Article - Digital Innovation (Review and Synthesis) (Kohli & Melville, 2018)

Question 1

What is this article about in summary?

Answer 1

It is a literature review about what is known about digital innovation so far. They focus on Information Technology Innovaton, Digital innovation and IS innovation.

Within the latter, there are 7 key components:

1. External competitive environment
2. Internal organizational environment
3. Initiate
4. Develop
5. Implement
6. Exploit

Question 2

What is IT innovation?

Answer 2

The organizational adoption and diffusion of new IT-enabled processes, products and services.

Innovation relates to the adoption of an already-existing IT artifact that is new to an organization and that is driven by various technological, organizational and environmental characteristics;

Question 3

What is digital innovation?

Answer 3

A product-centric perspective involving new combinations of physical and digital products to form new products.

Innovation relates to the underlying architecture of IT artifacts in enabling and constraining the development of new IT artifacts and the implications for structuring and managing innovation within firms;

Question 4

What is IS innovation?

Answer 4

The application of IT artifacts within organizations that requires significant change and leads to new products, services or processes.

-> Focus is on both IT artifacts and organizational dimensions of change associated with the development of new services enabled by IT.

Question 5

Which four processes are there in digital innovation?

Answer 5

1. Initiating
   Triggers, opportunity identification, decision-making
2. Developing
   Designing, developing, adopting
3. Implementing
   Installing, maintaining, training, incentives
4. Exploiting
   Maximize returns, leverage existing systems for new purpose

Question 6

What are possible outcomes of digital innovation?

Answer 6

IT-enabled products, services and processes

Question 7

What is the initiate process?

Answer 7

The organizational capability to identify, assimilate, and apply valuable knowledge from inside and outside the firm regarding opportunities for digital innovation;

Question 8

What are the key insights of this article about the initiate process?

Answer 8

• It is the capability to detect opportunities in an external environment;
• Firms might initiate digital innovation because they see others do it (this is called institutional isomorphism);
• Firms generate knowledge. They use this to foster innovations and to prevent investments in fads;
• Knowledge may lead to innovation, but knowledge gathering can be enabled by innovation as well;

Question 9

What is the develop process?

Answer 9

Two streams:

(1) Design science research focusing on the creation of artifacts;
(2) Adoption research focusing on how such artifacts are adopted;

Question 10

What are the key insights into the develop process?

Answer 10

• Architecture is an universal and critical concept within IS design. Different layers have different impact on effectiveness, but all layers are important;
• Omitting meta-requirements as a starting point for design can lead to design failure;
• Best practice design of a vendor supplier might be a myth –> always needs to be adapted to the organization;
• Top management support, external pressure and organizational size are the most predictive whether an organization adopts a given IT

Question 11

What is the assimilation of technology and what is critical for that purpose?

Answer 11

The extend to which technology use is spread out through the organization;

Critical: Top management Support

Question 12

What is the implement process of innovation?

Answer 12

The complex set of organizational changes that occur during digital innovation initiatives.

“How does organizational change occur when a new IS is introduced?”

Question 13

What are the key insights for the implementation process?

Answer 13

• Complex phenomena, such as organizational characteristics, cultural/national and local factors, influence how well change occurs with the introduction of an IS;
• There is a limit to how much managerial fiat can dictate the processes and outcomes of organizational change efforts –> behavior of employees over a long time influences it as well;
• IT-enabled change is not only influenced by the innovation processes, but also by other dimensions (change levels, change degree)

Question 14

What is the exploit process of innovation?

Answer 14

Leveraging existing systems and data sources to generate new innovations, in ways that exceed their primary goal;

Question 15

What are the key insights of the exploit process of innovation?

Answer 15

• Serendipity plays a role but not a decisive one –> it helps those who are already best prepared;
• Organizational learning and change management are critical to exploit;
• Sensemaking (giving meaning to collective experiences) through continued use creates a better understanding, opening up more opportunities to exploit;
• Knowledge sharing among partners, internal and external, leads to greater recognition to exploit opportunities;

Question 16

What are two additional perspectives to exploit innovations?

Answer 16

1: Exploitation only occurs when organizations make appropriate changes and adapt to new ways to use the IS (so focus on change management to facilitate exploitation) –> especially in mergers and acquisitions;

Question 17

What is meant by the external competitive environment as a influence on innovation?

Answer 17

How managers use digital innovation with a view to aligning their actions with the realities of the competitive environment;

Question 18

What is the logical of external attention?

Answer 18

Determining the optimal actions for a firm with regarding digital innovation within the context of its external environment

Question 19

What are the key findings of the external competitive environment?

Answer 19

• Alertness and environmental scanning are sensing capabilities that encourage digital innovation;
• Managers synchronize internal capabilities and determine optimal actions to respond to competition;
• Sense and respond capabilities must be integrated with the strategic planning process;
• IS play a critical role in developing sense and respond capabilities;

Question 20

What is meant by the internal organizational environment in innovation?

Answer 20

• Digital innovation is shaped by the features and dynamics of the internal organizational environment;
• Learning is necessary for innovation.
  (1) Experimenting with new IS leads to innovation;
  (2) Business managers who gain IT knowledge want to champion IT projects –> innovation;

Question 21

What are the key insights of the internal organizational environment in relation to innovation?

Answer 21

• Managers create an environment conducive to digital innovations, through engagement and support;
• A learning culture promotes opportunities for digital innovation;
• Senior Management support is critical for digital innovations to take hold;
• Ability to absorb new ideas is critical to digital innovation;

Question 22

How can outcomes of digital innovation be measured?

Answer 22

• Number of patents is the most used metric;

Impact of outcomes can be measured by:
Internal metrics:
- Productivity
- Profitability
- Risk mitigation
- Customer loyalty
Market facing metrics:
- Time to market
- Product features etc.

Question 23

What are some oppositions and tensions in the initiation stage?

Answer 23

• Limited research on how to reach consensus of observed signals;
• Limited research in the role of human agency on how to distinguish a signal from a noise;
• Research see organizations as ‘one voice’ -> that is not true in reality;
• Unclear of companies have processes for ‘sensing’;
• Should a company invest in processes on how to distinguish from noise and signal?

Question 24

What are some oppositions and tensions in the design stage?

Answer 24

• Design can be (a) focused on a technical artifact or (b) design of artifacts, business processes, practices etc.
• Design theories state it is foolish to only focus on the artifact –> affordances of a technical artifact can also be caused by product or organizational features. Only looking at the artifact neglect these;
• There should be a focus on the combination of the design of digital IS and organizational routines and practices;

Question 25

What are oppositions and tensions in the implementation stage?

Answer 25

• Innovation is possible organically, by using artifacts for other purposes. IS design theories however only focus on engineering processes (so they neglect organic innovation)
• According to design theories, an artifact should only be checked against pre-determined requirements. However, if you you also check them against situational specific factors while implementing, you might find more uses for the artifact –> innovation;

Question 26

What are some limitations of this research?

Answer 26

• Does not focus on who benefits from digital innovation and on the long-term impact of IS research;
• Design of artifacts might not fall into the digitial innovation research paradigm;
• The four processes that are identified might be difficult to distinguish in real life –> Reductionist fallacy;
• Innovation is not always a deliberate process, as stated in this research;