Bidirectional information transfer: An imperative for network and marketing integration in a Canadian telecommunications firm

ELSEVIER

0000 Bidirectional Information Transfer: Network and Marketing Integration Telecommunications Firm

An Imperative for in a Canadian

Jozke Lapierre and Brigitte Hhault

Market intelligence helps ensure that R&D efforts are focused on customer needs. In turn, R&D supplies the information necessary for gaining competitive advantage through advances in product and process technology. However, improved R&D-marketing integration means more than simply involving additional marketing personnel in product development. We must focus on identifying and achieving the desired level of integration. Joze’e Lapierre and Brigitte Henault present the results of a study examining the R&D-marketing inter&ace in a large Canadian telecommunications company. Their study explores managers’ perceptions of interfunctional integration during the planning and implementation of new services. The goal of this study is to identify the critical integration areas and managers’ satisfaction with the organization’s current level of integration. Network (i.e., technical) and marketing managers difSer substantially in their perceptions of the required level of integration. However, they agree on the five most important areas of inter-functional integration: marketing involvement in establishing service development schedules; information transfer from marketing to network on competitors’ moves; information transfer from marketing to network on customer requirements for new services; information transfer from network to marketing on network availability for providing evolved services; and information transfer from network to marketing on network restrictions affecting per$ormance, after-sales servicing levels, and service pricing. In other words, network and marketing managers view information transfer between their groups as requiring the highest integration level. Both groups agree that their budgeting activities do not require as much integration as other activities. Managers from both groups are generally dissatisfied with the current level of interfIunctiona1 integration. Marketing managers are far more dissatisfied than network managers in most areas of integration explored in this study. However, network managers are more dissatisfied than their marketing colleagues in all areas involving the transfer of information from marketing to network.

Address correspondence to Jozee Lapierre, Assistant Professor of Marketing, Ecole Polytechnique de Montrkal, 2900 boulevard EdouardMontpetit, C.P. 6070, Succursale Centre-ville, Montreal, Quebec H3C 3A7, Canada. J PROD INNOV MANAG 1996;13:152-166 0 1996 Elsevier Science Inc. 655 Avenue of the Americas, New York, NY 10010

0737-6782/96/$15.00 SSDI 0737-6782(95)00111-5

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Introduction

0

ver the last decade, several studies have concluded that a very important determinant of new product success is integration between R&D and marketing departments [w6,48]. Following this research wave, Gupta [8] has been a pioneer in identifying activities that require R&D-marketing integration and in describing conditions under which integration is facilitated or hindered [8,12,13]. Why are these two complementary research streams so important to high-technology firms? Part of the answer lies in the environment surrounding these firms, which is highly turbulent and characterized by customers who are sophisticated, knowledgeable, and aware. Furthermore, to gain an edge over competitors and succeed, high-technology firms have to get to the market faster and more efficiently, with quality products and services that respond to customers’ needs and expectations [30,33,51]. These firms must take advantage of technical evolution, while at the same time adapting it to market characteristics. A way to ensure that both technical and market aspects are taken into account in corporate strategy development is to encourage integration between R&D and marketing. The purpose of this article is to increase our understanding of the R&D-marketing interface in a large Canadian telecommunications enterprise evolving in a changing environment. This objective leads specifically to the expansion of Gupta’s [S] framework. Developing new services in such a turbulent environment. which involves diverse but interdependen It RIOGRAPHICAL

SKETCHES

Joz& Lapierre is Assistant Professor of Marketing and is in charge of the Technological Innovation Program at the undergraduate level at the Ecole Polytechnique de Montreal. She has a Ph.D. in Management and a Master’s degree in Project Management from the Universite du Quebec at Montreal. Her main research interests are business-to-business technical professional services marketing, commercialization of new technologies, and the market orientation of high-tech organizations. Her articles have appeared in the Journal of Rrtuiling und Services, and Advancrs

Consumrr Services, Quality in Services Marketing and

Mangement Management.

in

Brigitte Henault holds a B.Sc. in Civil Engineering and a Master’s degree in Management of Technology -_ from the Ecole Polytechnique de Montreal. She has been working for Bell Canada since 1979. where she has acquired technical and managerial experience. She is currently a member of the Corporate Strategic Planning Group. Before joining this group, she held various positions: engineer in real estate, supervising manager of access network conceptors, and network planner. This research is a byproduct of her Master‘s project.

internal and external actors, requires a significant level of integrated effort. The specific objectives of this research are thus to identify the critical areas of interfunctional integration and the satisfaction level of this integration. The choice of industry and organization was prompted by several facts. First, until recently the firm under study, a service provider, evolved mostly in a monopoly environment and had not dealt much with market forces; however, its philosophy is changing as the corporation’s management has started to stress the key importance of responding to customers’ needs and to competitive pressure. Second, the Canadian telecommunications industry is undergoing dramatic changes, especially from the service provider perspective. Telephony is a highly regulated environment. Local telephone companies used to evolve as monopolies in local access and long distance services with an obligation to provide universal service in their territory. The regulator has opened the terminal business and the long distance market to competition. The local access market is now being opened. Moreover, as the degree of regulation is changing, telecommunications technologies are evolving in a way that favors more convergence between service offerings and customer needs. For example, multimedia services incorporating data and image transmission will offer much more to customers than the wired, voice-only communications services that were universally offered by telephone companies. Furthermore, as telephone networks must adjust themselves to offer this specific capability, competitors are intervening to cream off the best from the most lucrative markets. Al1 these factors challenge the way the organization under study is evolving. The time has come to emphasize the deployment of new technology facilities coordinated with market demand and competitive pressure. Interfunctional integration is more than ever an issue that is central to the concerns of high-technology organizations involved in the development of new services and products. The first section of this article reviews the literature on integration and related concepts. The second section describes the methodology of the study. Succeeding sections present results and analyses. The last section addresses the managerial implications and explores some directions for future research.

Background Market

Orientation

versus Technology

Orientation

Two major trends have been identified technology business strategy development.

in highThe first

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trend is associated with an increasing rate of diffusion of new technologies. This phenomenon has changed product development and availability, shortened time to market, and made it possible to build a variety of products targeted to specific market segments or niches. As a result, companies, mostly technologyoriented, have mainly let technology dictate their business strategies [I]. The second trend is toward greater market orientation, which is aimed at meeting market needs. This approach, consistent with contemporary marketing concepts, relies on a search for market characteristics and consumer behavior information to better ensure that product development will respond to customers’ needs [I]. There is increasing evidence that marketoriented firms are more profitable than firms that are not [ 18,19,27], whereas a lack of market orientation is frequently cited as a cause of failure in product innovation [25]. In a similar way, improving interfunctional integration within the organization in order to ensure customer responsiveness is important and directly related to the firm’s competitiveness and profitability [35,39]. The challenge facing today’s managers is to incorporate both approaches in their business strategies [ 11. On the one hand, as technology has proven to be a critical successfactor [lo] by reducing time from design to commercialization while focusing on cost reduction and increasing quality and product variety, market-oriented firms should work toward increasing the importance of technology in decision-making. On the other hand, a comprehensive understanding of customers’ needs by R&D will contribute significantly to the commercial successof the new services [7,14].

Uncertainty

a?d High-Technology

Firms

Several researchers argue that technological organizations must reduce the uncertainty associated with market and technology [26], competition, and availability of internal resources [24] to improve their decisionmaking and implementation processes [50]. A general rule for reducing some of these uncertainties and developing product ideas that are technically and economically viable is to treat commercial, technical, operational, financial, and political information appropriately [6]. However, the question arises: How can this be done? One way would be to facilitate communication between actors, because this would allow the information gathered by one actor to be transferred to

AND

B. HkNAULT

the others [3,16,22,24,33,34,47]. In a recent study of 40 managers involved in marketing in technologybased firms, Sashittal and Wilemon [39] indicate that one of the concerns common to managers under pressure to improve interfunctional integration and customer responsiveness relates to information exchange. These managers expressed a need for “sensitive antennae,” because listening is vital for gauging internal and environmental changes, particularly shifts in customers’ needs and preferences. In another recent study on new medical product performance, Rochford and Rudelius [34] examined the effects of obtaining information from multiple functional areas during the various stages of the development of a new product and explored the effects of information sharing among functional areas. On one hand, their results suggest that a large number of functional areas in the firms under study do not contribute information, or use it, in many of these development stages.On the other hand, their results also indicate that for several stages of the new product process obtaining information from more functional areas and sharing information among more functional areas has a positive impact on new product performance. Thus, in order to reduce uncertainty and weave together technology and market into strategy-making, there must be effective communication and integration between the technical and marketing functions [ 11,15, 29,34,42,44,48]. Emphasis must then be placed on interdisciplinary teams that encourage a maximum of information sharing across functions [35]. This information transfer process will ensure that customer needs remain the focus of R&D activity and that products and services are efficiently and reliably produced, according to state-of-the-art technology. However, whereas most corporate managers believe in the virtues of cross-functional integration, in fact such integration is not all that frequent [9,38,44]. As a result, myopic corporate strategies are formulated, leading to innovation failures. In high-technology firms, such a phenomenon may be caused by the existence of highly specialized functions that have developed different degrees of competence, standards, values, and languages, thus causing communication problems. Other studies have shown that personality factors differentiating marketers and technicians also influence this critical interface [21]. An assessment of the cross-functional integration level is important to better align the organization toward developing successful business strategies and helping high-technology firms become more market

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oriented [20]. Difficulty nonetheless resides in the integration assessmentitself. The next step is thus to gain a better understanding of what integration is and to search for a practical way to evaluate it.

What Is Integration

?

In a report presented to the National Science Foundation, Souder et al. [49] define integration as “shared values, mutual goals commitment, and collaborative behaviors. ’ ’ Keeping the essence of this definition, Souder and Chakrabarti [48] refer to it as the symbiotic interrelation of two or more entities, resulting in the production of advantages superior to the sum of the advantages of each separately. Moenart and Souder 1241 further add to this definition, arguing that although integration means a strategic linkage of specialized groups, each group keeps its individual orientation. Furthermore, according to Gupta [8], integration is the quality of the state of collaboration existing among departments, which is required by environmental demands to achieve unity of efforts. This collaboration comprises two primary elements: l

l

Information transfer aimed principally at minimizing uncertainty. This information may include current market trends, customer needs, competitors’ positions operational results, technology trends. etc. [4,6,8.10-13,341. Involvement of each party in product innovation activities to influence actions [8,10-131.

Finally, Quinn 1331quantifies the benefits of integration in the following way: “If a number of individuals (n) work in parallel, but individually, on a project, their expected knowledge output would be n times the output of one individual. If they share information and do not duplicate work, and if the information of each person is of importance to the others, the potential output relative to that of an individual should approximate the function 2(n - 1) - 1, the number of interconnection channels among the n nodes.”

What Are the Integration

Areas?

Based on the work of several authors, Gupta [8] designed a measuring instrument to gauge the integration

level through 19 activities in the 3 following areas: R&D involvement in marketing activities, marketing involvement in R&D activities, and information transfer from marketing to R&D. This instrument has already been tested by Gupta and his colleagues in the American context [lo-131 and by Parry and Song [29] and Song and Parry [42] in Japanese high-technology firms. Several authors have specifically brought the importance of cross-functional communications to the fore, They argue that cross-functional information transfer infers that information flow is bidirectional, i.e., from marketing to R&D and from R&D to marketing [ 1,24,25,32,47]. However, one critical aspect of integration neglected in Gupta’s instrument has to do with the information transfer from R&D to marketing. Aaby and Discenza [1] argue that early communication with marketing, specifically with regard to technical parameters, has several benefits. It helps to sharpen marketing intelligence and identify facts required for new product formulation, competitive analysis, regulatory assessment, customer preference analysis. product conceptualization, and future market trend estimatesall of which is information valuable to R&D. Also. Moenart and Souder [24] maintain that the more information one function receives from another, the more the receiving function itself will be inclined to transfer information. Information is vital to the planning of any technology to carry out technological forecasting, long-range planning, and market opportunityseeking activities [43]. Information transfer from R&D to marketing is therefore of critical importance, even though Moenart et al. [25] argue that information flowing from R&D to marketing may serve less as an input to marketing activities, and more as an informative nature.

Is Achieving a High Degree of Integration Ultimate Goal?

the

In a study of 40 technologically innovative Belgian companies, Moenart et al. [25] show the importance of good communications for corporate effectiveness. They also demonstrate that the four variables they studied-project centralization, project formalization, interfunctional climate, and role flexibility-increase the communication flow between R&D and marketing. However. only two of these variables, interfunctional climate and project formalization, have a significant effect on the successof a project. This means that

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an increase in communication by different means does not necessarily help to fulfill objectives successfully and that several variables may influence the effectiveness of communication [4,8,10,11,36]. Even though sharing information may generally benefit the organization, some information may be superfluous and not useful [8,11,15]. For some activities, it is strongly desirable to involve parties other than the one strictly responsible for them; this is not true to the same extent for all the activities. The high-technology reality is that managers, for example, should not blindly assume that the more marketing personnel is involved in new product development, the better the product’s commercial performance will be. Consequently, the evaluation of the current level of integration must be compared with a threshold that represents the desired level of integration required to achieve corporate objectives.

Methodology An empirical study was carried out in a large telecommunications company (50,000 employees) with network and marketing management personnel to investigate their respective perceptions on inter-functional integration during the planning and implementation phases of new services. The company under study does not have pure R&D and pure marketing functions. These functions are outsourced to a separate entity formed by several phone companies to pool resources. Nevertheless, applied R&D and applied marketing are carried out in the company. To expand on the R&D and marketing model that is widely discussed in the literature, the operational aspects of the technical and marketing functions were considered. The technical functions are classified as network. This designation includes the planning and operational groups responsible for activities associated with the deployment of the network infrastructure that permits new service provisioning. The marketing function includes activities especially associated with knowledge of market and customers, as well as with sales activities. First, 10 in-depth interviews were conducted with managers, mostly vice presidents, to identify major concerns with regard to interfunctional integration. Then, a questionnaire was developed based on the nineteen areas requiring integration listed by Gupta [8] to evaluate the level of integration achieved and the level of integration required (Table 3). The question-

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naire was pretested by 12 individuals (managers from various functions and hierarchical levels throughout the organization under study and academics involved in the technology management field). The pretest made it possible to identify six additional activities (to Gupta’s 19 areas) where integration could lead to the achievement of corporate objectives in new services implementation: the first two areas concern marketing’s involvement in establishing deployment locations for equipment providing new services (A4) and choosing network sectors to be modernized (A5); the other areas relate to information transfer from network to marketing, that is, information about new technologies (Dl), network availability to provide evolved services (D2), future technologies (D3), and technical and operation network restrictions affecting performance, the after-sales servicing level, and service pricing (D4). Another important objective of the present study was to test the importance of these six additional areas of integration. Because interfunctional relationships are mainly conducted by managers, the population chosen for the study was the management personnel of the two functions, i.e., network and marketing. The sample unit was managers from three different hierarchical levels: directors (tier B), section managers (tier C), and lowerlevel managers (tier D). Data were collected via an internal mail survey among 629 managers. Table 1 presents the sampling composition and response rates. For each of the 25 areas to be studied (Gupta’s original 19 areas plus the six additional ones), managers were asked to rank, on a 7-point Likert-type scale, their perceptions of the current level of integration achieved between network and marketing and their perceptions of the level of integration required to realize corporate objectives regarding new services introduction. A score of 1 indicated no integration at all and a score of 7 indicated a very large amount of integration. A 7-point scale was preferred over Gupta’s 6-point scale in order to have a median point. Table 1. Sampling

Composition

and Response Rate Response Rate

Functions

Population

Sample

Respondents

Population %

Sample %

Network Marketing Other Total

1216 583 0 1799

360 269 0 629

210 107 7 324

17% 18%

58% 40%

18%

51%

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Reliability and Validity Although the measuring instrument used in this research was adapted from Gupta’s questionnaire [8], which has been validated several times, it is relevant to further validate it in the context under study. In this research, the instrument’s internal consistency was assessed using Cronbach alpha coefficients for each of the four main areas of integration (Table 2). All coefficients have values much larger than 0.70, which is the recommended threshold for applied research [28]. To help refine and validate the questionnaire, a pretest was carried out. Of the 12 individuals participating in the pretest, nine were very knowledgeable about the telecommunications industry and highly respected in the organization. They represented all management levels in the organization from both functions. The other three individuals were from academia and brought their knowledge of survey methodology and practices to this exercise. Thus, there is reason for confidence in the content validity of the instrument.

ers did agree, however, on the required level of integration in nine activities: Marketing’s involvement with network on: setting new product goals and priorities (Al), the network’s budget proposals (A2), establishing service development schedules (,43), establishing deployment Iocations for equipment providing new services (A4), and choosing sectors for modernization of equipment (A5). Information transfer from marketing on regulatory and legal restrictions performance and design (B2).

Network’s involvement with marketing keting budget proposals (Cl 1.

Perceived

Required

Level of Integration

To explore the required level of integration as perceived by network and marketing managers, a comparison of the mean scores based on the evaluation of the 25 activities by managers from the two groups was carried out. Results outlined in Table 3 are associated with the required level of integration for both functional areas. Differences between network and marketing managers’ perceptions of the required integration level are statistically significant for 16 areas (14 original areas [81). Of these, eight are significant at the .OOl level. Telecommunications network and marketing managTable 2. Cronbach Alpha Coeffkients Areas of Integration Involvement of marketing in network activities Information transfer from marketing to network Involvement of network in marketing activities Information transfer from network to marketing --__-

No. of Items

Level of Integration Achieved

in mar-

Information transfer from network to marketing on new technologies (Dl) and network availability to provide evolved services iD2).

Lowest Required

Results and Analysis

to network on service

Integration

Lewd

Although all activities are perceived as requiring an above-average level of integration, some present tower scores. Results outlined in Table 3 reveal that network managers perceive that the activities having the lowest required integration level pertain to their own involvement with marketing activities in: training

new service users (C7j:

designing

user and service manuals (C6):

marketing

budget proposals (C 1 i.

designing communication vice customers (CS)

strategies for new ser-

On the other hand, activities requiring the lowest level of integration are rate higher by marketing managers than the lowest-rated activities perceived by network managers. The activities are also more scattered. They are associated with:

Required l

8

0.908

0.883

5

0.846

0.855

8

0.898

0.902

4

0.888

0.910

l

l

Network’s involvement posals (C 1);

in marketing

Network involvement with marketing ing new service ideas (C2): Information transfer from marketing on regulatory and legal restrictions performance and design (B2):

budget proin screento network on service

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Table 3. Disagreement

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on the Required

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Level of Integration Required Level of Integration”

Areas of Integration*~’ A. Marketing is involved with network in: 1. Setting new product goals and priorities. 2. Network’s budget proposals. 3. Establishing service development schedules. 4. Establishing deployment locations for equipment providing new services.d 5. Choosing sectors for modernization of equipmentd 6. Generating new service ideas. 7. Screening new service ideas. 8. Finding commercial applications of network’s new service ideas/technologies. B. Marketing provides information to network on: 1. Customer requirements need for new services. 2. Regulatory and legal restrictions on service performance and design. 3. Marketing tests results. 4. Feedback from customers regarding service performance on regular basis. 5. Competitors’ moves. C. Network is involved with marketing in: 1. Marketing’s budget proposals. 2. Screening new service ideas. 3. Modifying services according to marketing’s recommendations. 4. Developing new services according to market needs. 5. Designing communication strategies for new service customers. 6. Designing user and service manual. 7. Training new service users. 8. Analyzing customer needs. D. Network provides information to marketing on: 1. New technologies.d 2. Network availability to provide evolved services.d 3. Future technologies.d 4. Technical and operational network restrictions affecting performance, after-sales servicing level, and service pricing.d

Network N=210

Marketing N= 107

Level of Significance

5.431 4.965 5.657 5.284

5.485 4.752 5.765 5.564

-

5.238 5.169 5.025 5.000

5.167 5.647 5.588 5.427

p < 0.01 p < 0.001 p < 0.05

5.631 4.833

6.029 4.550

p < 0.001 -

4.911 5.223

5.255 5.735

p < 0.05 p < 0.001

5.527

5.913

p < 0.01

4.216 4.518 4.836

4.510 4.873 5.360

p < 0.10 p < 0.01

4.768 4.408

5.689 5.184

p < 0.001 p < 0.001

4.035 3.900 4.455

5.118 5.097 5.282

p c 0.001 p < 0.001 p < 0.001

5.372 5.759 5.298 5.667

5.520 5.854 5.716 5.903

-

-

-

p < 0.01 p < 0.10

a Numbers denote mean scores; the difference in mean scores is tested by Student’s t test. b The term “product” in Gupta’s instrument has been replaced by “service” to better fit the context of this study. C Measures based on Likert-type scale with 7 points, where 1 = no integration and 7 = a very great deal of integration. d Activities in italics have been added to Gupta’s instrument.

Marketing’s involvement in the network’s budget proposals (A2). A consensus is found between the two groups on the fact that activities associated with the respective budgets (A2,Cl) do not require as much integration as the other activities. l

Highest Required Integration Level Results shown in Table 3 indicate that activities having the highest required integration level are mainly

associated with information transfer on both sides. On one hand, network managers perceive that the following activities require the highest level of integration: * Information transfer from network to marketing on: network availability to provide evolved services (D2) and technical and operational network restrictions affecting the after-sales servicing level and service pricing (D4). 0 Marketing’s involvement in establishing service development schedules (A3).

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Information transfer from marketing to network on customers’ new service requirements (Bl).

On the marketing side, managers also perceive that activities associated with the information transfer require high levels of integration. These activities are: . Information transfer from marketing to network on customers’ new service requirements (Bl) and competitors’ moves (B5). l

Information transfer from network to marketing on technical and operational network restrictions affecting the after-sales servicing level and services’ pricing (D4) and information on network availability to provide evolved services (D2).

The above results are similar to those of previous research on this topic, for example to those of Gupta, Raj, and Wilemon [ 131 who reported that marketing and R&D managers in American firms disagree significantly on the required level of interfunctional integration for most of the activities. A similar phenomenon was found in Japanese firms [42]. Their results show that marketing would like to see more integration than R&D in almost all the areas.

Agreement on Importance Although network and marketing managers differ on the degree of integration required for 16 of the 25 activities, findings indicate that they agree on the five most important areas of interfunctional integration (Table 4). It is particularly meaningful to note that activities associated with information transfer from network to marketing, those added to Gupta’s instrument, all ranked in the first half of all activities. This means that the achievement of a high level of integration in these activities seems to be very important to the population studied to meet corporate objectives in the field of new services introduction. Therefore, these activities should not be neglected in assessingintegration, because they represent, in the eyes of managers, crucial activities leading to the achievement of adequate interfunctional integration. However, information transfer from marketing to network is also mandatory. The above results confirm that integration, like its components, information transfer and involvement, works both ways (i.e., network to marketing, and vice versa). Table 5 outlines the five areas perceived by managers in both groups as requiring the highest level of

integration. Both groups have important respective responsibilities in terms of information transfer. Two of the top five areas requiring integration involve marketing as the network’s antenna in the market. Conveying customers’ requirements (B 1) and competition moves (B5) rank among the top five areas for both groups, meaning that they agree on the importance of market-driven motivation for new service development. Constant market surveillance and effective communications to network managers on market needs and competitor moves are a marketing responsibility. Reciprocally, network also transfers information to marketing, especially on network availability for providing evolved services (D2), on technical and operational network restrictions affecting the performance level of after-sales servicing and service pricing (D4). These activities are also perceived by both groups as being extremely important. The fifth activity that is very important to achieving ideal integration concerns marketing’s involvement with the network in establishing service development schedules (A3 ). Of the five areas where integration is perceived by managers of both functions as requiring the most integration, the two associated with information transfer from marketing to network were also ranked as the most important by Gupta, Raj, and Wilemon [ 131.The other three most important areas in Gupta et al.‘s results concern information transfer from marketing to R&D of regular feedback on product performance; marketing’s involvement with R&D in setting new product goals and priorities; and R&D’s involvement in developing new services according to market needs. Gupta, Raj, and Wilemon [13] also found that the integration areas that were important to marketing managers were essentially the same for R&D managers.

Who Is More Dissatisfied? The level of dissatisfaction was also examined. The difference between the level of integration required ideally and the level of integration actually achieved, as perceived by each group, was considered as a measure of dissatisfaction [ 131. It was found that both network and marketing managers are generally dissatisfied with the current level of integration (Table 6). Our findings indicate that marketing managers are far more dissatisfied than network managers in 19 of the 25 areas of integration. The areas where marketing managers are more dissatisfied than the network man-

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Table 4. Relative Importance

J.LAPIERREANDB.&NAULT

of Integration

Areas as Perceived by Network and Marketing

Managers

Rank of Required Level of Integration” Areas of IntegrationbP” A. Marketing is involved with network in: 1. Setting new product goals and priorities. 2. Network’s budget proposals. 3. Establishing service development schedules. 4. Establishing deployment locations for equipment providing new services.d 5. Choosing sectors for modernization of equipment.d

6. Generatingnew serviceideas. 7. Screeningnew serviceideas. 8. Finding commercialapplicationsand network’snew service ideas/technologies. B. Marketing providesinformationto networkon: 1. Customerrequirements needfor new services. 2. Regulatoryandlegalrestrictionson serviceperformanceand design. 3. Marketing testsresults. 4. Feedbackfrom customersregardingserviceperformanceon a regularbasis. 5. Competitors’moves. C. Network is involved with marketingin: 1. Marketing’sbudgetproposals. 2. Screeningnew serviceideas. 3. Modifying servicesaccordingto marketing’s recommendations. 4. Developingnew servicesaccordingto marketneeds. 5. Designingcommunicationstrategiesfor new service customers. 6. Designinguserand servicemanual. 7. Training new serviceusers. 8. Analyzing customerneeds. D. Network providesinformationto marketingon: 1. New technologiesd 2. Network availability to provide evolved services.d 3. Future technologies.” 4. Technical and operational network restrictions affecting performance, a Rank 1 is b The term ’ Measures d Activities

Network N= 210

Marketing N= 107

6 15 3 9

13 23 5 11

10 12 13 14

19 9 10 14

4 18

1 24

16 11

17 6

5

2

23 20 17

25 22 15

19 22

8 18

24 25 21

20 21 16

7 1 8 2

12 4 7 3

after-sales servicing level, and service pricing.d

allocated to the activity requiring the highest integration level and rank 25 to the one needing the least integration. “product” in Gupta’s instrument has been replaced by “service” to better fit the context of this study. based on a Likert-type scale with 7 points, where 1 = no integration and 7 = a very great deal of integration. in italics have been added to Gupta’s instrument.

agers are associated with their own involvement in activities where network is prime, with the exception of one activity (setting new product goals and priorities), and also with all activities associated with the network’s involvement and information transfer from network to marketing. However, network managers are more dissatisfied than their marketing colleagues with the information marketing transfers to them (all five activities), and in one area associated with marketing’s involvement with them in setting new product

goals and priorities. Specifically, in terms of the six new activities added to Gupta’s instrument, marketing managers are more dissatisfied than network managers. The most significant differences (p < .OOl) in the respective levels of dissatisfaction between the two groups concern network’s involvement with marketing in developing new services according to market needs (C4) and information transfer from network to marketing on future technologies (D3). Finally, both

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Table 5. Top Five Areas Requiring

Integration Network

Marketing

Iv=210

N=107

3

5

4 5

I 2

l

I

4

l

7

3

Marketing’s involvement in: establishing service development schedules (A3) Information transfer from marketing to network on: customers’ requirements for new services (BI) competitors’ moves (B5) lnformation transfer from network to marketing on: network availability for providing evolved services (D2) technical and operational network restrictions affecting performance level of after-sales servicing and service pricing (D4) l

l

l

groups are almost equally dissatisfied with the current level of integration in the network’s involvement with marketing, in five of the eight areas, i.e., areas pertaining to marketing’s budget proposals (Cl), screening new service ideas (C2), service modifications according to marketing recommendations (C3), training new service users (C7), and analyzing customer needs (C8). They are also almost equally dissatisfied with the current level of integration in marketing’s involvement in network’s activities such as setting new product goals and priorities (Al) and network’s budget proposals (A2) and finally, in one area of marketing information transfer to network, i.e., marketing test results (B3). The above results show some similarities with the findings of Saghafi, Gupta, and Sheth [38] who studied R&D and marketing interfaces in the telecommunications industry in the United States. First, the current integration level is far below the desired level. Second, marketing personnel are more dissatisfied than R&D (network) with their own involvement in R&D’s activities than R&D’s perception of marketing’s involvement with R&D. One issue raised by our results is that although network managers are generally less dissatisfied than their colleagues with the current level of integration, they are nonetheless more dissatisfied than their colleagues with the information transferred from marketing. This result is also in line with Saghafi, Gupta, and Sheth [38], who found that R&D managers, more than marketing managers, felt that the information transfer from marketing on new product requirements, regulatory issues, test marketing results, competition, customer feedback, and market trends is inadequate.

Do Achieved Integration Pereeptisns Vary among Hierarchical Levels of the Respondents? Finally, a comparison of the mean scores based on an evaluation of the achieved level of integration of the three hierarchical levels of respondents was carried out. For network managers, results indicate that significant differences exist between hierarchical levels on their perceptions of the level of integration achieved for three network activities involving marketing (Al ,A2,A3) and for one activity associated with information transfer from marketing to network (Bl). With regard to marketing managers’ perceptions, results indicate significant differences on three network activities involving marketing (A 1 ,A4,A5) and on two marketing activities involving network (C5,CS). These results are indicative of the fact that few significant differences exist between the three hierarchical levels of respondents in both functions. First, the two levels of middle managers, directors (tier B) and section managers (tier C), agree on the integration achieved. No difference was found on the marketing side, and only one significant difference (JJ < .05) was found on the network side, which concerns marketing’s involvement with network in setting new product goals and priorities. Network directors (tier B) are more convinced than their subordinates, section managers (tier C), that marketing is involved with network in setting new product goals and priorities. Second, with regard to directors (level B) and the lower level of managers (tier D), only one significant difference (p c -02) was found on the marketing side. This concerns network’s involvement with marketing in designing communication strategies for new cus-

162

J PROD INNOV 1996;13:152-166

Table 6. Dissatisfaction

MANAG

J. LAPIERRE

with the Current Level of Integration

Areas of IntegratiorP’ A. Marketing is involved with network in: 1. Setting new product goals and priorities. 2. Network’s budget proposals. 3. Establishing service development schedules. 4. Establishing deployment locations for equipment providing new services.d 5. Choosing sectors for modernization

of equipment.d

6. Generatingnew serviceideas. 7. Screeningnew serviceideas. 8. Finding commercialapplicationsof network’snew service ideas/technologies. B. Marketing providesinformationto network on: 1. Customerrequirements needfor new services. 2. Regulatoryandlegal restrictionson serviceperformance anddesign. 3. Marketing testsresults. 4. Feedbackfrom customersregardingserviceperformance on regularbasis. 5. Competitors’moves. C. Network is involved with marketingin: 1. Marketing’sbudgetproposals. 2. Screeningnew serviceideas. 3. Modifying servicesaccordingto marketing’s recommendations. 4. Developingnew servicesaccordingto marketneeds. 5. Designingcommunicationstrategiesfor new service customers. 6. Designinguserandservicemanual. 7. Training new serviceusers. 8. Analyzing customerneeds. D. Network providesinformationto marketingon: 1. New technologies.d 2. Network availability to provide evolved servicesd 3. Future technologies.d 4. Technical and operational network restrictions affecting performance, pricing.d

AND

as Perceived by Network and Marketing Network N=210

Marketing N= 107

B. IXENAULT

Managers Level of Significance’

2.522 2.382 2.405 2.070

2.470 2.440 3.000 2.600

p < 0.01 p < 0.01

2.348 2.515 2.510 2.572

2.713 2.960 3.020 2.980

p p p p

2.759 2.317

2.475 1.561

p
2.675 3.089

2.390 2.630

p < 0.05

3.296

2.723

p < 0.01

2.118 2.372 2.412

2.307 2.584 2.636

-

2.530 2.390

3.127 2.912

p < 0.001 p < 0.01

2.135 2.105 2.477

2.644 2.422 2.765

p < 0.01 -

2.025 2.030 2.081 2.396

2.406 2.314 2.723 2.881

p < 0.05 p < 0.001 p < 0.05

-

< < < <

0.10 0.05 0.05 0.05

after-sales servicing level, and service

a The term “product” in Gupta’s instrument has been replaced by “service” to better fit the context of this study. b Measures based on Likert-type scale with 7 points, where 1 = no integration and 7 = a very great deal of integration. c Numbers denote mean scores; the difference in mean scores is tested by Student’s f-test. d Activities in italics have been added to Gupta’s instrument.

tomers. Lower level marketing managers (tier D) are more convinced than section managers (tier C) on this issue. On the network side, directors (tier B) and lower level managers (tier D) disagree on the following three areas associated with marketing involvement: setting new product goals and priorities, network’s budget proposals and establishing service development schedules. In the three cases, directors (tier B) have higher perceptions than lower-level managers (tier D). The greatest disagreement nonetheless concerns the information transfer from marketing to network on cus-

tomer requirements for new services (p c .005). Again, directors (tier B) have higher perceptions than lower level managers (tier D). Third, most of the disagreement is found between section managers (tier C) and lower level managers (tier D) in both functions. On the marketing side, section managers (tier C) perceive more involvement from the marketing people than lower level managers (tier D) with regard to setting new product goals and priorities, establishing deployment locations for equipment providing new services, and choosing sectors for

RIDIRECTIONAL

IYFORMATION

TRANSFER

modernization of equipment, whereas lower-level managers (tier D) perceive more involvement from network people than section managers (tier C) do on designing communication strategies for new service customers and analyzing customer needs. On the network side, section managers (tier C) perceive more marketing involvement than lower level managers (tier D) with regard to network’s budget proposals and establishing service development schedules. A similar pattern is found for information transfer from marketing to network on customer requirements of new services. Even though not many statistical differences exist among the three hierarchical levels of both functions, the activities that have given rise to disagreement concern, first and foremost, marketing’s involvement in network activities and, second, network’s involvement in marketing activities. Only one difference concerns information transfer, and this is from marketing to network. Finally, most of the differences are present down the hierarchy, i.e.. between tier C and tier D.

Conclusion The general objective of this research was to shed some light on network/marketing integration in the telecommunications industry. The first issue at stake was the required level of integration. Findings reveal that managers from both groups disagree on the required integration level on most of the 25 activities. Furthermore, activities requiring the lowest integration level are, first and foremost, associated with the network’s involvement in marketing activities, whereas the activities requiring the highest integration level are mostly associated with information transfer between the two groups. It is noteworthy that both marketing and network managers perceive that information transfer from both their own function and their colleagues’ function should achieve the highest integration level. Results clearly show that managers from both groups share the same opinion when it comes time to identify priorities for investigation. Bidirectional information transfer activities were ranked among the top five areas by both groups of managers. This consensus is important, because it indicates that network and marketing managers will not work at crosspurposes when an effort is made at integration. A divergence of opinion between the two would, of course, make the achievement of integration far more difficult. In looking at the difference between the level of

integration perceived as required and the level of integration perceived as actually achieved, it is obvious that managers of both functions are very dissatisfied with the level of integration achieved in the company. Furthermore, marketing managers are generally more dissatisfied than their colleagues. When it comes to information transfer, the expeditor of information seems more satisfied with its accomplishment than the recipient. Another objective was to test the importance of the six additional areas for integration added to Gupta’s [8] instrument. First, it is important to note that all six activities are among those in the upper half of all activities on the required level of integration. These activities are therefore important for this study. Second, both marketing and network managers are of the opinion that two specific topics relating to information transfer from network to marketing that have been added to Gupta’ s [8] framework are among the top five critical areas of integration. Network availability to provide new services and technical and operational network restrictions affecting performance, after-sales servicing, and service pricing therefore require very special attention in order to ensure adequate integration. Consequently, it is evident that information transfer from technical groups to the marketing group plays a determining role in their interfunctional integration. Adding this field of activities to Gupta’s [8] measuring instrument for integration is therefore justified. The above conclusions suggest, first. a strong need for more emphasis on information transfer between the two groups, i.e., from network to marketing and from marketing to network. It appears that adequate information transfer could facilitate better mutual understanding, which is a prerequisite to satisfying both groups of managers [41] and the achievement of strategic objectives [2]. Specifically, information transfer is vital for developing a broad understanding of the constraints, orientations, and skills of others, which is necessary for informed decision-making [ 17,391. The final objective was to compare perceptions of the achieved integration level between the three hierarchical levels of respondents in both functions. As for the identification of priorities for integration, results show that activities associated with the level of integration achieved do not give rise to differences among the three levels in either functions. However, results show greater differences in perceptions between network and marketing managers at lower levels than at higher levels. Specifically, lower level (tier D) managers of both functions have higher perceptions of the

164

J PROD INNOV 1996;13:152-166

MANAG

integration level achieved than do section managers (tier C).

Managerial Comments and Implications When the results of this study were presented to managers in the organization, the lack of integration did not surprise them. It was already well known that coordination and integration between the different functional units were deficient. An underlying element of this deficiency was the fact that the profitability of a service was invisible to those contributing to its delivery: no one was “accountable” for it. The network people were responsible for the costs of deploying the required infrastructure, whereas the sales/marketing organization was responsible for the revenues generated by the implemented services. In the old monopoly context, the firm was constrained by the regulator to deploy voice service capabilities universally. No questions were asked as to its profitability. Prices were established on cost averages and not differentiated, for example, according to the type of territory, i.e., urban or rural. No coordination with the marketing or sales group was required. At the time of the study, the organizational structure did not allow the service’s profitability to be put into perspective (revenues minus expenses). Since then, a restructuring effort has been initiated to compensate for this deficiency, lead to more interfunctional integration. Furthermore, because there was no service success indicator to which the network deployment was compared, the network group was less concerned about the necessity of interfunctional integration. The sales/ marketing results were influenced by network’s deployment scheduling and scope. Therefore, the sales/ marketing group was more dissatisfied than the network group with the level of interfunctional integration actually achieved. Managers reviewing the study’s results were nevertheless comforted by the agreement of the two functional groups on the activities requiring more integration. These results could be used as a common starting point from which to reduce the discrepancy between the achieved level of integration and the level required to allow successful service implementation. They were also very pleased with the level of agreement between the respective hierarchical levels. This was good news. Managers’ comments were helpful in formulating managerial implications and directions for future re-

.I. LAPIERRE

AND

B. HJ%NAULT

search. On one hand, the dissatisfaction level expressed by all managers regarding the actual level of integration achieved indicates that the climate did not favor the realization of corporate objectives for implementing new services. Being more knowledgeable about the required integration level is one thing. However, if managers want this organization to overcome the tendency of departments to focus on functional issues that can be counterproductive at the organizational level [24], they will first have to find ways to make communications effective, an important part of successful integration at the different stages of the development process. They must organize in such a way that the information that is transferred can be appreciated and understood-so that individuals from both functions are able to use this information effectively [35]. In this context, relational management could be particularly suitable. A prerequisite to mature relational management calls for reciprocal involvement between groups [5]. One benefit of such management is a knowledge of both groups and should make the exchange process easier. Senior management should emphasize the benefits of reducing the gap between a uniquely technology-driven culture and a uniquely market-driven culture. A shift in the organization paradigm is therefore mandatory: “The way they do things” must be reexamined. Furthermore, the establishment of an information system customized to the organization and the adoption of a teamwork philosophy are examples of concrete action that could facilitate the achievement of bidirectional information transfer and symbiotic interrelation, i.e., mutual involvement in each others’ new service implementation activities. The technological organization studied in this research needs such responsive mechanisms to store, retrieve, reinvent, and transfer the contents of its knowledge base [25].

Limits and Directions for Future Research The findings of this research must be qualified in some ways. First, the analysis reported here reflects the perceptions of network and marketing managers of one large telecommunications enterprise only. Thus, the primary concern is the generalizability of the results from the sample. Further research should concentrate on the validation of the new areas of integration in other high-technology context to see if these findings are context-specific of it they are common to other high-technology firms or industries.

t~IDIRECTIONA1

INFORMATION

TRANSFER

Our results indicate that effective information transfer is perceived by managers of the two functions involved in this research as an important part of the successful integration and playing a leading role in successful service implementation. Research on this specific component of integration should be pushed further in order to examine, for example, the effects on new service performance of obtaining information from R&D and marketing, as well as from other functional areas during different stages of the new service development process. With regard to the other component of integration, the involvement of marketing with network and network with marketing, another research area that has been investigated by Meyers and Wilemon [23], concerns the organizational learning process. This is an important area considering the fact that the enterprise under study is currently undergoing a major cultural change. More research is needed to find ways to create a productive learning climate among functional areas involved in a new service implementation so as to make people more accountable for what they do. The result would be not only a responsive organization, but responsive people. Several questions nonetheless remain unanswered. One of these is: What is causing the significant gap between the perception of the required integration level and the perception of the achieved integration level? Barriers to integration are discussed in the literature [ 13,291. A more thorough study should be conducted to look into these barriers, so that by reducing them. this gap in perceptions can be filled.

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