TECHNICAL SKILLS AND STRATEGIC INTERMEDIATION IN THE COMPETITIVE STRATEGY

Two elements turn out to be crucial in a more complete interpretation of the competitive strategies implemented by the two companies. The first is to consider the project not as a constraint but as an opportunity. If the two companies accepted the role of mere executors, they would have compete in far worse conditions. In fact, they do not have the necessary economies of scale and they do not dispose of some national advantages that provide cost advantages from the outside the firm. The variation of the basic design is in both cases an important element and means a significant change in the way the firm competes: its activity is no more just an industrial activity but becomes an activity where services and industrial production are fully integrated. The second element is to control the integration of a specific product/service in a more complex system. When they submitted their bids, both companies realised that the key for competitiveness was the shift from the logic of the subordinate subcontractor to the one of the co-designer. Both companies do not consider the design and the production process only from the specific point of view of the steelwork producer, but they take care of the economic and technological impact of their product/service in the system of the whole built facility. It appears in all that the importance of the immaterial assets of the two firms is central. In fact, such a strategy requires that the firm master two sets of skills. The first, technical skills, leads to the production of certain goods (in these cases: the steel parts of the bridges and of the viaducts) and to the services related to them. These skills are partly codified, but in part they are not, since they are embedded in organisational routines. That means that an engineering firm charged with the design can hardly have that same level of knowledge of a specialised firm and that its contribution can often lead to an improvement of the level of efficiency. The second set of skills relates to the ability to redefine the client’s needs with products and services that add value for those who are trying to define them. It is possible to call this domain of activity as strategic intermediation (Reich 1991). It is important to underline that in the construction industry the client’s basic design may not be perfectly defined at the moment of the bid. Often the client proposes a basic design that represents the first step towards a more detailed one: the firms that compete for the realisation of the works can present variations to the basic design in order to cut the costs and/or increase the performances of the infrastructure. The firm must then be able to connect the client who is handling problems (with which technology to solve a specific problem? Is there any other way to solve it with lower costs and/or better quality?) with the firm-based technical services able to solve such problems with innovative products and services. These two sets of skills are the source of the competitive advantage upon which the firms have based their strategy in the two case studies we previously discussed. These relationships are illustrated in figure 6. It is important to underline the fact that the first set of skills is not the crucial one as far as this strategy is concerned. A firm competing only on the basis of the technical skills would necessarily restrict itself to the traditional subcontractor role. To the contrary, the second set of skills related to the strategic intermediation is the one that allows the firm to play a front line role, acting as a co-designer of the project. The firm that implements such a strategy cannot just innovate in its own domain of activity, but has to reconnect systematically its innovation with the evolution of the global construction process. That requires the control of common codes of communication that play a crucial role in the process of learning (Dosi, Teece, Winter 1990). It has to be underlined that we are not thinking just about technical innovation of the construction process, but also about the evolution of the organisational side of that process: the change of the actors and the evolution of their functions. In conclusion, the analysed strategy combines the traditional skills related to the production process with a new set of skills related to the ability to connect the client's needs (often unclear) to the technical competence of the firm - the strategic intermediation function. More, it seems possible to affirm that this strategic approach is not limited to this particular segment, and it can be applied more broadly to other submarkets of the construction industry. Such a framework points out the importance of the management of information in the firm strategy (Reich 1991; Rullani 1992). The importance shifts from high production volumes to the ability of managing ideas and information that create new value: in this way, small and medium size companies can successfully compete in the construction industry not only as hierarchically subordinated mere executors, but even as front line contractors’ partners and co-designers.