The issues raised in the second Systematic Review Question (SRQ 2)—“How does the NPD portfolio management process link to the strategy process?” are addressed in three literature themes: Strategy Process (T5), Strategic Decision-Making and Strategy
Process (T6), and Front-End NPD and Strategy (T7). In this section, each theme will be
discussed in detail, and the relationship between these themes will be shown in the Subject Relevance Tree.
5.3.1 Strategy Process (T5)
The strategy process theme comprises two theoretical articles by Hutzschenreuter and Kleindienst (2006) and Johnson et al. (2003). The former reported a literature review, while the latter presented a conceptual article. Hutzschenreuter and Kleindienst (2006) proposed an integrative framework that maps the extant streams of studies in strategy process. In addition, it suggests as well the research opportunities within each stream.
In their article, Johnson et al. (2003) addressed that despite the fact that process perspectives are regarded to have revealed “the black box of organisations”, they still leave some limitations (p. 10). From the limitations identified by them, those that are most related to the systematic review questions are, first, process perspectives disregard the role of managerial agency (Pettigrew, 1985). Second, the process paradigm has been more prescriptive. It has focused merely on the design of strategic change or decision- making process, ignoring the day-to-day activities of managers. The third limitation is caused by its detachment from strategy content, leading to the fifth limitation that it lacks explicit connections to strategy outcomes. Thus, they suggested advancing the understanding further to an activity-based (micro strategy) view. This view is concerned the detailed process and practices which constitute the day-to-day activities of organization and which relate to strategic outcomes.
To sum up, strategy process perspective bears a number of limitations: fails to regard the role of managers in the process; more prescriptive rather than descriptive; ignores day-to-day activities and detaches from strategy content and outcomes. To enhance the understanding of strategy, an activity-based view of strategy that centres on the detailed process is proposed.
5.3.2 Strategic Decision-Making and Strategy Process (T6)
Strategy process is the way in which strategies emerge and evolve (de Wit and Meyer, 2004), aiming at achieving and maintaining the firm’s strategic position (Chakravarthy and Doz, 1992). In this section, the strategy process will be viewed from the perspective of the decision-making process.
Chakravarthy and White (2002) stated that strategy process is a decision-making process. The decision(s) made is not a single decision or are not discrete decisions but is a stream of decisions and actions with specific patterns (Chakravarthy and White, 2002; Mintzberg and McHugh, 1985). The decisions evolve over long periods of time and cross multiple levels, bridging three different decision processes: cognitive process of individual decision makers, the organisational rules and routines (organisational process) and political processes within groups or individuals (Chakravarthy and White, 2002). These patterns of decisions are the core element of the strategy process (Chakravarthy and White, 2002; Noda and Bower, 1996), which are attributable to changes in the organisational and environmental context.
In their study of two large telecommunication companies, Noda and Bower (1996) identified “intra organisational dynamics” by which managers at multiple levels relate to external and internal forces and deal with the cognitive, political and organisational impacts of their actions (p. 188).
In summary, strategy process is concerned with decision-making processes that involve interaction between cognitive, organisational and political process, resulting in a stream of decisions with a specific pattern.
5.3.3 Front-End NPD and Strategy (T7)
Poskela (2007) conducted a research focused on the integration of strategic level and operative level innovation processes in the front-end phase. Figure 5.5 shows the conceptual framework of the linkages between strategic and operative level innovation activities. Each level of process is constituted by three sequential activities: exploration (what should be done), execution (how it should be done) and exploitation (how to take advantage of previous activities) (Poskela, 2007, p. 434).
Figure 5.5: The Integration of Strategic and Operative Level Innovation Activities Source: Poskela (2007)
Poskela (2007) suggested that the integration of strategic and operative level necessitates both top-down and bottom-up processing. From the top-level management’s point of view, Poskela (2007) extracted three factors that influence the effectiveness of the integration of the strategic level and operative level front-ends: (1) the level of concreteness of business strategies; (2) the emphasis on business-minded decision making, and (3) the balance between control and creativity.
In summary, the linkages between strategic and operative level activities are apparent. The effectiveness of the integration requires top-down and bottom-up processing.
5.3.4 The Subject Relevance Tree for SRQ 2
The analysis of the findings brings to light the relationship between the articles, which is depicted in the subject relevance tree in Figure 5.6. This figure shows that Poskela’s (2007) article, which represents the subject of strategic and operative level integration, is the core article in the SRQ 2 discussion. In the next section, this article will be central to the discussion of the findings.
Strategy(Formula.on:( • Strategic(vision( • Products,(markets,( technologies(and(R&D( strategies(( • Strategy(implementa.on( • Upper(management( control(( • Product(roadmap( • Por?olio(management( • Strategy(leverage( • Strategic(renewal( • Learning(
Exploration Execution Exploitation
• FrontBend(management( • FrontBend(ac.vi.es:(ideas( genera.on,(concept( development(and( business(analysis(( • Project(management(of( new(product( development( • New(product( development(ac.vi.es( • Management(of( commercialisa.on( • Commercialisa.on( ac.vi.es( • Learning(
Exploration Execution Exploitation
Strategic Level
Operative Level
Figure 5.6: The Subject Relevance Tree for Systematic Review Question 2 5.3.5 Discussion of the Findings
The literature reviewed presents vague information concerning the link between NPD portfolio management and the strategy process (SRQ 2). Poskela’s (2007) framework, which is addressed to demonstrate the integration process in the front-end phase of the innovation process, is the only concept which can be adopted to approach the answer of SRQ 2. Thus the following discussion will use this framework as a basis.
Linking business strategy and product innovation strategy with the NPD portfolio management process (Cooper, 2005) ensures the new products developed fit the business strategy (Cooper and Edgett, 2010). In the NPD portfolio management, companies deal with decision-making processes that produce strategic portfolio decisions and tactical portfolio decisions (Cooper, 2005). While the former determine where the firm should spend their NPD resources (people and funds), the latter, which follow from the strategic decisions, focus on individual projects—the selection and prioritisation of projects and allocation of the resources required (Cooper, 2005).
In order to portray these interactions, Poskela’s (2007) framework on the integration of strategic and operative level was modified, as shown in Figure 5.7. This modified framework shows that the process elements in NPD portfolio management, represented in the Enhanced Conceptual Framework of NPD Portfolio Management
SRQ$2$ How$does$the$NPD$por/olio$ management$process$link$to$strategy$ process?!! Strategy$Process0T5$ Front0End$NPD$and$Strategy0T7$ Strategic$Decision0Making$ and$Strategy$Process0T6$ Strategic!and! Opera.ve!Level! Integra.on! Role!of!Management! Control!in!Strategic! Renewal! Strategic! Opportunity!of! Product!Concept! Process!and!Strategic! Outcomes!Rela.onship! Strategy!Process! Framework! Strategy!Making! Process!in!Mul.! Level!Organisa.on! (Hutzschenreuter!and! Kleindienst,!2006)! (Poskela!and!Mar.nsuo,!2009)!!
(Noda and Bower, 1996)
(Johnson et al., 2003) (Poskela, 2007),
(Martinsuo and Poskela, 2011)
(Khurana and Rosenthal, 1997)
Fuzzy!FrontKEnd! Integra.on!
(Figure 2.3), can be categorised accordingly. As shown in the area within the dashed line, business strategy and product innovation strategy formulation are considered as strategic level activities in the exploration stage, while ideas generation and new product concepts development are regarded as operative level activities in the exploration stage. Furthermore, strategic portfolio decision-making processes can be classified as strategic level activities in the execution stage, whereas tactical portfolio decision-making processes can be categorised as operative level activities in the execution stage.
Figure 5.7: The Linkages of Strategic and Operative Level in NPD Projects Adapted from Poskela (2007)
Poskela’s (2007) initial framework has distinguished between exploration activities, representing strategy content formulation, and execution activities, which are contained in the strategy process part. This feature eliminates the shortcomings pointed out by (Johnson et al., 2003) regarding the detachment between strategy process and strategy content. However, Poskela’s (2007) initial framework does not show the links between activities within one level—exploration, execution and exploitation. In the modified framework (Figure 5.7), the interactions between these three activities are in place. These interactions in the strategic and operative level are parts of the phenomenon of interest for this review.
Strategy(Formula.on:( • Business(Strategy( • Product(innova.on( strategy:(Products,( markets,(technologies( and(R&D(strategies(( • Strategy(implementa.on( • Upper(management( control( • Product(roadmap( • Por@olio(management( • Strategy(leverage( • Strategic(renewal( • Learning(
Exploration Execution Exploitation
• FrontCend(management( • FrontCend(ac.vi.es:(ideas( genera.on,(concept( development(and( business(analysis(( • Project(selec.on,( priori.sa.on,(resource( alloca.on( • New(product( development(ac.vi.es( and(project(management( • Management(of( commercialisa.on( • Commercialisa.on( ac.vi.es( • Learning(
Exploration Execution Exploitation Strategic
Level
Operative Level
The area related to the conceptual framework of NPD portfolio management
From a strategy process perspective, Chakravarthy and Doz (1992) suggested that the utilisation of the right decision process and administrative systems (organisational structure, planning, control, incentives, human resource management and value systems) enables firms to achieve and maintain their strategic position. In line with this, in the context of NPD portfolio management, (Poskela, 2007) argued that successful portfolio management is indicated by decision making structures that support realisation and management for both top-down and bottom-up project activities.
5.3.6 Conclusions
Synthesis of the findings fails to reveal how the NPD portfolio management links with the strategy process (SRQ 2). This issue is not addressed in any of the literature reviewed, except for Poskela’s (2007) article which can be considered as only subtly pertaining to the issue.
Poskela’s (2007) article is regarded as the key article, nevertheless it has some limitations. First, the study only investigated the integration of strategic and operative level activities in the front-end stage. Second, whereas it indicated the factors that influence the effectiveness of the integration, the study did not propose formal mechanisms of how the linkages are formed and maintained. Finally, the study has not paid attention to the interaction between exploration, execution and exploitation activities.
5.4 ORGANISATIONAL ROUTINES AND NPD PORTFOLIO