Week 5: ORGANIZING CHANGE FOR INNOVATION Flashcards
(4) - Danneels (2010) – Trying to become a different type of company: Dynamic capabilities at Smith Corona (Inertia perspective)
Introduction
The Smith Corona case provides rich insights into the resource alteration processes by which dynamic capability operates, and highlights resource cognition as a missing element in dynamic capability theory.
To cope with environmental changes, firms need to renew themselves. Organizational renewal involves changing organizational resources and competences over time. Dynamic capability refers to the ability of a firm to renew itself in the face of a changing environment by changing its set of resources. The term “dynamic” refers to the renewal of resources and competences to address changing environments.
Changes in the firm’s set of resources can be achieved by various modes:
1. Leveraging
2. Creating
3. Accessing
4. Releasing
The purpose of this study is to advance dynamic capability theory by confronting it with an empirical case.
(4) - Danneels (2010) – Trying to become a different type of company: Dynamic capabilities at Smith Corona (Inertia perspective)
Ligt toe:
- *1. Leveraging
2. Creating
3. Accessing
4. Releasing**
✓ Leveraging existing resources involves putting them to new uses. A resource is a tangible or intangible asset that the firm owns, controls, or has access to and from which it potentially derives rents. Some resources are fungible, that is, amenable to multiple applications.
✓ New resources could be created internally and combined to form a new competence. A competence is a configuration of resources that enables the firm to accomplish a particular task. Adding resources and configuring them into competences involves explorative learning.
The ability of a firm to build new competences has been referred to as a second-order competence.
✓ It is possible to access new resources externally. Sometimes complementary resources can be accessed externally and be configured with current resources.
✓ The alteration of a firm’s set of resources may involve dropping existing resources, such as by selling assets or reducing workforce.
(4) - Danneels (2010) – Trying to become a different type of company: Dynamic capabilities at Smith Corona (Inertia perspective)
B. Findings
Smith Corona was successful in transitioning within its product category, going from mechanical to electric to electronic typewriters to personal word processors. However, it was not able to transition into other categories.
(4) - Danneels (2010) – Trying to become a different type of company: Dynamic capabilities at Smith Corona (Inertia perspective)
Dynamic capability
de ability van een bedrijf omzichzelf te vernieuwen in face met een veranderingende omgeving, door zijn resources te veranderen. Sommige bedrijven thrive in een veranderende omgeving, omdat ze in staat zijn resources te veranderen.
(4) - Danneels (2010) – Trying to become a different type of company: Dynamic capabilities at Smith Corona (Inertia perspective)
Dynamic capability theory
Dynamic capability theory = changes in the firm’s set of resources can be achieved by various modes: leveraging, creating, accessing, and releasing
(4) - Danneels (2010) – Trying to become a different type of company: Dynamic capabilities at Smith Corona (Inertia perspective)
Strategic renewal
Strategic renewal = changing organizational resources and competences over time, often accompanied by a change in the organization’s products
(4) - Danneels (2010) – Trying to become a different type of company: Dynamic capabilities at Smith Corona (Inertia perspective)
Conclussie
Conclusion:
- Self-assessment of the resource base in TMT and the board (Mental model for a resource scheme): What are the resources and what is the potential?
- There are several ways to change resources –> 5 ways for resource alteration
(4) - Roosenbloom (2000) – Leadership, capabilities, and technological change: the transformation of NCR in the electronic era
samenvatting:
Common failure of market leaders (dominant incumbents) in the face of revolutionary (radical) technological change. Mature, successful firms often fail to adapt successfully to revolutionary changes in technology.
Detailed explanation how NCR (National Cash Register) addressed the introduction of electronics to the field of business equipment and the advent of digital computers to widespread use. Persistence in
old modes of practice led eventually to a crisis, which was resolved favourably when new management and fundamental organizational transformations reversed adverse trends and restored robust profitability. No single theoretical perspective is sufficient to explain the path of NCR’s behaviour. NCR survived, we conclude, because new leadership provided the impetus to actualize latent dynamic capabilities.
Reasons for failing radical innovation:
● Architectural changes by competitors (especially in design)
● Changing technologies might bring competence destroying innovations
● Implicit and explicit social commitments to stakeholder
● Big firms have a lot to lose in comparison to small companies
(4) - Roosenbloom (2000) – Leadership, capabilities, and technological change: the transformation of NCR in the electronic era
Dynamic capability =
Dynamic capability = What enables a firm to integrate**, **build** and **reconfigure internal and external competences to address a rapidly changing environment
(4) - Roosenbloom (2000) – Leadership, capabilities, and technological change: the transformation of NCR in the electronic era
Three factors of dynamic capability
- Processes: NCRs initial processes were strong, robust and influential. But they were poorly suited for the new era. New processes were required. E.g. product development, product delivery, and marketing were hierarchical, ineffective at integration, and slow. Needed to integrate marketing and product development, so that the latter could be driven by customer needs rather than the preferences of ‘expert’ product planners.
Teamwork was needed to bridge formal boundaries and speed response to change. The established culture was a barrier to meeting these new needs. Learning was not an inherent element of processes at NCR.
The company had had no experience with reconfiguration or transformation of structure and processes in what was, until 1972, a highly-centralized organization. → electronic shift: integration, decentralization, customer driven. - Positions: Very strong customer base.
- Paths: Strategic directions made by top management into electronics. But the capabilities thus added to NCR’s endowment left open a range of opportunities along a range of potential strategic paths.
(4) - Roosenbloom (2000) – Leadership, capabilities, and technological change: the transformation of NCR in the electronic era
Conclusion NCR:
NCR is able to survive two technological shifts while many (large) incumbents tend to die in major technological change.
- 1st: option to use electronics to process financial information –> NCR pioneered with electronic calculation but bit first to market.
- 2nd: electronics into the age of semiconductor integrated circuit –> NCR was an early mover in semiconductor pioneered by others.
Electronic shift –> integration, decentralization, customer driven.
Technological change –> organisational change à NCR had to tap into their dynamic capabilities
NCR survived the changing environment, because new leadership provided the impetus (drijfkracht) to actualize latent (verborgen) dynamic capabilities
Significance of organizational process: Organizational processes were long-standing, robust and influential but poorly suited for the new era > Small firms have less problems with bringing new products to the market, as large companies can cannibalize their own products on a certain market.
(4) – Feldman (2000) – Organizational routines as a source of continuous change (Flexible perspective)
samenvatting
Martha S. Feldman claims that organizational routines have a great potential for change. She proposes a performative model of organizational routines. This model suggests that there is an internal dynamic to routines that can promote continuous change. The internal dynamic is based on the inclusion of routine participants as agents.
Change occurs as a result of participants’ reflections on and reactions to various outcomes of previous iterations of the routine. This perspective introduces agency into the notion of routine.
(4) – Feldman (2000) – Organizational routines as a source of continuous change (Flexible perspective)
Organizational routines:
Organizational routines: repeated patterns of behaviour that are bound by rules and customs and that do not change very much from one iteration to another
- Feldman (2000) Argues that organizational routines have great potential for change, because there are not inert (passief / bewegingsloos), but full of life
(4) – Feldman (2000) – Organizational routines as a source of continuous change (Flexible perspective)
Since routines are performed by agents they do change if:
Intended outcomes not achieved - Repairing
Unintended, undesirable outcomes produced - Repairing
Outcomes produce new possibilities - Expanding
Outcomes fall short of ideas - Striving
(4) – Feldman (2000) – Organizational routines as a source of continuous change (Flexible perspective)
Tabel met types of change in routines:
(4) – Feldman (2000) – Organizational routines as a source of continuous change (Flexible perspective)
Performative (prestatie gericht) routines model
- Internalization: From explicit to tacit (knowledge becomes operational knowledge)
- Socialization: Tacit at individual level to tacit at collective level (knowledge is shared)
- Externalized: Tacit to explicit (done by use of models and analogies)
- Combination (Systemized): Conversation from explicit to explicit (knowledge becomes systemized at higher level)
prestatie gerichte routines as a process of learning involving Nonaka’s model learning mechanisms: plans become internalized or embodied into actions, this becomes shared or socialized as the actions lead to outcomes. This shared knowledge is externalized as people compare it to models or ideals. These models or ideals then become systematized as plans and the cycle starts again.
