Mastering Digital Change: The Power of Absorptive Capacity in Tech Adoption
By Berto Mill, Technology Consultant, CIBC
The concept of dominant logic in management highlights a specific challenge: managers often develop a fixed way of thinking, shaped by years of reinforced financial success and discarding less effective strategies. This ingrained mindset makes shifting towards new, potentially transformative approaches increasingly difficult (Prahalad 1986). In the realm of digital transformation, where technologies like AI are rapidly changing business landscapes, this rigidity creates a significant hurdle. Legacy businesses, accustomed to long-standing operational methods, find adapting to these technological shifts particularly challenging.
Firms entrenched in traditional profit-driving methods often struggle to absorb new technologies (Cohen 1990), a phenomenon evident in legacy industries such as construction. For instance, many contractors find integrating basic digital solutions like CRM systems and timesheet software challenging, burdening business owners aiming to scale in the digital age. Customers increasingly expect digital experiences, which these companies are not equipped to provide. This is where the value of digital integration consulting becomes apparent. Consultants facilitate the adoption of digital tools without necessitating a fundamental change in the company’s dominant logic or strategy. The process remains consistent, but digitization and data collection are introduced. The key is then to leverage this data to develop new services and tools that benefit the company.
As we advance, AI and data governance emerge as pivotal drivers of scalability and sustainability in the business world.
Every day, new digital tools are emerging with transformative potential. For example, AI has dramatically reduced software development times from months to days. Concurrently, there is a skyrocketing demand for data governance techniques. In this landscape, digital integration consultants play a crucial role. They help companies adopt a ‘digital-first’ dominant logic, creating value by mapping out user journeys and integrating digital processes.
Adopting a digital-first approach transforms the customer journey, extending beyond traditional touchpoints like calls, emails, and in-person interactions. This approach fosters a seamless environment where employees and customers are more interconnected throughout the entire process. For instance, consider a retail scenario where a shopper creates an account at a store. This digital integration not only facilitates reward accumulation with every purchase but also enables the business to offer tailored recommendations based on the customer’s preferences. Such personalization enhances the customer experience and simultaneously provides the company with valuable data to refine their services.
When data is systematically collected across all organizational processes, it becomes a powerful tool for measurement and improvement. AI, for instance, can analyze spending trends in a financial firm, offering tailored advice to users on spending habits or savings plans. Additionally, AI’s capabilities extend to automating communication tasks, such as generating emails, recruitment letters, and reports, streamlining these essential functions.
As we advance, AI and data governance emerge as pivotal drivers of scalability and sustainability in the business world. The growing customer demand for personalized digital experiences poses a significant challenge to legacy companies entrenched in traditional dominant logic and limited absorptive capacities. The potential for digital transformation is immense, yet it requires a nuanced approach to bridge the gap between existing business models and emerging technologies. This is where the crucial role of technology integration consulting becomes apparent – serving as a vital intermediary to facilitate this transition and ensure that businesses keep pace and lead in the digital era.
References:
1. Cohen, W. M., & Levinthal, D. A. (1990). Absorptive Capacity: A New Perspective on Learning and Innovation.
2. Prahalad, C. K., and Richard A. Bettis. “The Dominant Logic: A New Linkage between Diversity and Performance.” Strategic Management Journal, vol. 7, no. 6, 1986, pp. 485–501.