Christophe Midler

Keywords: project management, organization, organizational learning, automobile industry

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Project Management and Evolution of the Permanent Organization of the Firm

Many companies in the Western world are currently implementing far-reaching reforms of their management systems for new products. This trend is affecting different sectors (Clark et al 1992, Giard andMidler 1993) and in it can be seen the effects of a shift from the competitive modes of a mass-market economy to those of an economy typified by variety or reactive adaptability. In this type of context the competitive edge of any company depends firstly on its capacity to market genuinely innovative products rapidly and at satisfactory levels of quality and pricing -and secondly on targeting them at specific market niches, with the aim of outmoding more ordinary products [START_REF] Dertouzos | Made in America[END_REF][START_REF] Stalk | Competing against Time[END_REF][START_REF] Cohendet | Flexibilité et mise en cohérence des données de production; in Les nouvelles rationalisations de la production[END_REF][START_REF] Coriat | Made in France, L'industrie française dans la concurrence internationale[END_REF]. The combination of these strategies multiplies the number of projects to be managed. The automobile sector demonstrates a particularly good example of the trend (Clark andFujimoto 1991, Midler 1993a). It typified mass-market industry up to the 1960s, and is now at the forefront of the developments in concurrent engineering and integrated project teams.

We will focus our analysis of such transitions on the relations between the temporary project organizations and practices on one side, and the permanent organizations and processes of the firm on the other. [START_REF] Galbraith | Matrix Organization Design. How to combine functional and Project forms Business[END_REF] analysed the range of alternatives between a functional organization and a product (or project) organization, the median situation being the matrix organization. Focus was there essentially on formal organizational patterns. More recent works in organizations give more precise and varied models for the permanent coordination processes within the firms (see [START_REF] Mintzberg | The Structuring of Organizations[END_REF]. Comparative research between American and Japaneese firms demonstrate the influence of such characteristics of permanent coordination processes on the project practices and efficiency [START_REF] Aoki | Toward an Economic Model of the Japanese Firm[END_REF][START_REF] Clark | Product Development in the World Auto Industry[END_REF][START_REF] Clark | Product Development Performance : Strategy, Organization and Management in the Auto Industry[END_REF]. Navarre (1993, p 181, 215) formalised the relation between the project management paradigm and the characterization of the firm: The classical north American project management paradigm is related to a vertical type of firm as the modern concurrent and integrated approches are related to a horizontal type of organizations. This research domain is actually growing, and it is also appearing under new labels as "management by projects" or the "Project-oriented Company" [START_REF] Gareis | Management by project: the management approach for the future[END_REF].

We aspire here to make an empirical contribution to such an analysis of relations between project management and firm organization. The article contains a case study, the "projectification" of the French firm Renault, during a four phase transition from the 1960s to ongoing evolutions. We will try to associate a political approach of the change (what is the power and the autonomy of project teams within the firm ?) with a learning perspective [START_REF] Argyris | Organizational learning (Readings[END_REF].

The account is based on longitudinal research which associates different methodologies: historical analysis, ex-post project diagnostics in the 1980's and real-time analysis of Renault Twingo project from 1989 to 1993 (Midler 1993a). [START_REF] Clark | Dynamic Manufacturing, Creating the Learning Organization[END_REF] Therefore, in the 1960s there was a time of informal project coordination [artisanat projet in French as used by Pierre Dreyfus, Renault CEO [START_REF] Dreyfus | La liberté de réussir[END_REF]]. Each project was managed on a case-by-case basis. The only person who linked and arbitrated between them was the CEO himself. This approach was suited to the manufacture of few non-diversified products but by the 1970s it was no longer capable of dealing with the growth of products in terms of number and complexity .

Second Phase: Centralized Project Coordination from 1970 to 1988.

The beginning of 1970 marked a first important evolution in new product development management. Project management and marketing experts were recruited, especially from American firms which had already experimented with these techniques. Organizational structures cutting horizontally across the corporation were set up as seen in figure 2, involving the heads of the various operational divisions. These met in committees to look at the project-related problems. Apart from these committees, communication remained essentially vertical, between the top and the bottom of each functional department. Project coordinators were appointed: these were people whose corporate status was fairly low and whose competence was not yet fully confirmed. Their task was to gather information for the committees of departmental managers and they obviously possessed no decision-making powers. [START_REF] Clark | Dynamic Manufacturing, Creating the Learning Organization[END_REF] Project control techniques were implemented at that time. A general standard product development planning was set to coordinate the different contributions. A common economic language based on the project Return On Investment [Taux de Rendement Interne] concept was defined, to arbitrate trade-offs between the various corporate departments. In this first step of "projectification" of the firm, the processes involved only the top of the firm. Its focus was essentially to manage the project portfolio in a way that would be coherent with the global strategy of the firm. Another important point is that the projects have no champion to enforce their identity and negociate with the strategies of the skill-based departments. The project is a result, a compromise between existing professional goals and methodologies. Finally, this phase is oriented towards implementation of the standard Project Management tools: planning, budgeting and the ROI criterion. In the middle of the 1980's, this Project Coordination System failed to meet Renault's increasing ambitions in terms of time, quality and cost control of the projects (Midler 1993a p 99). Matching the skill-based department strategies and contributions without a powerful coordinator was a particularly difficult and little effective process. In the same time, international comparison revealed more generally occidental project management practices to be far less competitive than Japanese automobile product development processes (Clark et al 1987).

Third Phase: Empowerment and Autonomy of the Project Management Structure in 1989

These facts were already known by 1986-1987. But Renault was then in an important crisis and all concerns and energies were focussed on short term programs in order to improve the financial situation of the firm. Developing project management performance was not a priority in that context. As soon as short term profitability objectives were met, the new CEO, Raymond H. Lévy introduced in December 1988 a reform creating Project Directors.

This change was essentially a political move: The innovation was not in the project management structure (it existed since the early 1970's) nor in a new methodology but in the power and autonomy given to this role. Project managers have now a powerful formal position in the firm, giving the project strong enough status to carry on an equally-matched dialogue with top departmental echelons. The project management role was entrusted to experienced and successful executive personnel, with much influence capacities due to their prestige and know-how. The project structure surrounding the Project Director was also developed to a complete team of departmental project supervisors (products, engineering, industrial production, purchasing, sales, quality, planning controler, economic controler, personnel relations) with one foot in each hierarchy and operating within a matrix-type model [START_REF] Galbraith | Matrix Organization Design. How to combine functional and Project forms Business[END_REF]. Figure 3 [START_REF] Clark | Dynamic Manufacturing, Creating the Learning Organization[END_REF]

Characterization of the Project Management Practices

This structural change is only the most visible part of the changing process; the part that was much studied after Chandler presented his famous theory of adjustment of structure to strategy (1962). Organizational change analysis needs also to focus on practices, behaviours and know-how within the formal patterns. The development of a new car involves more than a thousand professionals, hundreds of different firms. These complexe cooperative processes cannot be changed in an instant by the creation of a new project structure. Therefore, after the structural change in December 1988 began a experimental period for project management within Renault, to try to turn the new autonomy into effective practices for development of the new products. The first project of this third phase was the Twingo project which began in january 1989. We had the opportunity of studying it with a real-time observation methodology from its beginning to its end. This research followed another one, were we had made an ex-post analysis of a project of the beginning of the 1980s, ruled in the coordination project manager form. The conclusions of that research (Midler 1993a) can be interpreted in Argyris and Schön terms of level of learning [START_REF] Argyris | Organizational learning (Readings[END_REF]. The transition from phase one to phase two was a single loop learning process: A better coordination in a stable frame of reference. But the transition from the second phase to the third must be seen as a double loop learning process. We have pointed out five instances as radical changes in the "theories in use" of the firm concerning the product development processes.

The Global and Entrepreneurial Responsability of the Project Role

The first deep change lies in the definition of project roles. The job is defined by a result responsability on a global goal, the success of the future car, without mentioning required skills, expertise or methodology. It is an entrepreneurial job definition, with a great autonomy on the means to achieve the target, as projects managers in the precedent phase were characterized as applicant of the standard development procedures of the firm.

The Twingo project was a spectacular experiment to demonstrate how such autonomy could be used to create the organizational context that could drive all energies and concerns to the very key problems of a specific project. One important point about this project, a little innovative urban car, was the economic constraint. Many other similar project had already failed at Renault since 1973 on that criteria. Therefore, the project team generalised a "design to cost" methodology which reversed the classical development process. The development process was initiated on the base of volontarist economic targets for each sub-system of the car and piece of the manufacturing system, targets which were consistent with the global objective of the program. Then, the devopment went on to find technical solutions to fit these initial economic constraints. Such a process was found to be particularly efficient (see Midler, 1993a, p26-33). It led to significative changes in the manufacturing process (the first technology scenarios included a high degree of sophisticated and expensive automation, the design-to-cost operation leading to a 30% cut in the body shop investment for example) as on basic components as important as the motor (the investment cost of the motor finally chosen for the Twingo was less than half of the investment needed with the first motor proposition made by the motor engineers of the firm). On the sales side, the work done by project management led to innovations in distribution modes and in communications; these in turn led to major savings in program costs.

The Importance of Singularities in Projects

The classical industrial rationality is in a certain way a general attempt to escape from the singularities of particular situations. Professionnal identities are definied on typified problems. They implement standard operating procedures [START_REF] Cyert | A Behavioral Theory of the Firm[END_REF]. They introduce "buffers" and rules to disconnect these logics from outside contingencies [START_REF] Thompson | Organizations in Action[END_REF].

But singularities are key points for projects, these "one shot" adventures which cannot be cut from their specific context. Empowered project managers are therefore constant advocates for tailor-made methodologies and solutions for the particular problems of their project. A lot of decision on the Twingo project can be interpreted as a effort to make the most of the pecularities of the product : the innovative concept and design of the car, the simplicity of an undiversified product, etc... One exemple of such a decision was the modification of the planning of the project to meet the opportunity of a presentation of the car at the "Mondial de l'Automobile" in Paris in October of 1992.

Systematization of Horizontal Communication between Professionnals

In the second phase of Renault "projectification" process, cross-professionnal dialogue was limited to the top of the firm. In the third phase cross-professionnal communication had been generalised to the bottom of the firm, in order to anticipate possible problems as to improve the trade-offs between the various logical systems involved. This horizontal coordination was implemented in the project scheduling. Formerly, the work of the various experts was performed sequentially, starting with marketing and design, going on to engineering, production methods, materials purchasing and serial production and ending up with sales. On the Twingo project, contributors traditionally playing "downstream" roles (plant personnel, outside suppliers, sales personnel) were involved right from the beginning. The cross-professional communication was also concretized by physically gathering together a large proportion of expert personnel in the same location -known as the "project platform" [plateau du projet in French] -with the physical media and tools for development near at hand. Formerly, workers on a project stayed where their departments were physically located, which often meant that they were far apart. Physical proximity therefore enabled time measured in weeks to be saved in solving interface problems, in particular the management of modifications dictated by industrial feasibility. Finally, a new project guidance structure was set up with the goal of decentralizing the control of costs, schedules and quality risks out to those contributing directly to project development. To achieve this, the project was broken down into some two dozen sub-projects based on physical sub-assemblies or specific client services (automobile noise and behavior studies for instance). In each of these sub-projects, a group was formed to represent each of the skills involved: engineering, methods, purchasing, outside suppliers, industrial production etc. This decentralization made it possible to mobilize effectively the project players involved at ground level to achieve project objectives and make major improvements in the quality of the decisions reached. Members of the project team ensured the overall coherence of the work done by the various sub-groups.

Project Temporality and Convergence Logic

One of the major changes implied by the development processes introduced by project teams was to bind the corporation to a specific temporal progression, a progression defined by the project itself. In traditional development processes each department contributes to the overall project at a given point in the sequence, working toward a limited horizon. Now all contributors work within a common time frame [START_REF] Sayles | The Project Manager: Organizational Metronome in Managing Large Systems[END_REF]), which we have modelled in a diagram represented in Figure 4 (Midler 1993a, p 98).

Degree of freedom of maneuver in project

Level of product knowledge

Time axis

Figure 4: Project Convergence (from Midler, 1993) In this model, a project is represented by two connected processes: A learning process (dotted line) in which uncertainty about product features, industrial feasibility and market reception is gradually reduced, and a work process (solid line) in which the freedom to change the project is gradually reduced as the degree of irreversibility of project decisions rises. Project management has to control these coupled processes from the upstream initiation phase, where virtually anything is possible -but where nothing is actually known for sure -to the phase downstream when everything is known, but virtually no free choices remain. The anticipation strategies in the modern concurrent engineering approach can be visualised as in figure 5. In a first phase, project managers try to prevent early commitment in heavy irreversible decisions in the same time as they try to gather as much information as possible on the project. On a second phase, the project is locked as precisely and exhaustively as possible, for modern industrial systems are so integrated that their different variables are closely dependant. Finally, at the end of the project speed and rapid reaction are given maximum priority in order to expedite the finding of solutions to the remaining technical obstacles.

Rapid Convergence Slow Convergence

Degree of freedom of maneuver in project Level of product knowledge Time axis

Figure 5: Accelerating the project cycle

This focus-down convergence logic leads to joint continuity and rapid adaptation in management styles on the project (Midler, 1993b). On one hand, learning needs memory process in the project team. If those involved at the end of the process were not there at the beginning, there is a strong likelihood that they will have no understanding of the compromises and trade-offs negotiated by others. They will not accurately assess the risks taken by others in full awareness of the context, and there is even a risk that they will not feel personally bound by commitments entered into by others. But on the other hand, the management capacities needed at each phase are very different : the emerging phase needs strategic insights, creativity and charisma, a capacity to sustain high uncertainty contexts; the control phase requires precision, realism and negociation talents; the last phase is a permanent race against time, where remaining "details" can stop the process if they are not taken care of rapidly and where the project team have to undergo a very conflictual context.

The Twingo project was typical of such a focus-down convergence logic. When the project team was formed, no decision had been taken to go ahead with the project. At that time it still seemed impossibly risky in economic terms : 15% reduction in variable costs and 25% in investment were needed to meet the ROI target. Project managers then capitalized on the risk of abandonment of the project to look at any route which had not really been explored up to that time. Studies went on for more than a year before the decision to build the automobile was finally taken, based on satisfying data. When this point of no return had been reached, it went into a second "control" phase in which maximum stabilization was sought for all development parameters. Finally, at the end of the project speed and rapid reaction were given maximum priority in order to expedite the finding of solutions to the remaining technical obstacles. The final result were consistant with the commitment taken at the point of no return (Midler, 1993a, p50-51).

Partnership Development

The introduction of concurrent engineering principles into relationships with suppliers took the form of co-development processes. Early selection of suppliers was carried out using contract specifications which were sufficiently open to enable suppliers to help in the search for solutions. The Project Manager polled equipment suppliers as early as the beginning of 1989 using component price targets as a basis. The technical solutions they submitted in response were then negotiated with engineering design personnel following a route which is exactly the opposite of what is normal; that is, purchasing personnel normally use detailed and unchangeable technical specifications to call for competitive bids from suppliers, the goal being to arrive at the best possible price (see Womack et al 1990). Following this, the chosen equipment suppliers were closely integrated into the project development teams working inside the company in order to make quality cost and time savings in dealing with the many questions related to the interfacing of the areas for which suppliers were responsible with closely connected or interdependent project areas. The implementation of these new procedures was to have a dramatic effect on the Twingo project: it enabled a reduction in costs of 18% to be made on the components in the design-tocost program (compared with initial estimates made by project costing personnel). Reductions on certain components even reached 30% without affecting either quality or profit margin, simply by better targeting of specifications following a complete functional analysis of the product. The project management teams made major contributions to this evolution since their responsibilities cut right across boundaries between the corporation and the outside world: they spoke for instance in terms of "internal" and "external" suppliers, placing Renault plants and the facilities of Renault suppliers in a peer-to-peer relationship; they helped promote competition between engineering design personnel within Renault and like departments in outside equipment supply firms with the objective of widening the search for technical solutions, and so on. Purchasing personnel were naturally right at the heart of this revolution in the relationship between the corporation and its partners, a fact which implied an updating of both its supplier relations and its contacts with internal technical personnel, providing new meanings and new tools for traditional notions such as supplier quotation requests, selection and monitoring.

The Forth Phase of Renault's Projectification: Transforming the Permanent Processes of the Firm

Above-mentioned organizations and project management principles are now implemented on every new project within Renault. But yet, it is not the end of Renault's "projectification" process. A number of problems still remain. Professionals trained for years in a compartmentalized corporate environment have not been prepared for inter-department, or even inter-company, dialogue. Empowerment and growth of project structures lead to classical but important questions: what is the future for skill-based functional departments of the firm ? Are they going to disappear, scattered into different project teams? How is it possible to keep the long-term technical learning process, when organizational structures focusses energies on more short-term and product oriented objectives? What therefore is the future route of the improvement process in project performances? There seem today to be two likely candidates.

-The first candidate is to continue to reinforce the importance of project structures. If this was to happen, there would be increasing development in size and responsability of project teams, skilled-based departments becoming simply labor pools on which project managers could draw.

-The route down which Renault has gone -the second candidate -is not this one. Renault has chosen to balance out strong project identities and strong departmental identities, setting up a complementary relationship between the two. As the project logic, the logic specific to technical skill departments cannot be ignored in the context of the automobile industry: maintaining and developing a sales network, increasing the productivity of a multi-product fabrication system and the level of the technical skills of engineering design personnel are objectives which are just as crucial as the success of any project. The raw material of future projects depends on the development of departmental expertise. It therefore seems to be a more efficient solution to strengthen the two complementary identities and to enhance the cooperation between them. Against this background, the developments now to be expected are no longer so much in relation to project team management or even at the project/department interface. Rather, further "projectification" will occur in learning and internal reorganizing of corporate departments or supplier companies.

Changes in the Technical Skills within Corporate Departments The Taylor type work division has had the effect of making some personnel specialize upstream and others downstream in a linear process. The "upstream culture" thus became habituated to abstraction, developing the capability for strategic reasoning (in other words, defining scenarios and constraints in situations with high levels of freedom of maneuver). "Downstream culture" became reactive in outlook (capable of reacting in situations in which freedom is restricted but uncertainty comparatively low), aware of the importance of detail, of the approximate character of both forecasts and theoretical presentations, and habituated to pragmatic reasoning. Putting these two corporate cultures, as different as they are complementary, together in a context of concurrent engineering without any preparation cannot be immediately effective. The dialogue between very different departmental skill areas requires that each must show a higher capability for rationalization than in communicating with players on their own team. This requires suitable communication tools to be developed. How can it be possible, for example, to have meaningful discussions on the industrial feasibility of a component with only drawings as reference? New modes of individual knowledge and team action, in addition to new media for communication between skill-based departments, need therefore to be invented. A further major change is the integration of technical skills and value-control expertise: in other words -controlling costs, scheduling and quality. The process whereby work was divided up led previously to a sharp separation of these two types of competences, which was harmful to projects. What a project manager wants a technician to do, for instance, is to fit his technical decisions to quality and cost targets, to work not toward technical sophistication for its own sake, but toward the final success of the project as a whole. The final project debriefings operated as revealing the degree of expertise and relevance of skilled-based departments and pointed out the need for developping new knowledges. One spectacular evolution within Renault is the recent decision to merge the product engineering department and the process engineering department under same location and responsability, in order to develop technical knowledge combining product and process expertises. Another area for deep professional reorientation is the purchasing departments. New co-development strategies with suppliers necessitates new ways to evaluate, select and coordinate the suppliers, compared to the classical buying practices. Reengineering of buying departments is currently one of the main field of transformation, and it is not by chance that the new Director just appointed this year for conducting this transition is an outgoing Project Director.

Changes in the Relationship between Departmental Management Echelons

If horizontally-based project groups, bringing together personnel from workshops, engineering offices, purchasing departments and so on, are to function properly, those who take part in them need sufficient levels of competence and decision-making power, and they particularly need to be able to undertake negotiations which will commit their departments (and therefore the managers of those departments). This is incompatible with the Taylorian type of organization in which delegation is unheard of and in which competence is strictly divided between high-echelon experts and those who carry out the orders. Such organizational principles are still frequently encountered, and not only in industrial plants.

Changes in Tools for Assessing Departmental Performance

The standards by which the performance of project contributors is assessed also need to be reinvented; it is an illusion to think that project players will seek to optimize global project criteria if they are themselves assessed in isolation on criteria only partly related to their work. The upstream involvement of plants in the project is a typical example of this: the evaluation of the performance of individual plants is arrived at essentially on the basis of the ratio of the number of plant personnel to the number of automobiles produced. The involvement of workshop foremen or technicians prior to the launch of a new model, hiring and training the manufacturing team six months to a year before serial production -none of this is reflected immediately in any productivity indicator. This explains why it is so difficult to mobilize high levels of energy just at the moment when it would be most effective for the final design of facilities and the preparation of the teams involved.

Changes in Relative Status between Different Functions

In Western technically advanced corporations as automobile firms, upstream technical and strategic departments used to be in a dominating position (a push forward hierarchy). Concurrent engineering and project managers concern about global compromise on the project tend to change this relationship between the different functions of the firm (towards a more "pull" hierarchy). It gives downstream people new opportunities to express and enforce their constraints and value adding rationality.

Changes in Career Management within Permanent Structures

Projects are historic and temporary activities. One difficult problem is to match the continuous but temporary involvment in the project teams with the career management constraints in the permanent structures. We already saw how people rotation had dysfunctional effects on project convergence. But this rotation is generally the direct consequence of rational allocating of scarce expertise among different projects. Team dismantling at the end of a development is also a difficult problem: Permanent structures or new projects rarely open satisfactory job opportunities at the right moment.

Changes in the System of Industrial Equipment Supply and the Professionalism of Corporate Buyers

The traditional attitude of the corporate buyer is to seek out the cheapest sub-contractor to make a component carefully defined by drawings and specifications. The result of this is a fragmentation of sub-contact work: taking stamping as an example, there are sub-contractors supplying serial production tooling, others for the first wave of prototypes, and yet others for second wave. The cheapest suppliers are often those who have made the greatest reductions in their overheads -and, by the same token, in their design costs. Modern project managers challenge the worth of this kind of narrow specialization. They are looking for partners capable of undertaking an entire development process from the first prototypes right through to serial production, with the objective of anticipating as early as possible the constraints which will exist for industrial-scale manufacture and ensuring the lessons learned upstream will be remembered downstream. It will readily be understood that this implies fundamental changes in the way in which equipment suppliers are organized [START_REF] Banville | Towards a European Automobile System)[END_REF].

Conclusions for research.

We shall conclude our analysis of the Renault journey towards project orientation by emphazing two points which draw perspectives for futur researches.

The first one concerns the relation between the development of temporary organizations (as project teams) and the permanent structures and processes within firms, or more generally society. The relationship between temporary and permanent organizations is classically analysed in a "zero sum game" frame: the question is to find a good compromise between autonomy of temporary organization versus control from permanent logics of the firm. Our findings show that this autonomy/control dilemna is an intermediary step in the projectification process. Beyond that point, temporary organizations does not need less powerfull stable social logics but different ones. Our conclusion is that an important research question in the future is the evolution of the knowledge-oriented permanent organizations (or institutions) coupled with temporary product oriented organizations. Similar results and perspectives can be found at a more macro-level level : specific long term stable social identities or relationship can be positive factors to support the mobility, uncertainty and stress of temporary adventures of innovation projects (see for instance the analysis of the role of institutions in the construction sector by Eccles, 1981).

The second theoretical issue is the learning processes underlying Renault's "projectification". Analysing Japanese firms, Nonaka (1994, p 27-32) proposed a typology of three models for managing the organizational knowledge creation process : Top-down, Middle-Up-Down and Bottom-Up. Our analysis shows how these different models may be associated in a long term transition, as in Renault 30 years projectification. First move in the early 1970's is typical of Top-down logic. Creation of Project Directors at the end of the 1980's inaugurated a Middle-

First

  figure 1, into powerful, compartmentalized skill-based departments: engineering design, methods, production and so forth. No direct link existed between the operational divisions.Departmental

  Figure 3: The Project Director Structure (adapted from[START_REF] Clark | Dynamic Manufacturing, Creating the Learning Organization[END_REF]

Article paru dans Scandinavian Journal ofManagement, vol 11, n°4, pp363-375, 1995.

Acknowledgements.

The author is particularly grateful for helpful remarks and suggestions given by Rolf A. Lundin to earlier versions of this paper.

Up-Down logic : to generate "creative chaos", by emphasing product development performance as a strategic problem for the firm, and creating new actors and situations (global scope of responsability on a product development) ; to generate involvement and autonomy as conditions to initiate knowledge creation processes in this situation ; key role of middle management in the knowledge conversion processes between tacit and explicit knowledge (Nonaka, 1994, p 18-19). Our final comment will be on the implications of such a knowledge creation theory on management research methodology. Different French management and organization research centers have developped since the 1970's longitudinal research methodologies, as demonstrated in our research with Renault on "projectification". Such collaborations, which were exceptional and difficult to arrange in the 1970's, are since the mid-eighties more and more favoured in France, both by professionals and scientific authorities. We propose to interpret this recent development as a result of the growing importance of learning in the "grounded theories" [START_REF] Glaser | The discovery of Grounded Theory, Strategy for Qualitative Research[END_REF] among professionals as much as the impact of the traditional methodological debates within the scientific community.


Pierre-Jean Benghozi
email: jean.benghozi@polytechnique.fr

other challenge to the intellectual property system Design coordination with organizational departments of the firm in conception process

Introduction : Design based industry

Usually creative industries are defined as industries of entertainment and art, specifically dedicated to producing disks, movies, books, cultural services and so on. Nowadays, this a very narrow view of the place of culture and creativity in the economy. It is easily observed that traditional industrial sectors are using, more and more frequently, cultural and artistic inputs in their production. In particular, most industries rely on design for the conception of their new products. Such phenomenon highlights specific questions for IPR risen by the emergent importance of the design.

Industrial design is a strategic device for improving the quality of a great many products and a way of fascinating consumers through its symbolic content. Moreover should be also acknowledged the actual role of design in lowering production costs in many industries. This is the reason why design is not only a trait of luxury goods: it applies as well to a large number of final and intermediate goods.

Design has changed a lot in the past decade. From a tool limited to the most dynamic firms, it has become a condition of survival in saturated markets. Design used to be localized (usually in R&D departments) it is now spreading throughout the firm. Previously, design affected industries associated with specific techniques, market and artistic traditions. Today, design is more widespread: it does not only affect all sectors, but it is also spreading throughout the industrial chain and is not only limited to the upstream.

Enlarging traditional means for consuming creation-based productions, IPR values grow. Yet, duplication and distribution possibilities end to uncontrolled and massive copies using the gaps of property right or by piracy. Legal problems risen by new technologies concern therefore the structuring and "value" of design, on one side, the means for their protection and their control of the other side.

Design : demand and supply

Design is pushed by demand and pulled by supply Complexity of design production results both from supply and demand side : on the one hand, from the bursting of the creative productions, on the other hand, from the diversity of marketing and conception contexts.

Producers strategies strengthen technical possibilities. For they try to minimize their risks privileging repetition of success or steady patterns.

Owing to a combination of several factors, demand has won over supply in many industries.

Clothing industry, as an example, faced at the same time, a downturn in expenditure in western countries, higher imports and overseas manufacturing increasing the levels of competition. Consumers' selection criteria are the price and availability of the product, and how "fashionable" it is. The result is an acceleration in the number of products developed each year ; consequently, design deadlines become shorter.

The best place in the value chain to identify those needs and tastes is to be in direct contact with customers. In "buyer-driven commodity chains", large retailers, brand-named merchandisers, and trading companies play the pivotal role in setting up decentralized production networks in a variety of exporting countries. This pattern has become common in labour-intensive, consumer-goods industries such as garments, footwear, toys, consumer electronics, and house wares : production is carried out by independent factories that make finished goods under original equipment manufacturer (OEM) arrangements. The specifications are supplied by the buyers and branded companies that design the goods.

Design : hard to define

The question of property right is a powerful symptom of transformations technical mutations entail: evolution of products, production processes, distribution and consumption means, new actors, competitive structure of the market, concentration and diversification, regulation and control... Innovation and conception become more and more collaborative and less and less mosaic (simply combining competencies). It was already the case in cultural industry. But this phenomenon has been strengthened and widened to others sectors. Property rights in new medias suit therefore less and less the mere protection of designers and producers. In a collective creation, each contribution becomes anonymous and capacity for innovation holds more in the organization than in the creative spirit of individuals.

A ubiquitous place, a difficult job to be defined Importance given to creative developments suggests new agents and difficulty to set where creation and design take place. They are emerging locally, in the production process, or more globally, in the sector organization. In production and conception teams, new technical possibilities and manipulations require competencies to use new machines. They imply, thereby, a new labor division and the irruption of new actors in the creation process. According to the cases, design contribution can be conceived as a technical benefit (paid as a salary) or as a creative contribution (remunerated by property right). Therefore no labor organization is unanimously accepted and shared, as one can see in other industries. In such a context, each production can represent a particular arrangement and gives place for negotiation to determine precisely the nature and the origin of the creative contribution.

Combination of competencies

Several knowledge and competences required

In the value chain, the term "new product design" encompasses all activities from the preliminary design sketch to the selection of materials and fabrics. Production development of the product begins once a product pattern has been created. A new product may then be the result of either a new design or changes to an existing pattern. The following step is manufacturing, which can be broken down into several operations ranging from design to manufacturing.

As the main issue is meeting customer expectations within very short deadlines, it appears that the control of distribution, and particularly of sales feedback, is essential. More and more, design decisions are made on the basis of this information. Retailers are the industry agents having the greatest knowledge of the products success. Existing tools simplify the creative process. Rather than having to re-create a model from scratch (a new design sketch), firms may use libraries of models and patterns, which are modified from season to season.

Different structuring and organization of DBI

Differen structuring and organizational configurations …but of common trends t t t

A substantial consensus exists on the systemic features of the generation and distribution of technological knowledge and introduction of technological change. Variety among innovation systems reflects and stems from the variety of modes of coordination of the elements of the systems. The characterization of structure and dynamics creation systems and their modes of coordination then turn to become a central issue.

The variety of creative agents in terms of design opportunities and creation mechanisms is a key factor, from organization, financing and protection points of view: effective creation systems include manufacturing firms, service firms, retails, subcontractors, large firm, SME, individuals… in a myriad of specific actors specialized in competing and / or complementary roles. In sum, design is more and more viewed as the result of the repeated and dynamic interaction of agents which are embedded in a variety of specific and highly idiosyncratic systems. In other words design structures becomes specific, depending on the local conditions into which this creation process is embedded.

External differentiated configurations

Appropriation modes have been defined through structural specificities according industrial sectors and historical structuring

The model of the designer -creator The model of the anonymous crea or The model of brandmark distributor as a con ractor The model of brandmark distributor as a publicizer

The manufacturing industrial model The model of designer-producer

The model of the designer-creator Products are signés" (by a designer or a group of designers) On producer initiative

Independant designer

Producer

Market

The model of the anonymous creator Products branded by producer or distributor (textile, grocery...) On producer initiative designers can be substituted or "hidden"

Producer

Market

Designers

Distributors

The model of brandmark distributor as a contrac or t

Distributor brandmark Ikea, 3 Suisses...) On distributor initiative Subcontracting to producers Designers can be external and substituted, or in-house

The first restriction in protection of owners is economic. It sticks to undue exploitation. This problem always existed, but its importance is renewed thanks to new facilities in distribution and to difficulties in control. New technologies convert rarity of goods, and the corresponding conception of property rights. Their growing weight matches with dematerialization of products1. Situation shifts from design and publishing right, to exploitation and distribution right, it compels to mere "disposal right" with no materialization of the consumption, no possibility to control consumers' access.

Designers

Producer

Distributor

Market

The

Market

Main points to be highlighted :

technical or commercial oriented internal / external competition integration level within projects

Several aspects to be protected

Aspects to be protected

As a consequence, counterfeiting is affecting a wide range of products and industries components and it is several specific forms of piracy exist corresponding to different strategies of the economic agents : it can be the symbolic and immaterial value (trademark and mark services), the technical and functional quality of the produced good (design, innovation), or the production and distribution capacity (R&D knowledge). More precisely, different components of intellectual property can be counterfeited.

1.The mark. Here the pirate captures reputation and mark services, copying the trademark. The more licenses are traded by the original owner, the greater is the probability that the mark be copied. In some cases, such a practice can be applied to goods not actually produced by the original manufacturer. This happens, for instance, when the pirate puts counterfeited logos or trademarks (Lacoste crocodile e.g.) on products or goods which are not actually produced by the original manufacturer (a pirate may produce Lacoste ties or handkerchief which do not exist).

2.The design. Piracy consists in copying and using the idea, the technical conception and the original form of a product : it can be slavish copy, free adaptation or simple use of some elements or components of the original. In general, such products counterfeit simultaneously the mark and the design. Yet, in some cases, illegal copies of the Prada and Vuitton bags are inspired by the original form and material but are not always strictly counterfeiting the trademark. Such cases are frequent in industrial goods, when only the design is counterfeited. Moreover, pirates may improve fonctions and performances of pirated goods through innovations; it has been noticed that sometimes consumers ask Vuitton for introducing innovations found in pirated sacks.

3.Production infrastructure -In some situations, counterfactors are actual subcontrators of the original producers, using illegally original production equipment, models and infrastructure. In such a case, pirated goods may share the very same quality of the original ones. This is the case when subcontractors overproduce in order to sell part of the production on their own. Sport or textile equipment contractors are frequently facing such situations 4.Standards and interoperabillity -In other cases, (spare parts in car or aircraft industry, ink cartridges for printers), the core of the copying process do not rely on a form or a particular design but mainly on the interoperability capacity of the product . In this situation, pirates avoid patents, illegally using proprietary standards developed by the original producer in order to protect their markets and their innovations. Such standards are very important when producer uses them to bundle goods together, transferring revenues from one product to another one, overpricing some components once the customer is locked in: this is the strategy for spare parts in general. The razor manufacturers give, for instance, razors for free and selling their blades at a higher price. 5.Product. In certain situations, consumers and users themselves can develop unfair use or create themselves illegal counterfeiting (with potentially strong effects in case of mass production). This can happen when the producers have artificially segmented different submarkets discriminating quality and price according to different consumer's willingness to pay (business or professional use vs. private use for instance). As an example: software copies, abusive licences.

6.Distribution network. Finally, piracy can be originated in the distribution and retailers network.

Sellers and retailers could use original trademarks and original products to tease and attract consumers, and to sell, then, more lucrative substitutes bypassing exclusivity contracts or trading illegal copies.

t

Several means to protect IP

Several means to protect property rights for design

Relying on high symbolic value and intellectual property, design-based industry is structurally confronted to forgery. Given the spectacular growth of the design-based products, commercial piracy has today a large base. French statistics indicate that counterfeiting is taking place in every sectors : the average percentage of firms facing forgery is 19%, it raises to 65% in luxury goods and enforcement is difficult. DBI develops legal systems and private practices to enforce excludability. Nevertheless, to emphasize one of the many ambiguities of the illegal markets, it should be noted that unfair competition, in the form of illegal copy of a protected design, could be appreciated by the original producer as far as these practices are an indirect way to foster his/her reputation.

Facing such multi-sided piracy and dispersion of markets, Competences and production engaged in design may use specific protection sets of laws : protection of drawings and models, patent, brandnames and marks, author right -copyright.

Yet, recent evolutions are the result of "iron arm" (between producers, designers, distributors, and consumers notably) rather than decision of justice. In vary cases, marginal incomes of some activities are sometimes largely inferior to information and control costs over new markets. One slips thus from a reply in judicial terms (refinement of property right, institution of control devices) to a reply in economic terms (regulation of the competition, licenses or fiscal taxes, decrease of prices, modification of sales practices, collective management for property rights). New coordinations are established between economic agents. The development of license agreements, for instance, creates a balance between producers and distributors by off-market, rules by oligopolistic agreements, by establishment of entry barriers to new competitors.

Public / private strategies

Which s rategy ? Public

The first set of protection are legal based, consisting in the creation, adaptation and implementation of copyright, patent rights, trade mark protection and competition regulation. However, international treaties have their own limits. Firstly, the best enforcement strategies and policies are difficult to define as economic and cultural national models may be consistent with different solutions.

Then, enforcement policies can provide perverse effects, worst than the starting situation. As we pointed out before brutal enforcement of the law to foster commodification and free-trade could result in an unwitting outcome, such as the strengthening of the criminal organisation or the elimination of the illegal local industry.

Thirdly, IPR is hardly finalized nor enacted when illegal firms and consumers can get strong advantages through piracy (lower prices, low entry barriers, availability of commodities). As a consequence, some countries protect design for manufactured goods with copyright law, others deny this protection…

Private

The second set of rules are mostly private one and structured by economic and managerial rationale. They rely on the creation and operating of control devices or on the implementation of specific production attitudes. More precisely, we can distinguish the following strategies.

1. Tracability -Products are individually identified (by a specific number), production and distribution is precisely controlled, users have to declare themselves and can be registrated in a file. We can find such strategy in software industry but also in wine business.

2. Technical lock-in -To prevent reverse engineering and unauthorized copy, illegal or unfair use, producers can try to develop technical devices such as cryptography, artificial technical limitation, non standard interfaces, complexity and global conception. Such situation can be found, for example, in videogames : the cassettes presentation of software make them very difficult to imitate, notwithstanding any patent concern.

3. Innovation and frequent product renewal -An other way to prevent copy is to stimulate frequent renewal of goods and to to develop high innovation rates, adding regularly technical improvements in product design or fabrication process. Using such strategy, producers remain ahead pirats : imitators can only follow the market and have great difficulty to edit faked products in due time. As an example of such strategy, we could mention electronic and Hifi, or sport shoes.

4. Rising quality level and production complexity -An other mean to protect manufacturers is to make products, components, material and fabrication process more difficult and sophisticated. In such situation, counterfacting process becomes very difficult, requiring higher knowledge and equipments and involving high costs. Yet, as we saw earlier, such strategy does not prevent illegal competition by lower quality products. 5. Industrial secret . There are at least two main advantages in using industrial secrets. The first one is that information about innovation has not to be revealed. The second one is that while patents have an official deadline, secrecy is for ever (let us think of Coca Cola). Such strategy could be very efficient when reverse engineering is not possible. Of course spionage and the cost of keeping the secret unrevealed can be very high.

6. Exclusive distribution -It give original producers two main advantages. Firstly, they can know and control their retailers' network very well. Doing so, they make pirated products very difficult to be sold as they need an alternative distribution network. Secondly, exclusive distribution constitute a public information and give the consumer an immediate mean to know wether or not the products are legal : goods distributed outside the exclusive network are either illegal or stollen (cf. perfume or luxury).

7. Structuring consortium or cartel -The main objective is to share (at the business, the national or the industry level) control means and tools in order to constitute a major economic actor and to raise a credible menace for pirats and fraudulent economic actors (being them other firms or consumers). We can find such cartels in software industry (Business Software Alliance), in luxury goods (Comité Colbert), in cultural and audiovisual sector (IIPA, MPA...), but in more traditional industries as well (inks and printers spare parts).

Legal / Illegal enforcement

Which enforcement ?

Market regulation in the design-based industry is first of all devoted to a classic dilemma: whether or not to protect a monopolistic privilege arising from the acknowledgement of an enforceable property right over a design or an ornament. As far as the design-based industry is concerned a further dilemma could be approached. The design-based industry is divided into one legal market and two "counter-markets": the illegal market and the market occupied by criminal organization. The illegal market is an attempt to evade the formal constraints of the law (copyright, labor regulation, and fiscal charges), but in its essential nature it is oriented to the market rules of pure competition. The criminal organization, on the contrary, is a command economy, oriented to the coercive exploitment of subordinate agents and to the shunting of legal and social norms generating costs. These organizations are typical in drugs and cigarettes, but their activity in design-based industry are not at all marginal because they can exploit the same distribution and retail networks bypassing customs and police controls. In such cases, delivery channels, market places, street pedlars are frequently the same and are all strictly controlled by coertion.

All three segments of the aggregate design-based market are communicating. This means that, given the aggregate demand, it is possible, at some amount of transaction costs, to transfer activity from one another. Consumers as well can shift from one market to another. If so, analysing impact and efficiency of policy regulation, one should question what happens when the State enforces law against illegal producers.

First of all, according to the rationale of the crime economics approach the value of the sanctions should have a deterrence effect over individual criminal behavior. In this sense it could be stated that if criminal activities are much more heavily sanctioned then illegal activities, enforcement must have success in reducing criminal behavior. However in our context of struggle with criminal organisations it seems to be relevant to distinguish between pecuniary and non pecuniary sanctions. As a matter of fact, if pecuniary sanctions may be a strong deterrent against the strategies of the illegal firms, thatas we suggested are within the business -the same sanctions can be ineffective against criminal organisations, that do not reveal any capital asset, nor income to be struck at by the pecuniary sanction. Then, we have to turn to non pecuniary sanctions. Illegal firms are without any doubt influenced by pecuniary sanctions, on the contrary their application to criminal organisations may arise a limitation. To fight with criminal organisation does not allow fine tuning, thus reducing the scope for an enforcement policy.

Secondly, when it is forced to respect copyright law and fiscal norms, the illegal firm losses profits and faces increasing costs. One probable consequence is that the illegal firm is thrown out of the market. In that case, both the legal monopolistic firm or the criminal organisation can replace the illegal firm in the design-based market. Our argument is that in the competition to get the market share made available from the vanishing of the illegal firm, criminal organization can prevail over the legal firm. Empirical evidences of such evolution are given by industrialization rates in regions controled by criminal organisation. Researches made in southern Italy show that in the regions where the mafia's social capital is powerful, the industrial setting and the birth rate of firms are lower than in the other regions : such evidences give indirect arguments confirming that when criminal organisations are existing, legal firms can hardly take their place on the market (Beccattini, 1998;Sciarrone,1998) As a consequence, from the society point of view, renforcing enforcement could be worst if the fight against illegal firms gives raise to the strenghthening of a criminal organization. The economic and social dilemma of the enforcement is socially unacceptable because the alternatives are in any case worst than the current situation. In the one hand, a firm (the illegal one) is eliminated which is a real value, a set of entrepreneurial experiences, and of skilled labor force. In the second hand, new opportunities are offered to criminal organisations, the mafia or the yakuza's structures, completely running outside the law.

  as resources center" model Design = resources and competence center Integration in project team Simultaneous use of internal (to keep a good knowledge of the structure) and external (to get news ideas) resources

it will still increase with development of telecommunication networks and "informations' highways" whether their form will be.