Innovation in the Engineering Consultancy Field

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1. INTRODUCTION

1.1 BACKGROUND

Innovation is one of the major issues in many industries around the world. It is essential for the success in industry performance and based for development. Innovation is the one of key activities identified as being important to improve the performance of the construction industry (see Tavistock Institute, 1997 cited Page et al, 1999). Construction industry faces major challenges, including that of improving its environmental performance and every new construction project has its specific new requirements depending on the demands, existing knowledge, technical and other developments which are combined to form something new. Construction firms are increasingly being challenged to successfully innovate in order to satisfy better the aspirations and needs of society and clients, whilst improving their competitiveness in dynamic and abrasive markets (Sexton & Barrett, 2003a). By accepting this, there is consequent need for greater understanding of the theories and nature of innovation to identify and implement successful innovation in the construction industry.

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There are several definitions for innovation introduced by authors from time to time with different viewpoints (see Table 2.1). For example, Urabe (1988 citedSexton & Barrett, 2003a) revealed that innovation includes the generation of a new idea and its implementation into a new product, process, or services that leading to the dynamic growth of the national economy and the increase of employment as well as the creation of pure profit for the innovative business enterprise. The similarity between those definitions is that something new is created, a product or a process, and put to use. Innovation really means change(Sexton & Barrett, 2003a), and the change can be one of two types; firstly, change in the product or service being provided, or secondly, change in the process by which the product or service is created. These definitions are applicable for construction industry to improve the performance; the act of introducing and using new ideas,technologies,products and or process aimed at solving problems, views things differently, improving efficiently and effectiveness, or enhancing standards of living(CERF,2000 cited Sexton & Barrett, 2003a).

In the current thinking, innovation is not treated as a purely technological change; it can be classified according to its process; as radical and incremental innovations. Radical is a totally new product or service for the community whereas, Incremental innovation is a significant improvement of the existing product or service that happens gradually. Each case of innovation are affected by factors such cultural, human and management factors. Cultural factors are the factors which are related with the organisational environment. Individual’s personal characteristics are included in human factors the management factors are especially connected to thesupport from top management.

Schumpeter (1934; 1987cited Page et al, 1999) defines five types of innovation; namely, product, process, market, organisational and resource which can be a basis for the study of innovation in construction firms. Within these five types, process and organisational innovations are more significant in consultancy services firms. The generic innovation model (see Figure 2.1) show, that successful innovation outcomes are achieved through an appropriate innovation focus that is responsive to contextual factors, realised by appropriate organisationalcapabilities and channeled through effective and efficient innovation processes (Sexton & Barrett, 2003a).In the context market-based view and resource-based views are the main approaches. According to market-based view argues the firms oriented themselves through innovation to optimally exploit changing market conditions. Resource-based innovation focuses on firms’ resources to understand their business strategies to provide direction for innovation (for example, see Sexton & Barrett, 2003a). Ideas are taken to mean the starting point for innovation and also hierarchical needs of organisational, such as survival, stability and development are motivations for innovation.

There are two principal clusters of thought in the general innovation literature concerning the process of innovation in firms: multi-stage process which comprise of recognition, invention, development, implementation and diffusion stages (For example, see Sexton & Barrett, 2003a) and non-linear cycle process of different and convergent activities. Innovation processin the firms depends on the internal and external drivingfactors as well as barriers.

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Innovation drive from many different sources (for example, see Tatum, 1987; Slaughter, 1993 cited Egbu, 2005). Nonaka and Takeuchi (1995) and Egbu (1999a) revealed that knowledge is a vital organisational and project resource that contributes organisational innovations and project success (see Egbu, 2005). Knowledge management takes an essential part in the process of innovation. One starting point for the study of the role of knowledge in innovation at firm level is to focus on the various forms where knowledge can be taken and the modalities in which it plays a role in innovation.

Managing knowledge is a critical challenge for knowledge intensive firms (Robertson etal., 2001 cited Lu & Sexton, 2006) in bringing innovation. As Lu and Sexton (2006) suggests, appropriate human capability within construction firms is vital for successful innovation and performance improvement in the construction firms. Furthermore they argue that innovation in service firms is significantly different to manufacturing firms, and; also, project-based firm to non-project-based firms. This has implications to construction industry which id project-based and more service-oriented. Consultancy firms are more service-oriented and identifying their innovation behaviors is noteworthy in nature.

Lu and Sexton (2006) recognised knowledge capital (KC) (see Figure2.3); combination of human capital (HC), relationship capital (RC) and structure capital (SC) is the driver for innovation in knowledge intensive firms. By effectively manage these HC, RC and SC firms can achieve the successful innovations. Project-based knowledge transfers towards the organisation (project push) as well as individual and specific project requirements pulling (project pull) the organisational knowledge towards the project success are the essential drivers for innovation. In managing project-based innovation,knowledge between individuals and organisation is a key to success. In the construction industry consultancy firms take significant initiative part in every project.

Innovation in consultancy firms can be a new idea or new process put to use. Project-based knowledge transfer is significant in an innovation process of construction service firms. Knowledge transfer can take place from project to organisation as well as organisation to project. Managing the human knowledge (HK), structure knowledge (SK) and relationship knowledge (RK) is the major challenge for the firms to produce the innovation. Knowledge management practice in the innovation process is needed to improve the organisational performance.

CASE – C

Case Cis one of the leading consultancy organisations in Sri Lanka. It was established in 1976 and, it is a limited liability company consisting of charted Architects, Engineers, Quantity Surveyors and Urban planners. The firm offers comprehensive architectural and engineering services for all types of buildings, building complexes and related technical services and the firm offer comprehensive consultancy services in the areas of architecture, engineering (civil, structural, environmental, electrical), project management and urban planning.

Managing Director is the senior partner and the Chief Executive Officer. Three directors are handling three divisions:Administration, Architectural and Engineering. At the moment 35 full-time employees are working altogether including eight Architects, two Engineers and eight people in Quantity surveying division. Administration division consists of financial controlling unit, computer administration unit. Book keepers, typist, account clerk are working in these units. Architecture division’s activities are expanded to architectural and landscaping design. The Engineering division comprises of engineering contract and chief engineering.

4.3 CASE STUDY FINDINGS

This section discusses and analyse case study findings to answer the research problem through the key attributes (see Chapter 2) which were formed throughout the literature synthesis; Innovation focuses( see Section 4.3.1), Innovation out comes ( see Section 4.3.2), Innovation drivers( see Sections 4.3.3), Innovation barriers( see Section 4.3.4), Knowledge capitals ( see Section 4.3.5), Manage knowledge capital( see Section 4.3.6) and concludes with summary.

4.3.1 INNOVATION FOCUSES

Identify the focuses towards innovation is essential to explore the nature (Section 2.5.1.1). Since the interview guidelines include the identification of innovation focus, the respondents from each case, point out the organisation focuses (see Figure 4.1) during the interviews.

Case ACase B

Case C

Figure 4.1: Coding structure of innovation focuses

Table 4.1: Responses on innovation focuses

Description

Case A

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Case B

Case C

Arc

Eng &Dir

QS

Arc

Eng

QS

Arc &Dir

Eng

QS

Giving product with function

X

Keep Competitive Advantage

X

X

X

X

X

Multiple Projects

X

X

X

X

Survival in Market

X

X

X

X

X

X

X

Problem solving

X

Sustainable development

X

Client's satisfaction

X

X

Increase efficiency of firm

X

Skill improvement

X

Making profit

X

X

Arc- Architect Eng- Engineer QS- Quantity Surveyor Dir- Director

As per the innovation focuses factors identified through the research (see Figure 4.1), the key factors that the consultancy firm’s focuses are could be summarised as survival in market, keep competitive advantage, multiple projects, client's satisfaction, making profit,problem solving, increase efficiency of firm, skill improvement and giving product with function.

Survival in the market and multiple projects are most dominating focuses in each case. Case B all respondents, QSs from Case A and C empharised that survival in the market is a focus to innovation. The statements of architect and engineer of Case A and C, supported to this focus. In all three professionals view, survival in the market took important place. These respondents identified that increasing the efficiency of firm; improve the skills of employees as well as firm; and, achieving a good profit is related to survive in the market with a good reputation. Engineer in Case B mentioned “As a private company nobody think about innovation. To make profit,organisation is carrying some new idea. As well as by doing this we could survive in the market with the good name”. This is supported by other respondents as well. Problem solving identified as a focus by the engineer as well as a director in Case A. He supposed “Basically, every day we are doing innovation. Every site have problem. Even a house project we have to do some in first time. There is an innovation”.

Architect, Engineer and QSs of three cases are indicated multiple projectas a focus of the firms. The multiple projectsfocusindicates that the firms always focused to innovate as a whole organisation not a single project. Under this focus, they supposed to increase the efficiency of firms as well as give value for organisation rather than give value to a particular project. The QS in Case A said “we are considered to give a value to organisation rather than make success in a particular project”. Respondents from Case A and C and one from Case B indicated that get competitive advantage is also one of the key focuses to innovate. Offer a sustainable product with client and end-user satisfaction, and linearly, increase the profit was a point highlighted by them. Pay attention on getting Client’s satisfaction was explained as a focus by the engineer and QS in Case B. Engineer of Case A also supported to this factor. The QS of Case C stated “We have to satisfy the client. Otherwise they won’t come to this organisation for their future projects”.

Even though several focuses as explained above were identified from the study, these can be summarised under five main focuses of selected case study firms; survival in market, get competitive advantage, multiple projects, problem solving andgetting client's satisfaction. Other factors can be included under these main points. To achieve successful outcomes (see Section 4.3.2) these focuses are important.

4.3.2 INNOVATION OUTCOMES

The outcomes are depends on the company’s focuses, which are identified in Section 4.3.1. There is a relationship between focuses and outcomes that is focuses became outcomes when the innovation process success. Through the interviewee’s data, innovation outcomes in consultancy firms (see Figure 4.2) identified.

Case ACase B

Case C

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