Description
Elucidation in relation to vanguards and ventures projects as vehicles for corporate entrepreneurship.
Vanguards and ventures: Projects as vehicles for
corporate entrepreneurship
Lars Frederiksen
*
, Andrew Davies
Innovation and Entrepreneurship Group, Tanaka Business School, Imperial College London, South Kensington Campus, London SW 72AZ, UK
Received 17 May 2008; accepted 20 May 2008
Abstract
The concept of vanguard project refers to a ?rst-of-its-kind project, initiated to enable a ?rm to diversify into a new market or tech-
nology based on an existing market and client base. We show that the concept can be broadened by engaging with the corporate entre-
preneurship literature, which demonstrates that many entrepreneurial projects for diversi?cation are developed in areas where there is no
existing client and a market has to be created. The paper makes the unconventional connection between the literature on project business,
and studies of entrepreneurship using two examples from the UK energy sector to illustrate how ?rms develop vanguard projects where
there is no existing client. In both cases, the ?rms used vanguard projects to venture into new technologies or markets, to generate new
knowledge and experience rather than to optimise an existing activity. However, the learning from a vanguard project may not always
lead to a general scaling up or rolling out process across a number of new similar projects through applying the lessons learned in the new
venture. Future research on vanguard projects should embrace both the responses to existing client needs and internally generated ini-
tiatives to create entirely new markets.
Ó 2008 Elsevier Ltd and IPMA. All rights reserved.
Keywords: Vanguard projects; Corporate entrepreneurship; Capability building; Energy sector
1. Introduction
This paper explores the relationship between the notion
of vanguard projects and strategies for corporate
entrepreneurship.
Researchers have recognised that, at some point in time,
large well-established ?rms face the di?cult choice of
continuing to develop the capabilities supporting their
existing business or creating new sources of competitive
advantage by moving into new technologies and markets
[30,25]. Many ?rms have grown successfully by improving
their understanding of current customers’ requirements
and integrating existing technologies into their new prod-
ucts [40]. However, the introduction of radical change –
or ‘breakthrough innovation’ – in a product’s design or
purpose can threaten an established ?rms’ hitherto success-
ful business [11]. In this paper, we analyse the speci?c
organisational form that ?rms often employ to act as an
entrepreneur, in order to break away from their rigid core
capabilities and build new ones by diversifying into new
markets and technological ?elds [22].
Given the uncertainty involved in moving into
uncharted territory and recognising or pursuing an oppor-
tunity [5] a project organisation is frequently the instru-
ment used by ?rms to investigate departures from a
?rm’s current technology and market ([48, p. 164]).
Accordingly, we argue that some projects due to their
inherent ?exibility and speedy adaptiveness represent the
organisational vehicle involved with the development of
capabilities [20].
There is an increasing number of studies devoted to how
?rms use projects to improve the performance of existing
0263-7863/$34.00 Ó 2008 Elsevier Ltd and IPMA. All rights reserved.
doi:10.1016/j.ijproman.2008.05.006
*
Corresponding author. Tel.: +44 20 7594 3041.
E-mail addresses: [email protected] (L. Frederiksen),
[email protected] (A. Davies).
www.elsevier.com/locate/ijproman
Available online at www.sciencedirect.com
International Journal of Project Management 26 (2008) 487–496
activities and move into new innovative lines of business
[32,45] projects are temporary, ?exible organisations used
to:
achieve sustained competitive advantage through the
exploitation of already established resources and capa-
bilities. This entails administrative management of pro-
jects that is adaptive and responsive to the environment;
explore new ways to develop competitiveness by ventur-
ing into new markets and aiming for the frontier of tech-
nology to search for, discover and test new
opportunities. This implies entrepreneurial management
of projects that are pioneering and leading [24].
Davies and Hobday [14] distinguish between two main
types of projects. Building on Penrose’s [37] original anal-
ysis, the ?rm base refers to activities undertaken in existing
markets and familiar technologies. A ‘base project’ is
undertaken to meet current customer demands for an exist-
ing range of products and services. A ‘base-moving project’
is a novel initiative that recombines resources in order to
search, discover and test new market opportunities and/
or experiment with new technologies. Davies and Hobday
[14] use the term ‘base-moving project’ to emphasise the
process of capability building that takes place when a ?rm
learns to develop or adopt new technologies, or to respond
to or create new markets.
Employing the concept of base-moving strategies, Brady
and Davies [7] present a model of project-based learning
that occurs when ?rms move base into new technologies
and markets. Whereas a ?rm can initiate several base-mov-
ing projects as part of a strategy of diversi?cation, Brady
and Davies [7] identify a ‘vanguard project’ as the ?rst pro-
ject to be launched in a deliberate e?ort to move away from
a ?rm’s core business activities and venture into a new mar-
ket or technology base. The word vanguard serves as a use-
ful metaphor for conveying how a project can be
positioned in advance of the rest of the organisation and
at the forefront of innovation.
1
A careful review of Davies and Hobday [14], therefore,
reveals that there is a need to clarify the precise di?erence
between the concepts of base-moving and vanguard pro-
jects. A vanguard project is a subset of base-moving pro-
jects. It should be interpreted as the ?rst in what may
turn out to be part of a series of base-moving projects to
enable a ?rm to diversify into a technology or market posi-
tion. However, a vanguard project may not lead to success-
ful move into a new base, although it may generate useful
knowledge for future vanguard projects. In some cases, the
core business of the ?rm is founded upon the use of van-
guard projects to create a continuous stream of unique
products and experiences for clients, as in the example of
the design practices like the architect Frank O. Gehry [6].
The concept of vanguard project is useful because it
encompasses some of the organisational characteristics of
these ?rst-of-their-kind base-moving projects. A vanguard
project is an e?ective mechanism for ‘testing opportunities’
as well as mobilising and integrating dispersed specialised
knowledge residing within or outside the boundaries of
the ?rm. It is motivated by the need to generate learning,
information and the creation of new knowledge in an e?ort
to develop or renew the capabilities of the ?rm. Therefore,
vanguard projects are central for understanding the
dynamics of capability changes over time and through
events [22].
However, in our view, the concept of vanguard project is
often too narrowly de?ned. Brady and Davies [7] assume
that a vanguard project is established to respond to the
changing requirements of existing customers; such projects
are novel because they are highly customised to pre-exist-
ing clients [38], and, therefore, the innovation that occurs
in these projects is often client-driven. This interpretation
does not address the situation in which a vanguard project
is established to create a customer or market for an entirely
new product or service, or to search for and test a potential
opportunity. Projects undertaken purely to search and
build a new market or test a recognised opportunity, we
label entrepreneurial acts [44]. Like vanguard projects
developed with a client, project ventures are experiments
and must cope with the uncertainties of an unknown ‘solu-
tion space’
2
[15]. Yet, the conditions of high demand uncer-
tainty [27] are di?erent, since there is no client involved and
the outcome of the project venture is not secure in terms of
return on investment.
There are existing project management tools and tech-
niques for dealing with existing technologies and customer
requirements and a well-known set of uncertainties within
the solution space [42]. Gantt charts will identify key issues
such as planning, prioritising and sequencing of activities
in order to achieve e?ciencies. However, these traditional
types of project management tools often perform poorly
when faced with unforeseen uncertainties that, by their nat-
ure, cannot be dealt with at the outset [15], because these
types of tools have been developed to manage cost, time
and quality objectives, rather than learning and innova-
tion. The corporate entrepreneurship literature provides
useful insights into how ?rms strategically develop novel
initiatives and ventures to cope with unforeseen uncertain-
1
According to the Chambers English Dictionary (1988), a vanguard
means ‘the forefront: those who lead the way or anticipate progress’.
2
The notion of a ‘solution space’ refers here to the range of potential
solutions to a problem or potential problems that might be recommended
or de?ned before undertaking the actual task at hand. Knight [27] calls
this risk rather than uncertainty because the solution space may contain
unknown aspects, but the general list of variables is relatively well-known
and the uncertainties relate to those variables de?ning the solution space
and not to a discussion about the variables or about the general solution
aimed at. Von Hippel and Katz [49, p. 826] in discussing the solution space
state that ‘‘Economical production of custom products and services is only
achievable when a custom design falls within the pre-existing capability
and degrees of freedom built into a given manufacturer’s production
system”.
488 L. Frederiksen, A. Davies / International Journal of Project Management 26 (2008) 487–496
ties [8,48] and to develop experience to inform future
choices related to capability creation and evolution.
The literature on business projects has developed signif-
icantly since the mid 1990s through the linking by research-
ers of concepts from the project management literature
with strategic management studies, organisational econom-
ics as transaction cost economics and innovation theories.
In the context of an emerging entrepreneurial economy
[2], we believe that the marriage of vanguard projects and
corporate entrepreneurship research could bene?t both
?elds equally. The entrepreneurship perspective is useful
for increasing understanding about the variety and func-
tion of organisational designs associated with vanguard
projects and understanding the emergence of ?rm
capabilities.
This paper is organised in four sections. The main part
of this conceptual paper is Section 1, which establishes
the conceptual background to our argument. It discusses
the role of projects as vehicles for diversi?cation focusing
on vanguard projects and corporate venture initiatives. It
suggests that the concept of a vanguard project should be
extended to include contributions from the corporate
entrepreneurship literature. This integrated approach is
illustrated in Section 2 through two short examples from
the UK energy sector. Section 3 discusses how these two
examples relate to the theoretical framework. Section 4
concludes by proposing new directions for future research
on project business and entrepreneurship.
2. Projects as vehicles for diversi?cation: towards an
integrated approach
This section introduces the concept of vanguard project
and discusses the way that the corporate entrepreneurship
literature highlights how projects are used as ventures. It
advances the view that the concept of vanguard project
should be extended in order to address its role in ventures
to create new markets.
2.1. The project as a vanguard
There are numerous de?nitions of the project [18] and
especially how the concepts of projects and business link
to each other [1]. However, there is wide agreement that
a project is distinct from the routine tasks involved in the
high-volume production of standardised goods and ser-
vices. A project involves complex, non-repetitive tasks
and results in unique or highly customised output. Projects
are temporary organisations involving teams of individuals
from within a single ?rm or from multiple ?rms. A project
performs a time-sequenced set of interdependent activities
to achieve pre-de?ned goal or conform to speci?cations,
within a precise budget [31]. Projects are initiated to
accomplish tasks that do not occur su?ciently often to
warrant the establishment of an enduring organisation
[47] or because it is not economically e?cient to bring
together diverse and highly specialised resources on a per-
manent basis. Many projects are organised between suppli-
ers and clients through the institution of the market, while
others arise within ?rms to meet internal objectives [29].
Finally, as emphasised by Kreiner [28] all projects encoun-
ter uncertainties both internally with regard to organisa-
tion, governance and communication, and externally in
terms of how they cope with emergent events and other
unforeseen challenges.
Projects initiate innovation in two ways. First, as the lit-
erature on new product development shows, ?rms in all
types of industries use projects to make incremental
improvements to existing products and to initiate radical
breakthroughs in products that incorporate new technolo-
gies [50]. Development projects that create prototype prod-
ucts and services for a ‘virtual client’, concentrate on
achieving design freeze prior to market introduction and
production of the new product in large volume. Second,
?rms in project-based industries initiate the process of
diversi?cation through the establishment of a project. In
the extreme cases of music and ?lm making, each project
results in an entirely new product, and ?lm reels and
CDs are produced in large quantities.
Brady and Davies [7] developed a conceptual model of
project capability building in the capital goods industries,
in which process diversi?cation begins with the creation
of a vanguard project. This new type of project organisa-
tion is developed speci?cally to experiment with and learn
from a new technology and to explore novel market oppor-
tunities. In vanguard projects where the degree of change is
extensive, managers cannot rely on their existing experience
and approaches. They need to develop new capabilities to
manage bids, execute the project and integrate the new
technologies into products or systems. Furthermore, since
the notion of vanguard project underlines the elements of
learning, exploration and even discovery of novel opportu-
nities, it suggests that within these projects, special mana-
gerial attention should be paid to ongoing re?ection,
promotion of doubt and constant questioning and a rela-
tive openness and acceptance of major changes in scale
and scope or even early termination of a project [19].
Brady and Davie’s [7] model incorporates two co-evolv-
ing levels of learning. First, the bottom-up process of learn-
ing, which begins with an initial phase when the vanguard
project is set up to explore the new opportunity. Vanguard
projects are distinct from projects focused on achieving
operational excellence in a ?rm’s existing market or tech-
nology base. While current operational projects focus on
e?orts to improve e?ciency, vanguard projects are estab-
lished to promote radical or breakthrough innovation in
products, processes and services. In the project-to-project
learning phase, attempts are made to capture experience
gained in the initial phase (i.e. learning what) and transfer
it to other projects. In the project-to-organisation learning
phase, attempts are made to develop the capabilities and
resources to deliver a growing number of these new types
of project. This involves the transfer of practices related
to managing vanguard projects (i.e. learning how).
L. Frederiksen, A. Davies / International Journal of Project Management 26 (2008) 487–496 489
Second, top-down learning in which senior management
in the ?rm monitor the vanguard and subsequent projects
and, if the ?rm is successful in the markets, puts in place,
company-wide, the capabilities and resources needed to
focus activities on the new opportunity. A vanguard pro-
ject is used by large ?rms to develop and test emerging
technologies and markets to achieve the basis information
for the more encompassing strategic decision to move base.
This is realised oftentimes by scaling up a successful van-
guard project to a permanent business unit or model
responsible for delivering a large number of slightly similar
projects.
Brady and Davies [7] focus on vanguard projects that
are initiated to respond to the demands of existing custom-
ers, articulated, for example, in invitations to tender or in
close dialogue. Although these projects are novel for the
?rm, they are designed to satisfy a client’s pre-determined
speci?cations and thus could be regarded as an extreme
form of customisation. We suggest that a vanguard project
can be initiated as the autonomous endeavour of a supplier
or even a client. In this case, there are no existing customers
and the project is aimed at an emerging market or one to be
created. This is a di?erent type of project because the prod-
uct development phase is a relatively discrete act that does
not involve dialogue with customers. In this case, the van-
guard project is a corporate venture initiated under the
?rm’s own volition. For example, below we describe how
one ?rm established a vanguard project to build and oper-
ate a plant using a speci?c number of interdependent
energy-e?cient, carbon-neutral, novel technologies. The
aim of the project was to search for new opportunities,
develop some preliminary capabilities in a new but related
business area and generate experience and information that
would inform subsequent strategic decision making about
whether the ?rm should build a portfolio of similar sized
plant operations using the same or a combination of tech-
nologies. In this instance, the vanguard project was being
used to test new technologies (the qualities of the gas and
hydrogen produced) under operating conditions and to cre-
ate important operational knowledge prior to a move to
high-volume production for a speci?c plant and setting,
and a number of new plants.
We argue that some vanguard projects serve as an initial
corporate entrepreneurial device for responding to and cre-
ating innovation in technologies and markets. They are
used by large ?rms as ‘mechanisms to rede?ne and rejuve-
nate themselves, their positions within markets and indus-
tries, or the competitive areas in which they compete’ ([13,
p. 47]). Such projects are a strategic tool for developing and
recon?guring the ?rm’s capabilities [39].
2.2. The project as a venture
The classical entrepreneurship literature focuses on the
development of radical new knowledge embodied in new
products and services, which causes creative destruction
in the established market [4,41]. This view is complemented
by entrepreneurship research that argues that real novelty
(i.e. technological change) is not needed to spur entrepre-
neurial action. Kirzner [26] maintains that acquiring infor-
mation and learning, and being alert to market trends is
enough to lever entrepreneurial activities that yield
increased opportunities and potentially pro?ts.
We suggest that the recent body of literature on corpo-
rate entrepreneurship helps to demonstrate how ?rms use
projects to identify and test opportunities and create new
markets, rather than simply respond to customer-generated
initiatives for change. According to Burgelman [9] corpo-
rate entrepreneurship describes the process whereby ?rms
engage in diversi?cation through internal development.
Corporate entrepreneurship extends ‘the ?rm domain of
competence and corresponding opportunity set through
internally generated new resource combination’ ([9, p.
154]).
The concept of corporate entrepreneurship departs from
the classical entrepreneurship literature in its signifying
that it is the ?rm – rather than the individuals – that behave
entrepreneurially. Like individuals, ?rms may engage in
di?erent forms of (corporate) entrepreneurship to achieve
a variety of objectives, in which the management of risk
and uncertainty is a key challenge.
2.2.1. How to organise corporate entrepreneurship activities
We argue that corporate entrepreneurship refers to at
least four key ways that ?rms proactively interact with
the environment:
by creating spinouts;
by investing externally;
by engaging in alliances and joint ventures;
by launching and managing internally-based vanguard
projects.
A ?rm must decide which of these four options will best
achieve its entrepreneurial objectives. In this paper, we
focus on ?rms’ use of projects as an entrepreneurial vehicle
for venturing into new markets or technologies.
2.2.2. Strategies of corporate entrepreneurship
The literature on corporate entrepreneurship suggests
four main strategies. Covin and Miles [13] state that the
most common form of corporate entrepreneurship is ‘sus-
tained regeneration’, involving the continuous introduction
of new products aimed at the same or similar markets, and
involving largely similar families of technologies, to achieve
competitive di?erentiation. As a corporate entrepreneur-
ship strategy, this approach incurs very low risk.
‘Corporate rejuvenation’ refers to the ways in which
?rms seek to sustain or improve competitive advantage
by altering internal processes, structures and capabilities
[46]. It does not necessarily imply a change in product,
strategy or brand and often involves chasing e?ciencies
through realising scale or scope economies. This strategy
shares some similarities with the activities involved in pro-
490 L. Frederiksen, A. Davies / International Journal of Project Management 26 (2008) 487–496
cess innovation and, according to Covin and Miles [13],
appears a more uncertain strategy than sustained
regeneration.
A third form of corporate entrepreneurship is described
as ‘strategic renewal’. This is more radical in that it rede-
?nes the ?rm’s relationship with its markets or its position
in the industry, thus jeopardising its current position in
terms of market segment and brand. For example, Harley
Davidson, the US motorcycle manufacturer, achieved stra-
tegic renewal when it changed from being a traditional
American biker-favoured motor cycle producer to becom-
ing a niche supplier o?ering superior quality, excellent ser-
vice and increased responsiveness to customers’ product
requirements [36]. This type of corporate entrepreneurship
is often based on alertness to market trends, rather than to
supply side changes in terms of products and services.
Finally, corporate entrepreneurship can entail ‘a rede?-
nition of the industry domain’. This implies a change to the
rules of the game through the promotion of radical innova-
tion. Corporate entrepreneurship of this kind is rare.
Prominent examples include the development of the Sony
Walkman and the Apple iPod, both of which products pro-
vided ?rst mover advantages and an initial period of dom-
ination in completely new markets. This interpretation of
corporate entrepreneurship is clearly linked to supply side
changes. For example, the corporate innovation project
to develop the iPod was not undertaken in collaboration
with a client, and was for Apple, but did involve a radical
move into a new technology and a new market base.
Several scholars have examined how large incumbent
?rms use projects as a vehicle to support corporate entre-
preneurship [8,21,24,25]. Large ?rms, such as General Elec-
tric and IBM, have used internal corporate venturing (ICV)
projects to initiate organic growth and diversi?cation. In a
process of organisational growth and maturity, an individ-
ual ICV project can grow into a sizeable and separate new
business. ICV projects constitute an important source of
renewal for established ?rms. Burgelman’s study of a
high-volume producer looked at how ICV projects grew
into new businesses based on new technology. These pro-
jects linked technological possibilities to new or poorly
served market needs [9], and instead of being a top-down
initiative, were initiated by middle-mangers who often
encountered senior management resistance to their propos-
als and projects, which went against conventional corpo-
rate wisdom and current strategies.
Burgelman’s study of ICV projects demonstrates how
fast growth towards a sizeable business organisation
depends on functional e?ciency gains obtained by ‘the
development of routines, standard operating procedures
and the establishment of an administrative framework for
the new venture’ ([9, p. 38]). Galbraith’s [21] model of ven-
ture start-ups and growth shows how ?rms evolve through
distinct phases from initial business ideas (embodied in a
vanguard project) towards high-volume production. This
process of capability development and scaling up is similar
to the model of capability building proposed by Brady and
Davies [7]. However, whereas in ICV projects (in Burgel-
man’s study and Galbraith’s model) the move from initial
project to high-volume production depends on strong func-
tional capabilities (e.g. manufacturing and distribution), a
vanguard project moves to a higher volume stage based
on the delivery of repeated base-moving projects, and
depends on strong project management capabilities.
Kanter [25] distinguished between two generic types of
projects: mainstream projects, which are performed to meet
a ?rm’s current business commitments, and newstream
projects, such as an ICV, which are entrepreneurial initia-
tives designed to explore new business opportunities. Firms
are confronted with a balancing act between maintaining
the momentum of their mainstream activities, and starting
newstream ventures that will create future business. When
industry conditions are relatively stable, managers will
often display a preference for a predictable mainstream
project; in more turbulent environments managers may
be more willing to embark on a project that is outside
the traditional scope of the ?rm’s business. The creation
of a new business usually starts with the establishment of
a newstream project that moves quickly into a new market
space, such as initial project to design the IBM Personal
Computer, which was brought to market in 1981.
Corporate entrepreneurship can be implemented as a
top-down initiative or can occur as a bottom-up, autono-
mous process. Corporate entrepreneurship is sometimes a
strategic choice [13] that may be made as a result of
a high-pro?le, strategically important project, such as a
cross-functional product development team, a technology
incubator, or a skunk works operation. However, corpo-
rate venture projects can often arise from numerous small
projects and seed-bed initiatives scattered throughout the
organisation, each requiring only a few resources [3]. Over
time, such bottom-up newstream projects may become part
of the mainstream and be supplemented and substituted by
a smaller number of larger projects, making more system-
atic use of corporate-wide resources.
2.3. Vanguard and venture projects: towards an integrated
approach
Our review of the corporate entrepreneurship literature
suggests ?rst that relative little attention has been paid to
the analytical level of the project vis-a`-vis the ?rm or the
individual. Second, and more important here, it also sug-
gests that a vanguard project is not just as an innovative
response to the needs of existing customers, but should also
be understood as a novel entrepreneurial venture to create
new markets encompassing new customers. A vanguard
project can be set up as an innovative response to an exist-
ing customer, but can also be generated internally by a ?rm
seeking to exploit a new entrepreneurial opportunity
beyond its traditional base or in emerging markets.
A vanguard project can be recognised as an entrepre-
neurial venture to reduce uncertainty through the gathering
of information and experience to enable more informed
L. Frederiksen, A. Davies / International Journal of Project Management 26 (2008) 487–496 491
judgments and decisions about future investments in new
technologies and markets [10]. There are two main reasons
for organising innovative activities in vanguard projects.
First, it may be a strategic decision to reduce the risks in
exploiting new opportunities, by recombining or adapting
existing resources, knowledge, mind sets and technologies
to suit the new problems and situations. Second, it may
enable the testing of opportunities to connect with novel
technologies, new partners, and new market activities in
adjacent industries.
All projects incur degrees of uncertainty. Similar to
Cohen and Levinthal [12] two faces of uncertainty, we sug-
gest that vanguard projects have to cope with two catego-
ries of uncertainty:
Operational uncertainty – inherent in the internal man-
agement of aspects such as team dynamics, skills, pre-
determined product features, deadlines, etc., i.e. internal
project factors;
Environmental uncertainty – the relationship between a
project and its external environment, such as wider mar-
ket demand, technical change, and how the knowledge
generated by individual projects can be transferred to
other projects or organisational levels within the ?rm.
Mainstream projects face fewer uncertainties because
the solution space of the project is relatively well known.
There is uncertainty in mainstream projects, but it is con-
?ned to a number of established variables. Traditional pro-
ject management tools are based on the premise that a
project can be worked out as rational planning process.
Minkler [34] calls this parametric uncertainty as it involves
altering certain product dimensions within a stable frame-
work, to meet changing consumer demands. It typically
does not involve new organisational capabilities since the
solutions to a particular problem can be con?ned to a set
number of optional variables.
A vanguard project represents a ?rm’s endeavours to
overcome the increased uncertainties in newstream pro-
jects. Here, the traditional planning tools used to manage
projects are no longer useful because the core intention
of the vanguard project is learning and exploration, rather
than achievement of e?ciency and a pre-determined goal.
This relates to Minkler [34] structural uncertainty, which
refers to the more open-ended process of selecting from
many possible solutions in order to solve a complex prob-
lem. Vanguard projects have to cope with the introduction
of new variables and emergent events during project execu-
tion. Structural uncertainty in vanguard projects can result
in the reorganisation of industries and substantial changes
to the types of ?rms that constitute them.
A selectionist, trial and error approach is particularly
useful when a ?rm launches a vanguard project to develop
a new and complex product incorporating new design fea-
tures and technologies. This process of iterative learning is
focused on problem solving throughout the project, and
capturing learning rather than implementing known tech-
niques. The selectionist approach also suggests that ini-
tially a number of alternative vanguard projects could be
run in parallel (i.e. base-moving projects), in order to
decide which to terminate and which to continue. This pro-
ject portfolio approach aimed for vanguard projects only is
a costly strategy, however, and risks several projects com-
peting for scarce resources [51].
Vanguard projects focused on emerging markets with no
pre-identi?ed customers, often require ?rms to make
changes to their capability base. However, vanguard pro-
jects may also be used to implement a brand change; as a
re-branding tool it can change perceptions of the ?rm’s
capabilities and also indicate the ?rm’s strategy and future
development direction. For example, Enron strategically
used a number of succeeding vanguard projects to change
its image of a fuel and gas company to achieve wider recog-
nition as an electricity supplier [33]. The cases described in
Section 3 demonstrate that vanguard projects can be used
to change the ?rm’s capabilities and to change the ?rm’s
brand at a more discursive level. For example, BP uses a
combination of vanguard projects and the development
of new business units (e.g. BP Alternative) to signal its
move ‘Beyond Petroleum’.
Finally, the original conception of vanguard projects [7]
emphasises response to customer demands and learning, to
achieve the advantages of repeatable solutions. However,
supply-driven vanguard projects may not necessarily result
in replicable solutions or even to greater monetary pro?t.
Rather this type of vanguard project may be initiated as
an entrepreneurial venture for learning, capabilities devel-
opment and exploring opportunities for radical change. A
vanguard project may be terminated after a test run, and
only a few of the stylised facts and knowledge captured
may be exploited as guidelines in subsequent vanguard pro-
jects. By incorporating the notion of venturing into our
expanded de?nition of vanguard projects we want to
address the many di?erent ways that projects can be set
up to explore and exploit emerging innovative opportuni-
ties, which involve the prior creation of a market or cus-
tomer base.
3. Illustrative examples
We provide brief illustrative examples [43] of two pro-
jects in the UK energy sector in order to add to our under-
standing of the nature and purpose of a vanguard project.
These cases are both exploratory and not intended as com-
parisons, but rather are used to highlight speci?c features
of the vanguard project phenomenon. The examples are
based on secondary data sources, analysed through desk
research.
The examples involve two large incumbent energy gener-
ators and suppliers. The ?rms – RWE npower and BP –
sought to develop and change their capability pro?les
and brand images by moving into more energy e?cient
and carbon-neutral technologies, such as wind power gen-
eration and carbon storage. Both ?rms established van-
492 L. Frederiksen, A. Davies / International Journal of Project Management 26 (2008) 487–496
guard projects to explore these departures from their tradi-
tional base in the energy industry.
The cases di?er in terms of the technology involved:
wind turbine array (npower) and carbon dioxide storage
and hydrogen generation (BP), but both are situated in
the energy sector and have similar goals. Both ?rms used
vanguard projects as an entrepreneurial strategy to explore
the performance of new technologies and to test new mar-
ket options and, thus, employed vanguard projects as test
beds for diversi?cation into renewables in the energy
sector.
Energy suppliers are being faced with managing a bal-
ance between carrying out mainstream projects to preserve
their sunk cost investments and increasing the e?ciency of
fossil fuel technologies, and launching a vanguard project
to explore the radical option of moving into renewable or
carbon-neutral technologies. There are huge uncertainties
about the feasibility and reliability of renewable technolo-
gies for large-scale electricity supply as well as about which
renewable technologies might prevail and be cost e?cient.
Market turbulence creates uncertainties about the most
suitable business model for energy e?ciency and delivery
of low-carbon energy to end consumers. For example, it
raises questions about how much vertical integration is use-
ful and which parts of the industry should be integrated to
create and deliver the product (i.e. energy) and related ser-
vices (i.e. distribution, maintenance, retail, etc.) [23]. This
context makes the energy industry a convenient setting to
illustrate our argument.
3.1. The wind turbine case: npower Renewables’ North Hoyle
o?shore wind farm
RWE npower, one of the UK’s leading energy compa-
nies, generates and sells electricity using sustainable, envi-
ronmentally-friendly resources. npower’s parent ?rm
RWE npower performs all operational and routine activi-
ties. npower Renewables develops, installs and ?nances
projects designed to improve energy e?ciency and mainte-
nance costs for facilities. It has a wide ranging portfolio of
projects, such as onshore and o?shore wind farms, a hydro-
plant and a biomass plant which are operated by RWE
npower. As the UK government’s policy is to achieve a tar-
get of 10% of electricity from renewables by 2010, npower’s
strategy is to be at the forefront of this production.
The ?rst case study is npower Renewables’s North Hoy-
le o?shore wind farm project. North Hoyle was one of the
?rst-round designs and the ?rst site to actually be con-
structed. It comprises 30 Vestas V80 wind turbine genera-
tors each capable of generating up to 2 MW providing a
total installed capacity of 60 MW – enough electricity for
some 40,000 homes. Its output o?sets an annual release
of about 160,000 tonnes of CO
2
. The North Hoyle wind
farm is situated 7–8 km o? the coast of North Wales at a
depth of 7–11 m, with a tidal range of 8 m. It covers an area
of 10 km
2
. Connection to the grid system is at Rhyl via two
33 kV cables. The project’s ?nal cost was £81 million; it
received a grant from the then Department of Trade and
Industry in the UK, of £10 million (North Hoyle Wind
Farm Annual Report 2004/05, accessed online 15 August
2007).
North Hoyle can be seen as a vanguard project because
it was established not only to generate energy, but also to
serve as a platform to increase learning about the construc-
tion of wind farms in the UK. It involved a partnership
between npower (lead partner) and Greenpeace (a non-
governmental organisation – NGO) in the development
of ‘npower juice’, a ‘clean’ electricity product available to
domestic customers at the same price as traditionally pro-
duced electricity. Prior to its development no such energy
product existed on a large scale in the UK; it was uncertain
whether demand could be created and whether the energy
from North Hoyle could be sold through the existing chan-
nels. North Hoyle therefore is a vanguard in terms of both
its technical achievements, which will yield crucial informa-
tion for future wind farms in the UK, and in terms of its
business model (i.e. NGO involvement) and the sale of its
green energy project at no extra cost to consumers, which
highlights the market and organisational changes that this
project represents. At the opening at the North Hoyle wind
farm, Stephen Tindale of Greenpeace, commented that:
‘This pioneering windfarm will lead the way towards. . .big-
ger developments in UK waters that we so urgently need to
help tackle global warming. . .The ?rst turbine installed at
North Hoyle represents a crucial milestone on the road
to clean energy in the UK’ (npower Renewables homepage
accessed 15 August 2007).
The npower parent ?rm uses vanguard projects to
develop the ?rm’s capabilities in handling and exploring
new technologies and new combinations of technologies,
as well as larger scale energy projects. These projects are
often organised through a particular business unit with
specialised capabilities in initiating and governing uncer-
tain projects. npower is attempting through its vanguard
projects to establish and promote the ?rm’s environment-
friendly brand and capabilities and thus consolidate its cur-
rent competitive advantage in carbon-neutral energy
generation.
As the ?rst major o?shore wind farm in the UK, North
Hoyle was a groundbreaking project; it represented a learn-
ing curve for npower and the other parties involved. North
Hoyle has been operating successfully for over two years
with an impressive e?ciency of 95%. Lessons learnt from
the design and build phases and its two years of operation,
have been fed back into the development of npower
Renewables’ Rhyl Flats wind farm, which is a bigger pro-
ject currently in the tender evaluation phase. The experi-
ence of designing and operating the North Hoyle
windfarm will reduce uncertainty and anticipate a number
of the problems involved in the initiation of other wind
farm projects around the UK. npower Renewables has a
second-round o?shore wind farm, Gwynt y Mor (a
750 MW project) in the advanced development phase,
awaiting approval. The North Hoyle vanguard project
L. Frederiksen, A. Davies / International Journal of Project Management 26 (2008) 487–496 493
provided valuable information which enabled the scaling
up in the plans for the Rhyl Flats plant.
3.2. The carbon dioxide storage case
3
BP is one of the world’s largest energy companies. Its
main activities are oil and gas exploration and production,
re?ning and marketing oil products, and transportation
and marketing of natural gas and power. Its low-carbon
power business, BP Alternative Energy, is involved in
hydrogen power, photovoltaic power, wind power and nat-
ural gas-?red power generation. BP also has extensive
experience in pipelines and the management of oil and
gas in geological formations, power generation and petro-
chemicals operations.
Exploring collaborations with partners from other parts
of the energy sector, such as Scottish and Southern Energy
(SSE) is an example of BP’s interest in partnering with oth-
ers in the energy sector. A joint energy service company
(e.g. ESCO) was developing a project involving the design
and construction of the world’s ?rst industrial scale venture
to generate ‘carbon-free’ electricity from hydrogen. The
project was a so-called Carbon dioxide Capture Project
(CCP) and was located close to Peterhead in north-east
Scotland. A newly built reformer plant would convert up
to 70 million cubic feet of natural gas a day into carbon
dioxide and hydrogen.
The planned project to produce ‘decarbonised’ fuel and
use it at the site of production for power generation would
convert natural gas to hydrogen and carbon dioxide gases,
use the hydrogen gas as fuel for a 350 MW combined cycle
gas turbine power station, and export the carbon dioxide to
a North Sea oil reservoir for increased oil recovery and ulti-
mate storage. The project would reduce the amount of car-
bon dioxide emitted to the atmosphere through alternative
power generation by over 90%. While each of the compo-
nent technologies that make up the project is already pro-
ven, their combination proposed in this project would be a
world ?rst.
According to BP, this project would ‘represent a signif-
icant new step in providing clean energy to consumers,
tackling carbon dioxide emissions believed to contribute
to climate change and enhancing the recovery and utilisa-
tion of known world energy resources’ (BP Alternatives,
web site, accessed 10 August 2007). This can also be seen
as a vanguard project because it combines existing and
novel technologies within a completely new plant for
exploitation existing resources, using fossil fuels and
hydrogen power generation.
In 2007 BP was completing initial project engineering
feasibility studies and detailed front-end engineering
design work in order to identify the economic feasibility
of the scheme. The ?nal investment decision was to be
made in 2007, subject to which the project should com-
mence operation in 2009. Yet, due to various factors
among them BP’s interpretation of lack of political sup-
port the project was terminated after its design and scop-
ing phase.
The project would have required total capital investment
of some $600 million. It would have required an appropri-
ate policy and regulatory framework to encourage the cap-
ture of carbon from fossil fuel-based electricity generation
and its long-term storage. When fully operational, the
scheme was expected to capture and store around 1.3 mil-
lion tonnes of carbon dioxide per year and provide ‘car-
bon-free’ electricity to the equivalent of a quarter of a
million UK homes.
The project was located in the BP Alternatives division
and aimed speci?cally at changing the BP product portfolio
to meet the challenge of a zero carbon economy. BP was
therefore investing in continuous/high-volume production
of energy through renewable technologies, such as hydro-
gen, wind and solar power. However, certain projects are
being launched to test the technologies, the performance
and market aspirations before rollout of similar plants
around the world. This project re?ects BP’s engagement
in transforming itself from a company involved in fossil
fuels to a multi-product ?rm involved beyond petroleum
in the energy sector. In particular BP is interested – in
the short-term (2–7 years) – in power generation, and in
the longer term (10–20 years) in power transmission, distri-
bution and direct end user sales possibly through, or in
combination with, more distributed systems (i.e. Combined
Heat and Power). Lord Browne, former BP Group Chief
Executive, said:
‘This is an important and unique project con?gured at a
scale that can o?er signi?cant progress in the provision
of cleaner energy and the reduction of carbon dioxide
emissions’ (BP website, speeches 2007, accessed July,
2007).
The bene?ts of exploiting learning from a vanguard pro-
ject to develop large-scale business were clearly spelt out by
Lord Browne: ‘For example, if applied to just 5% of the
new electricity generating capacity that the world is pro-
jected to require by 2050, such schemes would have the
potential to reduce global carbon dioxide emissions by
around 1 billion tonnes a year – a material step in the chal-
lenge the world faces. The success of this UK scheme will
provide invaluable experience for the further application
of this concept worldwide’ (Ibid.). In the UK, and Scotland
in particular, the project would have provided a new, large-
scale source of decarbonised electricity for consumers and
extend the commercial life and contribution of the North
Sea to the UK and the Scottish economies. For BP the pro-
ject would have enabled: ‘opportunities to replicate this
3
While this paper was being developed BP decided to terminate the
design and planning of this vanguard project mainly because of di?culties
between BP and the UK government over time schemes, etc. However, the
lessons learnt by BP in the design and development of this project have
been assimilated and the company is currently embarking on projects in
the US and in Australia, both with local partners. Neither of these projects
has pre-established clients.
494 L. Frederiksen, A. Davies / International Journal of Project Management 26 (2008) 487–496
scheme and apply the associated technologies and experi-
ence in other parts of the world where we conduct business’
(Ibid.).
4. Discussion
These two examples show that vanguard projects are
not always established in response to customer demand,
but can be the result of a corporate entrepreneurial strat-
egy to create a new venture where a customer base must
be created or is emerging. This type of vanguard project
meets Christensen’s [11] strategic advice to be wary of
being always led by the demands of customers. These
types of vanguard projects are newstream corporate ven-
tures. They do not ?t with the use of traditional manage-
ment tools aimed at more administrative and routine-
based project activities. The vanguard projects launched
by npower and BP are means of achieving the corporate
entrepreneurship objectives of learning and testing rather
than simply optimising in terms of creating e?ciencies.
As mentioned by Dess et al. [17] such activities can be
seen as a mix of corporate entrepreneurship strategies
including strategic renewal, development of sustained
regeneration through the introduction of new products
within the same industry domain, and corporate rejuve-
nation. But, neither of the projects described here has
rede?ned the industry domain and/or changed the rules
of the game in the energy sector.
Both these cases suggest that large ?rms in the energy
sector may employ vanguard projects to create a novel
demand market and to test out technological options
before venturing into larger scale investment. The cases
also demonstrate that vanguard projects are not simply
about developing new knowledge and capabilities, but are
also about creating new brand image. This is because both
these vanguard projects are ingredients in strategies that
are not solely related to introducing more environmen-
tally-friendly products developed by the e?orts of the pro-
ject, but are also part of an e?ort to reposition the two
companies – npower and BP – within the energy industry
through the achievement of a di?erent brand pro?le for
their parent companies. This process, taking place over a
series of base-moving projects, can be considered an exam-
ple of corporate rejuvenation, as discussed in the corporate
entrepreneurship literature.
As our examples illustrate, vanguard projects have to
deal with many di?erent types of uncertainties and
unforeseen risks. Although npower’s wind farm project
was technologically challenging, key issues in the van-
guard project were the partnership with Greenpeace and
the development of a market for ‘clean’ energy, while
the BP project faced major uncertainties in terms of tech-
nologies, but the demand market uncertainties were rela-
tive low.
Traditional models of capability development in the ?rm
strategy literature do rarely include the role of project orga-
nisation in the development of new technological skills
[22,35]. In the two examples in this study the project man-
agement capabilities of the daughter-organisations were
necessary to infuse novelty into the core business processes
of the parent ?rms. In both cases the vanguard projects
were executed by launching an entrepreneurial project-
based venture to generate a new capability base for the
?rm. This supported the ?rms’ strategies of diversi?cation.
5. Conclusion
The concept of a vanguard project originally devel-
oped by Brady and Davies [7] refers to a ?rst-of-its-kind
project initiated to diversify into a new market or tech-
nology for existing clients or markets. From our review
of the corporate entrepreneurship literature it emerged
that many entrepreneurial ventures aimed at diversi?ca-
tion are developed through projects where there is no
existing client base and a market has to be created.
DeFillippi and Spring [16] employ the adjacent notion
‘project entrepreneurs’ to describe this phenomenon.
Their insight combined with our illustrative cases sug-
gests that future research on vanguard projects should
embrace responses to existing client needs and internally
generated entrepreneurial initiatives to create entirely
new markets.
We recommend that future theoretical research on how
?rms use projects to diversify and build capabilities would
bene?t from integrating ideas and perspectives from the lit-
erature on corporate entrepreneurship. We suggest that
vanguard projects are used as ventures for generating a
new resource base; however, further research is needed to
examine the organisational process of how the integration
and reuse of project outcomes translates into the project
routines of the parent company.
Previous literature on project business has emphasised
the importance of incorporating research from the main-
stream management literature including the theory of the
?rm, business strategy, organisational studies, new product
development and innovation management [52,1,45]. How-
ever, very little of the project business literature has
engaged with the ?eld of entrepreneurship, which occupies
a central place in the research areas listed above. Our
e?orts to expand the de?nition of vanguard projects are a
?rst step in this direction. Clearly more research is needed
to incorporate the corporate entrepreneurship literature
into project business research.
Acknowledgements
Lars Frederiksen and Andrew Davies would like to
acknowledge the funding for the research for this paper
from the EPSRC Innovation Studies Centre, Tanaka Busi-
ness School and the BP Urban Energy Systems Project,
both at Imperial College London. The authors want to
thank the participants and organizers of the 2008 IRNOP
conference in Brighton, UK for providing valuable com-
ments for improving this paper.
L. Frederiksen, A. Davies / International Journal of Project Management 26 (2008) 487–496 495
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doc_492289021.pdf
Elucidation in relation to vanguards and ventures projects as vehicles for corporate entrepreneurship.
Vanguards and ventures: Projects as vehicles for
corporate entrepreneurship
Lars Frederiksen
*
, Andrew Davies
Innovation and Entrepreneurship Group, Tanaka Business School, Imperial College London, South Kensington Campus, London SW 72AZ, UK
Received 17 May 2008; accepted 20 May 2008
Abstract
The concept of vanguard project refers to a ?rst-of-its-kind project, initiated to enable a ?rm to diversify into a new market or tech-
nology based on an existing market and client base. We show that the concept can be broadened by engaging with the corporate entre-
preneurship literature, which demonstrates that many entrepreneurial projects for diversi?cation are developed in areas where there is no
existing client and a market has to be created. The paper makes the unconventional connection between the literature on project business,
and studies of entrepreneurship using two examples from the UK energy sector to illustrate how ?rms develop vanguard projects where
there is no existing client. In both cases, the ?rms used vanguard projects to venture into new technologies or markets, to generate new
knowledge and experience rather than to optimise an existing activity. However, the learning from a vanguard project may not always
lead to a general scaling up or rolling out process across a number of new similar projects through applying the lessons learned in the new
venture. Future research on vanguard projects should embrace both the responses to existing client needs and internally generated ini-
tiatives to create entirely new markets.
Ó 2008 Elsevier Ltd and IPMA. All rights reserved.
Keywords: Vanguard projects; Corporate entrepreneurship; Capability building; Energy sector
1. Introduction
This paper explores the relationship between the notion
of vanguard projects and strategies for corporate
entrepreneurship.
Researchers have recognised that, at some point in time,
large well-established ?rms face the di?cult choice of
continuing to develop the capabilities supporting their
existing business or creating new sources of competitive
advantage by moving into new technologies and markets
[30,25]. Many ?rms have grown successfully by improving
their understanding of current customers’ requirements
and integrating existing technologies into their new prod-
ucts [40]. However, the introduction of radical change –
or ‘breakthrough innovation’ – in a product’s design or
purpose can threaten an established ?rms’ hitherto success-
ful business [11]. In this paper, we analyse the speci?c
organisational form that ?rms often employ to act as an
entrepreneur, in order to break away from their rigid core
capabilities and build new ones by diversifying into new
markets and technological ?elds [22].
Given the uncertainty involved in moving into
uncharted territory and recognising or pursuing an oppor-
tunity [5] a project organisation is frequently the instru-
ment used by ?rms to investigate departures from a
?rm’s current technology and market ([48, p. 164]).
Accordingly, we argue that some projects due to their
inherent ?exibility and speedy adaptiveness represent the
organisational vehicle involved with the development of
capabilities [20].
There is an increasing number of studies devoted to how
?rms use projects to improve the performance of existing
0263-7863/$34.00 Ó 2008 Elsevier Ltd and IPMA. All rights reserved.
doi:10.1016/j.ijproman.2008.05.006
*
Corresponding author. Tel.: +44 20 7594 3041.
E-mail addresses: [email protected] (L. Frederiksen),
[email protected] (A. Davies).
www.elsevier.com/locate/ijproman
Available online at www.sciencedirect.com
International Journal of Project Management 26 (2008) 487–496
activities and move into new innovative lines of business
[32,45] projects are temporary, ?exible organisations used
to:
achieve sustained competitive advantage through the
exploitation of already established resources and capa-
bilities. This entails administrative management of pro-
jects that is adaptive and responsive to the environment;
explore new ways to develop competitiveness by ventur-
ing into new markets and aiming for the frontier of tech-
nology to search for, discover and test new
opportunities. This implies entrepreneurial management
of projects that are pioneering and leading [24].
Davies and Hobday [14] distinguish between two main
types of projects. Building on Penrose’s [37] original anal-
ysis, the ?rm base refers to activities undertaken in existing
markets and familiar technologies. A ‘base project’ is
undertaken to meet current customer demands for an exist-
ing range of products and services. A ‘base-moving project’
is a novel initiative that recombines resources in order to
search, discover and test new market opportunities and/
or experiment with new technologies. Davies and Hobday
[14] use the term ‘base-moving project’ to emphasise the
process of capability building that takes place when a ?rm
learns to develop or adopt new technologies, or to respond
to or create new markets.
Employing the concept of base-moving strategies, Brady
and Davies [7] present a model of project-based learning
that occurs when ?rms move base into new technologies
and markets. Whereas a ?rm can initiate several base-mov-
ing projects as part of a strategy of diversi?cation, Brady
and Davies [7] identify a ‘vanguard project’ as the ?rst pro-
ject to be launched in a deliberate e?ort to move away from
a ?rm’s core business activities and venture into a new mar-
ket or technology base. The word vanguard serves as a use-
ful metaphor for conveying how a project can be
positioned in advance of the rest of the organisation and
at the forefront of innovation.
1
A careful review of Davies and Hobday [14], therefore,
reveals that there is a need to clarify the precise di?erence
between the concepts of base-moving and vanguard pro-
jects. A vanguard project is a subset of base-moving pro-
jects. It should be interpreted as the ?rst in what may
turn out to be part of a series of base-moving projects to
enable a ?rm to diversify into a technology or market posi-
tion. However, a vanguard project may not lead to success-
ful move into a new base, although it may generate useful
knowledge for future vanguard projects. In some cases, the
core business of the ?rm is founded upon the use of van-
guard projects to create a continuous stream of unique
products and experiences for clients, as in the example of
the design practices like the architect Frank O. Gehry [6].
The concept of vanguard project is useful because it
encompasses some of the organisational characteristics of
these ?rst-of-their-kind base-moving projects. A vanguard
project is an e?ective mechanism for ‘testing opportunities’
as well as mobilising and integrating dispersed specialised
knowledge residing within or outside the boundaries of
the ?rm. It is motivated by the need to generate learning,
information and the creation of new knowledge in an e?ort
to develop or renew the capabilities of the ?rm. Therefore,
vanguard projects are central for understanding the
dynamics of capability changes over time and through
events [22].
However, in our view, the concept of vanguard project is
often too narrowly de?ned. Brady and Davies [7] assume
that a vanguard project is established to respond to the
changing requirements of existing customers; such projects
are novel because they are highly customised to pre-exist-
ing clients [38], and, therefore, the innovation that occurs
in these projects is often client-driven. This interpretation
does not address the situation in which a vanguard project
is established to create a customer or market for an entirely
new product or service, or to search for and test a potential
opportunity. Projects undertaken purely to search and
build a new market or test a recognised opportunity, we
label entrepreneurial acts [44]. Like vanguard projects
developed with a client, project ventures are experiments
and must cope with the uncertainties of an unknown ‘solu-
tion space’
2
[15]. Yet, the conditions of high demand uncer-
tainty [27] are di?erent, since there is no client involved and
the outcome of the project venture is not secure in terms of
return on investment.
There are existing project management tools and tech-
niques for dealing with existing technologies and customer
requirements and a well-known set of uncertainties within
the solution space [42]. Gantt charts will identify key issues
such as planning, prioritising and sequencing of activities
in order to achieve e?ciencies. However, these traditional
types of project management tools often perform poorly
when faced with unforeseen uncertainties that, by their nat-
ure, cannot be dealt with at the outset [15], because these
types of tools have been developed to manage cost, time
and quality objectives, rather than learning and innova-
tion. The corporate entrepreneurship literature provides
useful insights into how ?rms strategically develop novel
initiatives and ventures to cope with unforeseen uncertain-
1
According to the Chambers English Dictionary (1988), a vanguard
means ‘the forefront: those who lead the way or anticipate progress’.
2
The notion of a ‘solution space’ refers here to the range of potential
solutions to a problem or potential problems that might be recommended
or de?ned before undertaking the actual task at hand. Knight [27] calls
this risk rather than uncertainty because the solution space may contain
unknown aspects, but the general list of variables is relatively well-known
and the uncertainties relate to those variables de?ning the solution space
and not to a discussion about the variables or about the general solution
aimed at. Von Hippel and Katz [49, p. 826] in discussing the solution space
state that ‘‘Economical production of custom products and services is only
achievable when a custom design falls within the pre-existing capability
and degrees of freedom built into a given manufacturer’s production
system”.
488 L. Frederiksen, A. Davies / International Journal of Project Management 26 (2008) 487–496
ties [8,48] and to develop experience to inform future
choices related to capability creation and evolution.
The literature on business projects has developed signif-
icantly since the mid 1990s through the linking by research-
ers of concepts from the project management literature
with strategic management studies, organisational econom-
ics as transaction cost economics and innovation theories.
In the context of an emerging entrepreneurial economy
[2], we believe that the marriage of vanguard projects and
corporate entrepreneurship research could bene?t both
?elds equally. The entrepreneurship perspective is useful
for increasing understanding about the variety and func-
tion of organisational designs associated with vanguard
projects and understanding the emergence of ?rm
capabilities.
This paper is organised in four sections. The main part
of this conceptual paper is Section 1, which establishes
the conceptual background to our argument. It discusses
the role of projects as vehicles for diversi?cation focusing
on vanguard projects and corporate venture initiatives. It
suggests that the concept of a vanguard project should be
extended to include contributions from the corporate
entrepreneurship literature. This integrated approach is
illustrated in Section 2 through two short examples from
the UK energy sector. Section 3 discusses how these two
examples relate to the theoretical framework. Section 4
concludes by proposing new directions for future research
on project business and entrepreneurship.
2. Projects as vehicles for diversi?cation: towards an
integrated approach
This section introduces the concept of vanguard project
and discusses the way that the corporate entrepreneurship
literature highlights how projects are used as ventures. It
advances the view that the concept of vanguard project
should be extended in order to address its role in ventures
to create new markets.
2.1. The project as a vanguard
There are numerous de?nitions of the project [18] and
especially how the concepts of projects and business link
to each other [1]. However, there is wide agreement that
a project is distinct from the routine tasks involved in the
high-volume production of standardised goods and ser-
vices. A project involves complex, non-repetitive tasks
and results in unique or highly customised output. Projects
are temporary organisations involving teams of individuals
from within a single ?rm or from multiple ?rms. A project
performs a time-sequenced set of interdependent activities
to achieve pre-de?ned goal or conform to speci?cations,
within a precise budget [31]. Projects are initiated to
accomplish tasks that do not occur su?ciently often to
warrant the establishment of an enduring organisation
[47] or because it is not economically e?cient to bring
together diverse and highly specialised resources on a per-
manent basis. Many projects are organised between suppli-
ers and clients through the institution of the market, while
others arise within ?rms to meet internal objectives [29].
Finally, as emphasised by Kreiner [28] all projects encoun-
ter uncertainties both internally with regard to organisa-
tion, governance and communication, and externally in
terms of how they cope with emergent events and other
unforeseen challenges.
Projects initiate innovation in two ways. First, as the lit-
erature on new product development shows, ?rms in all
types of industries use projects to make incremental
improvements to existing products and to initiate radical
breakthroughs in products that incorporate new technolo-
gies [50]. Development projects that create prototype prod-
ucts and services for a ‘virtual client’, concentrate on
achieving design freeze prior to market introduction and
production of the new product in large volume. Second,
?rms in project-based industries initiate the process of
diversi?cation through the establishment of a project. In
the extreme cases of music and ?lm making, each project
results in an entirely new product, and ?lm reels and
CDs are produced in large quantities.
Brady and Davies [7] developed a conceptual model of
project capability building in the capital goods industries,
in which process diversi?cation begins with the creation
of a vanguard project. This new type of project organisa-
tion is developed speci?cally to experiment with and learn
from a new technology and to explore novel market oppor-
tunities. In vanguard projects where the degree of change is
extensive, managers cannot rely on their existing experience
and approaches. They need to develop new capabilities to
manage bids, execute the project and integrate the new
technologies into products or systems. Furthermore, since
the notion of vanguard project underlines the elements of
learning, exploration and even discovery of novel opportu-
nities, it suggests that within these projects, special mana-
gerial attention should be paid to ongoing re?ection,
promotion of doubt and constant questioning and a rela-
tive openness and acceptance of major changes in scale
and scope or even early termination of a project [19].
Brady and Davie’s [7] model incorporates two co-evolv-
ing levels of learning. First, the bottom-up process of learn-
ing, which begins with an initial phase when the vanguard
project is set up to explore the new opportunity. Vanguard
projects are distinct from projects focused on achieving
operational excellence in a ?rm’s existing market or tech-
nology base. While current operational projects focus on
e?orts to improve e?ciency, vanguard projects are estab-
lished to promote radical or breakthrough innovation in
products, processes and services. In the project-to-project
learning phase, attempts are made to capture experience
gained in the initial phase (i.e. learning what) and transfer
it to other projects. In the project-to-organisation learning
phase, attempts are made to develop the capabilities and
resources to deliver a growing number of these new types
of project. This involves the transfer of practices related
to managing vanguard projects (i.e. learning how).
L. Frederiksen, A. Davies / International Journal of Project Management 26 (2008) 487–496 489
Second, top-down learning in which senior management
in the ?rm monitor the vanguard and subsequent projects
and, if the ?rm is successful in the markets, puts in place,
company-wide, the capabilities and resources needed to
focus activities on the new opportunity. A vanguard pro-
ject is used by large ?rms to develop and test emerging
technologies and markets to achieve the basis information
for the more encompassing strategic decision to move base.
This is realised oftentimes by scaling up a successful van-
guard project to a permanent business unit or model
responsible for delivering a large number of slightly similar
projects.
Brady and Davies [7] focus on vanguard projects that
are initiated to respond to the demands of existing custom-
ers, articulated, for example, in invitations to tender or in
close dialogue. Although these projects are novel for the
?rm, they are designed to satisfy a client’s pre-determined
speci?cations and thus could be regarded as an extreme
form of customisation. We suggest that a vanguard project
can be initiated as the autonomous endeavour of a supplier
or even a client. In this case, there are no existing customers
and the project is aimed at an emerging market or one to be
created. This is a di?erent type of project because the prod-
uct development phase is a relatively discrete act that does
not involve dialogue with customers. In this case, the van-
guard project is a corporate venture initiated under the
?rm’s own volition. For example, below we describe how
one ?rm established a vanguard project to build and oper-
ate a plant using a speci?c number of interdependent
energy-e?cient, carbon-neutral, novel technologies. The
aim of the project was to search for new opportunities,
develop some preliminary capabilities in a new but related
business area and generate experience and information that
would inform subsequent strategic decision making about
whether the ?rm should build a portfolio of similar sized
plant operations using the same or a combination of tech-
nologies. In this instance, the vanguard project was being
used to test new technologies (the qualities of the gas and
hydrogen produced) under operating conditions and to cre-
ate important operational knowledge prior to a move to
high-volume production for a speci?c plant and setting,
and a number of new plants.
We argue that some vanguard projects serve as an initial
corporate entrepreneurial device for responding to and cre-
ating innovation in technologies and markets. They are
used by large ?rms as ‘mechanisms to rede?ne and rejuve-
nate themselves, their positions within markets and indus-
tries, or the competitive areas in which they compete’ ([13,
p. 47]). Such projects are a strategic tool for developing and
recon?guring the ?rm’s capabilities [39].
2.2. The project as a venture
The classical entrepreneurship literature focuses on the
development of radical new knowledge embodied in new
products and services, which causes creative destruction
in the established market [4,41]. This view is complemented
by entrepreneurship research that argues that real novelty
(i.e. technological change) is not needed to spur entrepre-
neurial action. Kirzner [26] maintains that acquiring infor-
mation and learning, and being alert to market trends is
enough to lever entrepreneurial activities that yield
increased opportunities and potentially pro?ts.
We suggest that the recent body of literature on corpo-
rate entrepreneurship helps to demonstrate how ?rms use
projects to identify and test opportunities and create new
markets, rather than simply respond to customer-generated
initiatives for change. According to Burgelman [9] corpo-
rate entrepreneurship describes the process whereby ?rms
engage in diversi?cation through internal development.
Corporate entrepreneurship extends ‘the ?rm domain of
competence and corresponding opportunity set through
internally generated new resource combination’ ([9, p.
154]).
The concept of corporate entrepreneurship departs from
the classical entrepreneurship literature in its signifying
that it is the ?rm – rather than the individuals – that behave
entrepreneurially. Like individuals, ?rms may engage in
di?erent forms of (corporate) entrepreneurship to achieve
a variety of objectives, in which the management of risk
and uncertainty is a key challenge.
2.2.1. How to organise corporate entrepreneurship activities
We argue that corporate entrepreneurship refers to at
least four key ways that ?rms proactively interact with
the environment:
by creating spinouts;
by investing externally;
by engaging in alliances and joint ventures;
by launching and managing internally-based vanguard
projects.
A ?rm must decide which of these four options will best
achieve its entrepreneurial objectives. In this paper, we
focus on ?rms’ use of projects as an entrepreneurial vehicle
for venturing into new markets or technologies.
2.2.2. Strategies of corporate entrepreneurship
The literature on corporate entrepreneurship suggests
four main strategies. Covin and Miles [13] state that the
most common form of corporate entrepreneurship is ‘sus-
tained regeneration’, involving the continuous introduction
of new products aimed at the same or similar markets, and
involving largely similar families of technologies, to achieve
competitive di?erentiation. As a corporate entrepreneur-
ship strategy, this approach incurs very low risk.
‘Corporate rejuvenation’ refers to the ways in which
?rms seek to sustain or improve competitive advantage
by altering internal processes, structures and capabilities
[46]. It does not necessarily imply a change in product,
strategy or brand and often involves chasing e?ciencies
through realising scale or scope economies. This strategy
shares some similarities with the activities involved in pro-
490 L. Frederiksen, A. Davies / International Journal of Project Management 26 (2008) 487–496
cess innovation and, according to Covin and Miles [13],
appears a more uncertain strategy than sustained
regeneration.
A third form of corporate entrepreneurship is described
as ‘strategic renewal’. This is more radical in that it rede-
?nes the ?rm’s relationship with its markets or its position
in the industry, thus jeopardising its current position in
terms of market segment and brand. For example, Harley
Davidson, the US motorcycle manufacturer, achieved stra-
tegic renewal when it changed from being a traditional
American biker-favoured motor cycle producer to becom-
ing a niche supplier o?ering superior quality, excellent ser-
vice and increased responsiveness to customers’ product
requirements [36]. This type of corporate entrepreneurship
is often based on alertness to market trends, rather than to
supply side changes in terms of products and services.
Finally, corporate entrepreneurship can entail ‘a rede?-
nition of the industry domain’. This implies a change to the
rules of the game through the promotion of radical innova-
tion. Corporate entrepreneurship of this kind is rare.
Prominent examples include the development of the Sony
Walkman and the Apple iPod, both of which products pro-
vided ?rst mover advantages and an initial period of dom-
ination in completely new markets. This interpretation of
corporate entrepreneurship is clearly linked to supply side
changes. For example, the corporate innovation project
to develop the iPod was not undertaken in collaboration
with a client, and was for Apple, but did involve a radical
move into a new technology and a new market base.
Several scholars have examined how large incumbent
?rms use projects as a vehicle to support corporate entre-
preneurship [8,21,24,25]. Large ?rms, such as General Elec-
tric and IBM, have used internal corporate venturing (ICV)
projects to initiate organic growth and diversi?cation. In a
process of organisational growth and maturity, an individ-
ual ICV project can grow into a sizeable and separate new
business. ICV projects constitute an important source of
renewal for established ?rms. Burgelman’s study of a
high-volume producer looked at how ICV projects grew
into new businesses based on new technology. These pro-
jects linked technological possibilities to new or poorly
served market needs [9], and instead of being a top-down
initiative, were initiated by middle-mangers who often
encountered senior management resistance to their propos-
als and projects, which went against conventional corpo-
rate wisdom and current strategies.
Burgelman’s study of ICV projects demonstrates how
fast growth towards a sizeable business organisation
depends on functional e?ciency gains obtained by ‘the
development of routines, standard operating procedures
and the establishment of an administrative framework for
the new venture’ ([9, p. 38]). Galbraith’s [21] model of ven-
ture start-ups and growth shows how ?rms evolve through
distinct phases from initial business ideas (embodied in a
vanguard project) towards high-volume production. This
process of capability development and scaling up is similar
to the model of capability building proposed by Brady and
Davies [7]. However, whereas in ICV projects (in Burgel-
man’s study and Galbraith’s model) the move from initial
project to high-volume production depends on strong func-
tional capabilities (e.g. manufacturing and distribution), a
vanguard project moves to a higher volume stage based
on the delivery of repeated base-moving projects, and
depends on strong project management capabilities.
Kanter [25] distinguished between two generic types of
projects: mainstream projects, which are performed to meet
a ?rm’s current business commitments, and newstream
projects, such as an ICV, which are entrepreneurial initia-
tives designed to explore new business opportunities. Firms
are confronted with a balancing act between maintaining
the momentum of their mainstream activities, and starting
newstream ventures that will create future business. When
industry conditions are relatively stable, managers will
often display a preference for a predictable mainstream
project; in more turbulent environments managers may
be more willing to embark on a project that is outside
the traditional scope of the ?rm’s business. The creation
of a new business usually starts with the establishment of
a newstream project that moves quickly into a new market
space, such as initial project to design the IBM Personal
Computer, which was brought to market in 1981.
Corporate entrepreneurship can be implemented as a
top-down initiative or can occur as a bottom-up, autono-
mous process. Corporate entrepreneurship is sometimes a
strategic choice [13] that may be made as a result of
a high-pro?le, strategically important project, such as a
cross-functional product development team, a technology
incubator, or a skunk works operation. However, corpo-
rate venture projects can often arise from numerous small
projects and seed-bed initiatives scattered throughout the
organisation, each requiring only a few resources [3]. Over
time, such bottom-up newstream projects may become part
of the mainstream and be supplemented and substituted by
a smaller number of larger projects, making more system-
atic use of corporate-wide resources.
2.3. Vanguard and venture projects: towards an integrated
approach
Our review of the corporate entrepreneurship literature
suggests ?rst that relative little attention has been paid to
the analytical level of the project vis-a`-vis the ?rm or the
individual. Second, and more important here, it also sug-
gests that a vanguard project is not just as an innovative
response to the needs of existing customers, but should also
be understood as a novel entrepreneurial venture to create
new markets encompassing new customers. A vanguard
project can be set up as an innovative response to an exist-
ing customer, but can also be generated internally by a ?rm
seeking to exploit a new entrepreneurial opportunity
beyond its traditional base or in emerging markets.
A vanguard project can be recognised as an entrepre-
neurial venture to reduce uncertainty through the gathering
of information and experience to enable more informed
L. Frederiksen, A. Davies / International Journal of Project Management 26 (2008) 487–496 491
judgments and decisions about future investments in new
technologies and markets [10]. There are two main reasons
for organising innovative activities in vanguard projects.
First, it may be a strategic decision to reduce the risks in
exploiting new opportunities, by recombining or adapting
existing resources, knowledge, mind sets and technologies
to suit the new problems and situations. Second, it may
enable the testing of opportunities to connect with novel
technologies, new partners, and new market activities in
adjacent industries.
All projects incur degrees of uncertainty. Similar to
Cohen and Levinthal [12] two faces of uncertainty, we sug-
gest that vanguard projects have to cope with two catego-
ries of uncertainty:
Operational uncertainty – inherent in the internal man-
agement of aspects such as team dynamics, skills, pre-
determined product features, deadlines, etc., i.e. internal
project factors;
Environmental uncertainty – the relationship between a
project and its external environment, such as wider mar-
ket demand, technical change, and how the knowledge
generated by individual projects can be transferred to
other projects or organisational levels within the ?rm.
Mainstream projects face fewer uncertainties because
the solution space of the project is relatively well known.
There is uncertainty in mainstream projects, but it is con-
?ned to a number of established variables. Traditional pro-
ject management tools are based on the premise that a
project can be worked out as rational planning process.
Minkler [34] calls this parametric uncertainty as it involves
altering certain product dimensions within a stable frame-
work, to meet changing consumer demands. It typically
does not involve new organisational capabilities since the
solutions to a particular problem can be con?ned to a set
number of optional variables.
A vanguard project represents a ?rm’s endeavours to
overcome the increased uncertainties in newstream pro-
jects. Here, the traditional planning tools used to manage
projects are no longer useful because the core intention
of the vanguard project is learning and exploration, rather
than achievement of e?ciency and a pre-determined goal.
This relates to Minkler [34] structural uncertainty, which
refers to the more open-ended process of selecting from
many possible solutions in order to solve a complex prob-
lem. Vanguard projects have to cope with the introduction
of new variables and emergent events during project execu-
tion. Structural uncertainty in vanguard projects can result
in the reorganisation of industries and substantial changes
to the types of ?rms that constitute them.
A selectionist, trial and error approach is particularly
useful when a ?rm launches a vanguard project to develop
a new and complex product incorporating new design fea-
tures and technologies. This process of iterative learning is
focused on problem solving throughout the project, and
capturing learning rather than implementing known tech-
niques. The selectionist approach also suggests that ini-
tially a number of alternative vanguard projects could be
run in parallel (i.e. base-moving projects), in order to
decide which to terminate and which to continue. This pro-
ject portfolio approach aimed for vanguard projects only is
a costly strategy, however, and risks several projects com-
peting for scarce resources [51].
Vanguard projects focused on emerging markets with no
pre-identi?ed customers, often require ?rms to make
changes to their capability base. However, vanguard pro-
jects may also be used to implement a brand change; as a
re-branding tool it can change perceptions of the ?rm’s
capabilities and also indicate the ?rm’s strategy and future
development direction. For example, Enron strategically
used a number of succeeding vanguard projects to change
its image of a fuel and gas company to achieve wider recog-
nition as an electricity supplier [33]. The cases described in
Section 3 demonstrate that vanguard projects can be used
to change the ?rm’s capabilities and to change the ?rm’s
brand at a more discursive level. For example, BP uses a
combination of vanguard projects and the development
of new business units (e.g. BP Alternative) to signal its
move ‘Beyond Petroleum’.
Finally, the original conception of vanguard projects [7]
emphasises response to customer demands and learning, to
achieve the advantages of repeatable solutions. However,
supply-driven vanguard projects may not necessarily result
in replicable solutions or even to greater monetary pro?t.
Rather this type of vanguard project may be initiated as
an entrepreneurial venture for learning, capabilities devel-
opment and exploring opportunities for radical change. A
vanguard project may be terminated after a test run, and
only a few of the stylised facts and knowledge captured
may be exploited as guidelines in subsequent vanguard pro-
jects. By incorporating the notion of venturing into our
expanded de?nition of vanguard projects we want to
address the many di?erent ways that projects can be set
up to explore and exploit emerging innovative opportuni-
ties, which involve the prior creation of a market or cus-
tomer base.
3. Illustrative examples
We provide brief illustrative examples [43] of two pro-
jects in the UK energy sector in order to add to our under-
standing of the nature and purpose of a vanguard project.
These cases are both exploratory and not intended as com-
parisons, but rather are used to highlight speci?c features
of the vanguard project phenomenon. The examples are
based on secondary data sources, analysed through desk
research.
The examples involve two large incumbent energy gener-
ators and suppliers. The ?rms – RWE npower and BP –
sought to develop and change their capability pro?les
and brand images by moving into more energy e?cient
and carbon-neutral technologies, such as wind power gen-
eration and carbon storage. Both ?rms established van-
492 L. Frederiksen, A. Davies / International Journal of Project Management 26 (2008) 487–496
guard projects to explore these departures from their tradi-
tional base in the energy industry.
The cases di?er in terms of the technology involved:
wind turbine array (npower) and carbon dioxide storage
and hydrogen generation (BP), but both are situated in
the energy sector and have similar goals. Both ?rms used
vanguard projects as an entrepreneurial strategy to explore
the performance of new technologies and to test new mar-
ket options and, thus, employed vanguard projects as test
beds for diversi?cation into renewables in the energy
sector.
Energy suppliers are being faced with managing a bal-
ance between carrying out mainstream projects to preserve
their sunk cost investments and increasing the e?ciency of
fossil fuel technologies, and launching a vanguard project
to explore the radical option of moving into renewable or
carbon-neutral technologies. There are huge uncertainties
about the feasibility and reliability of renewable technolo-
gies for large-scale electricity supply as well as about which
renewable technologies might prevail and be cost e?cient.
Market turbulence creates uncertainties about the most
suitable business model for energy e?ciency and delivery
of low-carbon energy to end consumers. For example, it
raises questions about how much vertical integration is use-
ful and which parts of the industry should be integrated to
create and deliver the product (i.e. energy) and related ser-
vices (i.e. distribution, maintenance, retail, etc.) [23]. This
context makes the energy industry a convenient setting to
illustrate our argument.
3.1. The wind turbine case: npower Renewables’ North Hoyle
o?shore wind farm
RWE npower, one of the UK’s leading energy compa-
nies, generates and sells electricity using sustainable, envi-
ronmentally-friendly resources. npower’s parent ?rm
RWE npower performs all operational and routine activi-
ties. npower Renewables develops, installs and ?nances
projects designed to improve energy e?ciency and mainte-
nance costs for facilities. It has a wide ranging portfolio of
projects, such as onshore and o?shore wind farms, a hydro-
plant and a biomass plant which are operated by RWE
npower. As the UK government’s policy is to achieve a tar-
get of 10% of electricity from renewables by 2010, npower’s
strategy is to be at the forefront of this production.
The ?rst case study is npower Renewables’s North Hoy-
le o?shore wind farm project. North Hoyle was one of the
?rst-round designs and the ?rst site to actually be con-
structed. It comprises 30 Vestas V80 wind turbine genera-
tors each capable of generating up to 2 MW providing a
total installed capacity of 60 MW – enough electricity for
some 40,000 homes. Its output o?sets an annual release
of about 160,000 tonnes of CO
2
. The North Hoyle wind
farm is situated 7–8 km o? the coast of North Wales at a
depth of 7–11 m, with a tidal range of 8 m. It covers an area
of 10 km
2
. Connection to the grid system is at Rhyl via two
33 kV cables. The project’s ?nal cost was £81 million; it
received a grant from the then Department of Trade and
Industry in the UK, of £10 million (North Hoyle Wind
Farm Annual Report 2004/05, accessed online 15 August
2007).
North Hoyle can be seen as a vanguard project because
it was established not only to generate energy, but also to
serve as a platform to increase learning about the construc-
tion of wind farms in the UK. It involved a partnership
between npower (lead partner) and Greenpeace (a non-
governmental organisation – NGO) in the development
of ‘npower juice’, a ‘clean’ electricity product available to
domestic customers at the same price as traditionally pro-
duced electricity. Prior to its development no such energy
product existed on a large scale in the UK; it was uncertain
whether demand could be created and whether the energy
from North Hoyle could be sold through the existing chan-
nels. North Hoyle therefore is a vanguard in terms of both
its technical achievements, which will yield crucial informa-
tion for future wind farms in the UK, and in terms of its
business model (i.e. NGO involvement) and the sale of its
green energy project at no extra cost to consumers, which
highlights the market and organisational changes that this
project represents. At the opening at the North Hoyle wind
farm, Stephen Tindale of Greenpeace, commented that:
‘This pioneering windfarm will lead the way towards. . .big-
ger developments in UK waters that we so urgently need to
help tackle global warming. . .The ?rst turbine installed at
North Hoyle represents a crucial milestone on the road
to clean energy in the UK’ (npower Renewables homepage
accessed 15 August 2007).
The npower parent ?rm uses vanguard projects to
develop the ?rm’s capabilities in handling and exploring
new technologies and new combinations of technologies,
as well as larger scale energy projects. These projects are
often organised through a particular business unit with
specialised capabilities in initiating and governing uncer-
tain projects. npower is attempting through its vanguard
projects to establish and promote the ?rm’s environment-
friendly brand and capabilities and thus consolidate its cur-
rent competitive advantage in carbon-neutral energy
generation.
As the ?rst major o?shore wind farm in the UK, North
Hoyle was a groundbreaking project; it represented a learn-
ing curve for npower and the other parties involved. North
Hoyle has been operating successfully for over two years
with an impressive e?ciency of 95%. Lessons learnt from
the design and build phases and its two years of operation,
have been fed back into the development of npower
Renewables’ Rhyl Flats wind farm, which is a bigger pro-
ject currently in the tender evaluation phase. The experi-
ence of designing and operating the North Hoyle
windfarm will reduce uncertainty and anticipate a number
of the problems involved in the initiation of other wind
farm projects around the UK. npower Renewables has a
second-round o?shore wind farm, Gwynt y Mor (a
750 MW project) in the advanced development phase,
awaiting approval. The North Hoyle vanguard project
L. Frederiksen, A. Davies / International Journal of Project Management 26 (2008) 487–496 493
provided valuable information which enabled the scaling
up in the plans for the Rhyl Flats plant.
3.2. The carbon dioxide storage case
3
BP is one of the world’s largest energy companies. Its
main activities are oil and gas exploration and production,
re?ning and marketing oil products, and transportation
and marketing of natural gas and power. Its low-carbon
power business, BP Alternative Energy, is involved in
hydrogen power, photovoltaic power, wind power and nat-
ural gas-?red power generation. BP also has extensive
experience in pipelines and the management of oil and
gas in geological formations, power generation and petro-
chemicals operations.
Exploring collaborations with partners from other parts
of the energy sector, such as Scottish and Southern Energy
(SSE) is an example of BP’s interest in partnering with oth-
ers in the energy sector. A joint energy service company
(e.g. ESCO) was developing a project involving the design
and construction of the world’s ?rst industrial scale venture
to generate ‘carbon-free’ electricity from hydrogen. The
project was a so-called Carbon dioxide Capture Project
(CCP) and was located close to Peterhead in north-east
Scotland. A newly built reformer plant would convert up
to 70 million cubic feet of natural gas a day into carbon
dioxide and hydrogen.
The planned project to produce ‘decarbonised’ fuel and
use it at the site of production for power generation would
convert natural gas to hydrogen and carbon dioxide gases,
use the hydrogen gas as fuel for a 350 MW combined cycle
gas turbine power station, and export the carbon dioxide to
a North Sea oil reservoir for increased oil recovery and ulti-
mate storage. The project would reduce the amount of car-
bon dioxide emitted to the atmosphere through alternative
power generation by over 90%. While each of the compo-
nent technologies that make up the project is already pro-
ven, their combination proposed in this project would be a
world ?rst.
According to BP, this project would ‘represent a signif-
icant new step in providing clean energy to consumers,
tackling carbon dioxide emissions believed to contribute
to climate change and enhancing the recovery and utilisa-
tion of known world energy resources’ (BP Alternatives,
web site, accessed 10 August 2007). This can also be seen
as a vanguard project because it combines existing and
novel technologies within a completely new plant for
exploitation existing resources, using fossil fuels and
hydrogen power generation.
In 2007 BP was completing initial project engineering
feasibility studies and detailed front-end engineering
design work in order to identify the economic feasibility
of the scheme. The ?nal investment decision was to be
made in 2007, subject to which the project should com-
mence operation in 2009. Yet, due to various factors
among them BP’s interpretation of lack of political sup-
port the project was terminated after its design and scop-
ing phase.
The project would have required total capital investment
of some $600 million. It would have required an appropri-
ate policy and regulatory framework to encourage the cap-
ture of carbon from fossil fuel-based electricity generation
and its long-term storage. When fully operational, the
scheme was expected to capture and store around 1.3 mil-
lion tonnes of carbon dioxide per year and provide ‘car-
bon-free’ electricity to the equivalent of a quarter of a
million UK homes.
The project was located in the BP Alternatives division
and aimed speci?cally at changing the BP product portfolio
to meet the challenge of a zero carbon economy. BP was
therefore investing in continuous/high-volume production
of energy through renewable technologies, such as hydro-
gen, wind and solar power. However, certain projects are
being launched to test the technologies, the performance
and market aspirations before rollout of similar plants
around the world. This project re?ects BP’s engagement
in transforming itself from a company involved in fossil
fuels to a multi-product ?rm involved beyond petroleum
in the energy sector. In particular BP is interested – in
the short-term (2–7 years) – in power generation, and in
the longer term (10–20 years) in power transmission, distri-
bution and direct end user sales possibly through, or in
combination with, more distributed systems (i.e. Combined
Heat and Power). Lord Browne, former BP Group Chief
Executive, said:
‘This is an important and unique project con?gured at a
scale that can o?er signi?cant progress in the provision
of cleaner energy and the reduction of carbon dioxide
emissions’ (BP website, speeches 2007, accessed July,
2007).
The bene?ts of exploiting learning from a vanguard pro-
ject to develop large-scale business were clearly spelt out by
Lord Browne: ‘For example, if applied to just 5% of the
new electricity generating capacity that the world is pro-
jected to require by 2050, such schemes would have the
potential to reduce global carbon dioxide emissions by
around 1 billion tonnes a year – a material step in the chal-
lenge the world faces. The success of this UK scheme will
provide invaluable experience for the further application
of this concept worldwide’ (Ibid.). In the UK, and Scotland
in particular, the project would have provided a new, large-
scale source of decarbonised electricity for consumers and
extend the commercial life and contribution of the North
Sea to the UK and the Scottish economies. For BP the pro-
ject would have enabled: ‘opportunities to replicate this
3
While this paper was being developed BP decided to terminate the
design and planning of this vanguard project mainly because of di?culties
between BP and the UK government over time schemes, etc. However, the
lessons learnt by BP in the design and development of this project have
been assimilated and the company is currently embarking on projects in
the US and in Australia, both with local partners. Neither of these projects
has pre-established clients.
494 L. Frederiksen, A. Davies / International Journal of Project Management 26 (2008) 487–496
scheme and apply the associated technologies and experi-
ence in other parts of the world where we conduct business’
(Ibid.).
4. Discussion
These two examples show that vanguard projects are
not always established in response to customer demand,
but can be the result of a corporate entrepreneurial strat-
egy to create a new venture where a customer base must
be created or is emerging. This type of vanguard project
meets Christensen’s [11] strategic advice to be wary of
being always led by the demands of customers. These
types of vanguard projects are newstream corporate ven-
tures. They do not ?t with the use of traditional manage-
ment tools aimed at more administrative and routine-
based project activities. The vanguard projects launched
by npower and BP are means of achieving the corporate
entrepreneurship objectives of learning and testing rather
than simply optimising in terms of creating e?ciencies.
As mentioned by Dess et al. [17] such activities can be
seen as a mix of corporate entrepreneurship strategies
including strategic renewal, development of sustained
regeneration through the introduction of new products
within the same industry domain, and corporate rejuve-
nation. But, neither of the projects described here has
rede?ned the industry domain and/or changed the rules
of the game in the energy sector.
Both these cases suggest that large ?rms in the energy
sector may employ vanguard projects to create a novel
demand market and to test out technological options
before venturing into larger scale investment. The cases
also demonstrate that vanguard projects are not simply
about developing new knowledge and capabilities, but are
also about creating new brand image. This is because both
these vanguard projects are ingredients in strategies that
are not solely related to introducing more environmen-
tally-friendly products developed by the e?orts of the pro-
ject, but are also part of an e?ort to reposition the two
companies – npower and BP – within the energy industry
through the achievement of a di?erent brand pro?le for
their parent companies. This process, taking place over a
series of base-moving projects, can be considered an exam-
ple of corporate rejuvenation, as discussed in the corporate
entrepreneurship literature.
As our examples illustrate, vanguard projects have to
deal with many di?erent types of uncertainties and
unforeseen risks. Although npower’s wind farm project
was technologically challenging, key issues in the van-
guard project were the partnership with Greenpeace and
the development of a market for ‘clean’ energy, while
the BP project faced major uncertainties in terms of tech-
nologies, but the demand market uncertainties were rela-
tive low.
Traditional models of capability development in the ?rm
strategy literature do rarely include the role of project orga-
nisation in the development of new technological skills
[22,35]. In the two examples in this study the project man-
agement capabilities of the daughter-organisations were
necessary to infuse novelty into the core business processes
of the parent ?rms. In both cases the vanguard projects
were executed by launching an entrepreneurial project-
based venture to generate a new capability base for the
?rm. This supported the ?rms’ strategies of diversi?cation.
5. Conclusion
The concept of a vanguard project originally devel-
oped by Brady and Davies [7] refers to a ?rst-of-its-kind
project initiated to diversify into a new market or tech-
nology for existing clients or markets. From our review
of the corporate entrepreneurship literature it emerged
that many entrepreneurial ventures aimed at diversi?ca-
tion are developed through projects where there is no
existing client base and a market has to be created.
DeFillippi and Spring [16] employ the adjacent notion
‘project entrepreneurs’ to describe this phenomenon.
Their insight combined with our illustrative cases sug-
gests that future research on vanguard projects should
embrace responses to existing client needs and internally
generated entrepreneurial initiatives to create entirely
new markets.
We recommend that future theoretical research on how
?rms use projects to diversify and build capabilities would
bene?t from integrating ideas and perspectives from the lit-
erature on corporate entrepreneurship. We suggest that
vanguard projects are used as ventures for generating a
new resource base; however, further research is needed to
examine the organisational process of how the integration
and reuse of project outcomes translates into the project
routines of the parent company.
Previous literature on project business has emphasised
the importance of incorporating research from the main-
stream management literature including the theory of the
?rm, business strategy, organisational studies, new product
development and innovation management [52,1,45]. How-
ever, very little of the project business literature has
engaged with the ?eld of entrepreneurship, which occupies
a central place in the research areas listed above. Our
e?orts to expand the de?nition of vanguard projects are a
?rst step in this direction. Clearly more research is needed
to incorporate the corporate entrepreneurship literature
into project business research.
Acknowledgements
Lars Frederiksen and Andrew Davies would like to
acknowledge the funding for the research for this paper
from the EPSRC Innovation Studies Centre, Tanaka Busi-
ness School and the BP Urban Energy Systems Project,
both at Imperial College London. The authors want to
thank the participants and organizers of the 2008 IRNOP
conference in Brighton, UK for providing valuable com-
ments for improving this paper.
L. Frederiksen, A. Davies / International Journal of Project Management 26 (2008) 487–496 495
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