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Long Range Planning

34/6 December 2001

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Charles Baden-Fuller Editorial

    Modularity
    Modularity is a much discussed but little understood topic of management and so occupies a lead position in this issue. Since Adam Smith, firms have sought to exploit the division of labour to achieve scale and scope economies offered by the modern international economy. Yet, for many the increasing demands for mass customisation have frustrated the attainment of efficiency. Overlaying mass customisation is the even more demanding requirement for fast cycle new product and new service development. How then are efficiency gains to be traded off against these seemingly insatiable demands?Ron Sanchez joins with Robert Collins to explain how modularity is the key to resolving these dilemma.

    Modularity is much more than many suppose. It is not just a way of thinking about product design, it requires a special disciplined approach to management of innovation processes. When applied properly, modularity can go a long way to achieving Adam Smith's dictum. The authors explain the key dimensions of the modular approach. They back their discussion with vivid examples from implementing the modular approach in GE, one of the world's leaders in this area. They are also able to be critical, for they describe the areas of innovation and efficiency that the current thinking on modularity cannot resolve.

    Implementing Strategy
    Our second theme is the implementation of strategy. Although change is better understood than say ten years ago, the capacity to adjust to new situations challenges most organisations. Neil Thompson and Peter McNamara examine how to make cross border acquisitions work better. They argue that corporate entrepreneurship, which is usually associated with new ventures, works well in merger situations. They explain how corporate entrepreneurship can be applied and show its effectiveness by tracking a series of mergers over a seven-year period.

    Aaron Shenhar, who has published in LRP before, returns to examine the way we should view projects in organisations. With Dov Dvir, Ofer Levy and Alan Matlz, they note that most firms are turning to project based thinking, yet managers lack simple overarching frameworks for thinking about this new way of organising. Using a wide range of projects as examples, they come forward with simple yet powerful suggestions for thinking about the management of project based operations.

    Janek Ratnatunga and Shiran Cooray examine how to manage better the emerging joint venture between outsourcing firm and its supplier. They take a typical high technology component supply contract between Eastern and Western firm, and show how simple tactical issues combined to make strategic ones. By tracking both problem emergence and solution they provide valuable practical guidance in this area.

    Lastly, Charles Baden-Fuller joins with Siah Hwee Ang to update the ranking of European Business Schools for their research capability. They find a few changes in the league tables, mostly symbolising the rise of continental business schools. They also examine the role of US schools in driving successful publishing, an area where continental schools appear to be better organised. For non-academic readers interested in alliances the paper has much to say about what makes successful partners attractive to one another.

    Looking forward
    Looking forward, our next issue will lead with practical guidance on making knowledge management work. We also have future themes planned on strategic human resource management, on linking finance to strategy and on the role of fashions and fads in management practice.

Executive Summaries

Modularity

Ron Sanchez and Robert P. Collins Competing - and Learning - in Modular Markets ron.sanchez@imd.ch

    Today's markets for products and services increasingly demand customised and differentiated products to meet individual requirements. The modular approach to product and process architectures that has evolved now allows companies to create greater product variety and bring new products to market more rapidly, all at lower costs. This paper says that managers interested in applying modularity concepts must learn a new strategic logic that contradicts conventional management wisdom. This logic contains three counterintuitive principles: products design organisations; standardisation increases flexibility; and discipline enhances creativity. PDF

Strategy Implementation

Neil Thomson and Peter McNamara Acheiving Post-Acquisition Success: The Role of Corporate Entrepreneurship peter.mcnamara@ucd.ie

    This paper studies the success or failure of six acquisitions of East German companies by foreign multinationals. The authors argue that success or failure depends largely on the degree of corporate entrepreneurship present in companies and in all six cases they had their predictions vindicated when they revisited the companies after a seven-year period. Corporate entrepreneurship, they argue, instils the flexibility and innovation that is needed to make the most of an acquisition. The paper concludes by linking corporate entrepreneurship to the learning organisation and provides practical lessons for managers.

Aaron J. Shenhar, Dov Dvir, Ofer Levy and Alan C. Matlz Project Success: A Multidimensional Strategic Concept amaltz@aol.com

    Projects as powerful strategic tools for creating value and competitive advantage, with project managers as industry's new strategic leaders, is the vision of this article. But how to measure project success? The authors' research is based on different stakeholders' reactions to the notion of project success and its measurement, showing how this varies according to time and style of project. Using four levels of technological uncertainty inherent in the projects, they show how projects succeed according to three dimensions – time/budget; customer satisfaction; benefit to performing organisation, as well as a fourth developed during the study – the contribution the project makes towards preparing the company for the future. The assessment of project success according to meeting its original time and budget goals is shown as far too naive for the proper assessment of especially more far-reaching projects. Evidence is provided of projects where such constraints were significantly overshot, but where the pay-off for the performing organisation was considerable and provided a substantial platform for future profitability. Clearly a more sophisticated understanding of the nature of a project is indicated, both at its planning and budgeting stages, and for the eventual assessment of its success.

Janek Ratnatunga and Shiran Cooray Buyer-Supply Relationships: A Case Study of a Japanese and Western Alliance
Janek.Ratnatunga@buseco.monash.edu.au

    This case study of the relationship between a small Australian supplier and a large Japanese buyer shows that the difficulties such partnerships can encounter when they cross different business cultures are more than just linguistic. Perceptions of product features and quality, attitudes to business procedures and formal/informal controls, and expectations about information sharing may all differ – and yet compromises must be sought to preserve the value to each side of the advantages in style that led them to ally with a partner from another business culture in the first place. The considerable level of ‘testing' of the alliance undertaken by the Japanese firm, and the way suppliers who can swiftly circumvent delay-causing cultural issues to reach the ‘switching point' where rewards begin to flow, are both outlined. Examining the modes of adaptation undertaken between the partners in the case study, the article recommends a proper programme of visits at both strategic and operational levels and a full understanding of partners' expectations regarding procedures, controls and rewards, as well as pointing to the significant potential of the role of ‘link-pin' in adjusting expectations and easing communications.

Business School Reputations

Charles Baden-Fuller and Siah Hwee Ang Building Reputations: The Role of Alliances in the European Business School Scene.

Download the full article.

View the Top 100 European Business Schools.

View the Press Release for this article.

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