Ricardo Garza Treviño Industrial Project Business

83819 September 23, 2010

Complex products and systems innovation

I consider innovation as a source of opportunity for generating revenue. And the first thing that comes
to mind when thinking of innovation is new technology, complex technology. Although I believe there
are many ways to innovate, as for example changing the way to do some activities, the most usual is the
creation of new products, with new technologies or combination of others. For these reasons I agree
with Davies and Hobday, who mention that complex products and systems represent a significant
portion of gross value added of all advanced industrialized countries. 1 They also mention that involved
in complex product development is new knowledge 2, which I interpret as innovation.

Another aspect of innovation of my interest is its causes. Torkel Tallqvist mentioned in his lecture 3 that
according to Schumpeter (1942), discontinuances and changes are the origins of opportunity, and that
they are also origins of innovation. Davies and Hobday, centered in the complex products and systems,
describe that the changing innovation environment conditions that help it develop are technological,
policy and financial changes, market growth and internationalization of firms and deregulation of
sectors, for example, nuclear power and aerospace. 4 I agree with these causes and I also believe there’s
another one that is significant: People. Without people and entrepreneurship there would never be
innovation whatsoever. About this, Torkel Tallqvist mentions that these innovators, called activists, are
the main promoters of the innovative output of a firm. 5 He says that it is preferred that in the company
staff there would be more than one promoter, each one belonging to a specific area of knowledge, and
all of them working together inside a network of knowledge and actors he calls an innovation
ecosystem. Also, Davies and Hobday mention a little about this: “Tipically, CoPS projects are embedded
within dense networks which shape the structure and coordination of innovation”. 6

After mentioning the definition and causes of innovation, another important matter is the effects it has
and the conditions of business operation it requires. I stand in favor of adapting the several aspects of
business organization in order to serve innovation purposes. About the effects, Davies and Hobday
mention that based in the UK and other OECD countries, complex product and systems – and indirectly
innovation as I interpret – are a major source of competitiveness of firms. 7 Also, they mention that this
kind of goods serve as a point of entry of new technology into the economic system. 8

About how innovation – by means of complex product and systems – shapes the business conditions,
Davies and Hobday argue that the nature – complexity – of the product/system shapes the innovation

1
Davies A., Hobday M. (2005). Page 21
2
Ibid.
3
September 21, 2010, Åbo Akademi.
4
Davies A., Hobday M. (2005). Pages 29-30.
5
September 21, 2010, Åbo Akademi.
6
Davies A., Hobday M. (2005). Page 47.
7
Ibid. Page 22.
8
Ibid. Page 21.
processes, organizational form and style of management of the company. 9 They compare these three
aspects as how would they be in a mass-production focused business and how would they in a complex
products and systems focused firm. Of all the compared things, I found interesting that in the latter case,
the innovation path has to be an agreement between all the parts involved: “In addition to their internal
tasks, systems integrators have to coordinate the innovation activities of the supply network” 10. This
would be a big issue if the company has always been business-focused and not customer-focused. Also,
the other thing that interested me was about the management theory. Cited from Davies and Hobday,
“the capability to manage across the whole web of producers, users and regulations is an important
feature of successful project-based firms” 11.

In synthesis, the innovation path isn’t easy. The company interested needs to research and understand
the technological, political, social, environmental and not just market trends. It has to adapt their
organizational hierarchy, has to have high capable project managers and the most important of all, it has
to have a policy of high customer-oriented attitude.

Reference:

Davies A., Hobday M. (2005). The Business of Projects: Managing Innovation in Complex Products and
Systems. United Kingdom: Cambridge University Press.

9
Ibid. Page 53.
10
Ibid. Page 50.
11
Ibid. Page 51.