CONCLUSIONS AND DISCUSSION

This chapter will summarize the key findings of the thesis by synthesizing the key elements and findings of the theoretical and empirical chapters. Research questions are answered. Theoretical and managerial implications are discussed, and suggestions made for future research endeavours.

5.1. Synthesis and key findings

The research questions were the following: (1) what are the potential benefits of the enterprise agile framework, (2) how could absorptive capacity affect the organization’s ability to adopt agile and (3) how could absorptive capacity affect attitudes toward agile working methods? Providing comprehensive answers begins with an overlook of the key theories discussed in the theoretical framework and synthesizing discussed theory with the results of the empirical study presented in the previous chapter.

This thesis began with a quote from Charles Darwin who posited that the survival of a species depends not on its intelligence, but its responsiveness to change. The quote was chosen to reflect the evolution and survival of species to the evolution and survival of modern organizations, who similarly jockey for position in a world of unrelenting uncertainty and an endless stream of obstacles. The key issue central for the field of strategic management is how to become resistant to creative destruction and how to create sustainable competitive advantage in such a Schumpeterian world of innovation-based competition (Teece et al. 1997). The topical subject of adopting enterprise agile as the dominant mode of operation was suggested. Agile methods, techniques and operational models are gaining wide popularity among organizations of different sizes operating in various industries.

The theoretical framework of this thesis reviews literature to first understand how a modern adaptive organization is built. Next, to narrow the scope of theories of adaptive,

ambidextrous organizations, the agile framework was studied. Agile was found to be as much about values and principles as it is about concrete working methods and techniques and organizational structure. Similar to the continuous development of market conditions, the process of innovation has developed from traditional models to agile and iterative processes (Mills et al 2020). As a concept, the agile enterprise is the organizational equivalent of an adaptable and ambidextrous agile team, and a manifestation of a larger entity that embodies the principles and values brought to life by the agile manifesto (Rigby et al. 2018; Rigby et al. 2016).

Agile teams were first created for and are also best suited to innovation work, which is why the subject of innovation is also central for this thesis. Moreover, adaptive organizations are able to both compete in existing markets and they are also able to recombine and reconfigure assets and organizational structures to adapt in turbulent market conditions, and constant changes in technology. (O’Reilly & Tushman 2008.) To identify the most relevant theories, innovation was first defined for the parameters of this thesis: based on the definition of the UK Department of Trade and Industry (1998) who define innovation as “the successful exploitation of new ideas”, a broad perspective was taken. In a business context, an additional condition of successful introduction to market is attached to differentiate innovation from invention (Boons & Lüdeke-Freund 2013).

Sustainable enterprise success transcends success at one type of innovation, which is why Teece (2007) argues that organizations must simultaneously invest in R&D and utilize complementary organizational and managerial innovations. Strategically, critical decisions about resource allocation need to be made. The concepts of business model innovation and technological and product innovation were introduced (Pisano 2015).

Technology has no objective value, which is why a business model is needed to determine the paths to monetization and it thus largely influences the level of complementarity with the organization’s innovative activities (Baden-Fuller & Haefliger 2013). On a similar notion, innovation-performance linkages were introduced, and it was argued that the most effective way to approach innovation was to embrace a complex mode of innovative activities that encompass technological, non-technological, process, product and organizational innovations (Evangelista & Vezzani 2010; Oke 2007). To excel in several

types of innovation, organizations need to adopt a systematic approach to the subject.

Thus, an innovation strategy was argued to be essential (Pisano 2015).

To begin with and to ensure that innovative activities are financially feasible, innovative activities must be consistent with the organization’s wider strategy (Adams et al. 2006).

The objective of a strategy is to facilitate and enhance the alignment of organizational units and groups, clarify intentions and priorities and focus work activities around them (Pisano 2015). Innovation strategies are generally adopted to strengthen performance or to mediate the effects of uncertain environments (Morgan & Berthon 2008). However, an innovative organization can actually leverage innovative activities to increase performance despite the inherent uncertainty of global markets. Modern organizations need to also consider the potential value of external resources not directly owned by the firm in question, which is why the concept of open innovation was introduced (Chesbrough & Appleyard 2007).

Open innovation is about accessing external sources of knowledge through collaboration with stakeholders who possess relevant knowledge that can be utilized in the context of the company’s innovation process (Saebi & Foss 2015). To facilitate obtaining, integrating and commercializing knowledge from external sources of innovation, West &

Bogers’ (2014) process model was introduced. It argues that identifying and acquiring ideas and knowledge from external sources is only half the battle – these innovations must also be integrated into the firm’s R&D and other functions. A compatible organizational culture and a suitable level of technical capability are required. Thus, a broader theoretical framework is called for, which is why the concept of open innovation is so directly linked with the concept of business models (Chesbrough & Appleyard 2007). Fundamentally, the business model (BM) and business model innovation (BMI) -constructs examine the architecture of the organization’s value creation, delivery and capture mechanisms (Bocken et al. 2013). According to Achtenhagen et al. (2013), “business models which create value over time are embedded into a multi-dimensional organizational and strategic setting of capabilities, which are formed by sets of activities.” Thus, according to Achtenhagen et al., the business model itself is not an isolated construct but requires the support of strategic actions and dynamic capabilities.

Next, two types of qualitatively different learning were briefly studied. These are called exploration and exploitation, where exploration refers to discontinuous or breakthrough innovation and exploitation to continuous or incremental innovation (He & Wong 2004).

From the perspective of organizational innovative activities, it was found that these two types of innovation are contradictory in terms of organizational architectures and thus require effective management of strategic contradictions (Smith & Tushman 2005). The simultaneous successful employment of both explorative and exploitative innovation activities is called organizational ambidexterity in literature (O’Reilly & Tushman 2008).

If capabilities required for the profitable deployment of different technologies through a business model are not acquired and developed, organizations may not be able to build, let alone sustain competitive advantage (Teece et al. 1997). The theory specifically focused on what kind of resources and capabilities are required to exert a modicum of control in the often chaotic and uncertain business world is called dynamic capabilities.

Several different definitions for dynamic capabilities were introduced. Each definition was found to consider dynamic capabilities to be organizational and strategic antecedents through which managers manipulate firm resources and capabilities to facilitate the continuous development of competitive advantage. Managers are also responsible for recognizing business opportunities through the orchestration and integration of both new and existing assets. These assets and organizational capabilities are ingrained in the organization’s existing routines, structures and processes (Wang & Ahmed 2007). The routines can be identified in the way the organization operates, in its organizational culture, how the organization is structured, and in the general mindset of its senior leadership. (O’Reilly & Tushman 2008.) The connection between business models and dynamic capabilities is apparent, as BMI often requires changes to firm boundaries, changes or modifications in organizational structure and control, and even changes in internal organizational culture. Thus, most if not all business model changes are almost by definition strategic issues, for which the senior leaders are responsible. (Leih et al.

2015.) Based on these notions, Teece’s (2018) schema was introduced, which illustrates the interdependent nature of business models, organizational design and strategy.

Finally, as the building blocks and their interconnections were studied to a satisfying extent, the specific dynamic capability relevant for the scope of this thesis of building an agile organization was introduced. Absorptive capacity (AC) emphasizes organizational learning capability which helps firms assimilate and implement new technologies, practices and processes. Thus, in theory, this particular dynamic capability could affect perceptions toward agile methods and techniques. Furthermore, AC was chosen as it is a construct where reliable and scientifically validated questionnaires exist (e.g. Jansen et al. 2005) that were also a perfect basis for the first part of the survey that was conducted at the case company. Lichtenthaler (2009) argues that the benefits of dynamic capabilities are heavily contingent on organizational learning processes which manifest themselves in the firm’s absorptive capacity. Moreover, Tu et al. (2006) argue that absorptive capacity influences the firm’s ability to implement innovative management practices. In a general sense, the entire enterprise agile operational model and framework is an innovative managerial practice and definitely includes innovative practices on a smaller scale (AWM and AWT). Thus, a synthesis begins to form, roughly illustrated in Figure 12 below.

Figure 12. Synthesis of theory and empirical results.

The agile