The communication and integration of the life cycle perspective in innovation activities Conclusions from three Finnish case studies Tea Lempiälä Helsinki University of Technology Innovation Management Institute (IMI)

Background  The tightening and more versatile nature of environmental legislation  The pressure from international organisations and activist groups (since the 1970’s), intensified pressure especially in the engineering industry since the 1990’s  Growing interest of stakeholders  The increasing product chain orientation of environmental legislation

The challenges of the competitive environment for the companies

Definition of the key concepts  Ecodesign Integration into existing plannig processes without compomising other product criteria Importance of innovation activities  more than 80% of all of a product’s environmental impacts are created in product design Holistic approach  requires participation of the whole organisation  The Life cycle perspective ”Cradle to Grave” Balancing the environmental impacts of a product between the life cycle stages, instead of just transferring them from one stage to another  The Front End of Innovation (FEI) The weakest and most difficult phase of the innovation process Withholds great opportunities to improve innovation capacity (Charter and Tischner, 2001, Mathieux et al., 2001) (Ecolife network, 2002; Loikkanen and Hongisto, 2000; Mathieux et al., 2001) (Koen et al., 2001; Nobelius and Trygg, 2002; Kim and Wilemon, 2002)

Front-End of Innovation in the NPD process

How can the integration be managed?  Success factors: Linking to the overall business strategies Senior management commitment:strategic importance,allocation of resources,goal creation Motivation, rewarding, effective control mechanisms Communication Key individuals  Challenges: Unclear goals, insufficient leadership, inefficient control activities Gap between strategy and resources The “Green wall” (Alexander, 1991; Atkinsson et al., 1999; Hunton-Clarke, 2002; James et al., 1999; Kim and Wilemon, 2002: Khurana and Rosenthal, 1997; Noble, 1999; Shelton, 1996; Topf, 2001; Wehrmeyer, 1996)

Cross-functional communication (Wheelwright et al.., 1992, 17) Batch communication vs. Integrated problem solving

Cross-functional communication The difficulty of creating open cross-functional communication  Different, competing goals  increase in conflic  Power imbalance  The need for collaborative communication Cognitive vs. experimental vs. values-based information Pinto et al., 1993; Atuahene-Gima and Evangelista, 2000; Brett et al., 1998

The empirical study  Three cases (company + supplier)  The participating companies: Large Finnish engineering companies B2B markets  Descriptive  Main method of data collection ; interviewing

The research problem of the study:  How is the life cycle perspective integrated into the innovation activities of Finnish engineering companies and communicated to their subcontractors?  How successful is the communication and integration of life cycle-related information within the companies and between them and their suppliers The subquestions  1. What are the main drivers for integrating the life cycle perspective in strategic decision making of innovation activities and the ways of implementation?  2. How well are the perceptions of the importance of the life cycle perspective shared in the companies (communication and integration) and  3. transferred to their main subcontractors.

The scope of the study

Results of the empirical study Main drivers for integration: Legislation Customer Financers, own interest Integration to strategic decision making: Generally good Variation: as own topics, under the name of efficiency or integrated to technological issues Environment as a restrictive factor

The successfulness of communication  Strategies formed with two-way communication between the environmental and technological function, but not the sourcing function  Company magazines, seminars and environmental training frequently used  Effective reporting and measurement systems missing  lack of concrete rewarding system  Horizontal communication good, vertical communication weak

The communication and integration of the life cycle perspective

Communication towards suppliers  Overall communication in a good level  The life cycle perspective practically absent from communication  Legislation as a guiding feature in environmental issues  Role of own innovation or own product in realising the LC-perspective not perceived

Successfulness of communication continued  Differences especially in the perception of importance of own role in realising the life cycle perspective  Overly optimistic image of the different organisation levels of each other’s activities  Cognitive and values-based information most frequently used, experience-based information least transferred Perceived importance of the life cycle perspective / conceptual understanding of the life cycle perspective Distance from senior management

Managerial implications  The role of the sourcing function, vertical communication  Measurement, systematic reporting  Clear objectives and rewarding  The need for integrated problem solving  Life cycle perspective earlier to the innovation process: perception as an opportunity

Subjects for further research  Holistic organisational perspective to the integration of the life cycle perspective  The human resources perspective to the integration  The role of the supplier in the realisation of the life cycle  The role of the front-end of innovation in ecodesign