Digital Capability. Investigating Coevolution of IT and Business Strategies

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1 Digital Capability Investigating Coevolution of IT and Business Strategies Johan Sandberg Swedish Center for Digital Innovation vid institutionen för informatik, Umeå universitet

2 Digital transformation och organisatoriska strategier En överblick av trender

3 Pågående och accelererande digital transformation 3 Data explosion Fördubbling vartannat år Konvergens Krav på transparens över organisatoriska gränser Ett knapptryck (eller svep) Appleifiering av användarupplevelse Disruptiv innovation Dynamiska kompetitiva landskap Internet of things Allt blir uppkopplat Ökad komplexitet 50% av CIO:ers #1 källa till huvudvärk

4 Digital transformation påverkar organisatoriska strategier 4 Scale Dynamic IT scaling enables adaptivity Platform structures enable network effects and multisided markets Information abundance, big data and the internet of things Scaling through collaborations Scope Functional boundaries diminished Fluid product boundaries Disrupted business structures Speed Sources Product launches Decision- making Supply chain orchestration Network formation and adaptation Increased value from information Value creation from multisided business models Value capture through coordinated business models in networks Value appropriation through control of digital industry architecture Source: Bharadwaj, et al., "Digital Business Strategy: Toward a Next Generation of Insights", MIS Quarterly, Vol. 37 No. 2, pp

5 Digital förmåga En resa från IT som stödfunktion till komplexa, dynamiska kompetitiva landskap

6 RBV - en översikt 6 Konkurrensfördelar Achieved through the ability to deploy heterogeneously distributed resources Operationell förmåga `how we earn a living now capabilities (Winter 2003, p.992; Helfat and Winter 2011) Rutiner och resurser routines is repetitive, recognizable patterns of interdependent actions, carried out by multiple actors (Feldman and Pentland 2003, p. 95) Dynamisk förmåga the organizational and strategic routines by which firms achieve new resource configurations, (Eisenhardt and Martin 2000, p. 1107) Vad är en organisatorisk förmåga? a high- level routine (or collection of routines) that, together with its implementing input flows, confers upon an organization's management a set of decision options for producing significant outputs of a particular type. Winter, 2000, p. 983

7 Digital Capability - Investigating Coevolution of IT and Business Strategies 7 IT capability [the organizations] ability to mobilize and deploy IT- based resources in combination or copresent with other resources and capabilities. Digital capability An increasingly important predictor of organizaoonal performance is the ability to develop and sustain digital capability, i.e. a collec'on of rou'nes for strategizing by leveraging digital assets to create differen'al value

8 The coevolutionary process 8 Coevolutionary Strategy Processes (Adapted from Volberda and Lewin 2003 and Daft and Weick 1984)

9 Digital capabilty and organizational performance 9

10 Routines for change 10 Sensing Seising Transforming Enacted through routines for: Internal R&D/IT development Tapping into external sources for R&D/IT development Tapping into suppliers and complementors innovations Identifying customer- induced change Enacted through routines for: Enacting competitive actions through new business models/ products/services Adapting to IT change Adapting to environmental opportunities/threats Enacted through routines for: Transforming architecture of digital assets Transforming organizing logics and structures Transforming ostensive and performative dimensions of routines Transforming business models

11 Empiriska studier

12 Data 12 Research Context Interviews Observations, workshops Other ProcessIT 40 (Performed by coauthor) Co-author present in management meetings for five year period - Organizational charts - Annual reports - Evaluation reports R&D Centers 16 (2 performed by coauthor) - Workshop with involved actors - Internal reports - Annual reports Norrmejerier 40 (11 non-recorded) - Three tours of production sites -Three weeks of observations at headquarter - Demo version of ERP system Process automation 21 - Seven site visits - Three workshops on ecosystem development TOTAL 117 (75 performed by me, 42 by others) - Internal reports - System requirements analysis - Annual reports - Process maps - Internal project documents - Annual reports - Product pamphlets, documentation and instruction manuals

13 Artiklar 13 Area of concern Problem Sandberg, J., Holmström, J. Mathiassen, L. and Levén, P. A Platform for Open IT Innovation: Knowledge Brokering in Academia-Industry Collaboration, currently under review (first round). Knowledge brokering in open innovation Re-using boundary spanning linkages while avoiding inertia Sandberg, J., Holmström, J., Napier, N., & Levén, P Balancing diversity in innovation networks: Trading zones in universityindustry R&D collaboration. European Journal of Innovation Management, 18(1): Balancing diversity and stability in open innovation Balancing stability and diversity in innovation networks Sandberg, J. (2010), Coping with Complexity: Exploring Modularity and Flexibility in IT Infrastructure Adaptation., in Holmström, J. Wiberg, M. and Lund, A. (Eds.), Industrial Informatics Design, Use and Innovation: Design of organizational information systems Managing adaptation of standardized IT solutions and routines Theoretical framework Innovation and networks Innovation and networks IT infrastructure and systems design Unit of analysis Contribution ProcessIT (academyindustry innovation network) Insights on the role of network diversity and size, and empirical illustration of dynamics involved with generating ability for knowledge brokering. Four collaborative R&D centers Identification of two distinct types of boundary spanning R&D collaboration, insighst on balancement of stability and diversity, and design dimensions for Norrmejerier (Dairy company) Illustration of the reciprocal nature of IT and practices, empirical illustration of platform inspired thinking in design of organisations informatio Sandberg, J., Mathiassen, L., & Napier, N Digital Options Theory for IT Capability Investment. Journal of the Association for Information Systems, 15(7): IT enabled process innovation Identification of desirable IT investments Information requirements and options thinking Norrmejerier Theoretical microfoundations of digital options, and provision of actionable principles for identification of IT investments for improved process Sandberg, J., Holmström, J. and Lyytinen, K. (2013). Platform Change: Theorizing the Evolution of Hybrid Product Platforms in Process Automation. Platform Strategy Research Symposium. Boston MA Digitalization and platform ecosystems Managing coevolution of IT and business strategies Digital innovation and platform strategy ABB s process automation platform Identification of effects from digitalization of physical artefacts and resultant hybridization of product platforms, and illustration of the coevolution of IT and

14 HYBRID TECHNOLOGY AND ORGANIZATIONAL BOUNDARIES: THE EVOLUTION OF PLATFORMS IN PROCESS AUTOMATION Digitizing process control

15 HYBRID TECHNOLOGY AND ORGANIZATIONAL BOUNDARIES: THE EVOLUTION OF PLATFORMS IN PROCESS AUTOMATION Digitalizing routines

16 HYBRID TECHNOLOGY AND ORGANIZATIONAL BOUNDARIES: THE EVOLUTION OF PLATFORMS IN PROCESS AUTOMATION Digitalizing the world

17 HYBRID TECHNOLOGY AND ORGANIZATIONAL BOUNDARIES: THE EVOLUTION OF PLATFORMS IN PROCESS AUTOMATION > Hybrid concilation

18 Bidrag

19 Fyra huvudsakliga bidrag 19 (1) Digital kapacitet som begreppsapparat (2) Konceptuellt ramverk för att förstå samevolution mellan IT och organisatorisk strategi (3) Empirisk illustration av samevolution mellan IT och organisatorisk strategi (4) Specifika insikter om design och orkestrering av processer för att generera digital kapacitet

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