The strategic choices for product development, such as which market to enter, what product to develop, which technology to adopt, as well how resources, human and financial, are allocated and used to develop the new product, are relevant to successful NPD (Cooper et al., 1999). In 1970, Bower identified the relationships between strategy and resource allocation, developing a model for the Resource Allocation Process (hereafter RAP), “a complex, multilevel phenomenon that fundamentally shapes a firm’s strategy” (Bower and Gilbert, 2005). Resources, both financial and human resources, are needed to develop projects of innovation and NPD. The “patterns of resource allocation heavily influence the types of innovations at which leading firms will succeed or fail” (Christensen and Bower, 1996, p.198). The model for the RAP is made of three processes and three levels. The three processes underpinning this model
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are the definition of content, impetus for commitment and structural context; the three levels include the corporate, general manager in the middle, and operating (Gilbert and Bower, 2005, p.34, drawing upon Bower, 1970). The insights featuring this model, and the study of their relationships, are useful to understand how the resource allocation drives the strategy.
The RAP model has gained significant success, and developed further, over the years. Gilbert and Bower (2005), for instance, have identified how exceptions and anomalies to the model have opened new spaces and opportunities for its progress (Harrigan, 2007). The concepts underpinning the RAP model and, specifically, how the patterns for the resource allocation process can influence the success, or not, of the innovation and NPD processes were also considered for this study. It was eventually decided that the use of the RAP model was not appropriate to this thesis as the research objective focuses on examining how accounting engages in practice with the unfolding process of innovation, once the resources for the project are in place and the strategies for the new product have been identified.
This study places much attention on the role of accounting and control within NPD and innovation contexts, rather than on the resource allocation and the strategies for innovation. NPD processes have been portrayed as projects organized around phases (Davila, 2000, p.385; Tatikonda and Rosenthal, 2000; Jørgensen and Messner, 2009; 2010), which are generally characterized by the complexity of their parts and the uncertainties of their outcomes (Davila, 2000; Davila et al., 2009b; Jørgensen and Messner, 2010). These uncertainties may relate to what customers want in the future and the features of the new product (Harris and Woolley, 2009), as well as to heterogeneous, pluralistic perspectives and rationales (Nixon, 1998; Jørgensen and Messner, 2010; see also Nicolini et al., 2012). Overall, the objective of the NPD process is to develop projects which transform novel and useful ideas (Amabile et al., 1996) into a tangible physical asset (Davila, 2000, p.385), i.e. the new product.
Shenhar and Dvir (2007) have referred to projects as “engines that drive innovation from idea to commercialization” (2007, p.4). Projects differ from operations. Operations mean “repetitive, ongoing, activities, such as manufacturing, service and production whereas projects involve unique, on-time initiatives, such as launching new products,
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new organizations, or new ventures, improving existing products, and investing in the company’s infrastructure” (Shenhar and Dvir, 2007, p.3). Projects have been depicted as processes to be developed in order to achieve a certain goal under constraints of cost, time and quality (the Iron Triangle) (Atkinson, 1999). However, this triple constraint is associated to traditional project management. Constraints of cost, time and quality are not enough for the success of those projects which are complex, uncertain, and changing (Shenhar and Dvir, 2007; Turner et al., 2007), e.g. innovation and NPD projects fall within this typology of projects. For these projects a new approach should be used, such as a framework more success-focused, flexible, and adaptive (Shenhar and Dvir, 2007). In addition to project efficiency, (e.g. adherence to time and budget constraints), other success criteria should be considered when managing projects, such as the impact on the customers, the impact on the team, the business results, the preparation for the future (e.g. new technologies, new markets, new products) (Shenhar and Dvir, 2007).
To summarize, projects are not only characterized by constraints; attention should be also placed on the flexibility and the changeability of projects, e.g. projects of innovation and NPD. Projects may be distinguished by the dimension of novelty, technology, complexity and pace. According to which dimension features in the project, Shenhar and Dvir (2007) have suggested using the so-called diamond approach, “to provide a disciplined tool for analysing the expected benefits and risks of a project and developing a set of rules and behaviours for each project type” (2007, p.13). This results in acknowledging that projects, including NPD projects, are temporary organizations of which an in-depth understanding is necessary, in order to appropriately manage them (Turner et al., 2007). The role of the project manager is crucial in this sense, as he has to understand the project and find the best way to deal with the project.
2.4.1 Models for new product development
Kamoche and Cunha (2001) have illustrated three models to develop NPD processes: the sequential model, the compression model, and the flexible model. The sequential model relies on the logic that the majority of the activities and the outcomes of the activities that comprise the NPD process are predictable. For this reason, this model conceives of NPD processes as made of a detailed plan and list of tasks to be accomplished. This type of model defines a specific process of development, with definite discrete and sequential phases, such as “new product strategy, exploration,
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screening, business analysis, development, testing, [and] commercialization” (Kamoche and Cunha, 2001, p.739). Each of these phases includes precise roles and centralised decision making processes, which follow defined templates and guidelines. In this way, NPD is viewed as a relay race, “in which one stage follows another in [a] predetermined fashion” (Kamoche and Cunha, 2001, p.739). The sequential model for NPD processes is considered helpful in circumstances in which the uncertainty of product innovation needs to be managed and reduced. However, Kamoche and Cunha (2001) recognize that this model may appear to be too formal for all circumstances. It consists of tightly specified norms and procedures that are to be adhered to while moving NPD processes forward. This type of approach could reduce and discourage the flexibility that contexts striving to foster innovation also require (Tatikonda and Rosenthal, 2000; van der Meer- Kooistra and Scapens, 2008; Davila et al., 2009a).
Kamoche and Cuhna (2001) also illustrate an alternative model for NPD, the compression model. This model adapts and combines the sequential model, based on the need to reduce the NPD process time. The time for NPD is crucial and fundamental within contexts of innovation (Davila et al., 2009b; Harris and Woolley, 2009). The compression model involves overlapping tasks and activities in order to be efficient in terms of time management (Kamoche and Cunha, 2001). By following this model, NPD moves like an accordion. However, Kamoche and Cuhna also recognize how this model needs to be used, by cautioning to be aware of falling into “traps of acceleration” (2001, p.740) in a desire to reduce time to NPD. The structure of both the sequential and compression models, as stated by Kamoche and Cunha (2001), may not help address difficulties that are caused by sudden and unpredictable events, which are likely to occur within product innovation realms. In this respect, the so-called flexible model would be appropriate.
The flexible model is more suitable to NPD processes that are characterized by high levels of turbulence and uncertainty. More specifically, this model ignores the sequential structural features of the previous two models. The rationale of the flexible model builds on the fact that there is no reason to eliminate uncertainties. On the contrary, the need to “absorb” uncertainties is seen as an opportunity (Kamoche and Cunha, 2001) rather than something to be reduced or eliminated. Adoption of the flexible model allows NPD processes to develop flexibly, adapting to and incorporating
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changes as well as challenges as they are met. However, in adopting such a model, caution is needed in order to avoid descending into a chaotic situation caused by too much flexibility (Kamoche and Cunha, 2001).
In addition to these existing models for the NPD process, Kamoche and Cunha (2001), inspired by the practice of jazz improvisation, interestingly propose a further model – the improvisational model – where the need for both structure, (a key feature of the first two models: sequential and compression), and flexibility, (a key feature of the flexible model), is managed through and within so-called “minimal structures” (Kamoche and Cunha, 2001; van der Meer-Kooistra and Scapens, 2008; 2015). These minimal structures represent a sort of template of improvisation for innovation, where flexibility is managed and “where appropriate levels of responsibilities, priorities and procedures are clearly defined and combined with wide zones of manoeuvre” (Kamoche and Cunha, 2001, p.750). Within minimal structures, firmness and flexibility within NPD processes are balanced1.