Digital production innovation projects – The applicability of managerial controls under high levels of complexity and uncertainty

The purpose of the present study is to assist academics and practitioners in supporting and managing digital production innovation projects using managerial controls. The focus is on projects that deliver innovations containing new combinations of physical, digital and/or cyber-physical components, developed to be used within a production system. More specifically, this paper aims to explore the applicability of different managerial controls for managing and supporting digital production innovation projects, i.e. projects that are characterized by high levels of complexity and uncertainty.

This is a multiple-case study in which interview data was collected from five digital production innovation projects in two manufacturing firms. The empirical data was used to analyze success factors, challenges and obstacles in different phases of the studied projects, and to connect these to the application of different types of managerial controls.

The findings provide an increased understanding of who to control, what to control and how to control in digital production innovation projects.

This paper is focused specifically on the perception of managerial controls in digital production innovation projects and has not explicitly focused on manufacturing companies' intended usage of managerial controls. This paper's focus on manufacturing companies with producing customers and on projects developing solutions for their respective customers' production systems also encourages further studies at other companies undergoing a comparable transition. Given the necessary system perspective on managerial controls that is being highlighted, this paper emphasizes further research needs on how firms can also apply managerial controls to support external collaborations.

The results have a number of managerial implications regarding digital production innovation projects. The most prominent findings revealed the importance of giving attention to the managerial controls related to the decision-making process and the involvement from stakeholders outside the organization itself. In particular, it was shown that managerial controls securing a more holistic involvement in the decision-making process should be applied, and that managerial controls suitable for customers and partners need to be developed.

The study is among the first studies to focus on the application and perceived effectiveness of managerial controls in digital production innovation projects. The ways in which managerial controls are applied to collaborations with customers and partners and the ways in which action, cultural and personnel controls are combined and aligned to support the corporate decision-making process particularly stand out as essential for manufacturing companies' Industry 4.0 transition.