iasp 2011 full paper_convoy.v.2.7

8/14/2019 IASP 2011 Full Paper_Convoy.v.2.7

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The Convoy Model as a new glocal growth accelerator metaphorfor the economy in the next decade

Apart from a few very successful clusters around the world, most STPs struggle with developingcompanies into international growth companies. Possible explanations could be lack of the

necessary potential within the companies, lack of necessary assistance to prompt gaelle growthand secure internationalisation or unstable or unpredictable markets. This session will explore bestpractice in accelerating growth in high tech companies..

Author! "uan A. #ertolin, $hief %nnovation &fficer, espaitec Science and Technology Park of$astellon 'SPA%()

$o*authors! +erhard ensch '$-& ensch edia $), Paco (egre '$-& espaitec Science andTechnology Park of $astellon 'SPA%(), Antonio #arba '/icerrector Science and Technology Policies

"aume % 0niversity)

Executive Summary

For some 20 years, regional and city based innovation and economic development policy focused onclustering, based on Michael Porter's (1990 $ompetitive Advantage of (ations. !o"ever, there arestill those "ho are doubtful about "hether clusters foster economic development#

$n this article an alternative is proposed% the convoy model# &he evidence that clusters lead tosuccessful interfirm regional interaction is inconclusive# $s it time for a rethin)

$n the current economic climate, and bearing in mind the importance of creating ne" models tofoster the competitiveness of our *M+, it is necessary to redefine the model that has been "idelyimplemented, i#e# the luster Model# -e need a ne" model that "ill become the metaphor foraccelerated and ne" economic, technological and societal gro"th in the decade to 2020#

Convoy is a more powerful metaphor than cluster to describe a local economic developmentstrategy and is worthy of equal attention

Companies growth in high!technology environments" landscape

&he gro"th stage often re.uires ma/or changes in entrepreneurial strategy1# ompetition and othermaret forces call for the reformulation of strategies# ue to the rising of ne" and more substantialproblems than those the entrepreneur faces during the startup stage, a reorientation of the type ofleadership% from entrepreneurial oneperson to managerial teamoriented, is re.uired#

&he building of more dynamic capabilities for getting differentiation from emerging competitor is an

interesting challenge for gro"ing firms# &he movement to globaliation and more to glocaliation3concept (thining in global but acting locally re.uires also ree4amination of companies on theirculture, structure and systems to be adapted to the ne" challenges# 5o" it is the time to bring upessential elements such as innovation and entrepreneurial thining in strategies of gro"ingventures#

&hus, the transition from an entrepreneurial style to a managerial approach maes a difference inthe business gro"th process# &he ne" management approach "ill help to embed the company in aricher environment, "here different disciplines converge in a common "or streamlined "ithspecific fle4ible methodology that "ill be adapted to the dynamic change re.uirements to generatee4treme innovation (6trevation

1 +ntrepreneurships &heory, Process 7 Practice3 onald F# 8urato

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$f "e rely on the e4tended nsoff :ro"th matri4 "hich helps to decide business strategy in terms ofproducts and maret gro"th, "e "ant to focus on three specific strategies related to theinteraction bet"een the company and ne" marets% #roduct development$ %iversification and&igh technology#

Fig#1 +4tended nsoff :ro"th matri4 (*ource% ;ulfan


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Cluster model perspective

&he notion of cluster to refer to business and economic environments has been around since thebeginning of the 1990s, since PorterBs (1990 The $ompetitive Advantage of (ations, but theunderlying concept of agglomeration economies "as familiar to economists as early as the 1C90s,"hen it "as evident in the "or of lfred Marshall#

&he cluster, defined as a Dgeographic concentration of business initiatives, suppliers and associatedinstitutions in a particular fieldB has played an important role in enhancing firmsB productivity#lusters have enabled member firms to achieve important competitive edge in national andinternational marets#

Porter eventually opted for the luster model as a ey to promoting innovation in the target sectoror stimulating ne" business initiatives and "ith this vision a myriad of clusters have been created indiverse areas of e4pertise% biotechnology, $&, health , environment, etc# scattered geographicallyon the basis of the different values of each of them#

First, PorterEoften provides a list of elements in a cluster but can be condensed in four factor s%

1# Firms of a similar industry, its strategy and rivalry#2# *upply conditions (such as suppliers and e4tending to legal, technological, and consulting

services#># emand conditions (such as core customers#?# of 19


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&hey are static elements, capable of gro"ing by appro4imation# &hat is, entrepreneurs aredropped off on lusters, in their particular sector, in order to absorb the aroma of innovationenvironment# $n many cases, firms /oin clusters in the hope that this "ill generate ne" business, inmost cases by serendipity#

lusters are focused on specific products or services and no"ledge areas aligned to their

locationBs economic and industrial needs # s 8etels9

states% DThe necessary condition for any kindof empirical work on $lusters is to find a consistent definition of what economic activities belongor should belong to the cluster#

&he movement that businesses follo" "hen they land in a luster belonging to their sector israther (rownian, ie "ithout prior planning and spinning around looing for business opportunities#

8etels also suggests that a cluster location increases the efficiency and effectiveness of clusterfirms# luster location may mean that financial investment generates greater economic value thantheir opportunity costs#

nother aspect to eep in mind is the sustainability of a cluster once the initial phase has finished("hen more support is needed and indeed, creating a cluster is a longterm process "hich means

that the final cost could be higher than e4pected#

Leaving aside the different perspectives about the Porter's luster Model efficiency, mared byseveral authors in terms of the process of emerging clusters or ho" the model could be repeatablein other scenarios "ith success, "e have been searching alternatives or improvements to currentmodel, in order to foster the innovation, accelerate the impact achieved of a pro/ect andstrengthening the productivity of the processes involved#

Jy good fortune, "e met a very special person, Prof :# Mensch10"ith a very uni.ue idea that "eare comprehensively developing altogether# Prof# Mensch put for"ard a ne" concept% The ConvoyModel# &his ne" concept could become a revolution in the innovation arena in front of the formerPorter's luster Model#

)hat is the Convoy Model*

The Convoy Model++ +' is a ne" approach to the regionindustry innovation generation, and animproved alternative to Porter's luster Model, "hich aims to be built over three main cornerstones%

$t is multidisciplinary and multisynergic, as it allo"s the involvement of different agents(companies, institutions, governments, customers, providers and citiens by means ofinteractions3 (outin, outreactions3 (inout and coopetition relationships (cooperating Qcompeting #

$t stimulates and reinforce the =pen $nnovation actions# $t is a M$M= (Multiinput Multiouput entity#

9 &he evelopment of the cluster concept present e4periences and Further evelopments (200>

10 -iipedia, http%@@de#"iipedia#org@"ii@:erhardOMenschO($nnovationsforscher

11 &he $nspection Problem, :#=# Mensch, -oring Paper 5o# 2?1,


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Fig#2 Fishbone of tractor pro/ects (proprietary development

&he Convoy Model is dynamic compared to Porter's static cluster modelS it is planned rather thanevolving# $t acts as a magnet attracting collaboration and initiatives that enable continuousimprovement, continuous value creation, and synergies#

&he Convoy Modeldrives the elements in the innovation ecosystem via its main entity%the tractor#

&he Convoy Modelcan be considered as providing the motion in a cluster" all the positive economicimpacts highlighted by Porter (ne" /obs, economic "ealth, etc# also apply to this ne" model# $nother "ords, "e "ould agree that the colocation of companies, customers, suppliers and othersinstitutions increases the perception of innovation opportunities "hile amplifying the pressure forinnovation1>#

!o"ever, these effects are amplified in the Convoy Model, since the groupBs entrepreneurialactivity is focused on the needs of the DtractorB pro/ect#

&he Convoy Model can be used to regenerate traditional sectors and traditional managementtechni.ues, "hich have been unable to adapt to the future#

Tractor as the ,eystone entity of the Convoy Model

s has already been mentioned, the onvoy Modelrelies on a ey entity Dthe tractor-# Jut "hat isthe tractor3 of a pro/ect)

The tractoris the driving unit of a pro/ect, that pulls in one direction the colocation of relatedsatellite agents around it, and "hich "ill interact among them from inside to outside and viceversa# For instance, it "ill be similar to a consolidated and strongly innovative company that, onceestablished, attracts other companies to be located close to it in order to tae advantage of thepro4imity "hen tacling a pro/ect# &hese satellite companies may belong to other sectors anddisciplines and be engaged in activities related to the companyBs main mission# olocation of thesecompanies encourages coopetiting"oring (cooperating Q competing to"ards a common target#

&he Convoy Model does not relate to a specific sector# $t can be liened to an articulated vehicle"hose total "eight is driven by the traction element (tractor, also called the locomotive of theconvoy, and it is crucial to identify ho" many locomotives3 of the convoy "e do have (bearing inmind its M$M= 'Multi$nput, Multioutput' nature#

&he traction motion of a onvoy Pro/ect surfaces t"o po"erful effects%

1> Location, competition, and economic develop ment% Local clusters in a global economy3 +conomic evelopment uarterly, Porter, M# +#

(2000#

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Cross-pollinationamong the agents and entities involved is also inherited from the luster

Model#

Social Capital generation+., as a conse.uence of the no"ledge and information e4change

among all the pro/ect participants#

/eystones of the Convoy Model

-e have identified a set of elements that conform "hat "e call the 0ctagonal 1nnovationEcosystem3 "hich could be considered as the vital elements to develop pro/ects under the onvoyModel and that "ill determine the traction motion process#

Fig#> =ctagonal $nnovation +cosystem (proprietary development

&he =ctagonal $nnovation +cosystem is an evolved version of the *ilicon Halley ecosystem ofinnovation developed by &apan Munroe and Mar -est"ind1Eand tries to cover the most relevantstrategic a4es or cornerstones in the management of a *cience and &echnology Par# ll theelements are interconnected because of the inherent relationship among them# &he same elementscan be applied to "hichever pro/ect led by the *&P#

&ow to manage a Convoy #ro2ect*

&he pro/ect management methodology is crucial in the conte4t of this comple4 ne" model andre.uires a ne" perspective# Pro/ects are not implemented /ust to respond to user re.uirementsSthey must be capable of ongoing adaptation to changing re.uirements and ne" products, alsono"n as evolutionary pro/ect management3# &he final goal may be different from the initial

target based on initial user re.uirements# &his re.uires fle4ibility, a ne" pro/ect managementparadigm and a &1ST 3&igh 1mpact$ Short Time4philosophy, that is to say pro/ects performed basedon continual feedbac#

&he theoretical basis of this sort of evolutionary pro/ect management is comple4ity theory appliedto comple4 realities "hen no"ledge is lacing and available information is imperfect, anduncertain# &hese deficiencies are vie"ed as opportunities for innovative actions# +volutionarypro/ect management "ors "ith inventions and visions of possibilities, and scenarios about anaugmented reality#

1? $ntraorganiational social capital in business organiations% theoretical model "ith a focus on servant leadership as antecedent3, Pablo


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&he differences bet"een actual reality and augmented realities form the opportunity landscape"here con/ectures about the good opportunities for innovative initiatives guide the planning ande4ecution of pro/ects#

Hie"ed in this "ay, the rt of $nnovating is finding a middleground bet"een overcomplicating andoversimplifying the potential, and in designing a road map for the pro/ect "or "hile the intially

vague opportunity landscape gets clearer as "e go ahead#

onvoy Pro/ects embed comple4ity in society, economics and technology, and traditional pro/ectmanagement can not therefore be used hereS instead, a set of ne" challenges and re.uirements arebringing up in this ind of special pro/ects "here dynamics of instability1are present#

$n general, every onvoy pro/ect "ill be different due to the variety of e4isting approaches, butthey all should be treated as similar in essence# 5evertheless, .uantifying all the onvoycharacteristics related to its uncertainty is re.uired and the appropriate measures, if needed, mustbe taen#

Pro/ect uncertainty is a very important challenge in the management of today's pro/ects, and evenmore in those ones "here user re.uirements are changing along time (in some "ay because of ne"

functionalities re.uired by the user and in some "ay because of the feedbac from the results of itse4ecution# &he Pro/ect Management $nstitute's :uide to the Pro/ect Management Jody of8no"ledge U fourth edition (PM$, 200C describes uncertainty as ris conditions, aspects of thepro/ect or organiation's environment that increase pro/ect ris# &he ris of failing to meetschedule, cost or performance goals is "hat maes uncertainty threatening#

$t is not "orthless to say, that this sort of comple4ity in onvoy Pro/ects Management implies astrong focus on the design of an effective and efficient 5is, Mitigation #lan, in order to assess allthe potential combinations of possible solutions or results of the interactions, in such a "ay that "e"ill be able to get the J& (Jest ecision &aen "hen a problems arises#

=htaa and Fuaa"a1A have developed a very interesting model (yclic asual Model thatcontributes to facilitate the recognition of *erious problem pro/ects (*PPs empirically and help to

manage ris symptom# -e are planning to incorporate this model to onvoy Pro/ects


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"here%

req i 3n4 is the set of initialand ongoingrequirements, from iV0 to 5, that "ill feed the M (n orconvoy model funcionality and "ill vary depending on the results of the feedbac from theinteraction% op i (n and usr / (n

CM3n4is the &ransfer function of the onvoy Model pro/ect and defines its behavior based on inputdata (initial re.uirements and perturbations#

pr i 3n4is the perturbation function# &his function can not be modified so the transfer function M(n should predict the perturbations and modify its behaviour based on the output results too#

usr 2 3n4 is the interaction (from /V0 to M of the user over the results of the process M (n (alsono"n as user pattern function

op i 3n4is the 0utput result3 from the &ransfer function and the perturbations over the system VM(nWpr i (n

err3n4 05 feed3n4is a logical =< operation "here the errors detected by the user or additional

feedbac provided by the user to improve the output result of the process M (n aggregate#

63n4is the output final functiononce the system behaviour has been adapted and corrected#

1mpact of Convoy Model on 1nnovation 7eneration

=ne of the main .uestions that could come up "hen implementing ne" models of innovation is ho"to measure their impact on regional performance#

Porter

1C

demonstrated that strong cluster environment surrounding a particular regionindustryenhanced gro"th at the regionindustry level through increasing efficiency, driving productivity and/ob creation, and increasing returns to e4pansion, investment, and innovation# $ndeed anotherelement that contributed to the innovation generation "as spillovers bet"een a regional industryand strong clusters present in nearby regions#

&he onvoy Model is a special case of Porter's clusters from the dynamic motional perspective, sothe same ey performance indicators (8P$ should be considered as applicable in order to measuretheir impact on the region# !o"ever, the onvoy Model incorporates some additional elements that"ill reinforce its economic results%

=ne is the power of complex networ,s developed as a conse.uence of the multiple

interactions among all the agents and entities#

&he other element is the reduced time!to!mar,et of added!value deliverables produced#

&he philosophy of this sort of pro/ects delivers highimpact results in a very short term (!$*&, as aconse.uence of the fastperforming methodology that "ill help to increase the productivity of theresources used to build up onvoy pro/ects#

lthough there are several mechanisms to forecast and measure innovation performance, in theseind of pro/ects, there is one particularly interesting% by means of neural networ,s approach19,that "e are going to apply to demonstrate the highlevel of innovation generation produced by

1C lusters, convergence and economic performance3# elgado, M#, Porter, M# +#, *tern, *# (200A

19 Forecasting innovation performace via neural net"ors U a case of &ai"anese manufacturing industry3, &aiNue -ang, *hihhien hien

(200

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onvoy Pro/ects under this current model# &he techni.ue "as applied by the epartment of$ndustrial and $nformation Management from the 5ational heng 8ung Rniversity of &ai"an and it isperfectly e4trapolable to onvoy Model pro/ects#

Convoy Model 8anding at ST#s" Soft or &ard*

=nce "e have defined the onvoy Model landscape, the first .uestion that could be brought up is%

&ow could Convoy Model be used in Science and Technology #ar,s 3ST#4*

Let's start remembering the definition of *cience and &echnology Par, provided by $*P (2002%

A Science Park is an organisation managed by specialised professionals, whose main aim is to increase the wealth

of its community by promoting the culture of innovation and the competitiveness of its associated businesses and

knowledge-based institutions.

o enable these goals to be met, a Science Park stimulates and manages the flow of knowledge and technology

amongst universities, !"# institutions, companies and markets$ it facilitates the creation and growth of innovation-

based companies through incubation and spin-off processes$ and provides other value-added services together with

high %uality space and facilities.

Jearing in mind the strengthen of the concept% onvoy Model3 and the po"erful capabilities of a*cience and &echnology Par, "e "ould rather to e4tend the definition adding the follo"ing feature%

A Science and echnology Park should be able to identify and co-lead tractor pro&ects involving all the agents and

entities belonging to the 'ctagonal (cosystem of )nnovation with the main purpose of generating wealth in the

region and easing the ade%uate mechanisms to ensure the success achievement of the S*(s+

*&P become a very interesting scenario in "hich onvoy Pro/ects could be placed and due to severalreasons%

*&P are environments "here $& is straightfor"ard to develop and maintain relationships "ith

other organiations# &hese interactions ease the access to ey resources, information,marets, technologies, advantages from no"ledge and learning, scale and scopeeconomies, as "ell as ris sharing20#

*&P create a physical landscape that enables economic agentBs interaction "ithin the samegeographical area20# -e consider that the relations bet"een firms and Rniversities cangenerate valuable organiational social capital21#

*&P are an artificial physical structure that also facilitates interaction among the economic

agents located inside22#

20 *trategic net"ors3, :ulati, 5ohria 7 ;aheer, 2000, *trategic Management Kournal, 2000

21 *ocial apital :eneration $nside *cience Pars% n nalysis =f JusinessRniversity


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*&P is a magnet for heavy investment in technology# par attracts business dedicated to

applying innovative technology2>#

&his fact can help researchers to e4plain "hy and ho" organiations connect effectively, "orcooperatively and coordinate their activities to achieve a superior performance in the maret#ue to the nature of the *&P environment, onvoy Pro/ects "ill enhance the ability of the

companies involved in the pro/ect, to develop ne" products and bring them to the maret "ith highsuccess rates# &he no"ledge that firms can derive from their relationships may be particularlyvaluable for the development of ne" products and services2?,

$n order to be able to ans"er the .uestion about% ho" ne" tractors emerge, some actions have tobe taen%

reation a thinubator structure to set up an appropriate environment for the generation

of ne" ideas, determination of main goal of the pro/ect and identification of agents andentities to be involved#

=nce designed, it can be implemented in the very short term based on evolutionary

pro/ect management3 approach and using the appropriate mechanisms to put it on place#

-e are going to briefly mention t"o tractor pro/ects launched at espaitec *cience and &echnologyPar, not as case studies but as onvoy Model samples#

Convoy *odel for eiving ab ractor Pro&ect

Living Lab is a user cocreation techni.ue based on cro"dsourcing# &he Living Lab conceptoriginates from M$&, Joston and represents a usercentric research methodology for sensing,prototyping, validating and refining comple4 solutions in multiple and evolving real life contexts2E.

Living Lab is a good e4ample of a onvoy Model "here decisions are made about specific goals andtheir achievement is supported by numerous agents in a DfishboneB structure as the one already

depicted at the beginning of the paper#

&he implementation of the Living Lab is based on the involvement of the user (firms, organiationsand consumers in the innovation process#

t espaitec, *cience and &echnology Par of astellon, "e are developing a Living Lab (callede'Living Lab located at the Rniversity ampus and open to the rest of the citiens of astellon toparticipate in cocreating products and services, prototyping and validating them in severaltechnology fields% biotechnology, robotics, Machinetomachine communication and automatismsamong others#

&hrough open collaboration bet"een a large variety of participants (main step to generate openinnovation, e'Living Lab does not favor any specific technology but rather focus on fostering inter

collaboration among all of them and capturing the values of technology based on the usefulness thatit bring#

>?C>#

2> *uccess factors in *cience and &echnology Pars3 !odgson, J (199?# +n *cheifler MY # Los Par.ues ientTficos# Principales +4periencias

$nternacionales, +d# ivitas, Madrid

2? &he *ources of $nnovation3, +ric von !ippel, =4ford Rniversity Press (19CC

2E *tateoftheart in utiliing Living Labs approach to usercentric $& innovation U a +uropean pproach#3, Mats +risson, HeliPea 5iitamo

and *ei/a 8uli## (200E

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Convoy *odel for ioPharma ractor Pro&ect

&his is another e4ample, not as a case study because it is still running# &he pro/ect started in 2010at the espaitec, *cience and &echnology Par of astellon# &he pro/ect's goal "as helping theinnovating company, Mensch Jiopharma, in designing and in constructing an innovative phytopharmafactory in the astellon area#

&he biopharma product innovation is a natural medicine (medicinal herb that re.uires applicationand hybrid integration of brand ne" green biotechnology in the selection of medicinal plants, andthe application of proprietary plant bioinformatics in the selection and prototyping of plantvarieties, and their testing for biomedical efficacy#

&he ey point is that tractor pro/ect managers need the onvoy Model for steering the efforts athigher validity and reliability, and the innovatorentrepreneur needs the technical pro/ectmanagement sills that characterie a tractor pro/ect# $t "ors both "ays "hen it "ors# $n other"ords, if successful, the evolutionary pro/ect not only integrates several converging technologiesat the material level of the pro/ect, it also integrates t"o governance tools at the leadership levelof the pro/ect#

$n our e4ample of evolutionary planning of the Mensch Jiopharma phytopharmaceutical productionfacilities, the set of final specs includes three chuns% $ntegrating ne" green biotechnology ofmedicinal herbs "ith life science soil bioinformatics that is the platform for harvesting the naturaldrug material, on one side, and the processing, .uality testing and pacaging the natural drug, onthe other side of the supply chain, plus, thirdly, the rational integration of all that comple4ity "iththe convoy model# *o that the fully integrated +nterprise


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"hat and "hatnot (validity, reliability must be addressed strategically, at the beginning of theplanning process#

Jefore digging deeper into evolutionary pro/ect management, let us differentiate further# Fore4ample, let us separate notions of evolutionary from notions of revolutionary# -hen in February2011 R* President Jarac =bama "as referring to the challenges ahead in the innovation field,

calling it an actual *putni challenge, he "as referring to the 8ennedy time, "hen initially, in191, the national goal "as formulated as going to the moon# &hat "as vague enough for thetime# For some, it meant sending an pollo rocet so far up that the space vehicle "ould fly beyondthe moon and disappear in outer space# For others, it meant that the space craft "ould circle themoon once and then return to earth, "here it "ould go up in flames and evaporate "hen reentering the earth's atmosphere#

=ver and above the unmanned versions, the manned versions of the pollo pro/ect clearlybecame a revolutionary pro/ectS and it too the professionals at least a year until they "ere ableto formulate a more ambitious initial set of specifications that "ould fit the ultimate goal% &o setfoot on the moon and bring the astronauts bac home alive#

$n this paper, our tractor pro/ect is evolutionary and certainly not revolutionary# nd "e can

precisely state the convoy conditions for success on a more modest level of aspiration ( versus amore ambitious level of aspiration (J, and "e can estimate costs and revenues#&hus "e shall concentrate upon the planning stage of evolutionary pro/ect management and setaside details about the e4ecution phase, although in practice the phases overlap "hen initial goalsare being set higher and higher as for"ard learning permits#&he practical case e4ample presented here prompts us to differentiate levels of ambitions for theset of provisionally adopted final specifications that say "ith validity and reliability, for e4ample,most ambitiously, ho" to bring the astronauts bac home alive#

9acit" Evolutionary product management can ma,e value!adding contributions to quality of life

and to more income and growth

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Conclusions

&his paper does not aim to be a case study of different e4amples of onvoy Pro/ects "hen applyingthe model, but a "oring case paper and a alive reflection about ho" ne" models of innovationgeneration can foster the economy in a region (that should be the main goal of any *cience and&echnology Par, and above all ho" *cience and &echnology Pars can play an active role as a

tractor entity of those pro/ects as "ell #

onvoy Model poses the valueadded by reinforcing the fact that hybridiation (on all its forms andshapes is the ey for generating e4treme innovation (6trevation and, thus, for the creation of"ealth in the region#

*amples lie the Living Labs developed at espaitec or JioPharma &ractor Pro/ect, introduced in thispaper, are /ust e4amples about ho" a innovative philosophy of hybridiing agents, entities,industries and no"ledge can be successful "hen developing a strategy to achieve a goal# &hesepro/ects are still in developing phase so "e e4pect to get some results in a short term#

Jut, as Peter rucer already stated% 1f you can:t measure it$ you can:t manage it3, that is to say%it is crucial to develop techni.ues that allo" us to measure the impact of innovative methodologies#$n these type of highcomple4ity pro/ects, the measurement of efficiency and results is not easy dueto the large number of variables and uncertainty managed, nevertheless "e discovered that toolslie ;eural ;etwor,s are suitable mathematical models to forecast and assess the innovationperformance in these cases# -e could find others though#

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nne4 $% Methodological Foundation of +volutionary &ractor Pro/ectManagement

;onlinear %ynamic Complexity Theory < (asis for the Evolutionary =pproach

&he theoretical basis of evolutionary pro/ect management is comple4ity theory applied to comple4realities "hen no"ledge is lacing and available information is imperfect, and uncertain# &hesedeficiencies are vie"ed as opportunities for bold innovative actions that re.uire for"ard learning3to find and seie the opportunities# $n the cases of ma/or3 innovations, such for"ard learning isdoublecomplicated as it attracts other innovators and pulls other innovations along for the betteror the "orse#

*uch ma/or innovation3 pro/ects typically turn into +volutionary &ractor Pro/ects3#

&his contingency re.uires for"ard learning3 not only in actual reality3 but also in an augmentedreality3 as the actuality changes (transforms faster and faster# &ypically both the content of anactual3 reality can change fast, and the conte4t morphs# &his dual comple4ity calls for a nonlinear

dynamical programming methodology for the planning stage of such pro/ects# &his is e4plained inthe subse.uent section#

+volutionary pro/ect management "ors "ith technological inventions and visions of commercialpossibilities, and "ith scenarios about an augmented reality#

&he differences bet"een actual reality and augmented realities form the socalled opportunitylandscape "here con/ectures about the good or great opportunities for innovative initiatives guidethe planning and e4ecution of pro/ects# $n the ne4t section entitled coping "ith comple4ity ofcontents and conte4ts3 "e delineate a comple4ity theoretical frame"or for structuring thebusiness model and for strategiing about oing the right things3 and about oing things right3"ithout getting over"helmed by too much comple4ity#

Hie"ed in this "ay, the rt of $nnovating boils do"n to finding a middleground bet"eenovercomplicating the conte4t for "orth"hile actions and oversimplifying the innovation potentialand missing the best opportunities# $n a nutshell, the core competency in evolutionary pro/ectplanning is designing a road map for the pro/ect "or that morphs the intially vague opportunitylandscape into a successively clearer innovation potential as the innovations team moves on# -hat8enneth rro" some 0 years ago called Learning by oing3 in a (neoclassical -alras +conomy"ith mostly homogeneous goods and little or no innovation and entrepreneurship is no" conceivedas For"ard Learning3 in an (evolutionary *chumpeter +conomy "ith more and ma/or innovationsthat re.uire an evolutionary Microfoundation# $n the follo"ing t"o sections coping "ithcomple4ity3 and mathematical basis of the convoy model3 "e delineate *trategy*tructure*teeringPerformance aspects of such a Microfoundation thatBs consistent "ith evolutionaryManagement *cience#

+volutionary tractor pro/ect management is a challenge for management science#

=ne challenge is to find an economically sustainable mi4 of comple4 vs# simple#

s an e4ample for such middleground, it is often said that one bird in the hand is better than threebirds in the bush# Jy the same toen, the gist of evolutionary pro/ect management is to recogniecomple4ity by its t"o most prominent characteristics, namely, chaos versus partial order, and toloo for enough comple4ity, but not too much and not too little, for finding safe grounds for forminga business structure and formulating the business strategy# $n the follo"ing section, "e illustratethis approach by looing a some graphs of various degrees of comple4ity e4pressed by the mostoutstanding features of regularity in comple4ity% Rnity and *ymmetry# &hese features help thehunter to catch one bird at a time and not to get sidetraced by the birds in the bushes#

&ypically, ma/or innovations re.uire that a bunch of innovators move in convoy, and synchronietheir steps, moving in synch#


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&his is the core of Mensch's onvoy Model of motion in space and time, and finding opportunities forentrepreneurial innovations#

=riginally, :erhard Mensch conceived of the &he onvoy Model in his doctoral "or on /obshopscheduling, "hich deals "ith given /obs and perfect information# Later, in *tanford and Jereley, hee4tended this scientific "or on moving in synch to some *ilicon Halley innovation processes "here

/obs are defined as overcoming lac of no"ledge "hen information is scarce or impossible tofind under the spacetime circumstances# &his is the special relativity theory of innovation on t"olevels, on the leadership level and the division of labor level (see :#=# Mensch, &he $nspectionProblem, -oring Paper 5o# 2?1,


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nne4 $$% Mathematical Jasis of the onvoy Model for &ractor Pro/ects

&he Mathematical Jasis of the evolutionary3 methodology used in the onvoy Model as applied tothe *teering of &ractor Pro/ects in case of ma/or innovations is the ecomposition Principle ofmathematical programming, especially 5onlinear ynamical Programming "ith integrating For"ard

Learning on both the governance level (the +4ecutive &eam and on the division of labor level($nnovation &eams#

&his Management *cience Jasis is platform of the *trategy*tructure*teeringPerformance (***PParadigm in Jusiness dministration# $n general terms, the ***PParadigm had been conceived t"ogenerations ago as a norm for &he Function of the +4ecutive3# &his norm strongly emphasiedcorporate leadership (*trategy and operative results (Performance# $n later years, 19AE to 2000,the ***PParadigm became more and more evolutionary3 as many product life cycles acceleratedand got shorter, "hile successive "aves of innovations made structural changes in industries andmarets more radical (disruptive than ever before# &hat put greater pressures on the *trategy*tructure (** level of enterprise at the top and on the *teeringPerformance (*P level ofenterprise at the "orflo" level of enterprise# nd many formerly mundane3 pro/ects turned intotractor3 pro/ects "ith evolutionary3 re.uirements, "ith greater emphasis of shareholders on

outperformance3 by managers and "orers#

&his is the state of affairs in 2011# &here is a great need for improving the rt of $nnovating3 in"ays that are consistent "ith ne" economic Microfoundations and Management *cience#

&he ecomposition Principle composes three chuns3 of functions into an evolutionary3frame"or% 5onlinear ynamics of ( the **Functions of the e4ecutives, and of (J the *PFunctions of the "orforce, and ( the coordination function (***P# &he structuring frame"orfor strategic decision maing ( and operative decision maing (J "as setched in section oping"ith omple4ityZ3# &he ey variable is 5 for 4(i V 0,1,2,Z,5#

$n evolutionary terms, the aspects of *teering, &iming of ne" product initiatives, and *tarting suchactivities in synch "ith maret timing and in anticipation of industrial changes is by far more

complicated than coordinating traditional e4ecutive functions "ith stationary state vari ables 4(i,tcontrolled by some mature business strategy *(4# $n the 5onlinear ynamic Pro grammingframe"or these state variables are lined by connections 4(i/ for i,/ V 0,1,2Z5#

*teering means activating (4(i/ V1 and deactivating (4(i/ V0 these connections in relativity tocontents and conte4ts, and scheduling these activities to"ards attaining higher goals in the endthan appeared feasible at the start, given the initial state of (lacing no"ledge# &ractor pro/ectsare scheduling such search and learning activities, aiming at a ma/or innovation, by integrating andpulling along other (often minor innovations# &he attraction of the tractor is usually a headstart inthe possession of some chun of no"ledge3# &he +volutionary y namical Programming methodoptimies the strategic for"ard learning of the entire convoy#

$t helps coordinating and steering the ac.uisition of ne" chuns of no"ledge3, implement ting

this no"ledge into the scheduling of activities at times t such that the activated 4(i/,t form acostefficient and benefiteffective activity program% n evolutionary tractor pro/ect#

iasp 2011 full paper_convoy.v.2.7

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