Competence change in contract R&D : analysis of project nets

This research addresses the problem of what to consider as competence in research and development (R&D) and how does it change in contractual projects. Two cases are investigated, so called fault diagnosis systems and code generation methods and tools. They involve the Technical Research Centre of Finland (VTT) as a supplier and several companies as customers. Projects established by these parties from 1985 to 1998 have been analysed, to study how the supplier's competence evolves. The research is based on the analysis of several thousand pages of documents and interviews of some fifty persons. The change of competence is evaluated and explained within project-based relationships called project nets. Differing objectives and goals of the interacting parties are found to greatly affect project nets, and thereby the evolution of the supplier’s competence. In the code generation case, the focal VTT managers aimed at creating a versatile portfolio of fully contractual projects, for machine automation applications in particular. The approach did not work as intended. The code generation researchers produced design methods and tools that were, in the end, mostly utilised inside VTT – which neither benefited the contractual R&D business of VTT, nor resulted in explicit core competence. In the fault diagnosis case contractual projects were, however, used to create what can be considered as core competence of VTT as an R&D supplier. Still, even the code generation competence survived through many years and conflicting viewpoints to form a basis of business – not for VTT, but for some of the original inventors. This indicates both the key role of individuals in R&D and the need for strategic management of evolving competence. Development of functional capabilities to solve problems in certain applications is found in this research to be essential for the building of core competence of an R&D supplier. Flexible use of generic engineering techniques and implementation technologies is also important. However, this depends on how skilled customers are in this regard. The final part of the dissertation is devoted to the question of how to manage competence, based on the empirical insights of the research. The goal is to help pave the way for strategic relationship-based competence management in contractual R&D.