Project termination mechanism

The formula for negative evaluation and project termination contains the ab-sence (or the failure of the evaluation to lead into positive outcome) of product evaluation, market evaluation, product policy evaluation and competition evaluation. Specifically the formula can be stated as:









This formula can be interpreted as explaining a NPD project where the product met none of the evaluation criteria except risk evaluation that was present in some of the cases but was not minimized into the formula. Therefore, the NPD projects failed in almost all aspects of evaluation. This is interesting as partial success is completely absent from these cases. Thus the projects could be deemed as total failures when they were evaluated.

The evaluation stage proceeds in a straightforward manner as the different evaluation rules are applied during a short period of time. In some instances, such as when the electronic microscope was evaluated, the evaluation occurs during a single meeting where the new product group goes through the differ-ent evaluation rules and then decides to terminate the project.

The mechanism that is postulated to underlie this configuration relates to failure in ideation. The process begins when product development is deemed

to have proceeded to a stage where enough information has been gathered for the product to be evaluated. This puts the project into the agenda of the new product group, which then decides on the future of the NPD project. Through a meeting or a series of meetings the new product group goes through the differ-ent evaluation rules which leads them to deem the project unfit for commer-cialization and the project is subsequently terminated.

From the perspective of the functional components of the mechanism, the minimized configuration does not include a single present condition. There-fore, the projects could be deemed to have failed in all areas of evaluation. The only condition that is not minimized into the configuration relates to risk eval-uation. Overall, this mechanism depicts the escalation of failure that had been allowed to continue to either making of a prototype with the help of external financing as is the case with CK 12 aviation radiophone and Personal Dust Sampling Pump or the termination of a project at a very early stage as it the case with the electronic microscope.

7.2.5 Theoretical grounding for the mechanisms

First, it is noteworthy that these mechanisms are a more homogeneous group compared to the ideation mechanisms that were very varied in their form and content. This might stem from the notion that evaluation as a function is more structured and formal. What this stage yields is configurations of evaluation rules that the managers apply when evaluating products and how these config-urations can be typified.

It has also to be noted that each of the evaluation mechanisms that led the product into outcome stage included product evaluation. This is a strong indi-cator that the product itself creates grounds for its commercialization. Thus, it could be said that when managers deploy resources to ends they perceive most efficient, as suggested by Mahoney (1995), the viability of the product is on which they begin to configure the product to specific ends. Furthermore, prod-uct characteristics have been identified in the extant literature as a key success factor for new product performance (Henard and Szymanski 2001), which is also supported in the light of present findings.

These evaluation mechanisms relate largely to the pursuit of evolutionary and technical fitness by the management, which has been highlighted in the dynamic capability literature (e.g. Helfat et al. 2007; Teece 2007). Policy co-herent evaluation mechanism to existing market and new market evaluation mechanism are directed towards increasing the evolutionary fitness of the company. Both of these strive towards extending the presence of the organiza-tion in both existing and new markets. The policy coherent internal evaluaorganiza-tion mechanism is directed at increasing the technical fitness of the company by increasing efficiency in contrast to competitors. The final mechanism embod-ies the management’s realization that the products neither increase evolution-ary or technical fitness and therefore the projects have to be discarded.

Policy coherent evaluation mechanism to existing market increases evolu-tionary fitness by providing offerings to markets that the company knows or is operating in and is therefore aimed at increasing the growth of the company.

This follows the suggestion of Helfat et al. (2007) of how dynamic capabilities create performance by inducing evolutionary fitness. The triad of product evaluation, market evaluation and product policy evaluation are primarily fo-cused on fitting the product to the company and the market. This is done by selecting products that provide both internal fit with what the company does and external fit with the market environment. Therefore, it enables aligning products in relation to existing offerings of the company but also to the possi-bilities that the managers see to exist in the market. This follows the sugges-tion of Clark and Wheelwright (1993) that projects are not island in themselves but that they interact with other projects and that they have to match the oper-ating organization to be effective. Therefore, what the managers aim at is at-taining simultaneously internal and external fit (Siggelkow 2001).

The new market evaluation mechanism relates to selecting products to new market with risk mitigation. This incorporates the idea of evolutionary fitness through focusing on expansion into new markets. This follows the suggestion of Helfat et al. (2007) on how dynamic capabilities create performance by in-ducing evolutionary fitness through growth. The mechanism incorporates the presence of product evaluation, market evaluation and risk evaluation in addi-tion to the absence of competiaddi-tion evaluaaddi-tion. Selecaddi-tion of these projects for commercialization can be described as what Eisenhardt and Brown (Brown and Eisenhardt 1997; Eisenhardt and Brown 1998) refer to as probes – tests of new and possible markets with low cost projects. Nature of the projects mini-mized in this configuration after case specific analysis also upholds this, as ELSA was an initiative to pursue opportunities in the weather satellite busi-ness, CORA was a project to tap into the emerging market of OMEGA radio navigation technology, and finally SODAR was a project to expand into weath-er radar business. Thus all the projects had far-reaching goals. By using extweath-er- exter-nal financing in the projects, Vaisala was also able to keep costs of the projects down, which also follows the suggestions Eisenhardt and Brown (Brown and Eisenhardt 1997; Eisenhardt and Brown 1998) with regards to probes.

The third evaluation mechanism, labeled as policy coherent internal evalua-tion mechanism, incorporated product evaluaevalua-tion, competievalua-tion evaluaevalua-tion and product policy evaluation in addition to the absence of risk evaluation. This mechanism is directed towards increasing technical fitness of the company by enhancing the operational capabilities of the organization. In the project, which is left in this prime implicant after case specific evaluation, this is at-tained through cost efficient production of radiosondes. This is in line with the suggestion of Helfat et al. (2007) that technical fitness is manifested in how efficiently the company is able to produce its offerings.

The final mechanism embodies the absence or negative outcome from prod-uct, market, competition and product policy evaluations. When the product is incapable of increasing neither evolutionary nor technical fitness of the com-pany, the product development project is terminated.

Overall, it is possible to conclude that the identified mechanisms embody the managers’ pursuit to increase the evolutionary or technical fitness of the com-pany through the selection of products that are capable of inducing these ef-fects. Thus, evaluation pertains largely to the managers’ decisions of resource allocation to causes they perceive efficient. To do this, they exercise different combinations of evaluation rules. How different outcomes are pursued de-pends on the mechanism in question.