Improvisation as a Dynamic Business Capability

Reference: El Sawy, O.A. and Pavlou, P.A. (2008) IT-enabled business capabilities for turbulent environments, MIS Quarterly Executive 7:3, 139-150.

El Sawy and Pavlou, who have written several articles on the subject of innovation, conclude that strategic advantage requires a “trifecta” of operational, dynamic, and improvisational business capabilities. It’s easy to see why companies need to achieve operational excellence to succeed in almost any environment. El Sawy and Pavlou find, however, that dynamic and improvisational capabilities are necessary for success in turbulent environments, and that in the most turbulent environment, improvisational capabilities are most important. Furthermore, a company’s information technology capabilities need to be aligned and structured properly to support the desired mix of operational vs. dynamic and improvisational capabilities.

Monideepa Tarafdar and I have observed that innovative companies require an ability to achieve and balance operational excellence with strategic vision (Tarafdar, M. and Gordon, S., 2007), a competency we call “ambidexterity,” after O’Reilly and Tushman (2004) and Vinekar et al (2006). In our model, strategic vision relies upon what El Sawy and Pavlou term dynamic and improvisational capabilities, those that allow an organization to respond to the external environment. To this extent, our findings support El Sawy and Pavlou and vice versa.

What I found most interesting in this article is the authors’ division of capabilities for responding to the dynamic environment into two parts – dynamic and improvisational. They define “dynamic capabilities” as those needed to “effectively reconfigure existing operational capabilities to match the changing business environment.” They define “improvisational capabilities” as “the learned ability to spontaneously reconfigure existing resources in real time to build new operational capabilities that better match novel environmental situations.” From this definition, it seems that improvisational capabilities are simply a subset of dynamic capabilities. So, I’m struggling to understand if these really are substantially different capabilities, and if so, whether they require or build upon different information technology capabilities.

El Sawy’s and Pavlou’s model of “dynamic capabilities” includes four dimensions: environment-sensing, learning, knowledge integrating, and coordinating. Three of these dimensions (competencies?) clearly contribute to a firm’s ability to respond to a dynamic environment. Specifically, a firm cannot possibly respond to changes it cannot sense. So, environment sensing is critical. Also, it cannot respond if it cannot learn the skills and capabilities it might need in a changed environment. I’m not sure that coordination is a critical dynamic capability. Although I might not eliminate it as a dynamic capability, it seems more important as an operational capability. That said, operational capabilities, such as for leadership, flexibility, and governance, could also be equally important as dynamic capabilities.

The difficulty in deciding where coordination belongs in a model of business capabilities highlights the problems inherent in building such a model. And, it motivates the question of whether improvisation better understood one of the elements of the business capabilities trifecta or if it is more appropriately classified as a dimension of dynamic capability. If the other dimensions of dynamic capability are, implicitly, non-improvisational – that they are, in some sense, planned – then improvisation is orthogonal to them and would be better classified as a dimension of dynamic capability. Alternatively, if the other dimensions of dynamic capabilities can be achieved in both a planned and improvisational way, then it makes more sense to treat to treat them as both dynamic and improvisational capabilities, in which case the improvisational classification is needed to complete the trifecta.

While either model can work, I think it makes more sense to organize improvisation as a dimension of dynamic capability. For the most part, environment sensing is a planned activity, and the capability is not subject to a great deal of improvisation. Learning and integrating have more opportunities for improvisation, but also, especially at the organizational level, they are capabilities more organized than improvisational. So, I would argue, that ability to improvise is just one more dynamic capability.

What IT capabilities and infrastructure are necessary to support an improvisational capability? The authors provide some answers – I won’t go into them here – but clearly, more research is needed in this area.

O’Reilly, C.A., Tushman, M.L., 2004. Ambidextrous organization. Harvard Business Review 82 (4), 71–81.

Tarafdar, M. and Gordon, S., 2007. Understanding the influence of information systems competencies on process innovation: A resource-based view, Journal of Strategic Information Systems 16, 353-392.

Vinekar, Vishnu, Slinkman, Craig W., Nerur, Sridhar, 2006. Can agile and traditional systems development approaches coexist? An ambidextrous view. Information Systems Management 23 (3), 31–42.