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Article: Wednesday, 7 January 2015

It is said that cloud computing – connecting groups of remote servers to create central access to data storage and services – will transform the way we live and do business even more than the arrival of internet did. So how can businesses use the new possibilities offered by cloud computing? New research by PhD candidate Saeed Khanagha of Rotterdam School of Management, Erasmus University (RSM) reveals businesses often make the deadly mistake of using existing mentalities and ways of working to adopt new technology. Instead, he says, a fundamental shift in attitude is sometimes needed to realise the full potential of a new phenomenon.

Cloud computing technology is expected to transform a wide range of organisations, industries and societies, even in an already-digital age. But the complexities and uncertainties associated with such a transformation process present a puzzle for practitioners and academic researchers, such as overcoming ‘rigid’ resources and routines to adapt to the requirements of technological change. Some businesses have already been successful in maintaining competitiveness during and after a transformation to cloud computing. So what are their distinctive characteristics?

In his dissertation Dynamic capabilities for managing emerging technologies, organizational and managerial antecedents of effective adoption of Cloud Computing, Saeed Khanagha describes what makes an effective response to a technological change through his investigation of the interplay between structures, routines and managerial cognition using his close collaboration with industry players.

Organisations attempt to adopt cloud computing in ways imposed by existing mentalities and ways of working - a deadly mistake.

According to Khanagha, a close look from inside reveals these expert organisations can be quite capable of dealing with the technical aspects of change, but struggle in handling the associated organisational challenges, allocating resources, incentivising colleagues and experimenting in a new field. One outcome is these organisations attempt to adopt the new technology in ways imposed by existing mentalities and ways of working. However, this can be a deadly mistake because realising the full potential of new phenomena sometimes requires fundamental shifts in mentalities and ways of working so using ‘old’ approaches to adopt such changes is impossible.

Khanagha discusses the vital roles of internal change agents in adapting ways of working and reinventing organisations’ business models. He illustrates the process of innovation for cloud computing as a complex and highly uncertain picture. Managers must embrace the idea of change to lead their organisation through internal and external changes. He discusses the direct and intensive sponsorship of senior managers and the involvement of customers in the process of innovation as the most important means for timely and effective sensing and seizing of cloud-related opportunities.

Khanagha urges businesses to experiment, not only with the technology but also with organisational settings that foster effective consideration of new technology without damaging ongoing business. He describes optimal structures for dealing with new technologies that accompany a new business model, and highlights the importance of involving customers in the process of innovation if companies are seeking breakthrough innovations.

Khanagha’s findings illustrate how different organisational characteristics may influence the degree of dependence to managerial attention for responding to technological change.

The advancement of information and communication technologies has brought a digital age, where massive computing power, high speed and ubiquitous access to internet, and more recently cloud computing technology, are expected to transform a wide range of organisations, industries, and societies. The complexities and uncertainties associated with such a transformation process generate numerous puzzling questions for practitioners and academic researchers. How can organisations overcome rigidities in their resources and routines and adapt in line with the requirements of such technological change? What are the distinct characteristics of the established firms that are more successful in maintaining their competiveness during and after the transformation process?

This dissertation combines multiple data sources concerning organizational adoption of cloud computing. It includes data from an intensive four-year filed study, multiple comparative case studies, and a survey among Dutch companies, to provide a basis for better understanding of the micro-foundations of organisational capabilities for managing emerging technologies. Drawing on the literature of dynamic capabilities, this dissertation provides a more complete picture of the drivers of effective response to a technological change through investigation of the interplay between structures, routines, and managerial cognition. This dissertation provides first an investigation of the processes of organisational adaptation in response to the technological change.

I discuss what type of managerial initiatives are needed for fostering effective adoption of emerging technologies and what are the key determinants and managerial roles for realizing those initiatives. Second, I investigate the relationship between structure, strategic intent, and technology driven business model innovation and argue that, rather than any particular structural form, structural alteration may be crucial for enabling transition to a new business model. Third, I discuss the important role of involvement and close interaction with the customers in giving rise to managerial attention and initiatives that will in turn support exploratory behaviour in emerging technology fields. Lastly, the interplay between formalisation, centralisation, and managerial attention in enabling early sensing and seizing of emerging technologies has been investigated. The findings illustrate how different organisational characteristics may influence the degree of dependence to managerial attention for responding to technological change. The dissertation as whole provides new insights on the origins and outcomes of dynamic capabilities for managing emerging technologies.

Saeed Khanagha

Former Researcher

Henk Volberda

Former Professor of Strategic Management & Business Policy

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