Microfoundations for Sensing and Seizing of Digital Innovation Opportunities
Sensing and Seizing Digital Innovation Opportunities
Sensing and Seizing of Digital Innovation Opportunities are dynamic capabilities (higher order co-ordination activities) of an organization's senior management team that need to be built over time. Warner and Waeger (2019) find that sensing and seizing rest on microfoundations as shown in Table I below.
Table I: Microfoundations of Digital Dynamic Capabilities and Examples
| Micro foundations of Digital Dynamic Capabilities | Examples |
|---|---|
| Digital scouting | A company sets up a dedicated team to monitor emerging technologies like artificial intelligence, blockchain, and IoT, attending tech conferences and engaging with startups to identify potential disruptive innovations. |
| Digital scenario planning | An automotive manufacturer develops multiple future scenarios considering various levels of electric vehicle adoption, autonomous driving technology advancement, and changes in mobility preferences to guide their long-term strategy. |
| Digital mindset crafting | A traditional retail company implements a company-wide digital literacy program, including workshops on design thinking, agile methodologies, and data analytics to foster a more digitally-oriented culture. |
| Rapid prototyping | A financial services firm creates a "digital garage" where cross-functional teams can quickly develop and test new digital products or features, such as a chatbot for customer service, within weeks rather than months. |
| Balancing digital portfolios | A media company allocates resources between maintaining its traditional print business, growing its digital content platforms, and investing in emerging technologies like virtual reality for immersive storytelling. |
| Strategic agility | A telecom provider rapidly shifts its focus from 4G network expansion to 5G development and implementation in response to changing market demands and technological advancements. |
| Navigating innovation ecosystems | A healthcare company partners with tech startups, academic institutions, and other healthcare providers to co-develop a new telemedicine platform, leveraging the strengths of each partner in the ecosystem. |
| Redesigning internal structures | A manufacturing firm transitions from a hierarchical structure to a more flat, agile organization with cross-functional teams dedicated to specific digital initiatives, such as implementing IoT in their production lines. |
| Improving digital maturity | An insurance company invests in comprehensive digital skills training for existing employees, while also recruiting digital natives for key roles to enhance overall organizational digital capabilities. |
Sensing and seizing in practice
Consider a traditional retail bank that begins to notice rising customer interest in instant, embedded payment experiences, as fintech challengers roll out real-time peer-to-peer transfers and buy-now-pay-later options that make the bank's own card-based products feel slow and inflexible. That shift is a digital innovation opportunity in the making — but whether the bank actually senses it early and seizes it before competitors do depends on which microfoundations are in place, and on how deliberately senior management coordinates them.
On the sensing side, digital scouting is what first surfaces the pattern: a dedicated team tracking fintech activity, attending industry events, and talking to challenger startups notices the trend well before it shows up in the bank's own transaction data. Digital scenario planning then turns that raw observation into something actionable, by working through how quickly instant payments might be adopted across different customer segments and what that implies for the bank's existing card business. On the seizing side, rapid prototyping lets the bank stand up a pilot instant-payment feature in weeks through a dedicated "digital garage," rather than waiting on a multi-year core-banking upgrade; navigating innovation ecosystems lets it partner with an existing payments fintech instead of building the capability from scratch; and strategic agility lets it shift budget away from legacy card marketing toward the new offering once early pilot results look promising.
None of this happens by simply having these microfoundations present somewhere in the organization. Digital scouting that never reaches the executives running scenario planning just generates interesting trend reports that go nowhere. A rapid prototype built without an ecosystem partner in place may prove the concept but leave the bank unable to scale it quickly. And strategic agility that shifts budget toward the new offering without redesigning internal structures — for instance, without a cross-functional team that owns the initiative end to end — tends to stall once the pilot needs to move from a side project into a funded, accountable part of the business. It is senior management's active, ongoing coordination of these microfoundations — sequencing them, feeding insight from one into another, and re-combining them as the opportunity evolves — that converts a sensed trend into a seized, scaled digital innovation, rather than the presence of any single microfoundation on its own.
References
Warner, K.S. & Wäger, M. (2019). Building dynamic capabilities for digital transformation: An ongoing process of strategic renewal. Long Range Planning, 52(3), pp.326–349.