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Problem--Solving Oscillations in Complex Engineering Projects

By Jürgen Mihm, Christoph Loch and Arnd Huchzermeier


Coordination among many interdependent actors in complex product development projects is recognized as a key activity in organizational theory. It is well known that this coordination becomes progressively more difficult with project size, but we do not yet sufficiently understand whether this effect can be controlled with frequent and rich communication among project members, or whether it is inevitable. Recent work in complexity theory suggests that a project might form a "rugged landscape," for which performance deterioration with system size is inevitable. This paper builds a mathematical model of a complex design project that is divided into components (subproblems) and integrated back to the system. The model explicitly represents local component decisions, as well as component interactions in determining system performance. The model shows, first, how a rugged performance landscape arises even from simple components with simple performance functions, if the components are interdependent. Second, we characterize the dynamic behavior of the system analytically and with simulations. We show under which circumstances it exhibits performance oscillations or divergence to design solutions with low performance. Third, we derive classes of managerial actions available to improve performance dynamics, such as modularization, immediate communication, and exchanging preliminary information. Some of these have not yet received adequate attention in literature and practice.New Product Development, Engineering Projects, Complexity, Oscillations, Control Theory, Random Matrix Theory

DOI identifier: 10.1287/mnsc.49.6.733.16021
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