Agile organisations enable digital innovation
Previous research on agile organisations has mainly focused on large companies. At the same time, there is a tendency to highlight so-called start-ups as good examples. It is generally believed that larger companies have a lot to learn, especially when building a continuous digital innovation capability. In her research, Dulce Goncalves looks at start-up companies through an organisational lens to identify factors that promote or hinder their agile ability, so-called agility. The goal is to understand how start-up companies use agility to gain an advantage and enable digital innovation.
”The companies characterised by an agile culture and used open innovation were most successful in maintaining a high innovation pace.”
Dulce Goncalves is studying start-up companies in the automotive industry. In recent years, several start-ups have challenged this industry whose innovation strategies differ from those of established companies. By learning how start-up companies work to create agile organisations and how this agility is used to drive innovation initiatives, Dulce Goncalves contributes research with knowledge that later can be tested in the established companies.
“I have sought answers on how start-up companies use their agility to create an advantage regarding digital innovation. By examining the companies' organisational culture, I have been able to see differences between the companies. Not all companies proved to have the same organisational agility and ability to innovate. The companies characterised by an agile culture and used open innovation were most successful in maintaining a high innovation pace”, says Dulce Goncalves.
Four types of agile organisations
Among the start-up companies surveyed, Dulce Goncalves has identified four different types of organisational agility: digital industrial, digital complementary, digital exploiter and digital disruptor. In the different kinds of organisations, the value created by organisational agility is looked at differently and utilised.
“Start-up companies have different degrees of agility. Digital industrial companies have lower agility capacity than the other types of organisations. These companies tend to have an unclear business model and a one-sided technology focus, which leads to low digital innovation capacity. The digital complementary companies focus on research to integrate the results into their customers' products to generate value. They also use a certain co-innovation - innovation in interaction with others - of business models for the solution. The focus is mainly internal, but selling the product also requires a certain degree of open innovation. The result is that this type of company can achieve much higher levels of digital innovation capability,” Dulce Goncalves explains and continues:
“The companies that can be classified as digital exploiters have a higher agility ability. However, because they usually have strict requirements for a quick return on investment, their innovations tend to build on existing products, such as services added to a platform. They are visionary and adaptable and focus on the rapid development of services and products, but they can also be characterised by low digital innovation ability. Digital disruptors are companies that use visionary and innovative strategies and take full advantage of their organisation's agility. These companies focus not only on rapid but also in-depth development of innovation ecosystems or networks. The result is that they achieve a high level of digital innovation power.”
”It is important to have an organisational culture that allows for transparency and rewards a culture of cooperation and open innovation. This makes it easier to build trust and strong relationships between different actors.”
Organisational culture crucial for an agile organisation
In the search for an agile organisation, the organisational culture has proven to be an important piece of the puzzle. The organisational culture can promote or hinder both agility and digital innovation.
“It is important to have an organisational culture that allows for transparency and rewards a culture of cooperation and open innovation. This makes it easier to build trust and strong relationships between different actors. In this way, it will be possible to co-create and deliver results”, says Dulce Goncalves. In the future, she believes that more companies will engage in co-innovation:
“Companies will have to innovate together to survive in the tough competition. Transformative start-up companies are good at co-creation – but large companies seem to have a more challenging time with it. They do not really get into the game. Creating with others requires trust. It can also be difficult because the different actors have to take on different roles, and those roles can change over time. At one moment, a company can be a partner to be a customer or supplier in the next. This places high demands on companies and employees. Both management and employees need to be able to perform optimally in a sometimes chaotic environment. They must be able to reorganise when required and without taking up too much energy or time.”
About the licentiate thesis
Thesis title: Organizational Agility and Digital Innovation Capability in Automotive Startups External link.
Supervisor: Magnus Bergquist, professor
Opponent: Isabelle Reymen, docent Eindhoven University of Technology
The licentiate seminar was held on February 15, 2021
Agile organisational culture important not only in industry
For an organisation to benefit from digitalisation, its structure needs to be dynamic. The organisation must be able to collaborate in virtual contexts to use resources both within and outside the company. Today, it can be difficult for companies to run the entire innovation initiative themselves. They often need other players’ help to gain access to the necessary skills, enter the market more quickly with their innovation, and manage risk.
“It is crucial that companies dare to experiment and that they learn from their mistakes. Continuous learning is an essential component that needs to be integrated into the daily work to enable rapid digital innovation”, says Dulce Goncalves and concludes:
“It is not only industrial companies that can benefit from my results. They can be applied to all sectors of society, for example, in academia and the public sector. The purpose of agile organisations is to make full use of available expertise, regardless of where it is located, internally or externally, to develop a high and continuous innovation pace. It makes all organisations feel good.”
Text: Christa Amnell and Anna-Frida Agardson
Photo: iStock and Dulce Goncalves
The thesis: Organizational Agility and Digital Innovation Capability in Automotive Startups External link.
The article in Swedish: Agila organisationer möjliggör digital innovation External link.
School of Information Technology
Research environment: Embedded and Intelligent Systems (EIS)