Building an Innovation Management System in a Construction Multi-Business Corporation

The world today is changing rapidly and extensively that has been generating a highly competitive and turbulent business environment. Thus, organizations are greatly exposed to failure or bankruptcy unless they are able to innovate in order to cope with new challenging situations. Construction industry is often said that it is not very innovative in comparing with other industries such as aerospace or electronic. Construction multi-business corporations even have to face greater challenges for survival and growth. Since, they are usually relatively complicated entities. Furthermore, in construction multi-business corporations the communication in organization and coordination of activities, between different organizational levels, between different business units or divisions or departments as well as between projects’ sites are extremely complex. This complication generates many difficulties in encouraging, capturing and implementing innovation in each project and in the firm.

In Vietnam, the construction industry has been growing dramatically in recent decades. Under the condition of market economy, the private sector is getting stronger that create more competitive business environment. Moreover, the construction projects in Vietnam have been becoming much more sophisticated that are accompanied with more stringent requirements from the Clients, and fund providers. These sophisticated projects are often demanding technologies that are higher than the capacities of any Vietnamese contractors. Consequently, Vietnam construction industry has been becoming fertile land for foreign construction corporations to exploit. In order to survive in this competitive environment, Vietnamese construction corporations must find the ways to enhance and develop their competencies. Effective innovation development and implementation is considered as an essential method for such improvement. Hence, study innovation in the context of Vietnamese construction industry is completely necessary.

So, with all the challenges and problems that the construction multi-business corporations have to face and solve effectively in order to survive and thrive in present chaotic and unpredictable world, the importance of an innovation management system can not be overlooked. Mr. Nguyen Van Hoai made a study to find answers to the question on how to design an innovation management system that can be applied to promote and implement effectively the innovation in construction multi-business corporations. The main objective of his study is to build an innovation management system that is able to manage and the innovation in construction multi-business corporations so that the innovation is increased, promoted and implemented toward the organizational objectives’ achievement. In order to achieve his main objective, the following sub-objectives were established:

1. Develop and propose the theoretical framework with its critical attributes for Innovation Management System in Construction Multi-business Corporation.

2. Apply the proposed framework for investigating practical innovation in a Construction Multi-business Corporation in order to discover its strengths and weaknesses.

3. Finally, make recommendation to propose an appropriate and effective Innovation management system in Construction Multi-business Corporations.

Conclusions

Practical innovation scenarios in VINACONEX

The framework is used to design the questionnaire, which was applied to investigate the practical innovation scenarios in a construction multi-business corporation. VINACONEX has been selected for the investigation. A hundred of questionnaires have been sent out and 72 useable completed questionnaires have been received. The data analysis has revealed general innovation scenarios of VINACONEX including the strengths and weaknesses of the management control system.

Innovation implementation

It is concluded that VINACONEX has been implementing the product, process and administrative innovations. The product and process innovations were implemented more frequently and exerted greater impacts on the performance and development of the Corporation.

VINACONEX has used variety of information sources for innovation implementations, which are rival companies, government, management, consultants, clients and in-house R&D, research institutions, professional seminars, publications, conferences and meetings, and suppliers. However, the information flow from research institutions, professional seminars, publications, conferences and meetings is blocked in management level and not dispersed to the employees in the Corporation.

The innovation implementations in VINACONEX is usually obstructed by lack of qualified personnel, lack of technical equipment, lack of finance, lack of information about technology, high cost, high risk, and lack of management commitment. The top management in VINACONEX has not concerned and committed sufficiently to incremental innovation in the Corporation.

The innovation drivers in VINACONEX from external business environment include technology, construction market, government law/regulations, and economy at large.

The management system
The management system represented by management and leadership, strategies, structure, resources, culture and climate, and communication and collaboration is not strongly supportive to innovation implementation in the Corporation. Communication and collaboration is the strongest attribute in management system in which there are both strong and weak elements.

The second strong attribute of management system is the innovation strategies. The innovation strategies are included in the corporation strategies for the development of VINACONEX. They links with clear and measurable objectives, have long term focus and thrust.

Leadership is the third strong attributes of management system. The strongest elements of leadership are that the top management are emphasizing strongly on getting work accomplished and has clear vision to drive innovation implementation.

Regarding to resources, the strongest element is effective application of standard criteria for selection and recruitment personnel. The Corporation provides sufficient human resources, necessary tool and equipments for innovation implementation. In addition, the key person such as innovation leader, champion, innovator, gatekeeper and so on always present in the Corporation for innovation implementation. Time used for innovation implementation is also adequately allocated to the personnel doing innovation implementation. However, it is not clear that adequate annual budget is allocated and finance is always made available for innovation implementation in the Corporation. The training is also not provided sufficiently to the personnel of the Corporation.

Structure is the weakest attribute of management system. The Corporation has frequently applied cross-functional team for innovation implementations. The decision making is also decentralized to the lower level of management. Therefore, the structure of VINACONEX is relatively appropriate to facilitate the innovation implementation.

The other relatively weak element of the management system is culture and climate. It contains equally five strong elements and five weak elements. It is good elements for innovation implementation that all employees are encouraged to participate in generating new ideas and high priority is given for learning and experimenting new ideas. In addition, in the Corporation conflicts are handled effectively by resolving the issues openly among involving parties with or without higher level supervisor.

The operational level

At the organizational level, the innovation implementation can be initiated by project size, business plan, project execution difficult conditions, project challenging scopes, project complexity, project types, the desire improvement of project personnel, and availability of new technology. Innovation implementations in VINACONEX are also significantly influenced by the project constraints, which include cost, quality, time, technology, and design. Availability of technology and stringent quality requirements from clients promote the innovation implementation in the construction projects. However, limited time and budget allocated to the project execution will hinder the innovation implementation in the construction project.

Project team is a relative strong attribute of VINACONEX in supporting innovation implementation in construction projects. For innovation implementation in construction project, the Corporation attempts to integrate as early and completely as possible the project parties as a team. In addition, the Corporation always endeavors to integrate the high efforts from project parties in order to achieve the success of innovation implementation.

Regarding to communication and collaboration, a formal procedure of communication and collaboration is always applied for any construction project executed by VINACONEX. Therefore, communication and collaboration are very effective within project team and among the project parties. Nevertheless, multi-directional and informal communication and collaboration are not strongly encouraged in construction project.

Recommendations

Based on the strengths and weakness that has been drawn in earlier sections, the recommendations for improvements are proposed as following.

Regarding scale of innovation, it has been mentioned that radical innovations have much higher impact on the development of the Corporation than incremental innovations. It is recommended that the management level should give sufficient attention and stronger committed to incremental innovations and the employees should involve more significantly to radical innovation implementations.

For the information sources for innovation implementation, it has been indicated that suppliers, education and research institutions, and professional seminars, conferences, publications, and meetings are very imperative information sources for innovation implementation. Since, in practice huge load of innovation information and knowledge flows to the firms from these sources. Hence, the Corporation should create facilities or mechanism for the information from these sources dispersing wider and deeper within the Corporation. This will definitely promote the innovation implementation in the Corporation.

In concerning toward the communication and collaboration in the Corporation, it is identified that innovation strategies are the strategies that promotes the innovation implementations in the Corporation. As a result, it is recommended that the Corporation should apply certain facilities such as brochure, handout and so on or mechanism such as meeting to communicate effectively the innovation strategies and performance measure, which will enhance the innovation implementation in the Corporation. In addition, the necessary information should also be made available and easily accessed by all personnel of the Corporation. This will promote better information flow and knowledge sharing in the Corporation.

On the issues of leadership, it is apparent that lack of adoption of consensus and shared approach of decision making and participative decision making style will block the bottom up flow of creative ideas, which will hinder the innovation implementation in the Corporation. Therefore, the decision makers in VINACONEX should change their decision making approach in order to utilize better the intellectual capabilities of personnel in the Corporation. The managers in VINACONEX should also provide better and more sufficient feedback to the employee so that they can improve their works related to innovation implementation.

Resources are critical for innovation implementation, especially financial resources, which allows the Corporation to purchase innovations, absorb failure, and bear the cost and so on. Trainings are necessary to enhance the capabilities of personnel in organization, which is beneficial to innovation implementation. This is due to the fact that success of innovation implementation relies essentially on the competencies of personnel. Insufficient and unsatisfactory training may inhibit the success of innovation implementation. Therefore, the Corporation should provide better trainings to the personnel.

Regarding to the structure of VINACONEX, it has been indicated that freedom or autonomy and empowerment librates the personnel. As a result, they are able to work more independently, more creatively and innovatively. Therefore, although the VINACONEX’s structure is still considered appropriate for innovation implementation, it should be changed to fit better with the present dynamic environment. The change should be moved toward a more flexible structure that is able to provide the personnel more freedom for creativity and innovation implementations.

Culture and climate has been identified to be crucial in promoting the innovation implementation. The culture and climate in VINACONEX is not strongly supportive to the innovation implementation. Thus, tolerating failure and mistake can generate the culture and climate that personnel are encouraged to experiment the new ideas, to work more creatively and innovatively. The Corporation should also encourage constructive criticism and support better the change initiation that will promote the innovation implementation in the Corporation.

His thesis abstract is copied and posted.

Abstracts

At present, construction multi-business corporations have to face great challenges from highly competitive and dynamic business environment. Innovation is considered as one of the best solutions to overcome those challenges for development and prosperity. Therefore, it is apparent that there is the demand of an appropriate management system, which is able to promote the successful innovation implementation in construction multi-business corporations. This study has been conducted aiming at to satisfy that demand. Firstly, a conceptual framework with its critical attributes has been developed for innovation management system in construction multi-business corporations through extensive literature review. Secondly, the conceptual framework was applied for investigating practical innovation in a selected construction multi-business corporation in Vietnam, which is VINACONEX. Based on the strengths and weaknesses revealed from the investigation, recommendations were made to propose and appropriate innovation management system in construction multi-business corporation.