In 1990 Cohen and Levinthal* introduced the term “absorptive capacity” to describe the necessary ability of companies to sense new external information/knowledge to create new value propositions and then to seise (or capture) its value. This sensing and seising (terms introduced by David Teece) is by no means an automatic experience companies engage in. Quite the contrary, particularly when well-established in an industry it can be very hard to sense new conflicting information/knowledge about your current offering. This week I was working on a resource base map of a company comparing its resources (what it has) and capabilities (what it can do with what it has) to the relevant competition. Because we tracked these resource base maps over a period of 5 years it became quite clear how a lack of sensing and seising (i.e. absorptive capacity) moved the company from being a leader to being at the back of the pack.
Your ability to sense and seize new information/knowledge is essential for your company’s survival.
Because your company’s survival is at stake here and because taking in new, conflicting information/knowledge is hard, one cannot trust on emergent behaviour or on just luck. You have to be deliberate about this sensing and seising.
A recent article in the Long Range Planning explores deliberate mechanisms to facilitate your sensing and seising ability. The researchers distinguish between :
- Deliberate learning mechanisms for recognition (future customer needs, deeper customer needs, industry tendencies, etc.);
- Deliberate learning mechanisms for assimilation (fostering current and past critical reflections regarding customers, markets, and approaches, etc.);
- Deliberate learning mechanisms for exploitation (adapting or replacing organisational structure, procedures, competences, supporting new initiatives, etc.).
Research data directly confirmed the need for deliberate mechanisms for assimilation and exploitation. It turned out that ‘just’ deliberate mechanisms for recognition are not enough to link to innovation. Merely noticing new environmental information will only lead to innovation if the company first lets it renew its current understanding. If this renewed understanding happens there was a link between recognition and innovation.
This research data emphasises the need to develop deliberate mechanisms for capability to sense and seize. The question is now if you have the absorptive capability to sense the importance of this and to seise it… 😉
* “Absorptive capacity: a new perspective on learning and innovation”. Administrative Science Quarterly 35, 128-152.