Alfred Kieser & Nicole Reifenscheidt

Alfred Kieser & Nicole Reifenscheidt Innovation Capabilities in the Information Economy – Empirical Insights Into Clients’ Management of IT Innovation Projects and the Role of Consultants Workshop „Innovative Capabilities and the Role of Consultants in the Information Economy“ ZEW, Mannheim, Germany

Agenda Introduction Consultants and Innovation Adding the Client to the Equation Research Questions Empirical Study Empirical Findings Conclusion and Discussion

Introduction Consultants and Innovation (1/2) Basic assumption: Consultants push existing practices Potential contributions and roles of consultants in (IT) innovation projects ... • Own innovative activities • Joint developments with clients • Identify opportunities for innovation as well as (technical) options and solutions • Independent, objective view from the outside • Bridge the gap between technological opportunity and (often poorly articulated) user needs • Offer transfer of specialized, expert knowledge and experience („best practices“; „knowledge brokerage“) • Assist with implementation • Help to overcome anxieties and resistance • …

Introduction Consultants and Innovation (2/2) However ... / Potential barriers to innovation ... • General problems due to the nature of consulting e.g., problems of secrecy, long-term nature of innovation projects, not-invented-here syndrome • „Best practices“ = „proven“ practices? – Definition of innovation? • „Functionalist/traditional“ vs. more comprehensive/complex perspectives on consulting and consulting relationships e.g., existence and relevance of individual interests, latent functions, manipulation, mobilization of discursive and symbolic resources, indissolubility of sociopolitical skills and technical expertise • ...

Introduction Adding the Client to the Equation (1/2) “Consultants on the Catwalk” “The consultant had prepared for the important presentation by burning the midnight oil. He wanted to win the bid for the prestigious project of the electronic company by all means. The PowerPoint slides and the line of argument were polished down to the last detail. Finally, their team was called into the shaded room, which had just been left by the competitors. In order to relax the tense atmosphere, the consultant asked the blonde woman standing in the corner for a coffee. Bad luck for him that the blonde wasn‘t an assistant, but the head of the department. The job went down the drain, before the consultant could even start his laptop.” … Handelsblatt, 15.05.2007

Introduction Adding the Client to the Equation (2/2) … „Both sides are becoming more professional – the consultants with respect to client acquisition and marketing, the clients with respect to purchase and evaluation of consultants.” Handelsblatt, 15.05.2007

Research Questions Some Thoughts and Reflections • What are the changes in clients‘ attitudes towards consultants and in the management of consulting projects? How does this impact on the functions assigned to consultants in IT related innnovation projects and their contributions? • Does the tight(er) management of (consulting) projects promote or rather restrict innovations? • To what extent do consultants (under these circumstances) enable client companies to tap the innovative potential ofIT?

Empirical Study Methods and Data • (Explorative) Qualitative approach • Reconstruction of selected IT-related innovation projects (8 case studies) • 43 half-structured interviews (46 interviewees) with • members of the client company … • and external consultants … involved in the projects • Additional document analysis and participant observation where possible • Different degrees of (technical) innovativeness of the researched projects; in all cases innovative from the business perspective • Companies under research vary in respect to the size and the industry

Empirical Findings Clients’ Changing Approaches Towards Consulting and Projects (1/2) • Changes in theimageof consultants, their contributions and the client-consultant relationships • Clients become more skeptical/distrustful; they partly admit own shortcomings • Clients feel more powerful and self-confident • Former consultants increasingly move into managerial positions • Changes in clients’ management of (consulting) projects, e.g. with respect to • … the initiation of and decision on projects • formal ways of applying for projects; cost-benefit analyses; centralization of budgets, … • IT expenditures to be justified in business terms; need-pull pressures instead of technology- push innovations …

Empirical Findings Clients’ Changing Approaches Towards Consulting and Projects (2/2) • … the selection and purchase of consulting services • regulations and directives; bidding processes; beauty contests; powerful role of the central purchasing … • … the contracts • fixed price incentive contracts/ contracts for work; setting/scheduling of milestones and goals; specification of liabilities and accountabilities … • … an increasing focus on implementation • workable/feasible IT solutions … • … the evaluation of consultants/ projects • less attentionto evaluations or lessons learned; often usage of some kind ofshort supplier assessment questionnaire

Empirical Findings Main Roles and Functions Assigned to Consultants • Provide know-how and experience (technical, methodical/project) – Introduce “proven innovations” • Overcome clients’ habitual blindness to (their own) organizational deficiencies • Not (directly) involved in the development of the project, yet in feasibility/preliminary studies, quality audits etc. • Compensate for lack of resources (“body leasing”) • Assure implementation • Moderate between IT and business departments; specify business/user requirements and translate them into technical features/aspects • Support acceptance, overcome resistance, political functions • …

Empirical Findings Outcomes of Researched Projects • (Full) Potentials of the technologies usually not exploited • Intended organizational changes often not realized • Consultants often did not champion the most innovative/“best” solutions • In all cases IT solution implemented; “go-live” dates mostly met on schedule projects declared as a success (with the “criteria” of success e.g. being that the IT is implemented and runs errorfree, the project is on time and on budget etc.)

Conclusion and Discussion Consultants, Clients and Changes – Implications for Innovation Projects (1/2) Basically … • Consultants are mainly used for introducing existing solutions that are new to the specific customer Additionally … • Slim chances for highly innovative and thus incalculable projects of being pursued • Consultants’ know-how and ideas not fully utilized; risk of ignoring (more) innovative or better solutions than the ones chosen • Low risk appetite of consultants • Low probability of pursuing new ideas/improvements emerging during the project • Intensification of opportunistic behavior on the part of the consultants …

Conclusion and Discussion Consultants, Clients and Changes – Implications for Innovation Projects (2/2) … • Focus on implementation of IT at the expense of organizational innovations • Consultants (eventually) conform to clients’ conceptions and wishes (particularly to those of the user/business departments) • … Current trends in (consulting/IT) project management and new client-consultant relationships … … a mixed blessing? A necessary evil? A vicious circle? Not consequent enough/ having the wrong focus? …

Back-Up

BACK-UP Case Studies: Industries and Sizes of the Researched Companies

BACK-UP Case Studies: Researched Projects and Interviews (1/2)

BACK-UP Case Studies: Researched Projects and Interviews (2/2)

Alfred Kieser & Nicole Reifenscheidt