As illustrated in Section 7.5, accounting was recurrently practiced at Beta as it allowed the project manager, the project leader and the project Kappa team to produce information that revealed the impacts of the creative ideas of the project leader on the accounting performance of the new product in development. In particular, accounting translated the creativity, i.e. the ideas reflecting the desires of the project leader concerning aspects such as the “choice of the product’s components, the arrangement of its internal layout, the material technologies to adopt and the functionalities to implement” (Manager of Engineering) in terms of the cost of the new product. Throughout project Kappa, the impacts of creativity on the cost performance of the new product were periodically identified and analyzed during the meetings and collaborations between the project manager, the project leader, the sourcing manager, the manufacturing engineer, in which the cost of the new product in development (materials and labour costs) was estimated and compared with the target (see Table 7.1). The accounting figures produced during these meetings were inscribed within the project report, the document that illustrated the status of project Kappa to the gatekeepers at the end of each phase and to senior managers during the monthly active
project global meetings.
Even though the status of the product’s cost performance was updated monthly in the project report, it was observed that accounting practices, analyses and discussions of the
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impacts of creativity on the cost performance of the new product occurred nearly every day.
“The project leader and the team are constantly stimulated by me to think about the effects of their choices on the cost performance of the product Kappa. This happens because the accounting performance of the new product is assessed by the gatekeepers at the end of each phase, through the analysis of the updated project report, in order to determine the closure of that phase and the beginning of the next” (Project Manager).
However, it is also worth noting that during project Kappa it sometimes happened that the cost issues (i.e. product’s cost estimate being higher than the target) were neglected at the gate review in order not to spend too much time on the analysis of the cost performance, in order not to miss the opportunity to launch the innovation on the market soon. This happened at the end of Phase 3 and at the end of Phase 5. Even so, the project leader did not want the project to be undermined by accounting. The project leader never wanted the process towards his desired innovation hindered because of poor accounting performance. This need to meet the cost target could induce a limit to the creativity for innovation, as it was likely to restrict the choice of the product’s components, the arrangement of its internal layout, the technologies that were to be adopted, and the functionalities to be implemented in favour of a lower cost. Nonetheless, as stated by the project leader:
“During project Kappa, when cost issues [namely the product’s cost estimates were higher than the target] occurred, the actions I conducted to avoid or address these issues and to fulfil the cost target resulted in further stimulating and enhancing my creativity for innovation ...also, the meetings and the actions aimed at addressing the accounting issues, by investigating how to decrease the cost impacts of the choices and ideas for innovation, led to discover alternative and interesting ideas that were not considered before ... These ideas even enhanced the innovation I intended to develop during the NPD process” (Project Leader).
The accounting constraints could jeopardize what was conceived of for the new product until then, such as the creative ideas of the project leader, the ideal of innovation as desired by the project leader, the work in progress and the prototypes developed up to
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that point. The actions undertaken by the project leader and the team for addressing the issues often put back into play everything that was assumed until then. They focused the team on searching for alternatives and less expensive solutions by:
“changing materials, looking for alternative components or suppliers; by reviewing the internal layout, looking for an easier procedure of assembly which would have required less time, in terms of manpower and machine; reviewing the technologies to adopt, in order to find a solution to reduce cost” (Project Manager).
While the project leader and the team collaborated in carrying out these actions, and even though, in doing so, they were mainly dealing with accounting analyses and managed cost figures, it was realised:
“how these accounting actions also offered an occasion to further reflect on and study in detail the technical features of the work in progress of the new product as developed up to that point ... in these circumstances, the active stimulation of creativity led to the discovery of technical solutions that enhanced the work in progress during the process of pursuing innovation” (Project Leader).
To summarize, if accounting constraints initially appeared to jeopardise the work in progress of Kappa and limit the creativity for its featuring innovation, this limitation has been converted into an opportunity to enhance the development of innovation. Furthermore, the project leader of Kappa highlighted the importance of a periodic analysis of the accounting performance of the new product in development, not only for determining, controlling, monitoring and reporting the financial and accounting performance and results; but above all, it allowed for a broader and more detailed understanding of the ongoing process for innovation as well as its challenges and new possibilities.
7.9 Chapter Summary
The material collected within the empirical case of Beta describes the empirical accounting and innovation practices that unfolded during the development of the new product Kappa. From the beginning of project Kappa, the accounting performance of the new product in development was continuously monitored by the project manager by facilitating accounting practices in order to update the project report. The accounting
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performance was analyzed in light of the cost targets defined by the product manager within the PDD from Phase 2 of the project. The results of this analysis were periodically (monthly) reported to the senior managers of Beta during the so-called
active project global meetings. The accounting performance of the new product was
also verified by the gatekeepers at the end of each phase of the NPD process. In practice, the accounting performance of Kappa was analyzed through the use of the following accounting measures: labour and materials costs, which were periodically estimated and compared with their targets and updated within the project report. This occurred during the meetings that the project manager organized periodically, generally monthly. In particular, the project leader and the sourcing manager were involved in the estimation of the materials costs, while the project leader and the manufacturing engineer were expected to participate in the meetings for the estimation and analysis of the labour cost.
The individuals involved in the NPD processes in Beta were the project manager, the project leader and the experts inside and outside (such as the gatekeepers and the sourcing manager) the team. The project manager was in charge of coordinating and managing the NPD process by leading the team to work in line with the objectives of the project, in terms of cost, technical functionality, time-to-market, and the other requirements in the PDD. The project team executed the activities and the tasks for developing the new product Kappa. The project leader was responsible for the innovativeness and the technical performance of the new product. The project leader participated in, coordinated, and supervised the ‘technical’ activities to be carried out, constantly striving to realise the innovative technologies he conceived of for Kappa. Still building on the material collected within the case, the empirical process for innovation as featured in the new product and observed within the context of project Kappa at Beta is articulated as an unfolding of work in progress and prototypes that led to the creation of a new product, i.e. Kappa, which did not entirely fully fulfil the desires and the intentions for innovation of the project leader. However, it has also been demonstrated that the need to fulfil the cost targets led to discussions and tensions among the project leader and other staff that resulted in stimulating creativity for innovation. Moving on from the material described in this chapter and building on further empirical material that is considered to be helpful, the answers to the research questions are articulated in detail in Chapter 4.
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Chapter Eight
Findings 2 - How Accounting engages with Innovation
8.1 IntroductionIn the last section of Chapter 7, it was illustrated how accounting, even though it may initially appear to constrain the development of innovation for Kappa, in fact stimulates creativity and facilitates innovation for the new product Kappa. In this chapter studies and literature outlined previously in Chapter 3, which: review the balance between firmness/control and flexibility/creativity within product innovation processes (see Chapter 3, Section 3.6); review the role of accounting within processes of mediation among different interests and concerns (see Chapter 3, Section 3.7); review processes of hybridization of expertise (see Chapter 3, Section 3.8), are relied upon here to interpret and frame the contribution of the empirical material. The present chapter provides the answers to the three research questions formulated in Chapter 4, Section 4.4. Therefore, the aim here is to illustrate and explain, from an analysis and interpretation of the empirical material gathered, how accounting engages with innovation. Focus is placed on how accounting engages with the multiple interests, purposes and concerns characterizing processes of innovation, and its underpinning rationale, including the desires, intentions, and motivations for innovation (see Chapter 2, Section 2.6).
As explained in Chapter 4, firmness and flexibility, mediation and hybridization characterize processes of innovation and NPD. They entail different dimensions of and purposes for innovation (firmness and flexibility), the participation of multiple actors from different domains, featured by different interests and concerns (to be mediated), and also by actors with different expertise (who can hybridize their expertise with accounting). It is shown here how the interaction of the interests and concerns at stake in the NPD process can generate tensions within the rationale for innovation by drawing on accounting information and in so doing they have the potential to facilitate the process of innovation.
This chapter is organized as follows. First, Section 8.2 answers the first research question: how does accounting engage with firmness and flexibility in processes of innovation in new product development? It explains how accounting engages with the
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process of innovation involving project Kappa (i.e. the process from which innovation materialized featuring in the new product) through firmness and flexibility (see, among others, Kamoche and Cunha, 2001; Chapter 3, Section 3.6). Next, Section 8.3 answers the second research question: how does accounting engage with the rationale for innovation through processes of mediation? It illustrates how accounting engages with the process of innovation by facilitating mediation (see, among others, Miller and O’Leary, 2007; Chapter 3, Section 3.7) among the professionals involved in project Kappa. Then Section 8.4 answers the third research question: how does accounting engage with the rationale for innovation through processes of hybridization? It analyses how accounting engages with the process of innovation through processes of hybridization of expertise (see, among others, Miller et al., 2008; Chapter 3, Section 3.8) within project Kappa. Finally, Section 8.5 summarizes the key points of this chapter.
8.2 Research Question 1: How does accounting engage with firmness and