Strategic management of technology-enabled capabilities : a dynamic capabilities approach to strategically aligned value creation

Abstract

Organisations are finding it increasingly difficult to create value in the current dynamic, globalised, interconnected, and ever more complex business and technology environments. The Fourth Industrial Revolution (4IR) is set to increase these challenges as a result of the increasing complexity and dynamic changes in market, societal, and technological trends. While current technological trends potentially offer great value to organisations, emerging technological implementations and transformations often fail to realise the desired value creation outcomes. This research study takes an exploratory sequential mixed method approach to first articulate what the major challenges to technology-enabled value creation efforts entail, before devising a means to address the defined problem statement. Following an initial exploratory study with qualitative interviews, it was determined that the major challenges to technology-enabled value creation initiatives, in the current dynamic environment, can be linked to a dynamic capabilities perspective of strategic management. This perspective encompasses the dynamic adaptation of enabling capabilities to enact strategic alignment between the external environment and an organisation’s value creation system hierarchies. These hierarchies broadly include the organisation’s strategies, its strategy execution, and its capability creation, adaptation, and management. Dynamic capabilities are defined from a system perspective and are presented as functioning to enable this desired strategic alignment. The second phase of this study takes a deductive research approach that builds on the developed theory to develop and test operational hypotheses. This research phase is executed through a descriptive research design using quantitative methods to provide a valid representation of the observed phenomena. The first part of this representation takes the form of a three-dimentional model to conceptualise the strategic management of technology-enabled capabilities, from a dynamic capabilities perspective on value creation, within the context of the 4IR. This model consists of and/or correlates with various frameworks that are either referenced or developed within this study from a systems perspective. These include but are not limited to a new perspective on technology-enabled capabilities, a strategic planning roadmapping framework to support execution in practice, and an illustrative system architecture framework for Industry 4.0 to demonstrate conformity with current 4IR related conceptualisations. This conceptual model addresses an identified need to illustrate the interconnectedness of three different dimensions. These include the dynamic capabilities approach to maintain strategic alignment (enabling functional alignment), across the value creation system hierarchies of an organisation (enabling integration), over the value creation lifecycle (enabling temporal synchronisation). The model thereby serves to provide context to the complex system surrounding the strategic management of technology-enabled capabilities, from a dynamic capabilities perspective on strategically aligned value creation. The model is tested, by testing hypotheses through quantitative analyses of survey responses from large organisations operating in dynamic environments (such as during the global pandemic in 2020) and the outcomes are discussed. The main hypothesis proposes that organisations with higher strategic alignment capacities, as conceptualised within the presented model, will also have higher value creation capacities within dynamic environments. This hypothesis is validated by showcasing strong correlations (ρ = 0.74) between the defined independent and dependent constructs, which relate to a dynamic capabilities approach to strategic alignment and more effective value creation capacities within large organisations, respectively. This seems to indicate that the hypothesis is correct, meaning that the higher the strategic alignment capacities of organisations are as a function of more effective dynamic capabilities that constitute their dynamic alignment competencies, the higher their value creation capacities are as a function of more effective value creating and capturing competencies. Furthermore, this seems to give credence to the structure of the conceptual model that gives context to the relationship between strategic alignment (and its elements from a systems perspective on the strategic management of dynamic capabilities) and the value creation system of organisations (and the elements representing this system’s function). The study closes with recommendations for future research, such as to expand on this study with a larger sample, to replicate the study for small and medium sized firms, to explore the identified trends further such as that South African industries have not yet begun actual 4IR related technological transformations, and to define value metrics to assess the value of capabilities that emerging technologies may enable. Lastly, recommendations for the application of the research outcomes in practice are given. These are focussed on the required systems perspective of dynamic capabilities to create dynamic alignment capacities that could maintain continual strategic alignment in the face of dynamic change. Some practical principles are provided, such as for the development of toolkits to perform these functions in practical and structured strategic workshops along with a roadmapping framework to contextualise value creation efforts and their interdependencies over various execution timeframes.