot project, and the third is the deployment of the new project lineage following the initial one. From a Strategic Vision to a Disruptive Project: September 1995–March 1999 The strategy behind the Logan project was presented to the upper management of the firm by the CEO of the Renault group, Louis Schweitzer, in an autumn 1995 strategic meeting, during which the long-term plan for 2015 was presented and discussed. The global target was to make a significant growth step outside of the traditional European market on an unprecedented scale. The originality of the strategy was to deploy this internationalization through a poduct in a low price range product. “One audience member suggested that it would be useful for Renault to acquire a second brand. He was thinking about Delage, a top-of-the-range product. The scars we carried from 8
the Volvo era were still very present. I think I answered that I wasn’t opposed to the idea of a second brand but if we had one, it should be below Renault, meaning that we would be developing something at the entry level.” (Julien et al, 2013) The year 1996 focused on more urgent issues, and the strategic vision would only go a step further in the fall of 1997, when the CEO visited Russia on an official mission with the French President and visited the Russian Lada retailers that sold cars at that time for about US$6000 (about 5000€). Louis Schweitzer “came back with the notion that this was a good price level for a ’modern, robust and affordable car‘. This then became the three specifications that I established for our project’.(Julien et al., 2013) However, at the time, this vision was less than shared within the firm. Some scenarios are elaborated but they are squeezed in a dilemma of ongoing products, which were too costly to meet the required margin for a 5000€ sale or new redesign, which required major investments, and also inacceptable to meet the profitability target. Because the new product needed to prove its profitability, almost all the top executives at Renault (excluding the CEO) were skeptical or overtly hostile to the vision. The initial sales forecasts issued from strategic planning reflected this scepticism. Until the year 2003 (i.e., one year before launching), the first official forecasts for the L90 project was 60,000 vehicles a year at peak sales. As the CEO said to us: “I remember receiving (in 2004) 2005 global sales forecasts of 80,000 Logans and getting really angry, saying that I would accept nothing below six figures, and that it was silly of them to provoke me like this. 80,000 would have meant a failure. It was in mid-2004 that our Director for International Operations sent me photos of the moment when we first began showing the Logan in Romania. There were long lines in front of the dealerships. No one on the Executive Committee had expected that.”
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In fact, peak sales of Logan sedan approached 450, 000 vehicles in 2008 and global sales of the entry line product (derivated from the Logan sedan) approached one million vehicles in 2011, and the global sales of the entry product line derived from the Logan sedan were more than 15 times the original goal! With such skepticism, it took more than one year to convert the initial brief to an official project, the X90 project. A project director was nominated in March 1999, with a target that seemed impossible: designing a profitable car with a production cost 50% lower than the existing internationalized Renault product (already produced in Turkey), a global development investment cost 35% lower than the most economic project ever done at Renault and an industrial investment 44% lower than this same reference. Designing a Disruptive Project: March 1999–2005 Since the early 1990s the Renault group has been implementing heavy weight project management structures (Clark & Fujimoto, 1991; Midler, 1995). Such structures have had a key impact on the achievement of such challenges. The next step to implementation was the takeover of the Romanian Dacia firm after a long and difficult negotiation in the fall of 1999. This move gave Renault a low-cost production plant in Eastern Europe, the first targeted emerging market; however, the plant was far from meeting western standards in term of productivity and quality. Impressive changes had to be implemented to turn this “brown field” factory into a suitable opportunity for the Schweitzer vision. The project team then had a dual agenda: Designing and engineering the “5000€ car” with the Renault deparments in France, and setting up an efficient industrial unit as local supplier procurements on the Pitesti site in Romania.
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Figure 1 illustrates the main breakthroughs, explaining the success in meeting the variable production cost challenge. Four items seem paramount in achieving a systematic design to the cost-effective approach: local integration, product specification, carryover, and productivity gains. All in all, manufacturing costs were one half of what they had been on the benchmark vehicle.
Reference Product Productivity Carry Over vehicle simplification
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Figure 1: Breakdown of manufacturing costs (Source: Baudino & Chahbi, 2006).
On the design and industrial investment side, the achievements were also impressive, as demonstrated in Figure 2.
Reference vehicle
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Figure 2: Breakdown in design and industrial investment cost (Source: Baudinot, Chahbit, 2006). 11
The key investment-killing factors were on the engineering side: the systematization of carryover of low-cost solutions, a tight design partnership with suppliers, and the implementation of numerical validations, which minimized the costly full- size prototyping. On the industrial side, a systematic but unusual choice of a fully manual manufacturing process had dramatic effects on minimizing the investment costs in the new plant. To make this manual process choice efficient, a major renewal program was performed in the Pitesti plant to bridge the gap between a decrepit socialist conglomerate and an efficient plant in line with international standards in terms of productivity and quality. To achieve this renewal, Renault relied on two new Dacia vehicle launches, the SupeRNova in 2000 and, above all, the Solenza in 2003 as training projects in preparing the new Logan model. Figure 3 sums up the evolution of efficiency ratios achieved by the Pitesti renewal program.
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Figure 3: Dacia’s renewal program results, 1999–2005 (Source: Debrosse, Renault-Dacia). On the marketing side, the planned targeted market for the Logan was Central and Eastern Europe, where experts forecasted a significant development of the automobile market. In fact, the commercial launch of Logan in 2004 was a great success in Romania, as it appeared as a
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national rebirth and was heavily supported by the authorities; however, the original promise of the global Central European market did not materialize. The reason, which was ill anticipated, was that infrequent new car buyers were being recruited in the upper middle classes, whose expectations were more aligned with Western European consumers. For less affluent households, used cars offered an alternative widely preferred to brands such as the Dacia, which suffered from the double disadvantage of the region’s communist past and the fact that it was associated with Renault, a French, not a German company, known primarily for the Thalia, which also seemed to come from another era. This unwelcomed and unfortunate surprise called for a quick search for other geographical deployments. The Logan was then launched in Turkey, Algeria, Morocco, and Colombia in 2005 and those markets appeared promising. The question of whether the product would be launched in Western Europe, Renault’s core market, was a hot topic for a long time in the company. The marketing staff feared damaging Renault’s brand image and creating fierce competition between Renault and Dacia products. Finally, Louis Schweitzer announced the launching in the French market in the fall of 2004; one month after France, the Logan was launched in Russia. Following Schweitzer’s initial intuition, this became a very important project stage. The product was very well positioned on the market but here too, the initial plans had to be adjusted: Logan was sold under the Renault brand in Russia. “That was something that I had originally opposed since I only wanted to sell the Logan as a Dacia product. But I soon realised this wouldn’t work. The Russians didn’t want it and we couldn’t force them.” With this important change in marketing strategy, the Logan appeared to be a spectacular success in Russia, rapidly growing from 49,000 Logan in sales in 2006 to 60,000 in 2007.
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Managing the Expansions and Metamorphoses of the Initial Success of the Logan between 2004 and 2011 The initial Logan project was without doubt a success. This success paved the way for an expansion strategy that was spectacular: geographically, through a global marketing approach; and, in terms of product range terms, by designing a family of differentiated vehicles derived from the Logan platform. Figures 4 and 5 illustrate the magnitude of this expansion.
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Figure 4: The Entry line product expansion (Source: Jullien et al., 2013).
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Figure 5: The entry line geographical expansion. (Source: Jullien et al., 2013). With such an expansion, the project evolved from a marginal project to become one of the company’s main programs. The key question during this phase was how to shape this mutation and maintain the principles driving the initial project’s success while adapting to new contexts.
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Paradoxically, this dynamic of success based on the program’s deployment beyond its original aims did not simplify the missions of the people involved in its design and industrialization functions;on the contrary, it made them more complex and for the following reasons: 1. Certain design principles that had ensured the efficiency of the initial project found themselves at odds with the new necessities of deployment. Typically, the initial Logan had optimized the initial hypothesis of a single product on a single site. Now the goal was to deploy a diverse range worldwide. This raised several questions, including which initial options would be kept, how they should evolve, and what should be dropped. 2. The singularity of the product and target market helped to ensure the project’s convergence and facilitated compromises. The variety of targets and the subtle and heterogeneous positioning of entry products in different markets (translated by the semantic evolution from “low-cost” to “entry”) implied the incorporation of new constraints that might otherwise have been ignored. In turn, this raised questions about the best way of ensuring that the product maintained a clear meaning by seeking appropriate compromises. 3. Last, but not least, the initial project was quite uncertain, a precariousness that the project team turned into a strength by convincing people that it had to contend with unusual constraints. As it steadily “normalized” over the course of its deployment, these mobilization and persuasion levers started to fade, raising questions as to how to maintain a spirit of sacrifice (i.e., the need to make savings) with a program that was visibly in such good health. Along the same lines, the transgression of the firm’s best practices, which were a success condition for the initial project, were more and more questioned as the program had lost marginal status. And, of course, the fierce competition issues between the entry edition and Renault traditional’s range added a new dimension. 17
Such difficulties were overcome by the entry program management by adopting a projects lineage management, as defined by Chapel (1997), Le Masson et al. (2009). Lineage management is an exploration process of a promising valuable innovation field through a coordinated twofold expansion of knowledge (about markets or technologies) and products, in a bid to maximize continuous learning. The starting point is the dual nature of this expansion and the “generating concept” (Le Masson et al., 2009) underlying the lineage, one that defines its meaning without necessarily constraining it or setting limits. Lineage management is not simply a process of learning from one project to the next, which is generally assumed under the term of project to project learning, but a systematic and coordinated exploration strategy. The “5000€ car” was the first generative concept to drive the exploration of emerging countries markets, which is definitively a valuable innovation field. Then, the initial concept was expanded into the “entry” concept, which drove the additional work to new types of products, technologies, and customers. If the entry division could be analyzed today as a major cash cow of the Renault group, this was because it extended and amplified its initial success with a surprising range of projects, which ensured the entry program’s ultimate profitability. This was a multi-pillar, long-term learning process, associating ongoing changes in markets and products with the rationalization of industrial processes and the continuity of learning as a strategic focus. A key success factor here was the ability to maintain meaning and preserve the principles underlying various updating actions reflecting market contexts, products specificities, and regulatory opportunities. The entry program explicited six specific meta-rules (Jolivet & Navarre, 1992; Jolivet, 2003) to guide the expansions while maintaining the “Logan spirit:” Permanent and systematic exploration of new market opportunities. The program did not stop with its first success. Even as it exploited markets successfully, it still tried to build new ones, as reflected by the program director's comment that he never had any time to lose. The
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goal here was to constantly explore potential new countries, even when they were not initial target markets for the program. Identification of specific values to be highlighted in the new market . With the variant’s specific
unique selling points coming on top of the platform's generic competitive advantages; then by guiding new product design in a way that creates value only in these target areas; and continuing to cut costs on other features that should be the “bare minimum.” Clearly, there was a direct relationship at this level between the sums invested in the vehicle and the arguments that sales staff (or the advertising campaign) could use. All costs invested to add new features to this model created value for the customer. On the contrary, a “normal” car generally included a lot of costly functionalities the customer never asked for. Systematic pooling of technical learning, procurement, and so forth in the permanent and systematic design to create cost effort for all program products and factories, to maintain standardization effects and simplicity. The result was a permanent reengineering of the different products in the range, to adapt to the new expanded context: systematization of “design to logistics” for coping with the extended geographical production system; “carry across” and “retrofitting” to prevent the destandardization from new generation of products; and a “designing to variety” approach to limit the cost of the diversification of the range. Figure 6 shows how the program maintained the tight cost through the period of expansion.
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Cost at same product definition Impact of European norms Impact of product enrichment
Figure 6: Logan manufacturing costs evolution during the Entry line expansion. (Source: Jullien et al. (2013).
Speed of execution. When developing these variants to benefit from the effects of trends or temporary regulatory actions, which played out on a global chessboard. Fast and flexible industrial investments to test new market robustness. This kind of ongoing drillng was bound to encounter a number of surprises. The Logan's epic journey demonstrated to what extent expansion is characterized by initiatives falling short of their goals, and by strategic reversals taking advantage of unforeseen opportunities. Opportunistic, ex post facto use of the program's successes to take advantage of the kinds of often unforeseen circumstances characterizing the global markets. For instance, a
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vehicle designed for Russia sold like hotcakes in Europe and generated substantial margins there. These six meta-rules serve as the foundation of the entry program culture and are typical examples of entrepreneurial aggressiveness, which has been identified as a key component in corporate innovation culture (Lee & Peterson, 2003) as entrepreneurial orientation, as defined by Lumpin and Dess (1996) and Jeffrey and Covin (2012): “The key dimensions that characterize an Entrepreneurial Orientation include a propensity to act autonomously, a willingness to innovate and take risks, and a tendency to be aggressive toward competitors and proactive relative to marketplace opportunities,” (Lumping & Dess, 1996, p. 137)
Lessons Learned from the Case In this section, we will focus on three issues about the relations between disruptive innovation strategies and project organizing: How can disruptive pilot projects emerge from a disruptive strategy formulation? What are the relations between the disruptive pilot project and the permanent department of the firm? What are the specificities of multi-project lineage management approaches to innovation strategies? The Paradoxes behind the Emergence of Pilot Projects Christensen insists on the difficulty for established firms to perform low-end disruptions; on the contrary, they are very efficient in sustaining innovation strategies that fit their more attractive customers as the inside vision of excellence shared among R&D experts. The Logan epic appears to be an exception to this rule. The projectification of the firm appears as a key characteristic to meeting this challenge. Many academics insist on the necessary role of hierarchical support to make breakthrough innovation emerge in organizations (Burgelman, 2002), and the Logan epic is clearly a result of CEO Louis Schweitzer’s strategic vision expressed at the end of 2005. However, as 21
explained, this strategy was far from shared among members of Renault’s executive committee and, more generally, for the key players who could implement it (especially the engineering design department). In fact, in the ocean of skepticism and hostility, the Logan project emergence appears as a paradoxical mix of CEO support and its own precariousness and marginality. The initial target markets (Eastern and Central European countries) did not interest the executives who focused on the Western Europe countries. During the emergence phase of the project, other much more important strategic questions appeared on the firm’s agenda; namely, the hard productivity plan implemented by C. Goshn in 1997 and, in 1998, the big affair of the takeover of Nissan by Renault. As the first director of Romanian operations put it: “We were really lucky that no one believed in Dacia. Guys used to say to me, and are still saying, that I was taking unbelievable personal and professional risks, but I thought this was silly and didn’t worry about it. Very few people helped us because they had other things to do. It was the time of the alliance with Nissan. Planes leaving for Tokyo were full while we were heading off to Bucarest and Pitesti…” Even the people who were in charge of preliminary studies were experienced people but far from being managerial stars of the firm. As one of these pioneers said to us:
“Upon being appointed to the Logan project, the first thing you’d wonder is what you’d done wrong. People would try to reassure you but you’d still be tortured by doubt...” “Breaking the Rules” through Heavyweight Project Management In this ambiguous context, the success of the X90 project appears to be a confirmation of the importance of heavyweight project management in implementing disruptive strategies in established firms, as already stated by Patanakul et al. (2012). Such a structure was developed
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in the Renault group in the early 1990s (Midler, 1995). Autonomy was a key capacity to transgressing the firm’s best practices when those were not in line with the specific target of the project; this autonomy was based on various decisions. First, the team with people clearly sharing the project challenge. The initial chief development engineer staffed on the project had to be replaced after six months, because he could not perform such a necessary transgression of the existing general design rules. Second, as the project director said to us: “Building a compact and unified project team, with everyone working together at the St Quentin office, thus outside of the Technocentre. Our office hosted all of the different business areas as well as the project management teams and engineering subcontractors. This was a golden age for the X90’s project management.”
Third, the project team decided to outsource an important part of development to an external engineering firm, a Fiat subsidiary, which gave the project great autonomy from the inside engineering division. “Break the rules” rapidly appeared as the motto of the Logan team, which created a very efficient but conflictual context with the permanent department, especially the development engineering division. The Specificities of a Lineage Multiproject Approach to Innovation Strategies: Sequential Ambidexterity, Emerging Strategy, and Reverse Innovation The Logan’s starting concept had great potential—given its exploration of new markets and originality compared with the existing range—for technical learning. Its option value was clearly superior to what was achievable through the renewal of a traditional model, whose advantages and limitations would be easier to identify. Yet, it would also be wrong to view the whole of Logan's epic journey as something preprogrammed in the project's DNA. What was required was an ex-post facto management of 23
the project's initial deployment, one implying unforeseen expansion drives and significant revisions, all the while maintaining a coherent “spirit.” We have pointed out that the entry range and market expansion in many ways challenged the initial Logan project identity: Complexity increased because several cars are now being built on one platform; the family of cars has to fit the needs of various, heterogeneous country markets. We have identified the importance of generative concepts and meta-rules to solve these contradictions through coherently driving the expansions;’efforts and they appear as a key element of the entrepreneurial culture of the entry team. Over the course of its long history, Renault has often been at the forefront of innovative automotive mobility concepts; until the Logan case, however, the firm had never succeeded in deploying such a profitable project sequence from the initial pilot project. Academics have well pointed out the difficulties for established firms to implement low-end disruption strategy. Project lineage management appears to be a way of overcoming these difficulties by providing the opportunities of emergence and minimizing the risks. By choosing the more favorable geographical context for initiating the breakthrough, and progressing step by step on the product range as on the geographical deployment, lineage management succeeded in gaining credibility and then reaching targets that would have been immediately rejected if exposed initially in an explicit ex-ante strategic plan. This case illustrates how the lineage management concept can enlighten the temporal ambidexterity issue. Venkatraman, Lee, and Iyer (2007) and Gupta, Smith, and Shalley (2006) have distinguished between simultaneous and sequential ambidexterity. Lineage management is an interesting concept to analyse as operationalize the sequencial ambidexterity notion. An exploratory pilot project is followed by others that both have an exploitation dimension of the initial move and an exploratory dimension on new variables.
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In the same vein, the case shows how a deep multiproject analysis can enlighten the ancient and important theoretic fields surrounding the emergence of strategies (Mintzberg &Waters, 1985). Lineage management is a complex process that articulates an initial deliberate vision, variations due to autonomy in implementation, deep strategic reformulation from field feedback, and so forth. Finally, the global dimension of the firm appears here as an important capability to deploying the strategy. Using the world as a playing field for a trial-and-error, step-by-step strategy is one of the hallmark characteristics of the lineage. This is surely a major change in innovation strategies, which traditionally progress from the epicenter of the western market to progressively “trickling down” to more and more “exotic” areas. The Logan epic shows how reverse innovation tracks (a product initially designed and marketed for an emerging market, which later reemerges successfully in Western European market) can be also profitable (Govindarajan& Trimble, 2012).
Conclusion Innovation and project management are tightly linked in the empirical world; in the academic world, they develop in separated tracks. Through the emblematic case study of the Logan epic, we have tried to demonstrate how fruitful it is to articulate these two theoretical fields. Concepts such as heavyweight project management and project lineage management have been powerful analytical tools used to understand the organizational processes by which innovation strategies are implemented. In that sense, they can fruitfully complement general and often rather abstract strategic notions such as dynamic capability, ambidextrous organizations, and agility. On the other side, a strategic perspective is important to understanding how projects emerge and how they are related with each other and with the permanent components of the firm in a long-term perspective. Project lineage management appeared as an appropriate multiproject 25
approach to successfully conducting a low-end disruption strategy in an established firm and overcoming the difficulties well documented in the literature. Beyond this case study, further research is ongoing in three directions. The first delves deeper into characterizing lineage management processes and the associated organizational context. The second analyzes its implementation in other industrial contexts. The third focuses on building evaluation tools that take into account the lineage effect beyond the initial exploratory project. For classical decision tools, such projects are only high risk and low profit adventures. The Logan case demonstrates how a lineage effect, if efficiently implemented, can turn such uncertainty into highly profitable returns. Ongoing research will elaborate on the framework used to evaluate this potential and control its implementation.
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