"COUPLED PROCESSES" AS DYNAMIC CAPABILITIES IN SYSTEMS INTEGRATION

The dynamics of innovation in complex systems industries is becoming an independent research stream. Apart from conventional uncertainties related to commerce and technology, complex-system industries must cope with systemic uncertainty. This paper's objective is to analyze evolving technological paths from one product generation to the next through two case studies in the Brazilian aerospace industry, considering systems integration as an empirical instantiation of dynamic capabilities. A proposed "coupled processes" model intertwines two organizational processes regarded as two levels of dynamic capabilities: new product and technological developments. The model addresses the role of emergent properties in shaping a firm's technological base. Moreover, it uses a technology readiness level to unveil systems integration business tricks and as a decision-making yardstick. The "coupled processes" model is revealed as a set of dynamic capabilities presenting ambidexterity in complex systems industries, a finding that may be relevant for newly industrialized economies.

KEYWORDS:
Systems integration; dynamic capabilities; ambidexterity; industry value stream; technology readiness level

Characteristics	CoPS/Project organization	Mass production
Products	Capital goodsComplex interfacesHierarchical/systemic	Consumer goodsSimple interfacesSimple architectures
Production	Project/small batch	High volume/large Batch
Innovation paths	Craft-basedInnovation path defined ex ante	Formalized, codifiedInnovation path ismediated by the market
Industrial coordination	Multifirm alliances: PBOLong-term stability at the systems integrator level	Single firm as producerDominant designsignals industry shakeout
Competitive strategies	Systems integration capabilities targeted for complex architectures	Volume production capabilities (e.g., lean production, total quality management (TQM))

Topic	INPE MUX Camera case study	Embraer fly-by-wire case study
From integration to proprietary domain
Original system approach(integration domain)	CBERS-1 and 2 equipped with Brazilian WFI camera and other Chinese cameras including mid-resolution CCD camera. WFI camera had optics technologies at integration domain.	EMBRAER 170/190 family (1st gen: E1) with FBW control system, developed with a risk partnership (Honeywell).
New system approach(proprietary domain)	CBERS-3 and 4 equipped with Brazilian WFI (2nd gen.) and mid-resolution MUX camera, besides other Chinese cameras. WFI (2nd gen.) and MUX at proprietary domain, being developed and manufactured in Brazil.	EMBRAER 170/190 family (2nd gen: E2) with full FBW, developed by Embraer (software).
Complex product and system development
Initial technological base	Camera integration and electronic technologies were at a high TRL level, but optics technologies were at a low level (TRL 3). As with prior products, it was purchased from foreign experienced firms.	FBW flight control system in pitch and yaw axis, and hybrid FBW/hydro-mechanic roll axis. Embraer has, through subcontracts, purchased this technology. Embraer shares its knowledge regarding control laws with the partnership.
Technology development	Optics technologies were developed together with product development contract (TRL 4 to 9), without prior technology experiments (TRL 4 to 6).	Primarily, Embraer had bought knowledge (E1) and then developed the knowledge (after E1).
Desired capability	How to develop and integrate medium-resolution cameras; how to develop and manufacture optical lenses and components.	How to develop FBW software and control laws; how to integrate a FBW full system.
Resource allocation	INPE responsible for medium-resolution camera integration. Creation of a team dedicated to integrate remote-sensing cameras and develop space optical lenses and components inside Opto.	Creation of a team dedicated to develop FBW inside Embraer through internal reallocation and hiring.
Movement in the industry value stream	INPE moved upstream from systems integrator to subsystems integrator for medium-resolution cameras. Opto entered space applications market as a subsystem manufacturer.	Embraer moved upstream from systems integrator to subsystems integrator for FBW, and upstream for software development.
Project management key indicators
Schedule goals	High deviations from original baseline.	Low deviations from original baseline.
Budget goals	High deviations from original baseline.	Low deviations from original baseline.

Fundação Getulio Vargas, Escola de Administração de Empresas de S.Paulo Av 9 de Julho, 2029, 01313-902 S. Paulo - SP Brasil, Tel.: (55 11) 3799-7999, Fax: (55 11) 3799-7871 - São Paulo - SP - Brazil
E-mail: rae@fgv.br

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