Context of innovation

These potentially influential elements on the FFE refer to aspects related to the type of the FFE project in question.

1. Level of uncertainty

Uncertainty can be defined in different ways. For example, Milliken (1987) defines uncertainty as an inability to assign probabilities of future events, a lack of information about cause-effect relationships and an inability to accurately predict the results of a decision. In this regard, Perrow (1973) suggests that the degree of uncertainty can be categorised in terms of variability (number of exceptions faced when tasks are executed) and ease of analysis (degree to which known procedures can be implemented).

In this research project, we have adopted the definition of uncertainty that is probably the most used in previous literature: “uncertainty is the absence of information and more specifically, the difference between the amount of information required to perform a task and the amount of information already possessed by the organization ” (Galbraith ,1973, pag. 5).

Uncertainty may originate from different sources of the environment (Freel, 2005): economic (regulation, standardisation, information requirements); industrial/market-based (customers, suppliers, competitors) and resources/company-based (technology, skills, finances).

Previous research has particularly focussed on technical and market aspects (Poskela, 2009; Nagahira et al., 2006; Verworn, 2009), although importance has also been attached to corporate and resource-based aspects (O´Connor et al., 2013). Below is a summary of the sources of uncertainty in the FFE highlighted in Sperry's et al. (2009) and O´Connor’s et al. (2013) studies:

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Table 2.12 Sources of uncertainty in the FFE

Stage Sources of uncertainty in the FFE

Technical

• Size or variables of the system • Number of interactions

• Level of knowledge on specifications • Performance level per specification • Changing technologies

• Technical specifications, characteristics and developments • Type of production

Market-based

• Requirements • Preferences • Life cycle

• Adoption and acceptance of the innovation • Product portfolio of competitor

• Value proposition

• Sales and distribution infrastructure

Company

• Team capabilities • Project manager

• Relations of project team with rest of company • Expectations of senior management

• Organisational structure

• Relations with internal and external organisations

• Management of unexpected changes in the project team

Resources

• Resources and skills required to complete the project • Way of acquiring these resources and skills

• Partnerships or minority interests

Source: Own elaboration based on Sperry et al. (2009) and O´Connor et al. (2013)

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The reduction of uncertainty during the FFE is a success factor in the innovation project (Nagahira et al. 2006; Verworn, 2009; Moenaert et al., 1995) according to the theory of information processing. This theory states that the best way to accomplish a certain task (e.g. organising its execution) is dependent on the uncertainty and diversity of the task being performed.

FFE projects have three dimensions of uncertainty (Collareri et al. 2013):

• Uncertainty category: Technical, market, corporate and resource-based • Degree to which uncertainty can be perceived or anticipated

• Criticism: routine vs. obstacle for future progress. Degree of resolution of uncertainty (may occur immediately or project survival may be at risk)

Different authors have developed strategies to reduce uncertainty in the FFE (Andersson, 2010). In this aspect, Verworn et al. (2007) identify different types of strategies to be implemented based on the market and technological uncertainty apparent in the FFE project.

Likewise, various authors have studied specific actions that companies can adopt to reduce uncertainty. Moenaert et al., (1995) emphasise that information flows between the marketing and R&D departments help to reduce uncertainty efficiently but that, on the contrary, the centralisation of the project has a negative effect on the efficient reduction of uncertainty.

In this aspect, Hürzeler (2013) developed a management framework for the uncertainty of the FFE project in terms of the sources of environmental uncertainty perceived by Freel (2005), materialised in two fundamental strategies:

• Positioning: the individual has to adjust to an existing environment that cannot be actively influenced

• Control: assumes that the environment is subject to changes through individual action and therefore can be influenced

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The degree of uncertainty of the FFE has a major influence on the performance provided by the use of the different FFE business strategies (Eisenhardt et al. 1995; Poskela, 2009; Ahmad et al., 2013; Hürzeler et al., 2013; Zhang et al., 2001). Technological uncertainty has a significant influence on the optimal way to organise tasks (Sperry et al., 2009), knowledge and team capabilities (Ho et al. 2011), the nature of the project goals (Hong et al., 2004-b) and the level of maturity of FFE requirements (Tzortzopoulos et al., 2006; Ho et al., 2011).

This argument is supported by the following aspects of the contingency theory (Poskela, 2009):

• There is an association between contingency (e.g. market or technological uncertainty) and company structure.

• Contingency determines company structure

• There is an aspect of fine-tuning between the level of corporate structure and the level of contingency that leads to a better result

Different authors have pointed to the connection between uncertainty and other characteristics of the FFE project that have been considered as influential effects in various studies:

• Technological or market innovation (Herstatt et al. 2004, Chen et al. 2005; Verworn, 2009). As we indicated in section 2.2 ("Overview of the innovation process"), a high degree of uncertainty is related to exploration projects, which incorporate a greater risk, while those of exploitation feature a lower risk.

• Degree of change pursued by the project (Poskela, 2009) and its complexity (Ahmad et al. 2013). The greater the perceived change in the company status, the less chance there is to perform the idea (Griffiths- Hemans and Grover, 2006; Martinsuo et al. 2007). A company can feel comfortable with ideas that are based on pre-existing products or processes rather than implementing new technologies or paradigms (Attar, 2010).

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2. Ambiguity

Ambiguity, the individual's inability to interpret or make sense of something, given their inability to apply relevant interpretative knowledge (Zack, 2001), is also a feature of the FFE, with its importance highlighted by previous research. Despite this, Brun et al. (2009) identify less of a focus on the investigation of ambiguity in the FFE compared to uncertainty.

Likewise, Brun et al. (2009- a and b) highlights the following aspects:

• Fields (where it occurs): product, market, process and organisational resources

• Sources (reasons why it occurs): o Multiplicity (multiple hypotheses) o Newness (new hypotheses)

o Validity (representativeness of the sample) o Reliability (inconsistent answers in the sample)

Frishammar et al. (2011) identify the following aspects related to ambiguity in the FFE:

• Little attention in FFE literature on ambiguity (unlike that granted to the effects of uncertainty).

• Successful projects further reduce uncertainty and ambiguity.

• The negative consequences of ambiguity affect FFE performance more critically than those caused by uncertainty.

• Different results obtained by the various methods used in the reduction of uncertainty and ambiguity: Sequentially (successful projects) and simultaneously (unsuccessful projects).

• The time of reduction of uncertainty / ambiguity is greater in process innovation projects than in NPD projects.

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Ambiguity can have positive effects on the FFE in knowledge-based NPD processes (Brun 2011 and 2012), so a constant harmonisation between the two possible ambiguity management strategies is required (Brun et al., 2008 and 2009-a).

• Reduce by applying a hypothetical-deductive method proposed by these authors if the project prioritises clarity in the FFE.

• Uphold if the project prioritises innovation and flexibility in the FFE. Duimering et al. (2006) identify four behaviour patterns whereby NPD task structures change throughout this process as a result of ambiguity: task expansion, contraction, substitution, and combination. Additionally, these underline the importance of the following roles when multi-functional NPD teams attempt to resolve ambiguity: communication, knowledge and problem- solving. Finally, they suggest two ambiguity management strategies: decomposition of project tasks to minimise the interdependence between tasks, and flexible adaptation of NPD task structures when new forms of task interdependence are recognised during the development process.