Venturing relations enabling transformational innovation of engineering firms

Venturing relations enabling transformational innovation of engineering firms

Baak, Bram (TU Delft Architecture and the Built Environment; TU Delft Civil Engineering and Geosciences)

Wamelink, J.W.F. (mentor)
Scholten, V.E. (mentor)
Lousberg, Louis (mentor)
Stomph, Paul (graduation committee)

Delft University of Technology

Civil Engineering | Construction Management and Engineering

2019-03-11

The construction sector showed almost no fundamental change in the past 50 years, where other industries reaped the benefits of standardisation and digitalisation. Until recently innovation development was no issue for engineering firms active in this construction sector. At the moment however, they are progressing towards higher degrees of innovation by embracing digitalisation. This progression is influenced by an important development in the business model of engineering firms. Engineering firms were used to have exclusive insights in the value chain of the construction sector, which enabled them to sell these insights towards clients. Selling these insights as core business is threatened however, creating an urgency for a new core business. Engineering firms seem to aim for new business consisting of selling ‘total solutions’. Total solutions in which knowledge and assets of external parties are integrated, in combination with a licence business model to make it scalable. Selling such total solutions is regarded as a transformational innovation for conventional engineering firms, because it has the power to transform their core business. Engineering firms however, lack perspective on how they should develop transformational innovation. They have a strong impression that external parties play a role in the appropriate strategy, but it is unknown how to relate with these external parties in such a way they have an optimal effect on the transformational innovation development. This research investigates what order of steps is beneficial for engineering firms to develop transformational innovation through relations with external parties. A cross-case multiple case study methodology is executed in order to answer this question. Seven cases in which an innovation seeking firm makes a relation with an external venture are investigated. These cases comprise venturing relations outside the construction sector. Each case is investigated along multiple topics resulting from a literature review. The most important topics are the degrees of integration, autonomy and openness of the network. A cross-case analysis of the seven cases results in aspects that seem beneficial for (transformational) innovation development, derived from firms outside the construction sector. Subsequently, these aspects are evaluated by an expert evaluation panel consisting of three innovation experts of three leading Dutch engineering firms. The expert evaluation results in an order of steps beneficial for transformational innovation development of engineering firms in venturing relations with external parties. It seems beneficial to create a moderate degree of operational integration when both parties have business on the same domain. Furthermore, it seems beneficial to start strategic discussions between the engineering firm and the external venture after a moderate degree of operational integration is created. After strategic discussions three aspects seem beneficial. First, the provision of extensive strategic autonomy by the engineering firm to the external venture. Second, the creation of a high degree of operational integration between the engineering firm and external venture. Third, the creation of indirect closed network configurations between the engineering firm and external venture.The most important element in the discussion of the research is the suggestion to recognise the network characteristic ‘degree of complementary relations’ as a network characteristic influencing innovation development. With regard to the limitations of this research it may be considered that only seven cases are investigated. Furthermore, from the companies involved in each case only one or two persons have been interviewed. Lastly, the research scope was limited and a possible cross-industry bias cannot be excluded. A recommendation for further research is to investigate the role of clients in transformational innovation development, as they generally have a stringent role in the construction sector. Furthermore, the role of the rather conservative behaviour of engineers in developing transformational innovation at engineering firms is recommended to look into. Lastly, it is recommended to investigate how a special form of venturing, ‘network orchestration venturing’, can be applied to engineering firms.

venturing
transformational innovation
engineering firm

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Student theses

master thesis

© 2019 Bram Baak