Consortia, Project Marketing
& Systems Selling
Relating Project Marketing & Systems Selling to the Operation of Consortia
Rijksuniversiteit Groningen
Consortia, Project Marketing
& Systems Selling
Relating Project Marketing & Systems Selling to the Operation of Consortia
Rijksuniversiteit Groningen
Organisation: TNO Netherlands Organisation For Applied Scientific Research Supervisors: Ir. J.W. Assink
Drs. A.E. Jansen
Faculty: Management and Organisation Main Subject: International Business
Mentors: Drs. D.F.F.R. Maccow Dr. S.C. Voelpel
Student: J.C. van der Schors Date: 30/08/2004
Preface
This study has been conducted in order to fulfil the requirements of the Master of Science in International Business Science. The course is offered at the Faculty of Management and Organisation at the Rijksuniversiteit Groningen, The Netherlands.
Before attending the course, I obtained a Bachelor Degree in Hotel Management at the CHN University of Professional Education. After this study, I felt the need to elaborate my knowledge in the field in which the international hospitality industry operates. Obtaining a Master of Arts degree in International Leisure and Tourism Studies offered the possibility to enhance my knowledge of the social, physical, economic and political issues, underlying the international development of leisure and tourism.
The International Business Science course offered the possibility to enhance my knowledge on the functioning of organisations from different disciplines; social, technical, economical, and legal.
The international character of the course enabled me to maintain my international career focus.
The field study for this course has been conducted at a consortium of companies which are cooperating to develop a new desalination technology. Desalination is a topic I chose because of personal interest. The studies concerning international leisure and tourism increased my awareness for the need for sustainable sources of fresh water around the world. Desalination can be concerned as one of those sources. The field study offered me an opportunity to gain insight in this industry I hope to contribute to.
Acknowledgements
This study would not have been possible without the guidance of my mentors, and the help of my supervisors at TNO-MEP.
My first mentor drs. D.F.F.R. Maccow has guided me during the summer on a weekly basis. He introduced me to the theory of systems selling and project marketing, which have become an important part of my dissertation. He kept me focussed, by giving sharp feedback that forced me to get deeper into the study, and come up with better reasoning for choices made in the study. I am grateful for the enthusiastic way in which he guided me with the dissertation.
My second mentor Dr. S.C. Voelpel has been a great help especially at the start of the study, by providing me with many interesting papers, and in the meantime warning me to limit the focus of the research. I would like to thank him for his guidance, and in particular for stimulating me to narrow down the topic.
At TNO-MEP my first supervisor, drs. A.E. Jansen, has been very helpful to me, by explaining his perception on the history of the Memstill consortium in the first week. This provided a lot of insight on the practise of running a consortium at TNO-MEP. Further I am very grateful that he invited me to get acquainted with different kinds of projects that are more or less related to Memstill which gave more insight in the “world” of engineering.
My second supervisor at TNO-MEP, ir. J.W. Assink has played a major role in my study.
Without his support the data on which this report is based could most probably not have been collected. I am very grateful that he arranged contacts for me within TNO-MEP, but especially with the partners of the consortium. I want to thank ir. J.W. Assink, for all the time he granted me, when I stepped into his office, with another question.
Further, the partners of the Memstill project have to be mentioned here. I want to thank them all for providing me with information for my research. I am looking back at very pleasant interviews, from which I learned a lot.
My girlfriend Saskia Hoff deserves a special mentioning for her contribution. She has been a great support to me, attending me through the study from the beginning till the end.
Without you all this study would not have been possible.
Groningen, August 2004
Table of Contents
PREFACE 3
ACKNOWLEDGEMENTS 4
1 INTRODUCTION 7
1.1 BACKGROUND OF THE STUDY 7
1.2 BACKGROUND OF THE CASE 8
1.3 SIGNIFICANCE OF THE STUDY 11
1.4 OUTLINE OF THE REPORT 11
2 RESEARCH INTENT 12
2.1 ANALYSIS OF THE PROBLEM 12
2.1.1 Management problem 12 2.1.2 Stakeholder analysis 13
2.2 AIM OF THE STUDY 16
2.3 PROBLEM STATEMENT &RESEARCH QUESTIONS 17 2.3.1 Problem statement 17
2.3.3 Research questions 17
2.4 METHODOLOGY 18
2.4.1 Research Strategy 18 2.4.2 Research Design 18 2.4.3 Site and Sample Selection 18 2.4.4 Data Collection Procedures 19 2.4.5 Data Analysis Procedures 20 2.4.6 Limitations of the research 22
3 THEORETICAL FRAMEWORK 23
3.1 PROJECT MARKETING &SYSTEMS SELLING 24 3.1.1 General Insight 24
3.1.2 Project Independent Strategies 28 3.1.3 Project Specific Strategies 31 3.1.4 Post Completion Strategies 32 3.1.5 Comments on Project Marketing & Systems Selling 33
3.2 CONSORTIA 35
3.2.1 Formation 36
3.2.1.1 Motivation and effort 37 3.2.1.2 Triggering entity 39 3.2.1.3 Recruiting new members 40
3.2.2 Governance 41
3.2.2.1 Seeking domain consensus 41 3.2.2.2 Organisational structure 42 3.2.2.3 Managing the consortium 45
3.2.3 Performance 47
3.2.3.1 Measuring performance 47
3.2.3.2 Learning 49
3.2.3.3 Corollary commitments 50 3.2.4 Comments on the state of knowledge on consortia 50
3.3 PROJECT MARKETING &SYSTEMS SELLING AND CONSORTIA RELATED 52 3.3.1 Linking theories together 52
3.3.2 Conceptual Model 53
4 PROJECT MARKETING & SYSTEMS SELLING AT TNO-MEP 55
4.1 PROJECT INDEPENDENT STRATEGIES 55 4.2 PROJECT SPECIFIC STRATEGIES 57 4.3 POST COMPLETION STRATEGIES 59
5 OPERATION OF THE MEMSTILL CONSORTIUM 61
5.1 FORMATION 61
5.2 GOVERNANCE 65
5.3 PERFORMANCE 69
6 CONCLUSIONS & RECOMMENDATIONS 73
6.1 CONCLUSIONS ON MARKETING & SALES, AND THE OPERATION OF CONSORTIA RELATED 74
6.2 RECOMMENDATIONS 79
REFERENCES 83
APPENDIX: Interviews
1 Introduction
At first, the introduction first provides general information about the company, the department for which this study is conducted. Secondly, becoming more specific, information is provided on the project used as case for this study. This is divided into its relevance for society, and its technological background. Following on this, the aim of the study, significance of the study, and an outline of the report are provided.
1.1 Background of the study
This study is conducted on the benefit of TNO (Netherlands Organization for Applied Scientific Research). TNO is an organisation comprised of technical specialists. They produce a lot of innovative technologies which can be very useful for both Dutch and international industrial clients. TNO has difficulties to enter the market with their technologies, and once they have entered the market, they are often unable to expand their sales. This is a bottleneck, in which this study will provide more insight.
From a business science perspective it is very interesting to find out how they could do better. In order to get a grip on the causes of this problem a case is used. The case chosen for this study is the development of a new desalination technique, called Memstill. The project, which started in 1995, is initiated by one of the institutes of TNO: TNO-MEP (Milieu, Energie, en Processinnovatie).
Within this institute, the project is assigned to the department Process Technology (PT).
The Memstill project was chosen as case for this research because it provides a lot of information on the difficulties TNO-MEP faced to enter the market with this technology. The intended customers for Memstill are water suppliers, and users like breweries, on the international desalination market. The intended result of the project is a functioning desalination system. The means of putting this innovative technology into the market is to include customers for the desalination systems in a consortium.
The problem which will be studied in this dissertation is captured in the following problem statement: How can innovative technologies of TNO-MEP, in this case a desalination technology, Memstill, be placed in the international market, by means of consortia?
1.2 Background of the case
Background information on the case is provided in three ways: First, a background on the relevance of the case. Secondly, the technological background of the study. Third, the background of the partners cooperating in the case is provided.
Societal relevance of the case
The relevance of the case for this study is already mentioned in the previous paragraph. However the particular technological development, which serves as case, is of a great relevance to mankind, which cannot stay unmentioned in this study. The goal of the project is very appealing because it could offer a solution to one of the world’s greatest problems, water scarcity.
Back in 1961, U.S. President John F. Kennedy noted that: “if we could ever competitively, at a cheap rate, get freshwater from saltwater, that would be in the long-range interests of humanity and would dwarf any other scientific accomplishments”. (Kennedy, 1961)
Currently this wish of President John F. Kennedy is partly fulfilled. Since the middle of the 1960’s numerous companies have build over 15.000 desalination plants all over the world. The only predicament is that desalination is still not inexpensive. Of course all players in the desalination market try to improve their processes to decrease the cost of desalination, but they still continue to use the same techniques they have used since the sixties. The Memstill consortium is currently working on a competitive technique which might be accessible to those who need it most, you could think for example of the African continent. More information on the technique is provided in the next subsection, technological background.
Technological background
Triggered by the worldwide fresh water scarcity problem and the need for low cost water supply, TNO-MEP has developed a membrane-based distillation concept which radically improves the economy and ecology of existing desalination technology for seawater and brackish water. This so- called “Memstill technology” combines multistage flash and multi-effect distillation modes into one membrane module. Because a Memstill module houses a continuum of evaporation stages in an almost ideal counter current flow process, a very high recovery of evaporation heat is possible.
Patents have been applied for.
A consortium of nine parties is presently refining and improving the process concept and module design. This will result in a scaled up installation for 500 m3 desalinated water per day. This pilot installation will be operated on seawater in late 2004 and early 2005. Experience in other situations, including fresh water, will be obtained by operating small pilots in the period 2003- 2004. The market introduction of the first Memstill installations is anticipated for 2006.
km3 per year. This is about 50% of the accessible water from rainfall. An increasing number of areas on our planet suffer from water scarcity, and many more will suffer in the near future because of the rapid depletion of groundwater and surface water. There are three main ways to tackle this problem (Memstill Brochure TNO):
• Reduce demand and spillage
• Recycle and re-use of water
• Low-cost seawater desalination, which is cheaper than recycling
Today, thousands of desalination plants are operating worldwide, collectively turning about 26 million m3 of seawater and brackish water into fresh-water per day (2000). This is just 3% of the world’s consumption of drinking and sanitation water. If the expected decrease in desalination costs continues (typical production costs are now well below USD 0.50/m3), desalination capacity is projected to grow to approx. 36 million m3 per day in 2010 and 95 million m3/day in 2025.
Annual sales of desalination plants amount to about USD 1.5 billion today, and could increase to about USD 5 billion in 2025. (Memstill Brochure TNO)
Partners cooperating on the Memstill project
Background information on the current partners of the Memstill consortium is provided. The information comprises two elements; a description of the core business of the company, and the responsibilities of the company in the consortium. (Memstill Brochure TNO)
Ecological Management Foundation, Amsterdam
EMF is actively seeking and stimulating new technologies with potentially major improvements to the economy and ecology. EMF is coordinating the Memstill development project and contributing to the market exploration.
TNO (Netherlands Organization for Applied Scientific Research), Apeldoorn
TNO is a research and technology organization with over 5.200 specialists and has, among others, a strong position in membrane based separation technologies. TNO is the patent holder of Memstill and is the main R&D performer in the development project.
University of Twente, Enschede
The University of Twente (UT) is renowned for its research in membrane technology, which it has done for over 30 years. UT contributes to the development of Memstill by performing fundamental work, resulting in improved heat transfer at the liquid side and reduced fouling.
Water Technology Holland, Sittard
Water Technology Holland (WTH) is specialized in water technology, precision cleaning and process equipment & piping. Water purification is achieved by means of core technologies such as micro-, ultra- and nano-fitration and aerobic biotechnology. WTH contributes to the development of Memstill modules. WHT is licensed to commercialize Memstill. (Memstill Brochure TNO)
Seghers Keppel, Willebroek, Belgium
The Seghers Keppel Group (SKG) is well known for their installations for water (drinking water, process mater) and wastewater treatment. Installations are placed all around the world. SKG will design and construct the pilots for on-site test work. It is anticipated that SKG will design and construct the first commercial Memstill installations. SKG is also licensed to commercialize Memstill.
EON Benelux, Rotterdam
EON Benelux is one of the four major producers of electricity in the Netherlands. Energy savings continue to be important to the electricity sector, both from economic and environmental points of view. Memstill is expected to become an important new tool for using waste heat from power generation for the production of demineralised water. Engineers from EON Benelux are contributing to the project by demonstrating, testing and evaluating Memstill concepts for this type of applications in the electricity sector.
Heineken, Zoeterwoude
Heineken has grown into one of the worlds leading brewing companies and brews beer at over 110 breweries and in more than 50 countries, also in water scarce areas. Heineken International is part of the Heineken Company and is involved in the supply of services to its breweries, These services include water saving and engineering of water treatment installations. Heineken will test a small Memstill pilot unit at one of the production locations.
Gemeente waterleidingbedrijf Amsterdam (Amsterdam Water Supply)
Gemeente waterleidingbedrijf Amsterdam (WLB) is responsible for delivering clean and safe drinking water to Amsterdam and surrounding towns for economically attractive prices. Therefore, WLB is actively in search of new water sources and improvements in the production of water.
WLB will contribute its expertise on safe water production and analysis. Also, a Memstill pilot plant will probably be tested on one of the WLB’s production sites.
Evides, Rotterdam
Their ambitions can certainly be valuable to the consortium. Evides wants to become the largest supplier of industrial water, water related services, and tailor made installations for the industry in North-Western Europe. Evides will test a Memstill pilot, parallel to a MED-installation, with brackish harbour water and waste heat as energy source. (www.evides.nl)
1.3 Significance of the study
The study has significance from both a practical and theoretical perspective. From the practical perspective the study serves two purposes. First, because the study is based on a case, the Memstill project, it will result in recommendations that can help to improve the functioning of the consortium, and the chances for Memstill desalination systems on the international desalination market. Secondly, the study should give TNO-MEP a better understanding about the functioning of consortia, and market entries by means of consortia in general.
The theoretical significance exists out of a modest contribution to the extensive body of literature on cooperation between companies and consortia in particular. Literature on consortia is used to describe the organisation of the operation of the Memstill project.
Literature concerning project marketing & systems selling is used because this niche in the marketing literature is aimed at the question, how large projects and systems, for example power plants, can be marketed and sold. In this study both theories are combined in order to describe the relation between marketing and sales efforts with the operational aspects of the project
1.4 Outline of the report
The study starts with an analysis of the problem to find the core of the management problem. This problem analysis leads to the problem statement. After that the methodology used to collect and analyse the information used to answer the problem statement are substantiated (chapter 2).
A theoretical framework is provided in chapter 3, consisting out of three elements. First, literature on project marketing & systems selling is discussed. The second source of literature for this study concerns consortia. The third element is a description of how these theories can be used together, resulting in a conceptual model. The combination of both theories will then be compared to practice with the Memstill case.
In chapter 4 theoretical propositions concerning project marketing & systems selling are compared to the conduct of TNO-MEP, with Memstill in particular. Theoretical propositions concerning consortia are compared with the conduct of the Memstill consortium in chapter 5. The theoretical framework will be validated in chapter 6, Conclusions & Recommendation.
2 Research Intent
In the previous chapter is mentioned what the background of the problem entails, and what the aim of this study is. In this chapter the management problem will be elaborated. First an analysis of the problem will be made to find the core of the management question. Secondly, based upon the outcome of this problem analysis, the aim of the study is formulated, and limitations are provided.
Third, based upon the aim a problem statement and research question are formulated. Fourth, the methodology used to collect and analyse information to answer these questions is substantiated.
2.1 Analysis of the problem
In this paragraph the problem will be specified closer. First, the management problem is established in section 2.1.1. Secondly, a stakeholder analysis is used to find the core of the management question in section 2.1.2.
2.1.1 Management problem
In the background of the study, paragraph 1.1, is mentioned that TNO has difficulties to enter the market with their technologies, and once they have entered the market, they are often unable to expand their sales. The management of the TNO is aware of this, which makes this problem a
‘management problem’.
Management problem:
TNO has difficulties to enter the market with their technologies
Be aware that the term “problem” is a technical term. According to De Leeuw (2000) a problem situation for management is every situation that gives management reason to strive for improvement or renewal. In this respect, one can just as well speak in terms of challenges.
The functional management problem will be used as departure point for a stakeholder analysis, in order to find the core of this problem. The understanding of the problem is deepened by looking at the problem from different angles of different actors. This results into an analysis of the companies to which the problem is of a concern.
Stakeholder analysis
The stakeholder analysis will provide a deeper understanding of the management problem by mentioning relating problems from the angle of stakeholders. A deeper understanding is used to formulate the problem statement for this study. A stakeholder approach is chosen for the analysis of the problem, because this approach has an external focus, in contrast to for example a problem owners analysis, which is mainly internally focused. (De Leeuw, 2000) In this section the scope of the stakeholder analysis will be explained first. Secondly, a model will be presented illustrating the relations between the different stakeholders. As third, problems of the most relevant stakeholders will be discussed. Fourth, implications of the stakeholder analysis for the study are given.
Scope of the stakeholder analysis
The value system, Porter (1998), of TNO-MEP is used as starting point for a stakeholder analysis.
For this study, the stakeholder analysis is limited to stakeholders which are relevant to the management problem. TNO-MEP employees have mentioned the following types of stakeholders as relevant to the management problem: Universities, ‘manufacturing industry’, market, and TNO- MEP itself. The author has added consortia, which involve (most of the time) all parties together, as a separate type of stakeholder. Before analysing the problems of these stakeholders, the relationships between them will be clarified. These relationships can be regarded as the value system of TNO-MEP, and are illustrated by a model. (Figure 1)
Model of most relevant stakeholders
Based upon the value system of TNO-MEP a model is presented that illustrates the relations between the most relevant stakeholders of TNO-MEP. It illustrates how TNO translates fundamental research into applied research, and how it enters the market with it.
Figure 1: Most relevant stakeholders Manu-
facturing Industry
The value system of the business of TNO-MEP illustrated in the model can be explained as follows: Universities conduct fundamental research, TNO-MEP converts this into applicable knowledge, the manufacturing industry (engineers) use this knowledge to develop machinery, which is than sold to the market (end users from the Industry). The separate relations (illustrated with arrows) between the actors will be further explained below. The information in this section is based on unstructured interviews with employees of TNO-MEP.
The relation between the universities and TNO-MEP can be described as cooperative. More and more universities are co-developing knowledge with TNO-MEP. Within TNO-MEP this is referred to as knowledge development. Research of universities can find its way to the industry, its end users, by TNO-MEP.
The cooperation of TNO-MEP with the manufacturing industry (engineering companies and/or original equipment manufactures, OEM) relies mainly on contract research. The manufacturing industry requests frequently to improve or to make new processes and products for them. This kind of contract research is referred to as ‘knowledge application’ TNO-MEP expects from the manufacturing industry that they put knowledge developed at TNO-MEP into the market (Industry). The income for TNO-MEP is generated via royalties.
On rare occasions TNO-MEP directly delivers knowledge to the market. This happens roughly in two situations. The first is when the end user request TNO-MEP to develop solutions for a problem they have, this can be regarded as contract research. The second situation occurs when TNO-MEP cannot find a partner who is willing to put the knowledge or products on the market. When TNO- MEP remains of the opinion that this knowledge of technology should find its way to the market a
‘spin off’ will be founded.
An increasingly more popular way of putting TNO-MEP’s innovative technologies into the market is to use a consortium. These consortia always include an engineering company (manufacturing industry) and usually include an end user (market), and sometimes they also include scientists from universities. The construction of a consortium should activate the partners’
long-term behaviour, where as a separate buyer or supplier they could be driven by short-term gains.
The next step is to identify possible problems in the way the most relevant stakeholders cooperate.
Problems of the most relevant stakeholders
TNO-MEP: TNO-MEP aims at developing innovating knowledge, and transforms this knowledge to the industry. A complicating factor is that TNO-MEP is bound to a government decreed; it is a not for profit organisation. Their aim is to contribute to the competitiveness of the industry and society by translating fundamental research into applied technology, relevant to industry,
authorities and other societal bodies. TNO faces two main inadequacies in the process of doing this:
• TNO-MEP translates fundamental research into applicable innovations, for which demand does not (yet) exists. Or into innovations for which demand exists but the technology lacks.
• TNO-MEP does receive little royalties from innovations they put into the market, because there is not a lot of turnover.
Universities: More and more and more universities are co-developing knowledge with TNO-MEP.
Within TNO-MEP this is referred to as knowledge development. TNO-MEP is a means for universities to show that their fundamental research serves a purpose. Their work finds its way to the industry by due to TNO-MEP. In first instance, there seem to be no inadequacies in this process.
Manufacturing industry (Engineering Companies): The ideal situation for an engineering company is to produce and to sell and maintain one or a small number of types of machine as much possible.
TNO-MEP expects these engineers to take up their innovative knowledge, to develop applicable machinery, and to put effort in selling it. In return TNO-MEP expects to be rewarded with royalties. The inadequacy in this process is:
• Engineering companies are reluctant to put effort and costs in developing innovative ideas into end-products.
Market (Targeted Clients): The consumers of functioning systems that benefits from the knowledge developed by TNO-MEP usually apply it in some type of machinery. These clients prefer to buy a full serviced piece of machinery, including installation and maintenance contracts.
The inadequacy is:
• The market is not interested in R&D projects offered by TNO-MEP, instead of functioning products.
Consortia: In order to overcome discrepancies in this chain TNO-MEP often seeks a group of companies who are willing to cooperate in the development process. And above all, who are willing to share in the development costs. Within these consortia inadequacies come up as well:
• Members have to balance between individual and collective goals of the cooperation.
• Consortia change, or fall apart because of long lead times.
The inadequacies appear to originate in discrepancies between what the parties desire to receive, and what they actually get. Implications of this analysis will be discussed in the following section.
Implications of the stakeholder analysis for this study
The management question, TNO has difficulties to enter the market with their technologies, can be deepened with the information from the stakeholder analysis. This analysis shows that inadequacies appear to originate in discrepancies between what the parties desire to receive, and what they actually get. Two elements are particularly applicable to the management problem; TNO has difficulties to enter the market with their technologies. First, how can TNO-MEP interest the industry for their projects? Secondly, how can consortia be used for the operation of projects, in order to reduce discrepancies between parties of question and demand? These issues will be used to formulate a problem statement and research questions for this study.
2.2 Aim of the study
The aim of this study is twofold: First, it is to advice TNO-MEP on how they can improve the operation of the Memstill consortium. Secondly, it is to advice how Memstill desalination systems can be placed in the international desalination market.
In order to reach this aim, first a description will be provided on how TNO-MEP has operated the Memstill project till now, and which strategies they have applied to market and sell Memstill desalination systems. Secondly, theory on project marketing and systems selling, and consortia is used to provide recommendations for the continuation of the Memstill project.
2.3 Problem statement & Research questions
The problem statement and research questions are based upon an analysis of the management problem. Answering the problem statement should enable an answering the aim of the study. The problem statement is a direct result of the management question combined with the problem analysis. The research questions, on the other hand, are based upon the theoretical framework which is presented in chapter 3.
2.3.1 Problem statement
How can innovative technologies of TNO-MEP, in this case a desalination technology, Memstill, be placed in the international market, by means of consortia?
2.3.3 Research questions
The problem statement, leads to two main research questions, which are both divided into multiple sub questions. In contrast to the research question which is a result from the preliminary research, the research questions are based on the theoretical framework composed for this study. A third research question is added to discuss the practical generalisibility of the theoretical framework for other consortia of TNO, and for a theoretical validation of this framework.
1. How is, and can the Memstill project be, marketed and sold by TNO-MEP?
1.1 How have project independent strategies been applied?
1.2 How have project specific strategies been applied?
1.3 What are the possibilities to apply post completion strategies?
2. How is, and can the consortium be organised for the operation of the Memstill project?
2.1 How is the formation of the Memstill consortium realised?
2.2 How is the present consortium governed?
2.3 What are the results of the Memstill consortium till now?
3. How do the marketing & sales and the operation of the Memstill project complement one another?
In the next paragraph, is described how the information to answer these questions is collected and analysed.
2.4 Methodology
In this paragraph, the methodology of the empirical work for this study will be explained, to enable others to perform a similar study. The following methodological issues will be explained: research strategy, site and sample selection, data collection procedures, data analysis procedures, and limitations.
2.4.1 Research Strategy
An explorative research strategy for this study is chosen because it fits the purpose of the study.
The intention of this study is to answer an open question, a how question: How can innovative technologies of TNO-MEP, in this case a desalination technology, Memstill, be placed in the international market, by means of consortia? According to De Leeuw (1996), explorative research is most suitable for studies in which one; explores, forms ideas, and/or wants to answer an open question. This fits the idea of this study, to form a conceptual framework for the marketing, sales, and operation of consortia.
2.4.2 Research Design
The next step after choosing the strategy is the design of the research. The Memstill study is designed as an embedded single case study. The Memstill case study involves more than one unit of analysis. The Memstill project is regarded as the case, and the partnering companies as subunits of analysis, which makes it possible to compare empirical findings between different subunits.
2.4.3 Site and Sample Selection
The site selection in this case is based on the working environment of the partners of the Memstill consortium. Seven out of the nine partners are visited at their office. From those nine, four have been visited twice, for an orientation interview, and for the actual interview. The information from TNO-MEP is realised by working five months internally at TNO-MEP in Apeldoorn. The reason that people are visited face-to-face is that face-to-face interviews yield more information, as opposed to telephone or mail surveys. At the end of the research, one interview, with Evides, has been conducted by phone, due to a lack of time.
The selected sample used for the study comprises all contact persons, and steering group members of the Memstill project. Only one of those partners, E.ON, is not included in the research due to time limitations. The sample, therefore, is comparable to the total population involved.
2.4.4 Data Collection Procedures
The empirical data collection for this study is divided into four stages; problem analysis, orientation interviews, actual data, and a verification interview. In the first stage, qualitative data is gathered for the preliminary research. This problem analysis research comprises four unstructured interviews, which were used to specify the stakeholders in the value system and inadequacies in their relations. The aim of the first stage is to build a basis for formulating research questions. In the second stage, qualitative data is gathered for orientation. The orientation comprises five unstructured interviews, which are used to find out which topics in the literature are most relevant to the Memstill case. The orientation interviews together with the literature result in a theoretical framework, which will be tested in the third stage. The third stage concerns the actual data, construction of an instrument to test the theoretical framework in practice, and the implementation of this instrument. The three research stages are illustrated in table 1.
The data collection procedures will now be explained for the separate research stages of the study.
Before that there is one general comment, which is that all interviews have been done by the author.
Problem analysis
For the problem analysis four employees of TNO-MEP were asked to point out, what TNO-MEP does in practice, the value system. Being more specific, how they involve actors in the process of carrying projects. These questions have been discussed with four employees, separately from each
Table 1 Three Research Stages
Stage Desired Information Method
Problem analysis - Identification of stakeholders - Identification of inadequately
fulfilled demands of stakeholders
- Four unstructured interviews with employees of TNO-MEP
Orientation Interviews - Identification of relevant issues concerning:
- Performance of consortium - Visions on market entry
- Five semi structured interviews with two employees of TNO-MEP and three main partners of the consortium, SKG, WTH, and EMF
Actual Data - Gaining holistic view on:
- Performance of consortium - Market entry expectations for
Memstill
- Relating the concept to practice
- Seven structured interviews, based on literature, with 7 out of 9 members of the consortium
- Two employees of TNO-MEP were subject to a second interview on marketing and sales.
Verification Interview - Verifying the conclusions drawn in the research
- The results of the research have been discussed with 3 employees TNO-MEP (Memstill project manager, department head, and a strategic and commercial counsellor)
other. A model (figure 1) derived from this interview is used for the second round of interviews with those four employees to illustrate their answers to the question, what they thought about what might cause the difficulties that TNO-MEP has to put their products in the market.
Orientation interviews
These interviews (appendix: interviews) have been done with two employees of TNO-MEP, separately from each other. Besides that there have been visits to the three most actively involved partners, WTH, SKG, and EMF. For the five interviews, the orientation interview scheme has been used. The interviews took place in the same time as the literature was reviewed. The two main questions in the interviews are: What do you think about the performance of the consortium? And, what is your opinion on the market entry of Memstill?
Actual data
Structured interviews, with open ended questions are used for the actual data (appendix:
interviews). These interviews are conducted with eight out of nine members of the consortium.
These interviews contain questions concerning the three phases of the operation of consortia, and questions concerning post completion strategies.
Besides the interviews used for all partners, two TNO-MEP employees have been subject to a second interview which provides more insight in the project marketing and systems selling practices at TNO-MEP (appendix: interviews). These interviews contain questions about the three strategies recognised about systems selling.
Verification Interview
The conclusions and recommendations of the most recent concept of the study have been discussed in a 2.5 hour lasting discussion with three employees of TNO-MEP. The motivation for this interview was to increase the validity of the results.
2.4.5 Data Analysis Procedures
Data analysis procedures for this study are described separately for the different stages in the research: Problem analysis, orientation interviews, and the actual data.
Problem analysis
For the problem analysis four employees of TNO-MEP were asked to point out, what TNO-MEP does in practice, the value system. Being more specific, how they involve actors in the process of carrying projects. These questions have been discussed with separate employees. In the end, this
led to a model (figure 1) which has been discussed and adapted to comments of the employees which were involved in setting out the value system.
In a second series of interviews these employees were asked; what they thought about what might cause the difficulties that TNO-MEP has to put their products in the market. During the interviews the model (figure 1) was used to point out between which actors problems arise. The information from these interviews is than again handed over for confirmation.
Orientation interviews
The information derived from the orientation interviews is processed into a table. In this table the topics derived from the interviews are compared to topics in the literature. Because the focus of part of the literature has changed, this technique is only applied to the literature on consortia. First part of the literature was focused on market entry; later on this is changed into systems selling and project marketing. This gives more a marketing approach to the market entry. In the literature on these latter concepts one can clearly recognise a conceptual framework, which is used for this study as well. Because it provides a structured way to answer one of the research questions.
However, the literature on consortia is more scattered. Probably because this concept has been studied a couple decennia longer. The orientation interviews have been used to filter out the most relevant topics from this body of literature for the Memstill case. The part about consortia in the theoretical framework for this study contains the topics that are chosen based upon the introduction interviews. The theoretical framework about both theories is illustrated by a conceptual model which emphasizes the complementarity of both theories. Based upon the conceptual model and theoretical framework the interviews for the actual data are composed.
Actual data
This data collection session is used to answer the three research question of this study. The first question on marketing and sales is mainly based on interviews with employees of TNO-MEP. To this information relevant comments of the partners are added. The second question concerning consortia relies mainly on the statements made by partners, and is less dependent upon opinions from employees of TNO-MEP. For the third, combining research question, no separate empirical data is used.
The interviews for this session are based upon propositions from the literature. The conceptual model forms the basis for the structure. The separate concepts are used as structure for the chapters in which the empirical data will analysed. The concepts in turn are divided into a number of factors. These factors are used a propositions. The empirical “actual data” are compared to those factors from the literature. Because the case is an embedded case, multiple units of analysis can be used to relate the case to the theory, improving the internal validity. Contrasting findings are described, when relevant.
The descriptions resemble the following order; factor from the literature, opinion of TNO-MEP, followed an opinion, or multiple opinions of the Memstill partners. The Memstill partners are not mentioned separately because of confidentiality of the information.
Although factors from the literature are used to structure the analysis it does not mean the literature will be taken for granted. Wherever the literature does not fit the case, the analysis will be twofold. First, the empirical data will be reconsidered. Secondly, the theory will be reconsidered.
Based upon this analysis recommendations are given for improvement of the Memstill consortium, or other consortia of TNO-MEP, in the final chapter. Besides that recommendations will be given for the generalisibility of the conceptual model and the applied theories.
2.4.6 Limitations of the research
The complexity of validity and reliability, that is inherent to case studies, should be mentioned as major limitation to this study. However, utmost precaution is taken to secure validity and reliability. In this paragraph, a description is given how is dealt with these issues in this study.
Validity and Reliability
Construct validity: For the Memstill study three tactics are used to ensure the construct validity:
First, multiple sources of evidence are used; literature, interviews, and project documentation.
Secondly, a chain of evidence is created; orientation interviews, followed by literature and document study, the actual data, and confirmation interviews. As third tactic, the results of the case study are reviewed by key informants, by means of a verification interview.
Internal validity: The internal validity is guaranteed by the embedded case design. This design enables the researcher to compare answers, of more than one unit of analysis with each other. This can be used to bring divergent outcomes to light. There are three limitations to the internal validity of this study: First one of the partners E.ON has not been interviewed due to time limitations.
Secondly, the EMF has only been subject of an orientation interview, and did not participate in a Memstill partner interview. Third, Partners that have left the consortium are not asked for their reasons.
External validity: In this study an attempt is made to secure the external validity by relating the empirical findings of the Memstill case to examples from the literature. However, secure the reliability of the entire framework, as opposed to concepts out of it, the study should be replicated to other cases inside and/or outside TNO-MEP.
Reliability: The reliability in this study is secured by a detailed report of the theoretical propositions used in the study, inclusion of interview schemes, and a precise description of the methodology applied to the Memstill case. This should enable others to replicate the study.
3 Theoretical Framework
In this chapter, the concepts of project marketing and system selling will be explained, by elaborating on different strategies that can be applied to projects. A Memstill desalination system is the type of complex systems on which the project marketing and systems selling literature is aimed.
Secondly, the operational part will be explained. TNO is a project based company; many projects are operated by means of consortia. Consortia are regarded in this study as a tool to execute/operate projects. The operation of consortia will be explained in the second paragraph of this chapter. As third the two theories are linked together to create the actual theoretical framework that will be used for this study, which is illustrated by a conceptual model.
The conceptual model provides a perspective on how projects can be marketed, sold, and operated. The latter operational function is regarded in this study as a result of, and a source of marketing opportunities. The idea is to provide a cyclic perspective: marketing & sales, resulting in execution of projects, which result in turn in new business opportunities.
The theoretical framework, illustrated by the conceptual model (figure 2), is used in two ways:
First, it will be used to structure the empirical data of the Memstill case according to the framework. Secondly, the generalisibility of this theoretical framework itself will be discussed.
3.1 Project marketing & Systems Selling
In this paragraph will be explained how cooperating companies can market and sell projects. This niche in the marketing literature is recognised in the 1990's by the International Network for Project Marketing and Systems Selling (INPM). Recent articles from this scholar are mainly based on a model from the study of Cova, Mazet, and Salle in 1994. Therefore, this literature chapter will also be largely based on this "fundamental study".
First, will be clarified what project marketing and systems selling entails. Secondly, strategies will be described at the project independent level. Third, project specific strategies will be presented. Finally, strategies will be presented how to deal with marketing and sales after projects have been completed, post completion strategies.
The selection of literature for this paragraph is a result of reviewing (INPM) articles relevant to the case, and selecting the constructs and factors that reappear in most of the articles. (Skaates &
Tikkanen, 2002; Cova & Hoskins, 1997; Gunter & Bonaccorsi, 1996; Bonaccorsi, Pammolli, Tani, 19996; Cova & Salle, 1994) Table 2, illustrates the structure of this chapter.
Table 2
Structure of Literature Review Project marketing & systems selling ACTIVITY LATENT CONSTRUCT FACTORS
General insight 4.1
- What is project Marketing & Systems selling
- Milieu
- Approaches (postures)
- General Marketing Configuration Model Project Independent Strategies
4.2
- Analysis & strategic priorities - Network investments - Environmental scanning - Offer and demand anticipations - Creative offering
Project Specific Strategies 4.3
- Choice of technological & socio-economic adaptations - Resource mobilisation
- Proposal
- Negotiation
Project Marketing &
Systems Selling
4
Post Completion Strategies 4.4
- Management of modifications - Maintenance and after sales services - Securing customer satisfaction - Maintaining a relationship
- Stay informed about customers forthcoming projects
3.1.1 General Insight
In this section three topics will be discussed. For a start, the concepts of Project marketing and Systems Selling will be explained. Secondly, attention will be given to the milieu in which
companies operate. As third, three postures will be put forward, which companies can adopt to deal with their milieu.
Project Marketing & Systems Selling
First will be explained what the two concepts entail, subsequent to that insight will be given to the type of business where it is intended for. Next some characteristics will be summed to get a better grasp of the concepts.
Project marketing: On a general level, a marketed project is a transaction concerning a functioning whole which is delivered to the buyer, and covers a discrete package of products services and other actions designed to create assets for the buyer over a certain period of time.
Systems selling: The sale of a complex combination of products and services often appears to by synonymous with the delivery of projects. However, while projects, with the exception of professional service projects, can most often be considered as systems, systems do not have to be supplied in the sequential or process manner of a project. (Skaates & Tikkanen, 2002)
Project marketing and systems selling are relevant to a specific type of business, or business relationships. These have specific characteristics, and can be rather important for economies of high-industrialised countries. We are talking about a type of business in which large projects are bought and sold. Complex systems assembled from a large number of components – products, subsystems as well as services not to forget know-how, information and different types of contracts included. The focus is on marketing processes when large units are purchased and marketed including major capital equipment, comprehensive services and infrastructure, e.g. industrial plants, public utilities, telecommunications systems, airports etc. (Gunter & Bonaccorsi, 1996) Project marketing is still a highly sophisticated practice, mostly managed by market-sensitive, professionally mature engineers. There is no common theoretical background, at least in a unified form easily accessible in the international management community. This situation is particularly regrettable, since there is evidence that project- and system-based industries are facing high turbulence, due to rapid changes in the nature of markets and in product technologies. (Gunter &
Bonaccorsi, 1996)
Specific characteristics of the type of business, or business relations, make the difference with consumer marketing and conventional business-to-business marketing. Gunter & Bonaccorsi (1996) mention ten characteristics for project marketing and systems selling: customised production, long-tem character, high value of single order, bidder/supplier coalitions, increased share of service, know-how differences between supplier and customer, variability of scope of supplies and content of the contract, internationality, order financing, discontinuity of incoming orders. According to Skaates & Tikkanen (2002) the three key distinguishing features are:
• The discontinuity of demand for projects.
• The uniqueness of each project in technical, financial and socio-political terms.
• The complexity of each individual project in terms of the number of actors involved throughout the supply process.
The environment in which these features have their implications is called “milieu”, by the French project marketing researchers Cova, Mazet, and Salle (1995).
Milieu
What distinguishes the milieu from a simple localised network of industrial actors is its collective linkage to the territory developed by practices of all types. The actors share, both in their life and in their imagination, the community of some elementary structures. In this approach, the territory is no longer considered as a simple support of localisation factors but more and more as a group of territorial agents and economic, socio-cultural, political, and institutional elements having specific organisation and regulation patterns, shred by rules and norms. (Cova, Mazet, and Salle, 1995) According to them, a milieu is a socio-spatial configuration characterised by four elements:
• Territory
• Network of heterogeneous actors related to each other within this territory
• Representation constructed and shared by these actors
• Set of rules and norms (“the law of the milieu”) regulating the interactions between these actors Project marketing firms can take in different approaches in relation to the milieu in which they are operating.
Approaches
Cova & Hoskins (1997) have pointed out that project marketing firms may take in two fundamentally different approaches to project marketing in relations to the norms, rules, and representations of a given project marketing milieu and the demands of a specific customer: a deterministic posture, or a constructivist posture. Additionally the authors give the control posture:
• Deterministic posture; project-selling firms may anticipate, learn to comprehend, and excel in following the accepted rules and representations of the milieu and meeting the demands of the customer.
• Constructivist posture; project-selling firms may become actively involved in shaping these demands, rules and representations.
• Control posture; this posture presupposes that project-selling firms are constantly involved in attempting to control all rules, representations, and developments in their relevant milieus to minimise their market uncertainty.
These three postures are fruitful cognitive tools for understanding possible inter-organisational interactions or, more specifically, relationships between project selling firms and other milieu
actors. Furthermore, these postures highlight the fact that project-selling firms may in some circumstances be able to change the interpretations and norms of external others. (Skaates &
Tikkanen, 2002)
In the following three paragraphs a model of Cova, Mazet and Salle (1994) will be discussed, figure 2. The model is a general marketing configuration for project-to-order supplier firms. It helps project marketers in managing relationship marketing at both the levels of the individual project and the level of multiple projects.
General Marketing Configuration Model
1. Analysis and Strategic Priorities
2. Network Investments
3. Environmental Scanning
4.1. Development of a Core Offer 4.2 Dynamic Project Screening
5. Creative Offering
6.1. Choice of Technical Adaptations 6.2. Choice of Socio-Economic to the Project Adaptations to the Project
7. Resource Mobilization
8. Proposal
9. Negotiation
10. Completion
Figure 2: Source: Cova et al., 1994, p. 40.
Step 1 – 5 above the dotted line concern marketing-related steps taken independent of a given project. (Paragraph 4.2). Step 5 – 10 below the dotted line concern marketing and coordination
