PICMET 2007 Proceedings, 5-9 August, Portland, Oregon - USA © 2007 PICMET

Innovation and Organizational Trajectories

Alvair S. Torres Jr.', Ana Gati Wechsler', Cleber Favaro2IFEA-USP. University of Sao Paulo, Sao Paulo-SP - Brazil2UNICAMP, University of Campinas, Campinas-SP, Brazil

Abstract--The multiple-case study research in threeindustrial companies - located in Brazil- about organizationalchanging, comparing cases of lean production systemimplementation, revealed a suggested interpretation of thedeterminants and directions of organizational innovation.

The model tries to account for both continuous changes anddiscontinuities in organizational innovation. Continuous changesare related to secondary innovation, which doesn't break anorganizational paradigm, while discontinuities are associatedwith a new trajectory, since a primary innovation adopted bythe whole organization, including changes in technologicalmanagement.

Then, the innovative lean process associated with secondaryinnovation was inadequate to change the organizationaltrajectory and it explains the cyclical decisions. On the otherhand, the lean production system related to primary innovation,assumes the role as a new trajectory, influencing changes in totalorganization.

The greatest difference found in the companies forinnovative diffusion process, was the aspect of spread theorganizational principles or a simple set of management's tools.

I. INTRODUCTION

Economic theory usually represents technology as agiven set of factors' combination, defined in relation tospecific outputs. Technical innovation is generally defined interms of to move productions' possibilities, and /or in termsof the increasing number of producable goods [4]. Thedefinition we worked here is much broader. It's including theorganizational aspect, then let us define technology as a set ofpieces of knowledge, practical - related to concrete problemsand devices and theoretical - but practically applicablealthough not necessarily already applied - know-how,methods, procedures, experience of successes and failures.The achievements in the development of an innovationorganizational can be a problem-solving activity or in the softside as particular expertise, experience of past attempts andpast solutions, Organizational innovation, in this view,includes the perception of a limited set of possiblealternatives solutions and of notional future developments.One can see that the proposal definition to explain the reasonto an organizational technology to limit the thought solutionsand the limit ofnew trajectories to firm.

II. PARADIGMS AND ORGANIZATIONALTRAJECTORIES.

We suggest that, in analogy with scientific paradigmsfrom Kuhn [9], there are organizational paradigms ormanagement models and programmers [1]. A scientific

paradigm could be defined as an outlook which defines therelevant problems, a model and a pattern of inquiry.

In broad analogy with the Kuhn's definition, we definean organizational paradigm as a model and a pattern ofsolution of selected management problems, based on setprinciples derived from natural evolution and interaction ofpractical management in each organization [14].

Then, we define an organizational trajectory as thepattern of management problem solving activity on theground of an organizational paradigm and - in a dialecticalperspective - it helps to built or to change that paradigm.There is a strong link between paradigm and trajectory,because we consider the process as evolutionary [14].

In other words an organizational trajectory embodiesstrong prescriptions on the directions of management changeto pursue and those to neglect, influencing the continuousadoption of the paradigm through of secondary innovation orits disruptive process through a primary innovation. Givensome generic management tasks such as, for example, thatrelative to warranty of quality, certain specific organizationaltechnologies can emerge, with combination of 3 possibilities:their own solutions to that problem, the choose of a solutionfrom another paradigm and the exclusion of otherpossibilities. In our example, warranty of quality, we canresume the possibilities in three main solutions ofmanagement considering a bureaucracy model. 1) adoption ofa standard quality system as ISO 9001, TS 16949 or VDA6. 1; 2) association with a tool management of other model asTotal Quality, but including it in a bureaucracy system ofdocuments; 3) and the exclusion of other solutions as such ascreativity or autonomy of workers to give solutions in aroutine.

The broad analogy between scientific paradigm andorganizational paradigm we have been drawing should not betaken as an identity. In addition to the obvious differencerelated to the different nature of the problem solving incompanies, organizational knowledge is much less wellarticulated than is science [10]. Then, this aspect brings arelative dependence between the organizational model andthe adopted trajectories. It creates a row of possibilities forone paradigm to give us more trajectories of development ofcompany and the false sense that the company has a trulyinnovation, while, sometimes the innovation is just ananthrophagic movement of a paradigm establishing an ad-hocarticulation with another paradigm.

Much of organizational knowledge is not written downand is implicit in experience, skills, etc. This implies also thatthe definition of an organizational paradigm is bound to bemuch looser while the distinction between routine and new

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problems is likely to be hard to make in practice. The idea ofan organizational paradigm shall taken as an approximation,adequate in some cases but less so in others. It depends on toanalyze together with the trajectory. If in the evolution of thetrajectory the company is in a moment of bifurcation it can bea chance to change the paradigm or simply the moment of toadopt a secondary innovation, derivate from other experience,but it could be absorbed by the once paradigm.

111. ORGANIZATIONAL TRAJECTORIES AS ANEVOLUTIONARY PHENOMENON

The organizational trajectory is linked to a complexprocess of interaction similar to an evolutionary phenomenon.In this way the organizational innovation emerges. It's not acomplete deliberate process.

Mintzberg [11] explains a similar process to a strategywhen he shows us the imbricate mode between formulationand implementation. As a craftsman, the managers built astrategy idea by idea. One idea leads to another, until a newpattern forms. Action has driven thinking and the strategy hasemerged.

Then as an emerged strategy, an organizationalinnovation can emerge in response to an evolving situation, toa selection environment, so the implementer is the formulatorand innovations can be incorporated into trajectory as a faceof strategy.

This perspective is an evolutionary approach that can beverified in management, sociology, economy and socialscience in general. Several authors have made similarstatements. Merton [12] studied the unintended consequencesof social practices as well as the study of anticipatedconsequences. Nelson and Winter [13] established theelements of choose of technologies in the market as aselection environment. Giddens [7] notes that human historyis created by intentional activities but is not an intendedproject established under conscious direction.

In particular, an evolutionary framework is useful whenthe system was created during a trajectory, emerging, morethan a product o f deliberate decision. Then in anorganizational context, be it a decision process ormanufacturing practice, continuous or disruptive innovationsin a competitive environment, we can analyze such a dynamicphenomenon in evolutionary terms.

In particular to our research, Fujimoto [6] studied howthe history of Toyota's manufacturing system fit thisevolutionary view very well. Although the system turned outto be quite competitive, its elements were not alwaysintended at the start as competitive weapons.

In the story about rivalry between the two greatestJapanese companies, Toyota and Nissan, most important isthe fact these companies adopted different trajectories formanufacturing automobiles. Nissan traditionally looked toUSA and Europe for guidance in product and technology,concentrated on the use of mass-production paradigm andtended to emphasize high-speed, single-function machine

tools, automated equipment, and intensive use of computers.In contrast, Toyota evolved more independently, innovatingand creating over Western firms and with greater emphasison to create production management techniques to solve itsdomestic problems [3] .

There's a consensus that the Toyota Production System(TPS) is known as one of the world's best organizationalinnovation in both manufacturing quality and productivity inthe past few decades [15].

Toyota has many versions of its success, but they explainthe company's history in terms of a series of deliberate, well-thought-out steps [6], rather than as a result of naturalinteractions in an organizational trajectory. Then, thetraditional research considers Toyota as a set of resources androutines - organizational capabilities - that bring about highcompetitive performance. However, a focus an organizationalcapability leads us to further questions about how anorganizational innovation evolves. How a certain capabilitycreates high organizational performance is the centralquestion. The organizational trajectory into an evolutionaryperspective with a succession of the paradigms is ourtheoretical framework to try answering this question.

The evolutionists in economics and management clearlyhave wide-ranging ideas, but they all seem to share at leastone notion: the formation of a business system can not beexplained solely by foresight and deliberate planning. AsCharles Fine [5], in his Clockspeed, says each economicsector or business evolves in a different rhythm, it depends onof rates of evolution in products, process and organizations.We added the notion of chosen organizational trajectory.Then, a certain capability is linked a certain trajectory, if thecompany tries to change the capabilities but doesn't changethe trajectory or vice-versa, the truly organizationalinnovation is not achieved, just a temporally bifurcation, withlost of time, energy and money. We show same cases in amultiple case research of Brazilian market.

IV. METHOD

We used the multiple-case study as a research strategy.In general, "case studies are the preferred strategy when'how' or 'why' questions are being posed, when theinvestigator has a little control over events, and when thefocus is a contemporary phenomenon within some real-lifecontext" [17, p.13].

The organizational innovation chosen was the leanimplementation, mainly because of lean paradigm to have atToyota a well-investigated case to comparison and to keepthe replication logic [16].

In fact, the multiple-case study shall be designedfollowing the principle of replication logic, not a samplinglogic. Then, if similar results are obtained from all cases,replication is said to have taken place. This replication logicis the same when a critical experiment shall be repeated. It'slimited to a few cases due to be expensive or difficulty to findthe cases.

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The each case was carefully selected to produces asimilar result between they self- literal replication - and acontrary result when they are compared to paradigmaticalcase of Toyota. The theoretical framework about trajectoriesand evolution becomes the vehicle to state the conditionsunder which the organizational innovation as a phenomenonis found or not found.

The case study was designed for an exploratoryinvestigation [8] with focus mainly on questions about"what" and "how" the lean production system was or wasbeen implemented in each organization. The central questionwas "What are the ways in which a lean model is operated asinnovation in the companies?" The purpose is the question tobe a guide, conducting the exploratory study with the goalbeing to develop a pertinent proposition or model tounderstand the problem of organizational innovation. [18,19].

The multiple-case study follows an embedded design,involving more than one unit of analysis, because it includedseveral outcomes from each company, qualitative andquantitative analyses of a large number of aspects: roles,relationships, power, decisions making. The data for thestudy was collected from different sources in each company,starting by semi-structured interviews with professionalpeople and participant-observation in internal processmanagement. The strategy was mapping the units of analysisin that begin and after it to achieve other sources of evidenceand to repeat some interviews and participant-observations.Others sources of evidence were documentation, directobservations and files. The interviews were focused inmanagers and people of operational departments in severaljobs, including blue-collars workers.

The study was made in a longitudinal period, the enoughperiod to understand the implementation.

V. RESEARCH

The theoretical model here presented had its predictionsverified in some longitudinal observations of implementationof Lean production System in Brazilian market.

The warranty of replication logic was the guide tochoose. The all companies are western multinationals with arelevant market share in Brazilian market. They have apredominant manufacturing system as production way and inthe last ten years they are implementing a similar productionsystem to Toyota. All companies have called thisimplementation as a Production System and given a signalthat remembers the TPS. They contracted during theimplementation some kind of consultant using as guide orreference the TPS.

A. A plant of automotive industry with bureaucracyparadigm.

The first case presented was studied in a plant of globalplayer that produces commercial vehicles in Brazil. Theresearch was made analyzing the period from 1995 to 2005,when the board of company has conduced to some changes

becoming the company from a bureaucracy paradigm to alean paradigm [20].

The history starts in 1995. The economic liberalismapplied by Brazilian government brings the increase ofcompetitiveness and the traditional bureaucracy used in thecompany didn't working more. Then, as a response, the boarddecided to contract an international consultant and to beginthe implementation of lean production system. The changingprocess can be shared in 2 moments.

In the first phase, from 1995 to 2002, the Brazilian boardhad a relative autonomy to make decisions about actions torescue the profitability of unit. Then, in 1995 was contracteda famous consultant - ex-manager from Toyota - who starteda Kaizen program to introduce the principles of leanproduction and to replace the mass production embedded inbureaucracy paradigm.

The great wastes were detected and eliminated inapproximately 3500 kaizens done in this period involving allcompany. The great success was recognized and the plantreceived many visits from managers of other units of theworld. The lean was the main project of the company andother aspects were linked with this paradigm. The consultant,like at Toyota, conduced changes in Development, Facilities,Technology, Strategy departments and was been possible toconsider the lean as a new paradigm beginning in thecompany. In the documents and interviews was possible toidentify a language dedicated to this changing inorganizational culture. The lean was a primary innovationand the tools were considered a mean to learn the principles.

Therefore in 2000 began an intervention of headquarterin Brazilian board. The autonomy was reducedsystematically. First, the sponsor of consultant in Brazil wasretired and his substitute was not indicated by him, but byCEO. It was a first substitution of a sequence and didn't havemore sponsors of lean in key position or first level ofmanagers. The new managers knew the lean as a set of toolsand several actions to take the lean paradigm as a set of toolswere done:* the contract with the consultant was canceled,* the kaizen management office and its internal specialists

were dispersed,* the managers not more consider the lean as central

question. It's considering just a simple tool.

After it, follows a succession of changes justified as astandardization of management in global market. The newproducts were launched with a bureaucratic perspective;departments were exchanged and merged with correspondentreduction ofjobs. Cost reduction is the expression of the day.Now the lean production system is restricted in productionand standardized in all units of the world together with abureaucracy perspective. The audit was created and a set of69 tools are verified in periodic audits. The Brazilian unitwon annual awards of production system despite the auditorto want documents and registers proving the system. Insteadof Toyota, in this company if the worker can show the

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application of principles, but doesn't have a registration, thenhe doesn't receive the compliance.

In resume, the trajectory of the lean paradigm wasinterrupted and the bureaucracy model got strong again,because the head quarter didn't understood the lean as aparadigm or a primary innovation, but as a set of tools. Noweach unit in the world is lean if presents a compliance with 69tools. Would be Toyota's workers know to exist all tools?

B. A plant ofcosmetic industry with bureaucracy paradigm.This study was conducted with an evaluation of an

organization trajectory of a cosmetic company in Brazil.This company is among the three major players in the

Brazilian cosmetic market, with international participation aswell.

With a growing competition in the cosmetic business, theSupply chain operation efficiency becomes a competitiveedge in this business. In order to reach such efficiency a neworganization model is under implementation. Thebureaucracy paradigm have been faced, but alternativesolutions developed in order to follow the best practices oflean Systems based on Toyota success didn't break thecurrent paradigm.

Around 5 years ago, supply chain became an importantplayer in the business, in terms of cost savings to supportproduct innovation. In this way, new organizations,philosophies, tools or principles started to be evaluated tospeed this transformation process.

Some local and foreign consultants were evaluated inorder to analyze the supply chain process and to proposeimprovement solutions to management. Although supplychain was facing many challenges, the total businessorganization model was still based on individual functionsand stocks.

After evaluations and benchmarking, a consultantcompany proposes to start a transformation process insidemanufacturing using lean principles and kaizen tool to bringquick wins in terms of set up time and material flow insidethe factory. All of the kaizen weeks were successful duringthe implementation, but the results did not last long. Thefactors of bureaucracy paradigm were not break and theyproduced conflicts with lean system, for example:- lack of ownership, technical knowledge in the shop floor- centralized decision in the manufacturing organization- roles and responsibilities inside supply chain were not

clear.- planning and production departments had conflicts about

material management.

There was no longer effective participation of topmanagement on this effort after few months of start up. Asthe manufacturing organization saw the benefits in themethodology, it continues the kaizen weeks to improvemanufacturing process. However, it was an isolated decision.

One of the major critical factors to lean implementationwas the high number of new product launching in one year

and the consequent management of product demand forecastaffecting dramatically the pull system and kanban practices tomanage product raw material and packaging delivery to theplant. Although this practice is a challenge, a frequent reviewof material mix needs to be carried in order to use the pullsystem for high volume items and continue to use MRP forlow volume items. Then, instead of consider reducingoverproduction as a principle, the managers have seen theapplication of kanban as a tool, benchmarking automotiveindustry, when they should to make an adaptation of allroutines to reduction of inventory - set up, flexibility,leveling - not just the kanban.

One aspect of supply chain efficiency in bureaucraticmodel is the reduction of overheads as a general practice inall business to bring competitive costs. A cosmetic plantnormally is labor intensive, due to considerable semi manualoperations required by short life cycle products. Due to GMP(Good Manufacturing Practices) and documentation practicesrequired by Brazilian Federal Regulatory Agencies andQuality System Management, the company has taken a highfocus on the individual job role training and individualresponsibility. In the interviews, the managers said it brings aconflict with a semi autonomous group work model in orderto increase the group empowerment and reduction ofsupervision. This is an evidence about the company didn'tunderstand the principles of lean paradigm, wanting just toreach the use of tools. The manager has concerning with theindividual quality and responsibility - aspects of bureaucraticparadigm - when the teamwork and autonomy of workers aremeans to achieve decisions about quality more closed inmoment of production. The reduction of overhead by use ofless supervision is a secondary consequence in lean paradigmbut is understood by managers of bureaucracy company as amain objective.

In 2006 a business multifunctional manager's teamsuccessfully implemented a pilot test, using now a secondlean consulting company. The new approach for lean systemimplementation reinforced business value stream mappingfollowed by kaizens to implement pull systems and kanbantools to reduce company inventories and speed supply chaintransformation. Unfortunately, the pull system developed wasabandoned after a year of implementation

Several other continuous improvement tools, includingkaizens were successfully implemented in manufacturing inthis meantime. However, lean system as a long-term culturechange journey could not succeed yet.

Among all issues and difficulties, after 4 years of tryingand error for lean system implementation the key majordifficult was related to people stability in top management.Although now is well know lean system can be implemented,frequent supply chain and business top and mediummanagement reorganizations can not bring identity to suchbig company change as lean system implementation.

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C. A plant ofautoparts with mass production paradigmThe case presented in this section was conducted in a

plant of a global company that produces driveline and chassiscomponents to automotive and agricultural markets and thatis the first our second player in its segments.

In the beginning of the 2000s the Brazilian site hasdecided to pursue the conversion from a highly departmentalto a process oriented organization. As it follows, theconversion still on way and can be represented in fourdifferent moments.

The first phase was started when a business unit that hadits profitability hurt due to a volume decreasing in its market.As stated by Womack & Jones [15], this crisis established theneed for changing the paradigm from mass to lean.

In 2001 the Worldwide Headquarter transferred a newproduction manager to Brazil objectifying to restore thebusiness' health. From 2001 to 2003 significant wasteelimination occurred based on the application of shop floorkaizen events led by the foreign manager with punctualsupport of external lean consultants.

A relevant characteristic that must be accomplished isleadership style of this manager. He acted more like a dictatorthan a sensei, trying to speed up the process and putting therest of the leadership in co adjuvant functions during thekaizens. The "my way or go away" style, based on theauthority brought quick wins to the plant related mainly witflow creation through manufacturing cell design andchangeover time reduction.

In another hand, it is not possible to identify any effort todevelop mechanisms to sustain the lean transformation.Therefore, a solid foundation to a new lean paradigm still notbuilt.

Concurrently, the Business Units Heads decided toestablish Lean Promotion Offices in its plants starting asecond moment in trial for adopting the lean paradigm.Different approaches were defined by each Business Unit.The Brazilian plant selected the approach defined by the mainbusiness unit located in the country that was focused on theapplication of 16 lean tools.

After bringing back profitability to the business unit, themanager was invited in 2003 to become the Lean PromotionOffice Manager increasing his scope to the whole plant andall the business units.

For the following two years under its supervision, theLean Office organized many workshops spreading theknowledge on the lean tools as defined by the corporatemodel. The tools that were applied in the second phase werekanban, poka-yoke devices and 5S.

The fragile transformation was characterized by theadoption of a bureaucracy paradigm of tools instead ofprinciples. In addition to this issue, the aggressive follow updone by the Lean Manager sustained the improvements, butonly for a while.

When the Lean Manager was promoted to IndustrialDirector in another plant abroad, the third moment of trialbegan.

Without the internalization of the principles, a weakapplication of lean tools and a reduction of the pressure, thecurrent state status began to perish, going back to the initialmass production state.

In a very short term, the sense that the leantransformation stalled began to grow. Some frequent quotesfrom the middle leadership at this time were "Lean movedabroad" or "The manager put lean on his pocket and wentoff'. White collars registered a different impression whenyou tried to discuss improvement. The quote "I tried it beforeand I can assure you: it won't work!" became usual. It wascommon to see improvements suggestions really based on thelean principles, but the collaborators started to mistrust thelean paradigm.

After about 5-6 years of trial and error, understandingthat adopting the lean paradigm was a secondary innovation,the company is just restarting the journey now in 2007. Theplanned changes that characterize this fourth phase are:- New corporate model moving from 16 tools to 6 lean

principles;- New policy deployment process to create the link among

the strategic planning process and the strategic projects;- Inclusion of the application of lean principles as a

requirement to career progress;- New structure to Order Fulfillment Process organized by

value stream.

By those pillars the company is trying really to set theenvironment to effective paradigm conversion through aprimary innovation process.

VI. CONCLUSION

A critical aspect relates to how new trajectories emergedin the organizational context and how it was preferred toother possibilities.

The cases here presented suggesting some interactingmechanisms between cultural factors and economic factors[2]. It considers a broader set of aspects because of our studyto be exploratory and qualitative. From the stress betweenthese categories emerging primary or secondaryorganizational innovations. As cultural factors we identifiedthe decision process, the degree of centralization, thestructure of power and the fight between groups ofinteresting. As economic factors, we identified the structureof capital, the profitability, the position in value stream orsupply chain. In resume if the kind of culture is enough toinvolve all material aspects of organization, as a foaming, thediffusion of innovation follow the progress. Therefore, if theaspects of culture break this foaming view, then theinnovation is a point and stop in superficial aspects.

Then, the organizational trajectories are different oftechnological trajectories because the technology is welldefined by a certain pattern [13], but the organizationalparadigms are built by routine of the company and it emergesduring the evolution. It can to be a source of a bifurcation of

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trajectory, when there is a stress between different paradigms.It's the moment when the company tries to change and theinertial forces and changing forces of both trajectories areinteracting.

In the presented cases, the implementation's phasesrevealed us bifurcations of trajectories, therefore theyemerged as a technical innovation or a secondary innovationinto a continuous changing, and, in particular, was "themarket" as the prime mover. The management didn't haveworry with power relationships, groups of interesting,alliances and a net of sponsors and future successors. Then,the Lean management was treated as a tool under theparadigm and in the evolution of implementation, thebifurcation falls and a primary innovation did not happen.

Our suggestion is to treat the implementation ofmanagement changes as an organizational innovation, in fact,considering the interaction between cultural and economicaspects. Then, the bifurcation will have conditions to growup, to achieve maturity and to give another paradigm. Thisinteraction must lead the cultural aspects of power andsocialization, to achieve in first moment the principles andnot management tools.

These aspects about principles and paradigms can toclarify because at Toyota the workers can't to explain theTPS as a set of tools. In Toyota the principles of a certainparadigm are the prime mover and the set of managementtools are the emerged trajectory in responses to specificcultural and economic forces of environment. In anotherhand, Microsoft, as an example to contrast, has anotherprinciples that don't achieving the lean paradigm, but thatcompany and others achieved the success because take careof its trajectory with certain principles according to otherenvironment, following coherency and focus, and not amanagement by tools.

If the company belongs to an economic or businesssector and this activity evolves in a specific rate of evolution,including products, process and whole organization, then, weadded the responsibility to managers to choose an

organizational trajectory. To a chosen trajectory, it relates aset of principles and capabilities to be practiced in wholecompany.

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