Create a Plan for the Integration of New Technologies

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Organisations operating in competitive markets continuously seek to enhance their competitiveness through development and innovation of technology and marketing, design, and distribution systems. (Chesbrough & Teece, 2002). Even though new products are the most noticeable innovation outcomes, innovation is found not only in new products and technology, but also in processes and activities, and research and development (R&D) climate (Estrada, Martín-Cruz, & Pérez-Santana, 2013) leading to successful product creation.

All organisations need to adapt to technological change, including public and non-profit organ- isations (Thomke & Von Hippel, 2002). These organisations also need to create appropriate ICT (Information and Communication Technology) structures and find new ways to communicate with customers (Ryzhkova, 2012) – for example, by Internet (Facebook), text (SMS), voice (tele- phone), and video (video calls).

Even the best technology or process may not be successfully launched or implemented if the receivers in a market or organisation are not prepared to adopt it (Varkey, Horne, & Bennet, 2008). External market launches are normally accompanied by high-profile marketing cam- paigns, while internal launches are more mundane. They however often involve some action – for example, education and dissemination of infor- mation regarding the innovation, although not comparable in magnitude to external product launches. The inadequacy of internal innovation

campaigns versus external ones may actually affect the internal adoption processes and the diffusion rate (Damanpour & Daniel Wischnevsky, 2006), particularly with respect to employee motivation and involvement (Cavagnoli, 2011).

In the present paper, we study implementation of an innovative technology. The users could not influence the implementation, neither in content, nor in process. Despite this deficiency, unplanned initiatives emerged among the users, contribut- ing to enhanced efficiency of the final technol- ogy application. Thus, despite a badly planned and managed implementation, the end result was a success.

Furthermore, new technology implementa- tion calls for changes in organisational capabil- ity. Attempts to exceed an organisation’s existing capabilities could impede innovative activities (Danneels, 2007; Levinthal & March, 1993). Previous research into the dynamic capability concept (Teece, Pisano, & Shuen, 1997) found that a strong focus on sensing could lead to exag- geratedly high expectations of other parts of the organisation regarding seizing the innovation and undergoing transformation in response to it (Ellonen, Wikstrom, & Jantunen, 2009), caus- ing a ‘capability gap’ in innovation expectations across which the organisation could not deliver. An unbalanced (Kyoo-Man, 2013) dynamic capa- bility configuration is likely to adversely influence organisational performance.

This empirical case study adds to previous research on innovation and organisational change

Unbalanced dynamic capabilities as obstacles of organisational efficiency: Implementation issues in innovative technology adoption

Urban LjUngqUist Department of Industrial Economics, Blekinge Institute of Technology, Karlskrona, Sweden

Abstract: This paper draws on the dynamic capability framework in a healthcare context. It offers empirical experience of the sensing, seizing, and transforming capabilities acting in unbalanced configuration, potentially hindering organisational efficiency. Recent research is complemented by connecting three management roles to the dynamic capability framework. Lack of top management vision and co-ordination could lead to excessive autonomy of subunits, hindering knowledge and information transfer within the organisation. The findings also identify an organisational paradox that puts undue pressure on units to be dually flexible and consistent, thus pushing separation of content from process.

Keywords: dynamic capability, healthcare, innovation, organisational change

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It was only recently noticed that empirical studies of dynamic capability were rare (Newbert, 2007). In the current paper, a dynamic capabil- ity framework is applied from that proposed by the concept’s initiator (Teece, 2007; Teece et al., 1997), the notion of a capacity to sense and shape opportunities and threats, seize opportunities, and maintain competitiveness through enhanc- ing, combining, protecting, and transforming the business’s tangible and intangible assets. This new application provides the first comprehen- sive model of the concept that has been empiri- cally operationalised and explored (Ellonen et al., 2009).

The dynamic capability framework consists of the sensing, seizing, and transforming categories (Katkalo, Pitelis, & Teece, 2010; Teece, 2007; Teece et al., 1997). Sensing primarily involves searching and scanning for activities in the organ- isation’s environment. The sensing category includes processes to tap supplier and complemen- tary innovation, processes to tap developments in exogenous science and technology, and processes to identify target market segments, changing cus- tomer needs, and customer innovation. Many of these aspects apply logically to top manage- ment’s main task of envisioning and leading the organisation into the future. The connections, however, are merely theoretical, since numerous examples indicate top management’s inability to convey visions and lead the organisation onwards. Processes to direct internal R&D and select new technologies normally include processes of an ad hoc nature. Furthermore, the need to develop ‘absorptive capacity’ (Cohen & Levinthal, 1990; Volberda, Foss, & Lyles, 2010) to identify ideas applies as well. Sensing could also be described as an ongoing iterative process linked to daily activi- ties. Empirical studies demonstrate that awareness of process and interaction comes from entrepre- neurial characteristics, such as ‘…proactiveness, integrative skill, and intrinsic motivation’ (Lee & Kelley, 2008, p. 165), and from supportive organ- isational routines (Katzy & Crowston, 2008). Previous research shows that an excessive focus on sensing could raise unrealistic expectations within the organisation regarding seizing and transform- ing (Ellonen et al., 2009), causing a ‘capability

by including an empirical health care context. The main concern for many (public) health care providers is on efficiency. In this paper, we build on existing research in the construction of the research question: How could unbalanced dynamic capability configurations hinder organ- isational efficiency?

Drawing on dynamic capability theory, we complement recent research by connecting three organisational management roles (ad hoc, top, local) to the dynamic capability framework and identify important dynamic capability issues of organisational efficiency. We apply a bottom– up perspective from management in local units where the new technology is being implemented. This adds to existing research into dynamic capa- bility, which normally takes a top-down manage- rial perspective.

The purpose of this paper is to identify parts of the dynamic capability configuration that, when unbalanced, could become obstacles to organisational efficiency.

Theory The prevalent research perspective in strategy is the resource-based view (e.g., Barney, 1991; Wernerfelt, 1984), which focuses on organisa- tional abilities to manage resources and compe- tences, for example, in innovation processes. In this paper, we focus on capability, which is regu- larly subdivided into three subconcepts: various kinds of resources and capabilities, the capability to manage resources and skills in daily work, and the capability to manage and modify resources and capabilities in accordance with outside influ- ences (Helfat et al., 2007; Penrose, 1959; Winter, 2003). Our research focuses on the last type, commonly called dynamic capability. Dynamic capability is defined as ‘the ability to integrate, build, and reconfigure internal and external com- petencies to address rapidly changing environ- ments’ (Teece et al., 1997, p. 517), which relates well to a more recent definition, i.e., ‘the capacity of an organization to purposefully create, extend or modify its resource base’ (Helfat et al., 2007, p. 4). In the present paper, we formally adopt the latter definition, although scholars are still debat- ing alternative definitions (Barreto, 2010).

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the management roles to the empirical context instead of to the theoretical ‘orchestration’. In other words, we apply the roles in analysing the categories of the dynamic capability framework.

MeThod The ICT technology discussed here was imple- mented in nine healthcare units. Participation in the implementation process was determined jointly in discussions between project management and local unit management. Project management normally took the initiative in implementation. More details are presented below.

From discussions and interviews with respon- dents, and of the nine implementing healthcare units, the author made a final case selection using the following criteria: • minimum of six months since implementation; • use the technology on a daily basis; • implementation should be described as ‘suc-

cessful’ by both project management and local management; and

• the unit should be available to participate in the study.

Two units met the criteria and were contacted for meetings and interviews.

Case study method is used for data collection for this empirical study as it facilitates a deeper understanding of the context (Yin, 2003) of com- plex phenomena (Bryman & Bell, 2008). The case study is based both on primary and second- ary data: The former collected from interviews, the latter from archival documents on the focal context and other areas such as final reports on related projects. The primary data were used to describe the context of the cases, and the archi- val data for in-depth understanding. The archi- val data were used in an iterative process. They prompted questions to the respondents, and they were compared with findings from interviews. Comparison was made with projects previously conducted in the same public organisation or in other public health care organisations with similar projects, thus triangulating the data (Denzin & Lincoln, 1998).

Due to the exploratory design of this research, the interviews were informal in character and

gap’ in terms of innovations that the organisation cannot assimilate, i.e., innovation exceeding the organisation’s dynamic capability (Danneels, 2007; Levinthal & March, 1993), hindering its capacity to match the environment.

Seizing involves selecting and developing opportunities by maintaining and improving resources, support systems, routines, and compe- tences (Teece, 2007). Even though the healthcare sector’s central activities are influenced by the dynamics of the environment, these dynamics may also have implications for the efficiency/flex- ibility trade-off (Eisenhardt, Furr, & Bingham, 2010), particularly regarding the way that mea- sures to promote efficiency of daily handling of healthcare processes can act in opposition to the development of process flexibility (Augier & Teece, 2007; Teece, 2007). In addition, research- ers suggest that organisations tend to be ‘path- dependent’ (Cohen & Levinthal, 1990; Dierickx & Cool, 1989) and to rely on the same historic seizing and transforming activities (Ellonen et al., 2009), which also apply to public healthcare organisations. For these reasons, we here add the dimension of ‘adaptability’.

Transforming includes the following aspects: decentralisation, governance, co-specialisation, knowledge management (Teece, 2007), and what Simon (2002) calls balance between autonomy for rapid and accurate change adoption, on the one hand, and organised coordination, on the other. Without coordination, matching the innovation activities required to leverage a new technology may not occur (Chesbrough & Teece, 2002). This phenomenon is not limited to innovation, but applies to daily activities as well. Furthermore, recent empirical research finds evidence that managers’ limiting and framing biases, based on current resources and capabilities, could limit an organisation’s dynamic capability (Danneels, 2010; Leonard-Barton, 1992, 1995; Teece, 2000; Tripsas & Gavetti, 2000). Managers need to understand the value, reach, and applicability of the existing resource base to be able to manage it, let alone reconfigure and develop it. In Teece’s original framework (Teece, 2007, p. 1320), adopted in the present paper, a similar concept is called ‘orchestration’. Here we choose to relate

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eMpirical conTexT and cases Public healthcare organisations are complex. Politicians with different agendas sit on their boards and give the top management policy instructions. Such organisations often have lean budgets that focus on efficiency. At the same time, as evidenced in many countries, public healthcare organisations must fulfil cer- tain minimum performance levels, for example, regarding emergency care availability and time lag between patient presentation and consulta- tion with a doctor or the formulation of a diag- nosis. There are occasions when the focus on efficiency of the process contributes to a lack of overall co-ordination, as it appeared to do in the empirical context of the case studied in this set- ting, highly specialised physicians, nurses, and other staff work with patients in the context of individual treatment delivery, with an entirely different focus from that of process efficiency. Add to this scenario a stream of patients moving through several highly specialised autonomous units, all integrated with minimal coordination, and the complexity of the empirical context becomes obvious.

Management roles All healthcare organisations are comprised of various units and management roles. We here focus on three management roles – top management, local management, and ad hoc (project) management – central to the healthcare context of this study. The first role comprises politicians, functional (top) manag- ers, or a combination of the two. Their main task is to manage the organisation, which could be a major hospital or the healthcare units of a region, in accordance with political decisions, by means of explicitly formulated visions, and to coordinate the organisational activities. Their focus is, as mentioned, primarily on the efficiency of daily processes in the aggregate, to measure success and progress, instead of on daily activities.

The second role we study here is that of local management, which is mainly involved in daily healthcare activities – clinical issues such as treatment in internal medicine or orthopaedics.

the interview guide consisted of open-ended questions. In total six people were interviewed, a majority of them twice, in personal meetings and via telephone. Three of the six respondents were key informants. One is the manager of the project team responsible for the overall implementation. The other two are the managers for the two health care units, the cases under study.

Respondents were asked to describe to what extent they could plan and influence the proce- dure before, during and after implementation; to what extent they could influence the character- istics and surroundings, such as education pro- grammes and technological performance; to what extent, and how, the implementation procedure altered the daily activities. The respondents were also asked to describe potential changes in perfor- mance of daily activities, before and after imple- mentation. Each interview lasted for between 30 and 90 minutes. All interviews were recorded, transcribed and sent out to the respondents for correction and verification.

Results of this study were analysed from a within-case perspective (Yin, 2003). Lack of structural analysis of data may be perceived as a difficulty or weakness of case study research (Eisenhardt, 1989). To handle that difficulty, we designed the study using a heterogeneous approach that brings several perspectives together, facilitating more rigorous analysis, to improve fidelity, content validity and reliability (Creswell, 1994; Rouse & Daellenbach, 1999).

The interview transcripts, together with the project reports, internal memos and other archival documents, were thoroughly analysed for ‘patterns and themes’ (Miles & Huberman, 1994, p. 69). For validity reasons, the findings were also written up in an interim case report. Two key informants, and one member from the reference group, each inde- pendently reviewed the report. The revision pro- cedure followed serial iterations until the reviewer was satisfied with the result. Contradictory com- ments were addressed with special concern and thoroughly discussed with at least two reviewers, until an agreed formulation was achieved. Finally, the revised interim case report was checked by and discussed with two colleagues, looking for incon- sistencies and missing data.

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the efficiency gains are measured in the aggregate. Table 1 summarises the agendas of these three roles.

The project1 examined here had an overall aim of increasing healthcare efficiency in a par- ticular healthcare region. The project consisted of implementing high-technology video equipment, including a large flat-screen television and a video camera/recorder (hereafter: ‘Telemedicine’). The project had three overall objectives: • to add customer value; • to reduce the number of personal meetings; and • to complement telephone communication with

high-tech visual image communication.

The main efficiency benefit to be gained by implementing Telemedicine was to reduce the time and cost of travelling to meetings for employees, patients, and patients’ relatives. The reduced travel related to three types of meetings: • Initiation of healthcare plans (e.g., homecare

and special transportation arrangements), which normally occur towards the end of hospital treatment, for patients with aftercare needs post-discharge. These meetings are most commonly held to plan aftercare of elderly people with multiple disabilities and/or inju- ries. The healthcare plan procedure normally involves travel for the nurses and administra- tors responsible for post-hospital care, to meet with the patient and the hospital healthcare team, to obtain up-to-date information on the

In addition, local management focuses primarily on the quality and efficiency of the unit’s daily activities (local efficiency) and on the unit’s strategic development, for example, sharing of doctors’ experience and knowledge at confer- ences. The local units examined here have high autonomy. Unit autonomy may be beneficial due to its motivational aspects, with employ- ees being more involved in planning, decision- making, and implementation. However, autonomy may also have disadvantages, in that the organisation’s top management relinquishes some control of the unit. The autonomy may not be planned, but could emerge in the face of a top management leadership vacuum. The Swedish public healthcare system contains numerous examples of local units that have gained – or claimed – autonomy due to a com- bination of weak top management and strong local unit management. This phenomenon has gained a particular name, ‘chimneys’ (Meyer, 1993), visualising the local unit’s total focus on its primary activities, neglecting anything aside from those. In practice, unit autonomy, entails both advantages and disadvantages: the former relate to a focus on the customer (the patient) and highlight focal unit performance; the latter concern the difficulties that top management face in management and coordination of such a focus, which could lead to suboptimal system- wide performance.

The third and last role studied here is that of ad hoc management, here represented by a proj- ect management team whose raison d’être is to initiate, implement, monitor, and follow up the implementation of new systems and facilities, such as the video technol- ogy examined here. Their main focus is on the efficiency of the implemented projects. Though these projects are often implemented in daily opera- tional processes,

tabLe 1: agendas of the three heaLthcare management roLes

Agenda

Role

Ad hoc/project Management

Top management Local management

Main tasks Implementation of technology

Overall management and coordination

Healthcare clinical treatment

Ad hoc activities Formulate and realise vision

Research and development.

Execute political decisions Main focus Aggregated efficiency

in daily activities of implemented projects

Aggregated efficiency in daily activities

Quality and efficiency in daily activities of the local unit

1 Made anonymous.

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team joined the project and had the Telemedicine equipment installed at the request of a project manager. She saw great potential to save travel time, since this unit is divided between two hos- pitals 60 km apart. The unit already had a simi- lar, though lower quality, video projector system installed for internal meetings, somewhat reduc- ing the efficiency gains from the Telemedicine project. On the other hand, the presence of the equipment implied high technical awareness and prior-experience with a similar technology, sug- gesting potential for swift implementation and adaptation.

Telemedicine implementation was smooth and the system was soon used on a daily basis. However, Telemedicine did not increase effi- ciency at the Ortho unit as such, since the gains accrued only to the external nurses who now no longer needed to travel to the Ortho unit. In fact, the unit’s manager said that the Ortho unit’s efficiency decreased due to the technology imple- mentation. The reason is that, post implementa- tion, a nurse often had to stay with the patient throughout the video meeting, which could take up to one hour, and during the discussion of non- clinical issues. This was perceived as time- consuming by the nurses. However, the adminis- trator and nurse at the other end of the video link appreciated the nurse’s presence throughout the meeting, otherwise they would frequently need to offer additional information, as well as ask- ing and addressing additional questions requir- ing arising in the immediate situation, out of the patient’s need. Elderly patients with multiple disabilities frequently had difficulties adapting to Telemedicine, and the experience of viewing themselves in an inset window on the screen was confusing for some. Some of the interviewed nurses said that video interaction is impossible with dizzy patients and those with poor hearing.

Implementing Telemedicine reduced the num- ber of telephone meetings, especially for patients capable of participating in video meetings. The telephone meeting process differs somewhat from that of video meetings, since the former entails a sequenced meeting. The after-care nurses contact the patient’s family, via telephone. Then they con- tact the Ortho unit. At that stage, all details have

patient’s current condition and likely health and treatment needs on discharge from hospi- tal. These post-hospital care meetings normally take 45 minutes, yet the whole process could take four hours per patient, involving two or three nurses and/or administrators driving up to 100 km in each direction to and from the hospital – up to 12 hours of professional time plus direct travel costs;

• Internal meetings – including regularly sched- uled weekly or bi-weekly meetings for vari- ous healthcare professionals at local units, for example, meetings of doctors and the healthcare unit’s local management team. The meetings are important and highly prioritised, allowing professionals to discuss clinical problems, new methods, and clinically relevant management issues. When a unit has several geographical locations, local management teams need to dis- cuss and be up-to-date on managerial issues and directives. Some regular meetings involve three to five people spending one to two hours of travel time each, totalling up to 10 hours pro- fessional time plus direct travel costs; and

• Clinical examinations, here referring to meetings with patients to provide clinical examination services – for example, the clinical examination of a wound.

Participation in the project was determined jointly in discussions between project manage- ment and local unit management, the former normally taking the initiative to suggest participa- tion. Project and local unit management used sev- eral selection criteria when choosing participants: • appropriate setting for healthcare providers and

patients; • major efficiency potential; • long-lasting gains in efficiency to be expected

post implementation; and • geographical considerations involving, for

example, LAN facilities (bandwidth).

Two empirical cases are now described.

Case: Ortho The first case is that of an orthopaedic unit (here- after, ‘Ortho’). The unit and its local management

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Case: Physio The second case is that of a physiotherapy unit (hereafter, ‘Physio’). Like the Ortho unit, this unit’s local management team did not volunteer to participate in the Telemedicine project, but were asked to try out the system. The unit man- ager predicted that implementation would be very smooth and fast, due to technological issues their relevance to the physiotherapists’ daily work. He also thought it would be advantageous that the unit staff had limited expectations of the technol- ogy, and that these would soon be surpassed. He later commented that these limited expectations were not entirely beneficial. Employees and unit management could have planned implementation better if they better had understood the equip- ment’s potential.

Telemedicine was previously used by the Physio unit only for internal meetings, with occasional teaching by external lecturers, and patient update meetings from an external unit. The first two uses primarily eliminated travel time and costs for meetings and lectures, while the last replaced a function formerly handled via telephone. According to a physiotherapist, Telemedicine has resulted in greater patient safety, in that the patient ‘meets with’ the person respon- sible for upcoming clinical treatment. The time saved is mainly related to healthcare (and not administration). The unit has increased the num- ber of healthcare visits by more than 20% (annu- alised) despite the short time (about six months) that Telemedicine has been available.

The project management team suggested that the Physio unit could also clinically examine patients by video link during a trial period; yet the unit put this suggestion on hold. The next step, suggested by project management, is for the unit to adopt the healthcare plan procedure, which is expected to save travel time for both patients and healthcare employees.

The Physio unit on the other hand has pro- posed project managers should involve the local university in the project, so that unit employ- ees could view lectures and possibly interact with theoretical specialists. In addition, the unit manager also suggested involving a tertiary refer- ral hospital in the project, to enhance learning.

been decided on, and the telephone meeting with the Ortho unit is brief and primarily concerns double-checking details with the patient.

Furthermore, although Telemedicine was implemented at the Ortho unit, despite the implementation actually reducing the unit’s efficiency, the system deployment has had only a minor influence on the formulation of the patients’ healthcare plan. The Ortho unit calls for the aftercare nurses when the patient is ready to leave the unit. The nurses then decide when the healthcare plan meeting should take place. This is not ideal, according to the Ortho unit manager, since the unit is subject to demand pressures and so patients should not be kept in hospital longer than necessary.

In addition, when a patient is dizzy, the aftercare nurses are still required to use the Telemedicine sys- tem, even when a telephone meeting is preferred. According to the Ortho unit manager, this com- plaint can be put down to employee resistance to use Telemedicine, due to staff being tied to the patient and the video conference for a longer period of time than if the discussion occurred without the patient, via telephone. Also noteworthy that the patient’s family could potentially be invited to interactively join the video meeting with the patient and nurses. This may help to calm patients and reassure families, demonstrating commitment to achieving shared understanding of the patient’s condition and future healthcare plan. However, the Ortho unit manager indicated that, due to techni- cal difficulties, this is not yet possible.

Another potential offered by Telemedicine, according to the Ortho manager, is that aftercare nurses do not need to refer the patient to a doc- tor, since the nurse (with or without the patient) could interactively consult with the doctor in a Telemedicine meeting. In the latter case, the doctor could examine the patient clinically by Telemedicine as well.

To sum up, the Ortho unit is using Telemedicine only for healthcare plan meetings and not for internal meetings or clinical examina- tions. It is not used for internal meetings because of the existing video projector conference equip- ment previously mentioned, already installed in the conference meeting room.

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customer does not benefit from an integrated product offering, or when sourcing and other inputs do not benefit from integration and/or aggregation’.

Furthermore, from a dynamic capability perspective, the local units seem to span all three capability categories: they sense and seek external state-of-the art R&D knowledge from conferences and colleagues at other hospitals; they seize this technology by selecting applications that fit their unit’s treatment priorities; and they transform these applications by implementing them in daily processes. The local units have high an ‘absorptive capacity’ in the sensing function (knowing what to seek) due to their highly motivated employees, who are also highly adaptable in seizing (know- ing how to apply an application to the local unit). Both a unit’s absorptive capacity and adaptability are related to its autonomy. In addition, the local units displayed a high local transforming capa- bility as well, here referring to the high validity and reliability of medical treatments. The degree of organisational transformation, however, is low, due to the ‘chimneys’. Only minor knowledge transfer and information sharing take place.

In general, and from the dynamic capability perspective, local unit autonomy is beneficial, though its potential is under-exploited, since local management cannot influence the overall health- care process. In the cases examined here, unit autonomy seems undetected, or perhaps even ignored, by those in the other two management roles. An example from the empirical case descrip- tion is the rigid implementation plans, which were partially demotivating for local unit employees – interfering with their autonomy – but also not beneficial to the organisation as a whole, as they excluded a holistic view of patients and their needs to (horizontally) visit several healthcare facilities (chimneys) during rehabilitation.

Top management Top management’s main focus is on total organisa- tional (aggregated) output, and on benchmarking good internal and external examples. That is, they focus on the dynamic capability category of sens- ing. This makes sense in the light of the political agenda, often inherent to healthcare organisation

The unit’s doctors and physiotherapists could then observe and interact with the tertiary refer- ral hospital specialists’ clinical examinations and treatments of their patients. Furthermore, when the Telemedicine system is not in use and is avail- able, other local units frequently borrow it for their own activities.

discussion Initially, the discussion focuses on analysis of the cases in light of the three management roles, then moves to consideration of the dynamic capability categories of sensing, seizing, and transforming. To foster greater understanding of the phenom- ena, we conclude with certain propositions.

Local management Local unit management’s primary interest is in daily activities – patient treatment. However, as is evident in the cases examined here, the local units constantly become involved in other local units’ processes as well, since the patients are mov- ing horizontally across the ‘chimneys’. This may lead to the neglect of developments elsewhere in the organisation, such as knowledge trans- fer and information sharing. Local management could infer that such transfer and sharing are not for them to determine, since these are top man- agement matters. The enthusiasm of local unit employees is infectious, as evidenced, for example, by employees of local units adjacent to the Ortho unit taking the initiative (without the involve- ment of project management implementers) to use the new technology. In other words, the local units primarily focus on their own activities, even though they are logically involved in each other’s processes.

From a local unit’s perspective, there are ben- efits to the ‘chimneys’ as well, for example, since patient satisfaction and output performance are highly prioritised. Problems arise when the pri- oritisation is local only. On the other hand, when it comes to dynamic capability issues, the ‘chim- ney’ structure has the potential to be locally very adaptive to environmental change, and therefore implies an inherently great dynamic capability. As Teece (2007, p. 1337) puts it: ‘There is little harm and much benefit from decentralisation when the

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processes and learning. This inability may be due to the great path-dependency evident in top man- agement actions. Researchers suggest that organ- isations tend to be path-dependent (Cohen & Levinthal, 1990; Dierickx & Cool, 1989) and to rely on the same historic seizing and transform- ing activities (Ellonen et al., 2009). On the other hand, the organisation as a whole ought to be path-dependent, reliably so, in its daily healthcare processes. In short, top management does not seem connected to the seizing and transforming dynamic capability aspects of the organisation.

Project management When the project management team implements technological innovations in the organisation, it acts on orders from top management, which, as we have demonstrated, mainly emphasises the sens- ing dynamic capability category. Furthermore, since the project management focus is on the implementation procedure as such, partly due to their own competence and capability perspective, problems may occur.

The project management team does not seem aware of the potentially negative outcomes of a project, such as altering daily routines and shifting problems to other healthcare units (downstream in the value chain), as described in the cases pre- sented in this paper. The problem is also evident in the aggregated efficiency measurement of proj- ect success, which, due to cumulative analysis, excludes local unit obstacles and facilitators that could potentially increase or decrease implemen- tation efficiency. Less attention seems to be paid to the needs and autonomy of the local units, to the negative side-effects that implanting innova- tions might bring. Project management seems to neglect the seizing dynamic capability altogether. This is unproductive, since it weakens their con- nection to the daily activities (at the implemented local units).

Project management activities seem to be directing internal R&D and the selection of new technologies in discussions with top manage- ment. On the other hand, the absorptive capacity (Cohen & Levinthal, 1990; Volberda et al., 2010) to identify ideas that relate to local daily activities obviously applies more to local unit management.

issues, with its strict cost focus, due to budgetary restrictions. It also makes sense for other reasons, as the healthcare organisation is dependent on macro- economic and macropolitical factors such as: • changed political decisions (changed political

majority in a region/nation); • changed economic factors (financial crisis

affects people psychologically); • changed societal behaviour (people move to

larger cities, increasing pressure on the health- care organisations affected);

• changed technological behaviour (people use new information and communication chan- nels); and

• changed legal issues (privatisation/deregulation of healthcare).

According to local unit managers, top man- agement is unable to offer organisational guid- ance, through fully developed visions, to lead the organisation into the future, indicative of weak seizing and transforming dynamic capabili- ties. From a theoretical strategy viewpoint, this is surprising, since existing research emphasises the importance (Harrison, 2005; Winter, 2003) of fully developed aims for motivating and guid- ing employees. One reason for this weakness may be biassed managerial thinking that could actu- ally limit an organisation’s dynamic capability (Danneels, 2010; Leonard-Barton, 1992, 1995; Teece, 2000); Tripsas and Gavetti (2000) refer to the cognitive inertia implicit in such managerial processes. Another explanation of the weak trans- forming dynamic capability is the relentless focus on outputs, which could de-emphasise the impor- tance of the healthcare (treatment) processes. Furthermore, the top management focus on aggregated efficiency is probably another expla- nation, in that daily process quality (efforts and achievements) are not evident in the cumulative follow up numbers. A third explanation pertains to the political organisation, which could block top management’s ability to seize and transform.

Top management also seems less aware of the importance of stimulating knowledge transfer and information sharing among local units. This is unexpected, since transfer and sharing foster good practice. They ultimately institutionalise efficient

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capability categories. We now review these details and suggest propositions to be tested.

In an empirical healthcare context, we show that lack of top management vision and co- ordination leads to local units that are excessively autonomous (chimneys), in some respects, hin- dering knowledge and information transfer within the organisation. Despite this autonomy being evi- dent at the local management level, it is a matter for top management to handle. Top management action, or lack thereof, is the critical determi- nant. More relevant and deliberate co-ordination could limit autonomy, reduce the obstacles, and enhance knowledge transfer within the organisa- tion. Furthermore, a strong sensing capability and an equally strong transforming capability – as in the local management – imply local unit-focussed initiatives that do not necessarily benefit the organisation as a whole. The strong transforming capability comes primarily from a local unit’s co- specialisation and knowledge management, which are organised to support and deliver superior per- formance in its daily activities. The transformation category could benefit from being redirected from a local only focus onto an organisational focus.

Proposition 1: Autonomous local units not being co- ordinated, when their efforts are not directed towards both local and central aims, could be an obstacle of organisational efficiency.

This discrepancy calls for alteration in the idea input, to capture the ongoing daily processes in which employees’ integrative skills and involve- ment come into play, as well as their interactions with colleagues and patients (Lee & Kelley, 2008). This input would strengthen the seizing category, in which all three management roles are weak. See Table 2 for a summary.

proposiTions To sum up, two case studies have been presented, showing how an innovative technology was suc- cessfully implemented in a healthcare context. After studying how various organisational management roles (ad hoc, top, and local management) took part in the implementation from a dynamic capability perspective, we are now ready to propose catalysts of and obstacles to organisational change processes.

Scholars suggest that an organisation with a strong sensing capability that is not balanced by equally strong seizing and transforming capa- bilities risks overdoing innovation – innovating beyond its dynamic capability (Ellonen et al., 2009). Our findings advance support for such a view, suggesting that a strong sensing capability and equally strong transforming capability do not bring organisational success if not balanced by an equally strong seizing capability. A more compre- hensive explanation, we suggest, is to be found in the internal details of these three dynamic

tabLe 2: categorisation of heaLthcare dynamic capabiLity according to the three management roLes

Dynamic capability category

Actor

Project/Ad hoc management Top management Local management

Sense Benchmark output externally Benchmark output externally

Benchmark external R&D treatment on local unit specialities

Measuring project output in terms of aggregated efficiency

Political decisions as input Measuring internal output in terms of aggregated efficiency

Seize – – R&D Project implementation procedure in focus

Autonomy in delivery (process)

Transform Expect implementation directives from top management

– Path-dependency in patient treatment (content)

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INNOVATION: MANAGEMENT, POLICY & PRACTICE Volume 16, Issue 1, April 201492

(efficiency) are handled versus the development process (treatment flexibility) (Augier & Teece, 2007; Teece, 2007).

Proposition 3: Local units building non-beneficial autonomy, with actors involved not balancing flexibil- ity with efficiency, could be an obstacle to organisa- tional efficiency.

A strong transforming capability was identi- fied in the autonomy of the local units, allowing them to focus on both efficiency and flexibility. In particular, we found the local unit to be path- dependent in the content of its daily activities in patient treatment, though not in the process of the same, where high adaptability was displayed instead. High adaptability seems essential, since local management cannot always determine or influence the daily processes in which they are involved. At the same time, they also need to be highly path-dependant and to build treatments and processes on established knowledge, clini- cal tests, and research. Put differently, the local units cannot be flexible in their daily clinical con- tent (treatments), they must be path- dependent. However, they should be flexible in their daily processes (systems) – here they must not be path-dependent.

Proposition 4: Path-dependency in daily activities, in process instead of content; and adaptability in content instead of process could be obstacles to organisational efficiency.

The adaptability dimension logically belongs to project management due to its ad hoc nature. As indicated by the previous proposition, adaptability is crucial also to local management’s daily activi- ties. From the empirical case descriptions, it seems this ‘common ground’ between the two manage- ment roles is under-exploited. It could potentially be used to bridge the two, to bring about mutual understanding and enhanced co-operation. The co-operative initiative should come from the project management team, since they are used to working in ad hoc settings and to adapting to new contexts, such as the local unit’s daily activities.

Proposition 5: Lack of mutual understanding and co-operation among local units could be an obstacle to organisational efficiency.

A strong seizing capability particularly applies to organisational efficiency, since it involves the selection and development of resources, sup- port systems, routines, and competences (Teece, 2007). In the present paper, however, we actu- ally identified a weak overall seizing capability, due to weak top management guidance and co- ordination of local units, inferring weak organ- isational efficiency. More specifically, the only seizing aspect we identified were R&D efforts of local units, in which knowledge and applications suitable for the focal (local) unit were adopted and adapted.

Proposition 2: A seizing capability not being balanced by a sensing and a transforming capability, could be an obstacle to organisational efficiency.

In this study, two of three management roles are mainly concerned with efficiency at an aggre- gated level. The main focus of the third role, local management, is more on flexibility than effi- ciency, particularly in terms of treatment actions. This trade-off may be the main reason why there is an inherent mismatch between the other two roles (project and top management) and the local management role.

A strong sensing capability matched with a strong seizing capability could lead to high bar- riers between local units even within the same healthcare process, because of the dominant focus this pairing would direct towards the local unit. The mismatch also could lead to high bar- riers between local units, on the one hand, and top management and project management, on the other. This would particularly apply when, as in the present cases, both project and top management possess weak seizing capability. This is partly due to the local unit’s strong local focus, and partly due to top- and project man- agement’s lack of specificity when it comes to daily activities. The latter merely focus on aggre- gated efficiency. Furthermore, even though the healthcare sector’s central activities are occasion- ally not influenced by environmental dynamics, these dynamics may still have implications for the efficiency/flexibility trade-off (Eisenhardt et al., 2010), particularly concerning how daily activities such as healthcare processes

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• one strong dynamic capability category does not compensate for weakness in other categories;

• strong sensing and transforming categories com- bined with a weak seizing category hinder the ad hoc management role from fully comprehending the details of daily activities. A stronger seizing capability could serve as ‘common ground’ when fostering adaptability within management roles;

• balanced sensing, seizing, and transforming capabilities could bring about an overly focussed agenda on the part of operational (local) manage- ment, which could eventually establish excessive autonomy, erecting walls around local activities and building what are known as organisational chim- neys. Top management co-ordination is essential to avoid this and to bridge the local units’ so called chimneys. This particularly applies when manage- ment roles differ in their balance of capabilities;

• combining the sensing capabilities of different management roles brings strong input to the organisation, yet must be balanced so as not to exclude the sensing capability of any one role;

• a local unit’s transforming aims should fit the organisation’s transforming aims, otherwise local autonomy could be disadvantageous to the organisation; and

• for enhanced understanding and specificity of daily processes, the management roles could be analysed in terms of content and process (path- dependency and adaptability, respectively) for enhanced organisational change and efficiency.

Managerial implications • Lack of top management vision and co-

ordination could lead subunits to become excessively autonomous, which could hinder knowledge and information transfer within the organisation. Despite this autonomy being evi- dent at the local management level, it is overall the responsibility of top management;

• a strong sensing capability matched with a strong seizing capability could lead to high bar- riers between local units in the same healthcare process, because of the dominant focus this pairing would direct towards the local unit. The mismatch could also lead to high barriers between local units, on one hand, and top and project management, on the other;

The transforming capability is strongest where healthcare issues are most readily adapted – in daily activities and processes. Project management, for example, was found to possess high transforming capability, pri- marily in high adaptability contexts. However, this was likely to be due to the units’ ad hoc nature, as emphasised in the previous proposi- tion. Decentralisation and autonomy are also prerequisites for local versus top management organisation. Autonomy could serve as both a catalyst and an obstacle. The opposite is the case for ‘near decomposability’ (Teece, 2007, p. 1323) and coordination, which, except in project management implementation efforts, seem to be missing. The same applies to gover- nance, which serves merely to explicate visions and organise top management as such. As previ- ously emphasised, top managers’ framing biases and cognitive limits regarding current resources and capabilities actually could limit an organ- isation’s dynamic capability (Danneels, 2010; Leonard-Barton, 1992, 1995; Teece, 2000), as evidenced in the empirical cases examined here. Co-specialisation and knowledge management are central themes, primarily in the daily activi- ties of the local units, but also, in the project organisation as well. Without co-ordination, Chesbrough and Teece (2002) state that the matching innovation activities required to lever- age a new technology may not be implemented.

Proposition 6: Shortage in or lack of co-ordination in innovative and daily activities could be an obstacle to organisational efficiency.

conclusions Theoretical contributions This empirical study contributes to research into strategic change in general, and particularly to research into dynamic capability. We bring new knowledge of the sensing, seizing, and transform- ing capabilities and of how, in an unbalanced configuration, they could hinder organisational efficiency and change.

We also link three organisational management roles (ad hoc, top, local) to the dynamic capabil- ity framework and identify dynamic capability issues, important for organisational efficiency:

INNOVATION: MANAGEMENT, POLICY & PRACTICE Volume 16, Issue 1, April 201494

acknowledgeMenT The author gratefully acknowledges the support from the Research Council of Blekinge County, making this research possible.

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Received 20 February 2012 Accepted 24 April 2013

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