Knowledge that Transforms

This paper analyses the changing pattern of relationships between project-based suppliers and railway operators in Europe. These changes are related to the creation of new market structures in railway sectors during the 1990s. The paper discusses two main consequences of this change: (1) the shift of core capabilities from railway operators to project-based suppliers, and (2) the emergence of numerous organisational interfaces and new feedback loops that bridge railway projects and railway operations. Drawing upon the concept of large technical systems (LTS) and upon the model of innovation in complex product systems (CoPS), the paper claims that innovative activity in railways can only be adequately understood by paying attention to the interdependencies between railway projects and the operational railway network. Projects and the operational system are interwoven activities, forming a project–system innovation cycle. Two case studies of large-scale railway projects in Germany and the UK are presented to support the argument. The evidence suggests that successful innovation in market-based railway operations increasingly depends on dynamic systems integration and effective co-ordination capabilities. Dynamic systems integration refers to the need for the continuous adaptation of technical and organisational project solutions in response to the changes in the operational system. It is argued that projects can be managed more effectively under market structures that provide certain organisations in the railway system with a strong co-ordinating role in the activities linking projects with the operational system.

Using entropy statistics we analyse scaling patterns in terms of changes in the ratios among product characteristics of 143 designs in civil aircraft. Two allegedly dominant designs, the piston propeller DC3 and the turbofan Boeing 707, are shown to have triggered a scaling trajectory at the level of the respective firms. Along these trajectories different variables have been scaled at different moments in time: this points to the versatility of a dominant design which allows a firm to react to a variety of user needs. Scaling at the level of the industry took off only after subsequently reengineered models were introduced, like the piston propeller Douglas DC4 and the turbofan Boeing 767. The two scaling trajectories in civil aircraft corresponding to the piston propeller and the turbofan paradigm can be compared with a single, less pronounced scaling trajectory in helicopter technology for which we have data during the period 1940–1996. Management and policy implications can be specified in terms of the phases of codification at the firm and the industry level.

In this paper, we assess complexity in organizations in terms of the dimensions of ‘depth’ and ‘breadth’. We examine how this operates in firms, indicating how different fields of research have tended to highlight only certain aspects of complexity, for instance, technology or products. In addition to assessing the impact of growing complexity in each functional area along either dimension, we further investigate the conditions under which complexity between the dimensions or functional areas may be coactive or conflicting. Detailed examination of historical evidence shows that greater complexity in one dimension or function does not necessarily lead to greater complexity in another. However, any simplification within a function or between functions may require changes in organizational structure and managerial control.