How to create performance-rich virtual dynamic learning organizations
Digitalization is essentially an innovation issue and organizations are approaching it with the usual wide variety of attitudes, methods and expectations encountered in managing innovation and change. The attitudes depend largely on the organization’s digital maturity. But innovation and change should rather be explained and motivated by increasing profitability, competitiveness and customer expectations rather than hard technologies. Moreover, in Industry 4.0 open innovation business ecosystems, the concepts of innovation, knowledge and technology become highly integrated in organizations utilising virtual networks of partners, where technology management has moved into the strategic domain of virtual dynamic learning organizations (VDLOs).
The Business Dictionary describes enabling technologies as equipment and/or methodology that, alone or in combination with associated technologies, provide the means to generate giant leaps in performance and capabilities of the user. For example, the coming together of information and telecommunication technologies, the internet of things, and groupware has levelled the field so that even smaller firms are able to compete in areas where they otherwise could not. It is not specific technological innovations but rather the capability to generate a stream of products, services, and process changes that matters for long-term organizational performance.
In the Industry 4.0 economy dynamic capabilities theory is profoundly important in creating performance-rich virtual dynamic learning organizations (VDLOs) to replace dysfunctional bureaucratic entities. Disruptive key enabling technologies (KETs) play a major role at many organizational levels in this transformation and change. As a result, new challenges and opportunities arise with respect to product, service, process, and organizational design and development. Moreover, dynamic capabilities are seen as an ability to reconfigure, redirect, transform, and appropriately shape and integrate existing core competences with external resources, and strategic and complementary assets to meet the challenges of a time pressured, rapidly changing world of competition and imitation.
Dynamic capabilities are not primarily concerned with fixed assets, but rather aim to explain the way firms locate resources for innovation over time, how existing resources are generated and deployed, and where new resources are obtained. This is highly relevant for developing an approach to technology management, since it explains how combinations of resources and processes can be developed, deployed and exploited for all technology activities in the Industry 4.0 economy. Capabilities theory does not take the market or the product as a given, but as objects of strategic reconstruction, emphasising the key role of strategic management in appropriately adapting, integrating and reconfiguring internal and external organizational skills, resources, and functional competences towards a changing environment. Bureaucracies are incapable of achieving this.
The foundation of dynamic capability is for it to be embedded in the values, beliefs and guiding principles constituting the organizational value system, and the organization’s leaders, particularly at the executive level, to possess effective role modelling abilities to create paradigms and structures that motivate managers and followers to efficiently achieve strategic benefits. The value system contains the profoundly important beliefs of trust and openness, as also the total quality management principles of customer focus, innovative continuous improvement, employee empowerment, and knowledge-rich systems thinking, which are all of paramount importance for organizational performance and enhancement in modern open innovation business ecosystems of Industry 4.0.
Innovation and technology management has moved into the strategic domain of virtual dynamic learning organizations. The four aspects most influenced by the Industry 4.0 economy are customer expectations; product, service and process enhancements; collaborative innovation; and organizational forms. The latter focuses on transforming from bureaucracy to embedded dynamic capabilities. Bearing in mind that disruptive key enabling technologies (KETs) are profoundly responsible for the transformation and change in organizations brought about by these four aspects, the importance of technology management cannot be underestimated.
However, technology management must be seen through the lens of dynamic capabilities theory. Technological changes continuously create new challenges and opportunities in product, service, process, and organizational development. Opportunities need to be captured and converted into value through effective and dynamic technology management, which requires new ways of understanding it to also capture its dynamic nature and the very important concomitant managerial aspects. Technological capabilities therefore consist of both dynamic and operational capabilities that are a collection of routines and activities to execute and coordinate the variety of tasks required to manage technology.
Prof Pieter Steyn, Principal, Cranefield College
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