Dr Emer Curtis and Prof Breda Sweeney examine the positive impact of time constraints on the process of new product development
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Working without time or resource constraints could be portrayed as the perfect creative environment, but can ‘less’ sometimes lead to ‘more’ – and when might that be the case?

In this article, we examine the positive impact of time constraints on new product development (NPD), drawing on our research in a medical devices company. Early academic literature suggested that control hindered creativity, as it was seen as reducing freedom. However, attention has more recently turned to the potential for management control systems (MCS) to stimulate, structure and support creativity in organisations.

Various different constraints typically apply to NPD work such as restrictions on the number or quality of skilled people assigned to a given project, time pressures, financial limits on the costs of materials consumed by the project and constraints on equipment available for use. These types of constraints relate to limits on the investment in a given project within a creative space, rather than limits on the ‘solution’ to the problem.

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When it comes to creativity, “the human mind can be highly productive when restricted” (Hoegl et al, 2008, p1,384). Hoegl et al (2008) maintained that resource constraints work better in situations of bounded creativity (described as ‘thinking inside the box’, as opposed to unbounded creativity, referred to as ‘thinking outside the box’).

This is because the premise ‘less is more’ is already ingrained in the process. They also maintained that it works better where there is an engaging project objective, term cohesion and team potency (a ‘can do’ attitude). Our study focused on the impact of constraints on the amount of time that is invested in a project.

Time pressure imposes a constraint on creativity and can emanate from time budgets or time deadlines. Time budgets and time deadlines impose different types of pressures and time deadlines have been referred to as an acute (short-term, high intensity impact) form of time pressure, as opposed to time budget pressure, which has been referred to as a chronic (i.e. persistent, relatively unchanging time pressure) form of time pressure (DeZoort and Lord, 1997). In our case company, both forms of time pressure existed.

OUR CASE ORGANISATION

Our study focused on a medical device company that provides subcontracted new product design services for a wide range of customers. The company charges customers for subcontracted product design and development work, on a time and materials basis. Product design engineers work for a broad range of customers from small, venture capital-funded start-ups to large industry leaders. They offer services over the full range of design activities, from proof of concept through to final design, testing and validation.

Approximately 80 engineers are employed by the company. Revenue is generated immediately by providing a service to customers that is billed on the basis of (highly skilled) labour hours and materials. The company has been very successful, with the quality of its design work being recognised by both customer and industry awards.

Because of the nature of the business, the ideas or problems to be solved are brought to the company by customers. Customers sometimes bring very clearly defined problems; but other times they come with more vague ideas and the company will organise a brainstorming session with the potential customer and a group of their engineers to consider possible routes to solutions.

Once a customer approaches the company with a design project, one of the project managers develops a proposal for the job. This proposal includes a detailed specification of the work to be performed, the deadlines, the assumptions on which this is based and an estimated cost based on engineering time and materials required. The price agreed forms the basis of the time budget for the project team. To ensure that full consideration is given to all aspects of pricing, two or three staff sign off on proposals before they are given to customers.

Although in principle, the company charges fully for all time and materials used by a customer, in practice any variations from the agreed fee must be negotiated and justified to the customer based on variations in the assumptions agreed in the original quotation. The rate at which resources are consumed in relation to the project is monitored closely, with the weekly cost being referred to as the ‘burn rate’ on the project.

TIME PRESSURE

Time pressure arises both from external time deadlines imposed by customers and also time budget pressure from the customer-agreed fee and associated engineering time budget (set in advance of beginning the project). Although they attempt to build a little ‘slack’ into their engineering time budget (which feeds into the fee quotation), the project leaders explained that customers will generally seek to negotiate downwards from the initial fee quotation and associated time budgets, resulting in a situation where projects are conducted against a backdrop of ticking time and budget clock.

Time deadline pressure appeared to be most dominant and project managers referred to the importance of not missing external deadlines, particularly where a product may be scheduled for an animal or human trial.

Engineers were conscious of operating under much tighter time deadlines than companies undertaking R&D on their own behalf. Interestingly, however, rather than this creating a sense of inequity, they conveyed a sense of achievement in their ability to work under pressure. They believed that the tight time constraints pushed effort and performance to high levels and increased efficiency.

While acknowledging that the time and budget pressure created high stress levels, rather than complaining, they claimed that not everyone was suited to working in that type of environment, further emphasising their own sense of pride in being able to work successfully in a highly pressured environment.

This is consistent with the view that resource constraints work well with bounded creativity (Hoegl et al, 2008), which is described as ‘thinking inside the box’, as opposed to unbounded creativity, referred to as ‘thinking outside the box’. Hoegl et al referred to previous research on the benefits of bounded creativity that is based on the key assumption that ‘the human mind is most creative when given fewer, rather than more, alternatives to solve an innovation problem’ (p1,386).

However, despite the fact that the problems addressed are typically clearly specified in this company, the interviewees pointed to the fact that ‘outside the box thinking’ was regularly required to find creative solutions to very challenging technical applications.

In addition to time deadlines, time budgets are also a key driver of time pressure. Time budget pressure can be alleviated if the price can be renegotiated with the customer. However, renegotiations with customers can be stressful for project leaders, particularly if extra work is required to address an unanticipated problem. Because of the uncertainty of development work, upfront communication with the customer of any time budget or deadline problems was considered very important to keep the contribution from the project on track and the customer satisfied. There are some structures in place for communicating with customers, but it is largely down to individual engineers as to how it is managed.

THE CONTROL ENVIRONMENT

So, what were the key elements of the management control system that facilitated the high levels of motivation and productivity under such time pressure? Our study identified three key features of the control environment.

First, the core values of the organisation. A picture of a highly creative organisation emerged from interviews with staff and management across functions; revenue was the key focus of attention, failure was accepted and the control system was used to stimulate ideas, support search efforts and communicate knowledge. The most striking feature of our findings was the extent to which these core values permeated the thoughts and words of the organisational members.

The values of the company reflected an open, innovative culture and were regularly used in interviews to describe the culture of the organisation, relationships between staff in different departments, between staff and senior management and between staff and customers. The values were manifest in the relatively flat organisation structure and the conscious effort to limit bureaucracy in the organisation.

Managers and staff consistently praised the flexibility of the organisation and the ease with which decisions could be made. Coupled with an emphasis on innovation was an acceptance that a certain number of ideas would fail and a tolerance of such failure when it occurred. This created an environment where employees were willing to question current thinking and take risks in putting forward new ideas. The organisation accepted the inevitability of mistakes and it was considered important “to let people make mistakes and learn” (project leader). The openness, innovativeness and flexibility encouraged by the core values supported the ‘can do’ attitude of engineers.

Second, employee empowerment and giving engineers autonomy in how to do their job was emphasised as a key motivator. This high motivation resulted in opportunities being followed up. One senior manager described it as “people are biting your hand off to give it a go and to be proactive about it”. This is consistent with the findings of Hoegl et al (2008), who suggested that resource constraints are better suited to situations where there are engaging project objectives, team cohesion and team potency. This motivation was supported by the rapid growth of the company over the previous five years, which was seen to give excellent opportunities for career advancement and CV building.

Lastly, clearly defined projects were an important feature of the environment. All creative projects originate from the customer and the need to manage customer expectations and ensure customers are billed for both the planned and unplanned time actually spent on the project was recognised. Thus, practices have developed around creating clear, detailed specifications for projects, specific time deadlines and clear budgeted resources.

Project management tools that create a clear documentary trail for the project to comply with quality and regulatory requirements and regular customer contact ensure a well-defined and focused creative space. Regular accounting information on engineering time and costs incurred supports the specific boundaries around the creative resources used for a given project. While the creativity is clearly defined by the project specifications, engineers were also protected from interruptions in their work by the highly visible link to revenue and the short-term measurability of the return from the creative space.

In summary, we found a company where pressurised creativity flourishes under hard external time deadlines and semi-negotiable time budgets. This time pressure bounds the creativity; however, potential negative impacts of the boundaries appear to be limited by effective use of other controls such as personnel, culture and project management controls.

Dr Emer Curtis

The findings reported in this paper form part of a larger project on management control and innovation. The authors gratefully acknowledge funding received from Chartered Accountants Ireland Education Trust for this research. For more information, or if your company is interested in participating in this project, please contact Prof Breda Sweeney for further details (breda.sweeney@nuigalway.ie). 

References

Prof Breda Sweeney

  • DeZoort, FT & Lord, AT. (1997). ‘A review and synthesis of pressure effects research in accounting.’ Journal of Accounting Literature, 16, 28-85.
  • Hoegl, M, Gibbert, M & Mazursky, D. (2008). ‘Financial constraints in innovation policy: When is less more?’ Research Policy, 37, 1382-1391.

 

 

 

http://www.engineersjournal.ie/wp-content/uploads/2013/04/Deadline-1024x817.jpghttp://www.engineersjournal.ie/wp-content/uploads/2013/04/Deadline-300x300.jpgDavid O'RiordanBiomedical devices,NUI Galway,research
Working without time or resource constraints could be portrayed as the perfect creative environment, but can ‘less’ sometimes lead to ‘more’ – and when might that be the case? In this article, we examine the positive impact of time constraints on new product development (NPD), drawing on our research in...