RISE Project - Research Institutes in the Service Economy - wp5 comptences

8/6/2019 RISE Project - Research Institutes in the Service Economy - wp5 comptences

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RISE - RTOs in the service economy

Workpackage synthesis report, wp5

Service deliveries in an economy ofcompetence supply

Mike HalesCENTRIM

University of Brighton

Mike Hales, CENTRIM, 2000

A final report of RISE: RTOs in the serviceeconomy - Knowledge infrastructures,innovation intermediaries and institutionalchange

RISE reports may be downloaded from:http://centrim.bus.brighton.ac.uk/go/rise/

sRISE coordinator: Dr Mike Hales

CENTRIM - The Centre for Research in

Innovation Management

Direct line: +44 1273 642190

Email: [email protected]

This report constitutes a deliverable specified in the

RISE work programme

Contract number: SOE1-CT98-1115

Funded under the TSER programme by the European

Commission, DG Research

Date: January 2001


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Service deliveries in an economy of competence supply

Contents

6.1 Knowledge intensive business services may be interpreted ascompetence-supply activities................................................................................ 1

6.1a A distinction needs to be made, between knowledge intensiveservices and knowledge intensive firms............................................................. 1

6.1b Competence is a strategic and pragmatic concept, referring to theways in which the prior organisation of things and peopledetermines success.............................................................................................. 2

6.1c Competence is an interactional and 'hands-on' concept, referringto the contingent ways in which people mobilise resources andresources mobilise people in real time and space ...............................................4

6.2 Collaborations as distinct from explicit services may be the

way in which competences are got ...................................................................... 9

6.2a Single service deliveries are unlikely to generate strategiccompetences ........................................................................................................ 9

6.2b Suppliers of competences may not be explicitly selling innovationservices .............................................................................................................. 11

6.2c Competences may not be supplied whole......................................................... 126.2d The effects of a service in 'the learning economy' need not be

'learning' - at least, for a client. The service of competencedevelopment is available to whoever seizes it from the interaction ................13

6.2e Competences do not only 'support' products. In the serviceeconomy, competences can be (service) products ............................................15

6.3 The content of a service - Supply scope........................................................... 16

6.3a Provisioning, rental and competence building................................................ 166.3b A spectrum of 'stickiness' and complementary competences.........................16

6.4 Interaction scale ..................................................................................................... 19

6.4a Simple interactions, longer-term interactions and 'large'outcomes............................................................................................................ 19

6.4b Complex, multi-party collaborations within government fundingprogrammes may be seen as standardised (public) serviceproducts, but not as simple supplier-received services ...................................20

6.5 Downstream scope ................................................................................................ 21

6.5a Competence supply may occur in four modes which subtenddifferent orders of scope .................................................................................... 21

6.5b First-order and second-order competences as inputs and outcomes...............236.5c The 'same' innovation function may be delivered via different

service packages ................................................................................................ 256.6 Downstream scale.................................................................................................. 28

6.6a Asset memory, genre memory, story memory................................................. 286.6b Small services, self-services and frequently required services are

more important than reflected in our analysis ................................................ 326.7 Competence as a way of dealing with knowledge intensive

business services.................................................................................................... 33

6.8 Practical issues and future research .................................................................. 34

6.8a 'Cultural' analysis of resources, performances and genres ............................346.8b 'Small' services................................................................................................. 356.8c Service involving collectives ............................................................................ 35

Appendix 1:Case study format guidelines

Appendix 2: Case studies for wp5


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Executive summary

In the RISE micro-analysis context, a competence is defined as an ability of a firm- or some operating unit of a firm - to do something which either enables or sustains

participation in a market on a 'qualifying' basis similar to other participants,

allowing it to produce similar things and act in similar ways; or inflects the businesstrajectory of the firm in relation to markets, competitors, costs, asset usage, etc,bestowing 'leading' qualities on the firm.

This micro-level analysis is based on 10 case studies spread across six of theclusters analysed in the cluster workpackage of RISE (wp3). Each was prepared to astandard format. (See Appendix 1).

Competences are interpreted under two aspects: as phenomena of purposefulaction within a resource-based, interactionist frame of reference (the resourceperspective); and as constructions of economic strategy, in which humans are 'addedto' concretely configured assets (the asset perspective). Assets are constituted bytheir tradability (and thus exist in contractual frameworks), resources by their

availability and 'ready-to-hand' qualities of usefulness in the particular practicalsetting that they happen to be addressed in. Both perspectives may be appliedsimultaneously; the resource perspective is more fundamental. An asset perspectivecannot account for how humans coordinate or act competently; rather, we have torefer to the ways in which resources are mobilised and structured in courses of action,and in turn, structure the future course of actions.

The RISE interpretation of competence is notable because of the way in which itcombines two aspects. On one hand we deal with 'shippable' aspect of science- andtechnology-related services and encapsulated components of competences: objects suchas configured equipment, prototypes, documents, software on platforms. On the otherhand we deal also with 'performed' and interpreted elements of service andcompetence.

As an alternative to 'knowledge', a competence-centred analysis can assistservice users, providers and funders (in the case of government) to more adequately -that is, concretely - weigh up the scale and complexity (scope) of service from a publicor commercial supplier that is required to contribute or contribute to a particularcompetence.

Distinguishing between the service offered by a supplier and the service 'seized'by a participant helps in identifying the complementary competences that must bemobilised by a user in order that the outcomes of a given service 'delivery' interactionmay be translated into a significant competence for them. Otherwise there is dangerthat a service will merely deliver degenerate forms: additions to the assets register, adhoc pieces of individual learning, or isolated practices which do not have significance

for the organisation.

We question the extent to which a competence can be 'delivered'. Instead wemove towards a 'reception theory' of competence. One principle which perhapsdistinguishes passively consumed services - like hairdressing - from activelyconsumed services like competence development ('learning') is that it may bemeaningful to speak of the former as being delivered, while in the latter it seems moreappropriate to suggest that whoever seizes the service from the flow of interactiondetermines finally what the content of the service is. More than one participant -including a 'supplier' - may seize more than one kind of benefit from the performingof a service.

We have made a distinction between 'knowledge intensive' firms (those relyingheavily on qualified professionals) and knowledge intensive services, which we define

in terms of competence supply. Our study focuses on characteristics of services(competence-supply interactions) rather than institutional characteristics of service


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suppliers (KIBS firms or RTOs). We retain a focus on what innovation services do,and also allow the possibility of recognising other ways in which such outcomes areachieved, rather than tacitly assuming that the explicit delivery of a service is a

primary or reliable route to competence.

Competences do not only support (manufactured) products; in the service

economy. Competences may themselves be (service) products; competencedevelopment maybeproduct development.

Collaborations (more tacit, more durable, larger in scope or scale, more mutual)as distinct from explicit services may be the way in which competences are got.

Different combinations of 'stickiness' in the supplied elements of a service implymobilising different complementary competences in the client firm.

Three durable modes of institutional memory - genres, stories, assetconfigurations - may be distinguished from three degenerate (individualised or

fragmentary) forms: skills, concepts, acquired property. Significant competence-supply services leave traces of these three kinds, and downstream effects arise frommobilising these deposits.

A service supplier may afford systematic opportunities for learning (reconfiguredcompetence) via its offered services ('positioned' pre-configured assets, resources andstaffing). But a client organisation need not learn, and will not learn (change itscompetences) if it does not mobilise complementary competences. On the other hand, asupplier of a rented competence may upgrade or transform that competence (and thuslearn), even while a client simply 'channels' the output in ways that do not transformits own competences.

An economy of competence-supply is not equivalent to a 'learning' economy.Receiving the use of a (supplier) competence may be quite enough to satisfy the client

firm's needs in its competitive situation, without any need further to 'learn' (changeits embedded competences).

The 'same' innovation function may be presented in quite different servicepackages, depending on the client's cluster context. The material characteristics oftheir products, the dynamics of the value-system in which a client participates, andthe location of the client firm in its particular value chains, determine importantcharacteristics of the innovation process (as a strategic process) for the client at a

particular conjuncture. The contribution of innovation services suppliers for the'same' innovation function differs between cluster contexts, regarding the kind ofcontribution that they can helpfully offer in terms of dynamics, risk management andother kinds of in-context facilitation of the client's value-management strategy.


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Service deliveries in an economy of

competence supply

In addition to studying interactions between RTOs and client firms, at the level of linkages withininnovation clusters, RISE has also carried out case studies of the interactions that constitute the

process of service delivery. This level of analysis had three aims:

1 To complement the meso-level analysis of clusters and RTO functions with a micro-level

analysis of innovation service-products, service delivery events and their management.

2 To explore and evaluate a conceptual framework based on 'competence' as distinct from

'knowledge', as a way of analysing knowledge-intensive business services; and

specifically

3 To identify and illustrate some significant features of translating, producing and

substituting competences via service delivery events.More informally, we can say that this level of analysis is concerned with the doing of innovation

services. We are seeking a conceptual framework to describe not just what innovation services do

within the dynamics of innovating firms (ie, to describe 'innovations'). We also seek to describe

the doing or activeperforming of a service: how one performance determines another

'downstream'. This calls for an analysis at a phenomenological level, cast in terms of

contextualised courses of action and resources for action, as distinct from the structural level of

other RISE workpackages.

1 Knowledge intensive business services may be interpreted ascompetence-supply activities

1.1 A distinction needs to be made, between knowledge intensive services and knowledgeintensive firms

RISE is concerned with 'knowledge intensive' services to firms. The category 'knowledge

intensive business services' is quite widely used but rather poorly defined, and it begs many

questions regarding the content of the activities referred to, their coherence as a class of activities

(they are often referred to as if they constituted a distinct sector) and their significance within

economic systems. Our micro-level analysis sought a way to frame and answer two core

questions. First: what is the service 'intensive' in, or what does it intensify in the participating

firms? And second: how may a big or significant effect - a strategic outcome - be generated via an

activity which by definition, as a service, must in some sense be small or limited, relative to the

whole span of activity subtended by the 'user' of the service?

Our focus has been on analysis of interactions, rather than structural characteristics of particular

nominated organisations on the supply side (RTOs, KIBS*), supposedly constituting a sector. The

significance of innovation services, as intermediate activities in a production system, is in what

they do for a client firm (somehow, promote 'innovation') rather than in how they themselves are

composed. We need to be able to identify what is supplied into a client firm by an innovation

service, and what is 'left behind' when the service is completed (ie how the service determines

downstream activity in a participating firm). It is not very helpful to characterise innovation

services by their own inputs. Previous work on knowledge intensive business services (KIBS) hasa weakness here. KIBS have been treated as a sector defined most strongly by its measurable


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inputs - notably, professionally qualified labour - and only weakly by its outputs and effects. For

example, the SI4S project (Bilderbeek, den Hertog, Marklund, & Miles, 1998) defined

(technological) KIBS as a statistical aggregate assembled from other sectoral categories as follows:

Private companies or independent organisations;

Relying heavily on professional knowledge i.e. knowledge or expertise related to a

specific (technical) discipline or (technical) functional domain; and

Supplying intermediate products and services that are knowledge-based.

In RISE we have dealt with the vagueness of 'knowledge based intermediate products and

services' by analysing services as competence-supply activities. Our sample has not been limited

to KIBS* and RTO*s (organisations nominated as KIBS and RTOs). Instead we have assembled a

corpus of case studies in which innovation and competence-production are being generated out

of interactions between innovating firms and service-supply organisations of various kinds.

These case studies are situated within the various clusters analysed at the meso-level by RISE,

thus providing a great deal of context for each individual case in terms of innovation trajectories

and drivers in the cluster, roles of KIBS and RTOs, specific technology and market conditions, etc.Applying grounded-theory analysis to this case-study corpus, we have pursued the two core

questions outlined above. The first question 'What does a knowledge intensive service supply?' is

pursued by identifying some significant characteristics of scale and scope in interactions between

service-supplying organisations and client firms which generate competences (sections 3/4

below). The second question 'How does a service generate a significant outcome for a client firm?'

has been pursued by identifying scale and scope characteristics in the downstream activity of

participating firms, following from the service performance (section 5/6).

1.2 Competence is a strategic and pragmatic concept, referring to the ways in which the priororganisation of things and people determines success

Competence, as a term in management discourse, has several advantages as an analytical

framework compared with 'knowledge'.

It is an intrinsically strategic notion. It refers to the success and expectations of success of a firm

in a competitive environment. Thus 'competence' possesses some of the qualities of

deliberateness that belong to 'innovation'. In contrast, a 'knowledge' perspective can often be

somewhat agnostic; it is easy to treat it as if it were a natural resource or a force of nature - like an

apple growing on a tree - rather than a wilfully forged artefact. Competence is not primarily

about possession and appropriation (of assets), but about doing and the conditions that enable

appropriate doing. At the same time, however, assets are central in a competence view of

practice, since assets are things that are distinguished by their special properties of 'doing',enduring and becoming.

In the RISE context, a competence is defined as an ability of a firm - or some operating unit of a

firm - to do something which either:

Enables or sustains participation in a market on a 'qualifying' basis similar to other

participants, allowing it to produce similar things and act in similar ways; or

Inflects the business trajectory of the firm in relation to markets, competitors, costs, asset

usage, etc, bestowing 'leading' qualities on the firm.

For example, being able to keep its machines in working order on the customers' premises is a

qualifying competence for a photocopier company, and being able to regularly innovate saleable

medicines or diagnostic technologies is a qualifying competence for a medical biotechnology


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company. 'Leading' competences cannot be easily defined in the abstract, since they depend

essentially on the terrain of the market at a particular time, the positioning of players and the

effect that the leader's action has on the terrain of competition and trajectories of innovation,

especially for its competitors. For the medical biotechnology company, a leading-edge

competence might be an ability to move between technologies or product formulations more

rapidly than competitors because it operates effectively as a 'hollow' firm, outsourcingproduction by using production services, or trading in intellectual property rather than physical

products. For the photocopier company, a leading edge competence might be an ability to

continuously develop sector-specific service products in emerging niche markets (eg books-on-

demand) around stable core technology which meets customers' needs in core mass markets

(such as corporate in-house printshops and global distribution networks).

Defined in this way, competence has no particular reference to technology or scientific services.

This narrowing of interpretation comes in when, in the RISE context, we consider the activities of

specific service suppliers - RTOs. RTOs are defined functionally by their involvement in R&D,

technology transfer and other services related to research and technology. The competences that

they may contribute to are in the first place technological, concerned with innovations in physicalproducts and physical processes, as distinct from, say, the labour-management competences, the

competitive bidding competences or any other subset of competences demanded by operations in

a particular kind of market and participation in some particular cluster environment. The

question is open, at the case-study level, whether the services delivered by RTOs and other

technology- and science-oriented organisations contribute to other kinds of competence. It may

be in this dimension, for example, that RTOs are found to differ from KIBS firms: some kinds of

KIBS firms (eg mainstream management consultancies) may be more centrally concerned with

organisational innovations or business innovations, via services such as organisation

development, management development, services to brand management or product strategy,

and so on.

Innovation does not equate with competence, so to study competence supply is not the same as

studying innovation services. A company will have competences in production (operational

competences); it may also have distinctive competences in innovation; if it is very innovative, it

will have 'second order' competences in changing the focus of its operations and innovation

activities. The relation between competences and innovation is that innovations are constituted

by significant changes in the array of a company's competences; either operational competences,

or competences to innovate. Services that to do not change the competences of a client firm, but

simply furnish a competence that operates within that firm's existing framework of competences,

are not supplying innovations, merely competences (!). For example, a facilities management firm

that operates a data network for a client company is providing an operational service not aninnovation service (which, as it happens, has a high technology content). In contrast, an FM

agreement which specifies that the service supplier will identify and maintain the strategic

capability of the network for the client, in negotiation with the client - and also puts in place a

form of management which is competent to link service-level monitoring with the client's

strategic management processes - is clearly an (innovative) agreement to provide an innovation

service, bundled with an operational one.

Similarly, a service contract that mobilises the competences of an external firm to test quantities

of biological material as part of the pre-market drug testing process of a pharmaceutical firm is

not supplying innovations. This competence is one which, presumably, the client firm possesses,

but perhaps on a lab scale rather than a trials scale. The client is simply renting a competence -

mobilising a pre-existing competence - which is functionally equivalent to its own but available


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on a different scale or in a different timescale. This enables it to negotiate a quite precise and

unproblematic self-contained service-level agreement or fee-for-service subcontract for the

service. It is a routine, operational competence within the production system for 'innovations' -

that is, the speculative production of potentially marketable molecules or technologies. In this

case, the service is an 'innovation service' because it furnishes (routine) competences within the

client's formally demarcated and routinised innovation process. Whether this activity actuallychanges the competences of the client firm - for example, by bringing a successful production

route for a successful new drug treatment into the product range of the firm - is something

determined by actions that lie elsewhere than in the service activity and the contracts that

mobilise and frame the subcontractor's competences.

For a supplier of intermediate services, seeing them as supplying competences to a client puts

them in the frame of their 'customer's customer' rather than limiting the analysis of a service to its

immediate content (a 'product' which is once-and-for-all 'delivered', handed-over to a client). On

one hand, this is an important competitive characteristic of thoroughly customer-oriented

practice in the service economy. On the other hand, this reveals yet another quality of

'innovation' that belongs to 'competence and is not shared by 'knowledge': an innovation issomething that appears in the market; until it appears in changed commercial interactions and

relationships it is not an innovation. Competence, similarly, is about what the customer will do

after the service delivery is over. Its significant effects, if it has any, lie the 'other side' of the client

firm, in its own markets. A service that supplies (already-configured, rentable) competences

which simply 'fit in' with the client's prior structure of competences (for example, as additional

capacity) is concerned only with its own characteristics as 'a deliverable'. But a service that

supplies rented competences may also change the qualities of the client's own behaviour, and

thus 'reach forward' to future outcomes beyond the end of the service itself. For example, a drug-

trials analytical service may update the client's awareness of current analytical technique, or an

engineering rapid-prototyping service may feed operational materials (eg CNC machining tapes),

information (eg assembly details) and understanding (eg critical design parameters) into the

client's tooling and productionising decisions, with consequent material effects on the real-time

structuring of the 'capital sinking' process in a regime of time-based competition.

1.3 Competence is an interactional and 'hands-on' concept, referring to the contingent ways inwhich people mobilise resources and resources mobilise people in real time and space

In the RISE micro-level analysis, a competence is a property of a system constituted by people in

a firm, organised in the actual ways they are organised (including culturally, through shared

languages, interpretations, professional identifications, common resources, etc), together with the

firm's non-human assets, also organised in a particular way. Assets too are culturally organised,

via their participation in conventional usage within communities of practice, the symbolicqualities that are attributed to them and the value that they are credited with. A competence is

treated as a collective property, a systemic capability of a concrete socio-technical system to do ....

this and this and this ... in this kind of context.

Competences are complex material-cultural constructions. RISE analyses this complexity in two

ways: through a 'resource' perspective and through an 'asset' perspective. On one hand,

competences are socio-technical constructions which arise from concrete configurations within

which humans (as 'cultural' beings with a corporeal existence) are articulated with each other in

cultural, temporal and geopolitical 'space' and also with (and through) non-human entities like

machines, sounds, documents and dispositions of physical stuff in physical space. These non-

human entities are constituted as resources for human action, by the action-orientation of the


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humans. In this sense, competences are phenomena of purposeful action within a resource-based,

interactionist frame of reference. Second, however, as we have already outlined in 1.2 above

competences are constructions of economic strategy, in which humans are 'added to' concretely

configured assets. Assets - as distinct from resources in the first model - are constituted as such

by their tradability - they are exchangeable and detachable between different situations - and

thus their value in a market. Resources, in contrast, are constituted as such by their availabilityand 'ready-to-hand' qualities of usefulness in the particular situation that they happen to be

addressed in. The same thing - for example, a tool - may be regarded as an asset (when its

exchangeability, detachability and tradeable value are at issue) and as a resource (when its

specific location and relationships of being 'within reach' and 'ready for exploitation' are at issue).

The two images are not symmetrical: a resource does not need to be an asset, whereas an asset

presumably has to be recognised as a potential resource by at least somebody in the circuit of

exchange. In this sense, the 'resource perspective' is primary, applying to all action, while the

'asset perspective' is secondary, applying to certain specialised kinds of activity within formalised

frameworks of economic practice.

Both the 'asset' perspective and the 'resource' perspective are significant in the micro-levelanalysis of RISE. On one hand, because we are examining the qualities and limits of public and

semi-public services (the services of RTOs as organisations funded by public money) we are

involved in a consideration of what is tradeable and what is not. Thus the asset perspective is

called for. If we want to consider the positioning of individual service products of RTOs or KIBS,

or the strategic position of an RTO or KIBS firm, we invoke an asset frame of reference. On the

other hand, because we wish to understand what is delivered into (performed into) a client

organisation, such that the organisation's future performances are inflected in some way and

imbued with different qualities and dynamics because of this residue, we are considering the

resources that are available for performances before, during and after the service event, in both

supplier and client settings. Analysing the doing of a service, and the doing that is subsequently

enabled, invoke the resource perspective. The former is relevant when we want to consider the

offered services of a supplier: what assets are disposed, in what configurations, through what

historical process of configuring, in order to construct a distinctive service product which the

supplier is in a position to 'deliver'? The latter is relevant when we want to consider the received

services of a service interaction: what resources are now disposed in the fields of which actors,

and what behaviours may these configurations now support?

The asset perspective is most widely spread through the literature of innovation. Figure 1

represents a fairly consensual 'asset' model of competence. Competences are built around

configurations of assets; but strategic competence lies in the ability of a firm (its 'dynamic

capability') to unfreeze and reconfigure assets, thus constituting new or upgraded competences.These dynamic capabilities themselves are competences: 'second order' competences (abilities to

change what the organisation can fluently, routinely do) whose use is the reconfiguring of

operational competences (abilities to routinely do something necessitated by success in the

competitive environment). Competences in Figure 1are represented as systems of action,

comprising humans articulated with one another in a context, and with resources.

The figure also indicates that competences may be located at the level of an operating unit (eg a

particular service-providing department in an RTO) or some other community of practice (eg the

company management Board) as distinct from the organisation as a whole. Issues of internal

structure and process - the distributions and trajectories of assets, resources and humans within

organisations - thus are relevant to the building of competences and assessing of competence-

delivering services. As far as explicitly received services are concerned, these typically are


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delivered unit-to-unit, rather than between entire organisations. Operational relationships

between communities of practice or operating units of a firm (for example, when considering the

diffusion of technologies imported into a firm, or the 'ripple' of a service through the downstream

activity of wider communities within the firm) may themselves be analysed as deliveries of

competence-supplying services on this same model; except that they may be tacit rather than

explicit, and are not necessarily organised under the same kinds of formal rationale for assetmanagement that apply in the acquisition of external assets and services.

Figure 1 Competences as configured assets; dynamic capabilities assecond-order competences; competences as abilities to do significant things

Assets Competences

'Liquidised'for

reconfiguring

Configuredinto...

Dynamic capabilities

Second-order competences

Competences in 'learning'(=strategicallyconfiguring&reconfiguring assets)

Significant (inter)actions,in a competitive context

Acquisitionand disposal

..

!

The firm - or an operating unit

As used in the micro-level analysis of RISE, 'resource' refers to something ready-to-hand in an

action context. It may be seen as useful by an actor, and used in accomplishing an action (for

example, a document, a relevant piece of suitably contextual language, a wordless action) or it

may serve in orienting an action (for example, a mute sign that some conditions for action are

now available - like the banging door of a colleague's office down the corridor). Resources

typically are common - multiple actors may access them. Resources that are enduring - and not

all resources are (for example, spoken words may not be) - may also be manipulable: a document

may have marks placed on it; or an item may be moved from one place to another. Such

resources can serve as media of (explicit or tacit) communication.


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The concept of a resource is important in our micro-level analysis because it brings the symbolic

dimension of practical activity into our analytical frame: language, communication,

interpretation, reading and writing and speaking, the attribution and display of meaning and

significance, purposeful interaction, evaluation - and hence, strategy. We indicated earlier that

the resource perspective was primary while the asset perspective is secondary; and here we find

another version of this - strategy (the defining frame of an asset perspective) is possible onlybecause human activity can be purposeful and coordinated. An asset perspective cannot account

for how humans coordinate or act competently; rather, we have to refer to the ways in which

resources are mobilised and structured in courses of action, and in turn, structure the future

course of actions.

RISE uses a simple (though not nave) coding scheme to describe interaction. It contains six

categories, as shown in Figure 2and outlined in Box 1.

Figure 2 The presentation mix of activities - Forms in which traces of action can bedeposited in practices

Objects Documents Humans

..

Interactions

!Languages

/ models

Tokens of

power

CAPSULES

PERFORMANCES & READINGS

Box 1 Elements of presentation mixElements available as detachable, durable bounded capsules

'Shippable' physical artefacts such as machines, equipment, tools and machine-systems.

'Shippable' document-artefacts: Media, a sub-class of artefacts including'readable' or interpretable items of all kinds (for example, a video recording or an

image).

(Voluntarily) mobile human individuals who are knowledgeable, skilled,experienced, well-connected and accepted in various communities of practice, etc.

Elements performed in situ, and interpreted

Live, ongoing human interactions (perhaps amenable to recording in somemedium, but delivered live into the flow of action). Patterned interactions constitutecommunities of practice.

Language-games: locally embedded, ongoing languages, linguistic codes andother self-consciously performable and reproducibleforms of representation andcommunicative interaction. These may be formalised or informal. For example:definitions, models, interpretative schemas and classifications, images and icons,


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specialised vocabularies that have limited currency in specific social groups, re-toldstories.

Durable, visible tokens of power:Markers of roles and resources, revisedattributions of significance and dispositions of assets; badges of membership andauthority; formal allocations of resource - notably, budgets; and so on). Like language-

games, these are embodied and visible but hard to read and grasp for non-members -this is their 'intangibility'; otherwise they may be perfectly tangible - a machine, forexample the latest model computer - can be a token of power.

Modules or packages of practice - A composite of any or all of the abovetypes of elements

Practices in fully-working order: 'Pieces of culture'; embedded assemblies ofhumans and resources on a small or large scale, more or less fully equipped with: toolsand equipment, documents, skills, specialist languages, forms of interaction (language

games) and systems of power that keep them in shape and create the 'reach' of thepractice. This is a composite category, comprising elements from all the above. A

competence is a system of practices in working order. A practice in full working ordercan be analysed as a 'genre' on a small or large scale: see below, Section 6.1.

The importance of a resource perspective - and the presentation mix schema in particular - is

twofold. First it provides resources (!) for addressing the 'liveness' of both knowledge intensive

services, as processes that typically are interactive, and the ways in which 'bodies of knowledge'

are present in and distributed across systems of practice seen as 'knowledgeable bodies' made up

of humans and non-humans. And second, it provides a particular way of handling tacitness. In

this framework, tacitness is seen as the work that bodies do, as distinct from the work that words

do. The presentation mix schema is made up of categories of 'stuff', all of which are visible to and

accessible to fully participating practitioners in a practice. The bodies of the things involved - thesound of the spoken word, the orienting presence of a person or document, the presence or

absence of a 'totem' object or other token of power (a corporate logo; the chief executive's

signature; a statement from the finance department approving a budget allocation) - are the forms

of presentation. If some of these items can also 'speak' or be read in an explicit way - because they

are humans who utter words or documents or dials that have words and formally-coded symbols

on their faces - this is an additional, distinct (and important) quality possessed by only some

elements in the presentation mix.

This kind of materialist approach to communication and coordination is necessary in order to

avoid attributing magic powers to stuff - of documents to 'carry' knowledge, or words to

coordinate and give direction to actions. In a resource perspective, rather than being an odd andunder-privileged mode, tacitness is simply one of the basic ways that things get done. Indeed,

explicitness only works, as another way that things get done, because tacitness (the bodies of

communicants and communication media) 'got there first'. This is a further sense in which the

resource perspective is primary and the asset perspective secondary: only some resources are

addressed and exploited explicitly, whereas explicit handling and the keeping of accounts is a

defining characteristic of stuff addressed as assets.

This last point underlines once more that fact that the resource perspective - and presentation mix

as part of this - is not just about service deliveries or knowledge intensive activities. It is about the

presentation of any practice to another in interactional time and space, or indeed, of a practice to

itself at another time, via 'memory'. The six categories contained in presentation mix provide a

simple vocabulary for referring to the forms in which past activity, or activity elsewhere, leaves a


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trace or becomes visible in current activity, here and now. The forms of presentation proposed in

RISE for analysing a 'knowledge intensive' service delivery are also the forms of memory in

which the service-delivery actions leave their contributory traces in the future activity of the

client organisation; they are the 'handover' of the 'delivery'. To the extent that the mix of traces

includes interpreted and performed elements - alliances and social networks, 'strategy stories',

analytical models, marked distributions of power (eg budgets, investments), etc - as well ascapsule elements like documents and configured equipment, we are dealing with a 'received' as

distinct from a 'delivered' service. Given that a competence must always include interpreted or

performed elements (ie resources) as well as capsule elements (eg physical or documentary

assets) it makes sense to regard the outcomes of all competence-supplying services as ultimately

constructed by the client (as a function of the readings and modes of performances that they carry

away from the service event) rather than simply delivered by - or in principle deliverable by - a

supplier. A service is what the beneficiary seizes from the interaction, and retains and maintains

as valued, contextualised outcome and memory. On this basis, a collaboration may be 'of service'

to any participant, whether nominally a supplier or a client.

2 Collaborations as distinct from explicit services may be the way inwhich competences are got

2.1 Single service deliveries are unlikely to generate strategic competencesOne main conclusion from the case studies is that the evolution of significant competences may

be only weakly related to the delivery of explicit services. Putting this another way, in structuring

the processes through which significant competences are developed it may be important to have

forms of interaction which are in some ways 'bigger' and sometimes also more informal than is

normally expected from explicit, discretely received services. Putting it one further way: it is

unlikely that a big (strategic, weighty, durable, etc) competences will be supplied by a small

(discrete, limited, cheap, etc) service.

We are here implicated in discussions about the boundaries of the firm and forms of

collaboration. Coombs and Battaglia for example (1998) discuss various forms of governance

under which 'core competences' may be supplied or developed in inter-firm collaborations.

Forms of governance range from routine transactions for well-defined, standard services or

information products, through negotiated service-level agreements for the performing of some

specified activity, into longer-term relationships more broadly defined including preferred-

supplier relationships and strategic alliances which provide for various kinds of mutual

'servicing' and resource sharing between parties. Ultimately, the extreme strategy for acquiring a

competence is to acquire the firm that possesses it. Clearly, this spectrum passes beyond the

boundaries of what can reasonably be interpreted as a supplier-to-client 'delivered' service. Thisshould serve as a warning not to overplay the significance of increases in the amount of trade in

discrete business services.

In our RISE cases, the most dramatic instances of strategic outcomes were not from simple

services but were constructed via prolonged processes of interaction containing numerous

episodes. See Box 2 and Box 3.


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Box 2 A bookwork printer creating strategic competence in new business nichesthrough a long relationship with a value-added supplier of digital printing

equipment

A small, niche-market book printing firm developed two entirely new, innovativestrands of business activity (essentially document management services) through a

ten-year dialogue with a technologically advanced, R&D-intensive service supplier inthe print equipment sector. However, the explicit services supplied never went beyondroutine leasing contracts for printing plant (digital print machinery and operatingsystems software), and the strategic dialogues and development support for newapplications of new technology, which informed the client's strategic development,were 'delivered' as informal sales support which was bundled 'free' with the explicitservice of value-added equipment reselling/leasing.

Box 3 A gearbox manufacturer outsourcing discrete services and insourcingintellectual property

A manufacturer of auto gearboxes, anticipating future demands of auto

manufacturers, innovated a gearbox with a radical extension of previous functionality(six speeds generated through a quite different internal configuration than a five- orfour-speed gearbox). This was achieved via a ten-year process of internal R&Dsupported tangentially by a variety of piecemeal external services from RTOs, designcontractors, universities and intellectual property brokers.

In quite different ways (in quite different firms, in clusters with quite different innovation

dynamics) both cases illustrate the proposition that developing truly strategic competences is a

process that extends over much longer periods of time, and involves interactions and activities

that are much more tacit and evolutionary, than is easily consistent with the notion of a

specifiable, 'deliverable' service. A third case usefully expands this issue: see Box 4.

Box 4 A collective service provided as a government-funded programme ofcollaborative R&D

A small science-intensive firm operating in the area of biotechnology-based drugs anddiagnostic kits was able to significantly develop both its product range and itsdevelopment strategies through a prolonged (four-year) programme of projects withnational RTOs. This case can be seen to have the same qualities of extended duration

found in the first two (a shorter literal duration, but a greater intensity of interactionthroughout). But it was constructed as a prior strategy, and implemented through a

programme of explicit service-level contracts for individual R&D projects. In this casethe programme itself can be interpreted as a 'macro-service'. The firm was only able toarticulate this strategy thanks to a funding and negotiation framework furnished by anational government collaborative R&D programme. In this case the essential, quitecomplex service (provided by a government agency rather than the participatingRTOs) was the negotiation, partial funding and steering framework for a strategicR&D trajectory on a far larger scale than either the firm or any of the participatingRTOs would have been willing to risk with its own resources.

Features emerge with this case which may have much to do with whether the service qualities of

RTOs are distinct from those of KIBS firms. They are:

i) The collectivised scale and scope or complexity of the activity generated by the service

framework (four RTOs in various discrete, project collaborations with the SME hub firm);

and


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ii) The contribution ofpublic venture funding (justifiable on the basis that systemic

improvements were being generated in the 'application' and industry networking

competences of the RTOs, in addition to tradeable products and market-relevant

competences for a specific firm).

Traditionally, the role of RTOs has been characterised both by collective definition and

distribution of R&D (eg for subscription members of an RTO's client base) and by theinvolvement of 'public good' funding (provided by government on the basis that it will generate

spillover effects and overcome market failures).

2.2 Suppliers of competences may not be explicitly selling innovation servicesThis is a second main conclusion. In the book printing case above, the partner in innovation was a

service supplier but the service being explicitly supplied was an operational one not an

innovation service: namely, equipment leasing. Competence is not equivalent to innovation; so

competence-supplying services may not be related to innovation but rather to the performing of

operational activities. In the book printing case a technological competence - ability to use a

particular technology in a particular range of applications - was the core of the strategic businesscompetences that they developed. The acquisition of the technology is at the core of this; and the

supplier supplies the technology - or some of it, since other elements of the eventual working

technology were supplied by the printer. Supplying early versions (beta test versions) of new

technology to the printer, notably operating systems software together with the supplier's

systems analysis and coding skills to adapt the software, was part of the informal service

arrangement in this particular case. But does the early supply of new technology to printers in

general make the supplier a supplier of 'innovation services' as distinct from a value-added

supplier of innovative equipment? Does the informal supply of software development

competences to a valued, innovative customer make an equipment leasing firm into an

innovation services firm?

In a fourth case (Box 5) the service supplied is an operational service: batch fermentation. Does

this make the firm an innovation services firm rather than a specialist manufacturer, or

manufacturing services company? Is this small-scale production service an 'innovation' service

simply because the client is an innovative firm, behaving as such because they compete within an

innovate-or-die industry? Is the specific case of Box 5 an innovation service because a financial

service relevant to the innovation setting is rolled-in with the operational service of molecule-

manufacture?

Box 5 A manufacturing-services firm providing a bundled financial service toselected firms

Production of fermentation batches is required within an innovation process forbiomolecules or diagnostic technologies, at different levels: producing test batches ofnew biomolecules for testing purposes; scale-up and optimisation of process conditionsat production scale for ingredients of medicines or reagents in testing kits. In one ofthe RISE cases this service is supplied by a manufacturer specialised in fermentation

processes. 90% of the supplier's contracts are production contracts, mainly on arelatively large (multi-batch) scale. Short-run contracts for development purposes

provide only 10% of the supplier's business. The supplier has two service products: ashort-run production volume which is less profitable because set-up costs eat into the

profit; and a long-run production volume on which the manufacturer can comfortablymake money.

However, for small biotechnology firms an additional element may be added to theservice. These firms are often unable to easily capitalise the innovation process, and


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find the prototype-testing phase of development both demanding of resources andexpensive. They not only welcome the opportunity to subcontract trials-scale

production (concentrating their core competences) but also may benefit from afinancial risk-sharing deal. The manufacturing-services firm can, at its discretion,offer a small biotechnology firm various kinds of risk-sharing arrangements thatinvolve deferred payment for the manufacturing service, including a risk of non-

payment if the client's innovation fails.

The competences of the service supplier include not only assets and routinesconsistent with a wide range of fermentation processes, but also financial assets andbusiness routines to negotiate a risk deal or loss-leader deal on the manufacture of testquantities of a new biomolecule, and the asset-positioning to propose a future workingrelationship involving a particular distribution of value production in the value chain(ie outsourced manufacturing of biomolecules).

The above questions are rhetorical. The point is that categories are not watertight. 'Operational'

services like fermentation capacity may possibly be appropriated as 'innovation' services (not

only because small scale is available but also because explicit development services such asrecipe-optimisation may be available, along with the utilisation of production capacity).

Operational services like equipment leasing be accompanied by informal supply of an innovation

service like software development. The way we propose to deal with this category problem in

RISE is to recognise that innovation services may be tacit or informal as well as explicit, and may

also be provided as part of the business mix by suppliers whose majority business (in terms of

profit) is production rather than development. This causes problems for a survey approach, since

the actual content of statistical categories becomes blurred. But it helps in refocusing the lens of

'innovation' services. It may be helpful to consider that all forms of 'knowledge intensive'

production may potentially be viewed as sources of competence, and thus as tacit or 'bundled'

innovation services. The supplier of new digital printing technology via leasing arrangements is

certainly in a knowledge-intensive business (is, in fact, one of the world's most prominent R&D-based manufacturing companies) and the introduction of 'embodied knowledge' in the form of

advanced technology is part - though only part - of the process of competence building in a

technology-using firm.

2.3 Competences may not be supplied wholeA further point emerges from this. Competences may not be supplied 'whole'. Rather, elements

may be supplied that may be organised into competences, by being combined with other assets

and competences of the firm. The elements may be assets (such as machinery or patents) or skills,

or even pieces of public property such as items of scientific knowledge from the research

literature. The emphasis then shifts to the complementary assets, and complementarycompetences, of the user firm, which may or may not be sufficient to transform the supplied

elements into significant competences. The danger with this reasoning is that the notion of

competence-supplying may break down completely. How small an element of competence needs

to be supplied (a machine? a skill? a skill held by two people? etc) before a supplier ceases to be

regarded as supplying competences or contributing to competences? This would be a problem if

we were looking for single watertight categories to describe activities. But if we are satisfied with

ways of mapping the contributors to competences in a firm, there is no necessary problem here.

We simply need to distinguish between supplies that are significant and supplies that are less

significant in contributing to significant competences, relative to the other assets and

competences that are mobilised in the process. A discrete analysis of supply, out of context would

find this a problem; a systemic analysis of supply in context need not.


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In contrast with the equipment-supply case (where just a part of a significant competence - the

machinery - is supplied, most of the time, by the supplier to most clients) in the fermentation

services case the supplier supplies the whole competence to most customers most of the time. The

majority of contracts simply utilise the working capacity of the firm to manufacture molecules by

fermentation routes; they rent the fermentation competence of the firm 'whole'. But a minority of

contracts do not only mobilise this whole operational competence - to optimise and stabiliseproduction at a 'production' scale; they also cross-breed it with their own competences (in

molecule design, in biochemistry; in risking assets on unproven new molecules) in a dialogue

around scale-up and the productionising of lab-scale production knowledge, thus enhancing

their own awareness of their own competences in a wider context.

These issues - of supplying 'whole' competences and elements that may (beyond the frame of the

service interaction) be organised into competences - are developed further below. We discuss the

scope of service delivery in terms of different orders of 'stickiness' in the content of a knowledge

intensive service (Section 3.2); whole competences are more 'sticky' while discrete elements are

more transferable. And we discuss the scope of downstream effects of service delivery in terms of

four modes of supply (Section 5.1); some modes are more limited than others in what they leavebehind as residues in the client organisation.

2.4 The effects of a service in 'the learning economy' need not be 'learning' - at least, for aclient. The service of competence development is available to whoever seizes it from the

interaction

One particular point needs to be made regarding services in 'the learning economy'. Innovation

services need not deliver learning to clients, as the content of the service. Learning - accumulated

competence embodied in configurations of assets, resources and humans - is mobilised in the

performance of a service. The competences of both supplier and client are mobilised to construct

a service performance. But a pure 'rental' service is (by definition) one in which the competencesof the client are not changed. In this situation the competences of the supplier are simply

delivered 'through' a channel in the client or embodied in some bounded configuration of assets

or resources that does not yet constitute a competence for the client. It may simply be

competently produced current output for the client - for example, when subcontracted

consultants deliver training in the use of an IT system 'through' a software supply firm - or

provisioning for future innovative activity, such as a design or a prototype. Admittedly its is

difficult to imagine a situation in which a subcontracted design or prototyping activity did not

generate learning in the client firm. However, whether it does - that is, whether the competences

of the client are changed via the service event - depends on whether the client mobilises the

competences that are needed to articulate the 'handover' of supplier's activity and (more

crucially) the performing of the supplier's activity into the systems of assets, resources andactivities of its own organisation. We could say that whether a competence-supply service

delivers learning into a client firm depends on whether the client learns. This need not occur. We

need to remain aware of the difference between offered and received services. Offered services

are functions of the supplier's 'positioned' pre-configured assets, resources and staffing. Received

services are functions, also, of the client's mobilised competences. A service supplier may afford

systematic opportunities for learning via its offered services, but a client organisation need not

learn, and will not learn if it does not mobilise complementary competences.

A related point can also be made. Service suppliers often learn, even when clients don't. Thus it

may be that some of the significant innovation processes occurring in a 'learning economy' are

processes of competence development in service-supplier organisations as distinct from


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competence development in client firms. A supplier of a rented competence may upgrade or

transform that competence, even while a client simply 'channels' the output in ways that do not

transform its own competences.

Service performances do not only produce competence outcomes for clients. They may also

generate competences in supplier organisations. Specifically, to the extent that these competencestake on 'weighty' and extended forms - significant configurations of assets, durable genres,

enduring stories - they may form future service products or elements of service products for the

supplier. Box 6 describes two situations in RISE cases where suppliers achieved significant

development of service products through their interactions with clients.

Box 6 Product development for suppliers, within service interactionsOne of the cases in Box 12 below relates to an RTO that developed an implementationof its intellectual property (in the field of terrotechnology - engineering maintenance)within the framework of an alliance with a client who was willing to risk the time andcost of a pilot implementation. The supplier/system-developer provided time and

prototype software free while the client paid for computing platforms and their ownstaff time. The RTO was under pressure to operate with less core public funding andgenerate revenue streams from services and products, so for the supplier it wasstrategically necessary to develop intellectual property assets - developed under publicsubsidy - into deliverable service products. At the close of the project the supplier hada 'hard' asset - working software code stored on media - plus 'performance'competences in training, story resources for future marketing to other clients and anasset position, in relation to the client, that made it likely that they would receive

further implementation contracts from the client.

The service supplier in the case of just-in-time book production (Box 2) was a VAR ofdigital print systems. Over the period of interaction and informal innovation-servicing with its innovative client - ten years - a niche market in short-run book

production became established via the successful activities of 'early adopter' clientssuch as this one. The VAR has a business strategy of selling not just leases on digitalprint systems, but 'solutions' for clients who operate in specific markets: in-houseprint, high-street instant print, etc. By the later stages of the relationship with theinnovative printer, the VAR supplier had achieved the competences necessary to startselling a 'solution' for short-run book printing: mechanical adaptations of machinessuited to book materials, operating systems software configurations, links with third-

party equipment suppliers (binding etc) and stories of 'how to do it' backed up with ademonstration site.

We can also point out that from the standpoint of competitiveness and the operational conduct of

a firm's business there is no necessary problem about a (rented) competence-supply service inwhich a client does no learning. Rather than learning, the client outcome of a competence-supply

activity may simply be action, appropriate action, operational action: the delivery of an output by

the client. As long as the action that is achieved through the mobilisation of the supplier's

competences is appropriate in the client's business context (that is, competent) the service can be

said to be relevant. What is at issue here is simply that we should mark a difference between

competence supply, innovation and learning. Competence supply services are not necessarily

innovation services. They may be operational services, but performed by mobilising very

substantial competences rented from a supplier. These represent the outcomes of innovative

processes in the supplier. At the same time, the delivery of a non-innovation service to a client

may be a locus of competence-development - innovation - for the supplier. Analytically, to study

a system in terms of competenceproduction is equivalent to a study of innovation or learning. Butto study a system in terms of competence supply is not. Competence supply is relevant to


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competitiveness in different ways than competence production, ie, participates in different

innovation dynamics. Specifically, competence supply services may generate innovation in

suppliers (and thus function as innovation 'services' for the supplier) even when they do not

involve innovation by the client.

2.5

Competences do not only 'support' products. In the service economy, competences can be(service) products

In the present context a model is at work, concerning the relationship between competences and

products, which differs from Prahalad and Hamel's model of 'strategic core competences'

(Prahalad & Hamel, 1990). Their model is applied to large R&D-intensive firms, and suggests that

for strategic purposes (to do with managing the core business and maintaining trajectories of

success) a manufacturing firm whose competitiveness depends on R&D-based product

innovation should manage a repertoire of 'strategic core products' which are grounded in a

repertoire of 'strategic core competences'. The products (eg types of glass) are backed up by the

competences to create and manufacture them (eg operational technologies, routines and genres of

practice, in R&D and manufacturing).

In services, this distinction between the 'product' and the 'process' is typically less clear cut. As

Metcalfe and Miles (2000) point out, a service supplies a transformation rather than a thing. The

front office in manufacturing is conventionally seen to contain just 'the product' itself (an

artefact), shipped to the customer (neglecting the fact that shipping is a service); but in services -

and specifically in knowledge intensive services and innovation services - the front office is

frequently a place of interaction and (often) co-production between supplier and client, where

competences of both are mobilised to generate the 'product' - which is a hybrid of both

performance and 'closing' outcome. In services of this kind, a competence can itselfbe a product -

that is, a firm's competences at the close of a service delivery may be an offered product, a prior

configuration of assets, resources and staffing which may be brought to the front office on thenext occasion and directly 'presented' to the client in a real time delivery-performance. In

knowledge intensive services, then, the learning of the supplier in service delivery (the

competences newly configured within the service performance) may actually be product

development, and not simply an input to product development. This applies also to 'service

intensive' manufacturing of course, where competences are a tacit element of the product-service

mix.

The relationship between core products and core competences may in fact be reversed on

services, compared with the 'strategic core competence' model. Consider a company that leads

with its services - for example, a digital print systems company which markets its systems (ie

'photocopiers' plus networks plus operating systems software) as 'business solutions' configuredfor various differing customer sectors. This company may regard its relatively stable technology

architecture as an infrastructure that supports its continuous customisation and evolution of

sector-adapted service products. In other words, strategic core competences (to deliver a

significant solution to a customer's business problem, in the form of a leasing deal) are supported

by core products (the systems architecture of machines and operating systems software), and not

the other way round.


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3 The content of a service - Supply scope3.1 Provisioning, rental and competence buildingThe asset model of competence (Figure 1, section 1.3) generates three basic options in the scope of

a competence-supplying service. In order of increasing scope, the service may supply:

Assets - as distinct from competences. Subsequent to the delivery of these assets (or

production of these assets in situ) they may later be configured into competences by the

dynamic capabilities of the recipient firm. This is aprovisioning or support modeof

competence supply.

Competences that already exist as established and probably routine abilities to do

something (in the supplier organisation) based on prior configurations of assets. This is

the rental or hire modeof competence supply.

Competences to change the competences of the client (dynamic capabilities, second-order

competences, of the supplier). This is a building modeof competence supply.

Each mode has different implications regarding the complementary competences required in theclient firm, if usable competences are indeed to be the outcome of the supply of service.

In the asset-supply mode, the client needs dynamic capabilities to configure assets as

competences, together with the strategic competence to make an appropriate decision regarding

the overall cost, value and timescale of competence-building by this route. In the competence-hire

mode, the client needs the competences to hire a suitable supplier plus the ability to 'position' and

channel the supplied competence so that it forms part of the range of operational competences in

play within the firm; together with the strategic competence to evaluate the cost of temporary

acquisition against the cost of holding the competence in-house. In the competence-building

mode, the client needs competences at least to choose a competent competence supplier and

evaluate the risk of failure; and probably also a range of dynamic capabilities to augment andenable those of the supplier. Each of these options has a different spectrum of costs, accompanied

by a different downstream span of scale in its outcomes. The lowest order of supply scope

(provisioning) generates competences at some time in the future, perhaps. The middle order of

scope (rental) generates access to competences which may be mobilised now, but ceasing at some

future time (the end of the rental period). The highest order of scope (building) generates new

competences soon, which are retained.

3.2 A spectrum of 'stickiness' and complementary competencesThe asset model of competence does not cover the full range of what may be supplied in a

competence-supply service, or in the services of organisations that supply innovation services.On one hand, resources as distinct from assets may be supplied; on the other, organisations may

supply operational services. Thus the neat theory-based model of 3.1 above needs to be

augmented in a pragmatic way in order to handle actual services.

First, we cannot fully understand the work that knowledge based services do for their clients

without taking resources - as distinct from assets - into account. While assets must become

resources (for at least some actor) before they can be useful in practice, the reverse is not true;

resources may be supplied to an innovating firm that are not assets, in the sense that they can be

held and traded. The public-good outputs of basic science are resources of this kind. Appendix 2

of this report (section 2.2: Self-service resource suppliers) notes that significant innovation inputs of

this kind may be available to firms in self-service mode, free - from the 'cornucopia' of thescientific literature - rather than via delivered, paid-for services. It also suggests that such inputs


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may be assembled together by a service supplier (a library, a project management consultancy, a

design consultant, an R&D subcontractor, etc) as a package of resources which, while not an asset

in the sense of intellectual property, is significant and uniquely usable for a client firm. Such a

package of resources may never be converted into an asset (eg a patentable design) but rather,

may become an intrinsic part of the cultural web - the interpreted and performed symbolic

system of stories, models, language, etc; the common cultural property of a working community -which holds together a competence in the client firm (and specifically, 'glues' assets together in an

articulated, directional, working configuration, making them do something).

Second - a further 'resource' issue: in the hybrid analytical framework of assets/resources, even

though humans are 'capsule' elements in the presentation of services it does not make sense to

treat them as assets - unlike other capsule elements (software, patent documents, configured

machinery, etc) which may be valued as assets as well as being resources. Rather, humans figure

in the scheme of competences as 'resource-full' entities; in other words, the flesh boundary that

makes a human a 'capsule' can be regarded as a package of resources. These resources include the

ideas and stories that the person carries (grounded in theory, grounded in experience), the

languages they can speak (ie, the formal and informal codes that they are literate in), thematerials and media that they are capable of mobilising (ie converting into resources in a context)

through their personal skills, and the people and things distributed along the networks that these

skilled, professionalised people participate in.

And finally - an operational services issue: organisations that supply inputs to innovation

processes may also supply consumable (but research- or technology-intensive) inputs to

operational processes. A lab that supports an innovation process with testing may support a

production process with the same tests. A batch manufacturing facility that supports an

innovation process with prototype batches of a new material may support the full-scale

production of the same molecules. An organisation that provides consultancy in best-practice,

grounded in its knowledge of the primary competences at work in an industry, may publish

handbooks of data (technical data, market statistics, contacts and source-lists, etc) to be used

operationally on a day-to-day basis in the industry. And so on. Such 'current' knowledge-based

and technology-based inputs are better accounted for as working capital expended on

consumables rather than financial capital invested in assets.

Taken together with the three pure asset/competence modes of supply identified in section 3.1,

these three dirtier cases give us a six-channel model for the scope of competence supply, as

diagrammed in Figure 3.

Figure 3 The scope of competence supply - A spectrum of stickiness in knowledgeintensive inputs

PUBLIC-GOOD

RESOURCES(eg

publishedresults of

basic

science)

CONSUMABLEINPUTS tooperationalprocesses

(eginformation,

special

materials)

ASSETS(eg

intellectualproperty,software,

equipment)

HUMANS(ieskilled,

experienced,qualified,

well-connectedprofessionals)

1st-orderCOMPETENCESin full working

order, mobilisedunder arental

agreement

2nd-orderCOMPETENCES

to developcompetences in

the clientorganisation

Supply of competencesSupply of assets & resources


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In the context of debates about intellectual property, complementary assets and strategic

competence, this array of six channels can be regarded as a spectrum of 'stickiness'. The diagram

ranges its elements in increasing degree of 'stickiness' from left to right. The least sticky elements

on the left are available perhaps cheaply and certainly easily: through searches of public

information spaces, through spot-contracts or simple service-level contracts, etc. Assets to areavailable relatively simply, as a matter of routine or context-specific negotiation. They are more

sticky than consumable inputs though; this is part of the reason that they have the status of

'assets' and not simply consumables - it is intended that they should stay around and have an

effect, and also, that they should in some way be distinct from inputs that are more easily

available to competitors. Humans are extremely mobile in a certain sense; but as participants in

competent organisations they need to be regarded as very sticky. A person carries a package of

skills, contacts, ideas and so on around from location to location. But not all locations afford the

opportunity for proper mobilisation of these. A person working to full potential, as a resource-

full employee and 'an asset to the firm', is closely integrated with other people, material assets

and resources, and cultural frames. This constitutes a very 'sticky', locally-contingent

configuration which may or may not be easy to reproduce in another setting, depending on how

many tacit and explicit bridges (of people, of culture, of the 'capsule' elements which, in actor

network theory are called 'immutable mobiles') there are between the settings.

By definition, competences are the most sticky things that we might try to acquire or supply.

Competences are organisations; most likely, subsystems of (formal) organisations. Competences

are networks: they are woven into the company's fabric - of assets, of culture, of geography. Small

competences might be mobilised at arm's length and positioned within an existing array or

added at small cost. Large competences cannot be expected to be available simply or cheaply, or

without a substantial amount of 'tangling' of the practical webs of one organisation with another.

The only way to acquire a really substantial competence is to buy the organisation; and then thechallenge remains, of integrating this fully-working competence into the pre-existing

configuration, without killing the goose that has been laying golden eggs.

The product range of a supplier of innovation services may span any number of the modes in the

stickiness spectrum, integrated in different combinations to constitute individual service

products. For example we might find strategic consultancy (2nd-order competence) coupled with

current information (consumable input, mobilised in a competence-development process);

configured custom software (assets, or a licence) coupled with in-sourcing of contract

programmers (humans) and system-implementation competences (1st-order or 2nd-order,

depending on how mechanical the process actually is); a patent licence (assets) plus current

research knowledge (public-good resources) plus product-design work (1st-order competences).And so on.

For the customer, the cost implications of each kind of supply are different; that is to say, the

competence implications are different. The asset- or resource-supply modes do not, by definition,

generate competences for the client, and require investment and expenditure of different kinds to

turn them into competences. Public goods may be 'free' apart from search costs; but the mode of

literacy that is required to interpret them into workable resources may have a high acquisition

and maintenance cost, and the labour and complementary assets required to convert them into

unique assets is all downstream, risky opportunity cost. Specialised consumable inputs may

constitute part of an operational competence, provided that the complementary modes of literacy

(in reading information) and genres or skills (in handling materials) are present in the customer


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company. And so on. It is clear that, by definition, an asset- or resource-supply service demands

complementary competences (including, but not reducing to, complementary assets) before it can

constitute a competence in the client firm.

In the case of direct supply of existing competences in full working order the cost logic is

different. Mobilisation of a competence is guaranteed. But it must be located, as a live flow ofactions, appropriately within the frame of existing competences and activities of the client - either

as 'a piece of jigsaw' (in the case of a rented, first-order competence within an unchanged terrain

of client competences) or an 'inflecting' process in the case of a competence-building service. To

some extent the appropriate location and 'fit' of the service can be identified jointly with a

supplier during a contract negotiation phase; this may be one of the competences that is being

paid for. But at some level, the client depends on its own competences in locating external

competences in relation to its own, and in articulating them with the ongoing flow of activity in

the organisation in order to avoid compromised or lost competences and unnecessary costs

elsewhere (in the case of a poorly matched or poorly integrated rental service) or a shortfall in the

hoped-for outcomes (in the case of a competence-building service).

4 Interaction scale4.1 Simple interactions, longer-term interactions and 'large' outcomesTwo issues of interaction scale have been identified already in section 1.

First, the cases outlined in Box 2, Box 3 and Box 4 imply that the 'largeness' of the activity

required to construct a strategic competence means that it is improbable that strategic

competences will be generated by simple, discrete 'deliverable' services as distinct from

prolonged dialogues and series of interaction episodes. Thus, in identifying and promoting those

interactions between organisations that are involved in developing strategic competences, wemay find ourselves looking at collaboration or cooperation in a broad sense (also, over a broad

time span) rather than service delivery as a specific, time-limited variant of collaboration. This is

consistent with the type of policy stance that has become quite widespread with the spread of

'systems' approaches to innovation, namely policies that promote cooperation (for example, in

the form of 'cooperation to compete' in public-funded pre-competitive R&D projects, learning

networks and projects that are expected to overcome 'systems failures' by developing the

technology-transfer competences and mutual institutional links of national firms and

organisations in the national science base).

Second, the duration of the period over which processes of interaction occur is likely to be shorter

for discrete 'service deliveries' compared with strategic alliances or collaborations such aspreferred-supplier links. Of course, these categories may overlap in terms of timescale: a large,

complex 'project' for example may extend over quite a long period of time. The biotechnology

case outlined in Box 4, involving four RTOs and an SME over four years, had the form of a

programme of projects and was sufficiently formal in its contractual framework to be regarded as

a single, complex service arrangement. Clearly, a project or even a programme can sometimes be

regarded as a single, complex, extended service. This depends on the degree of contractual

formality and explicitness with which the phases and elements of the service are integrated with

each other, and negotiated between stakeholders in the process.


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4.2 Complex, multi-party collaborations within government funding programmes may be seenas standardised (public) service products, but not as simple supplier-received services

The multi-party, pre-competitive R&D project case of Box 4 suggests that the dyadic supplier-

client model may break down with 'strategic' services involving a number of parties. There is a

sense in which the hub f

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