IT-Enabled Business Capabilities for Turbulent Environments

Abstract

A turbulent business environment is characterized by unpredictability arising from unexpected changes in market demand and consumer preferences, new technology developments, and technological breakthroughs. Our research shows that there are three types of IT-enabled business capabilities that influence strategic advantage in such turbulent environments: operational capabilities (ability in process execution), dynamic capabilities (the planned ability to reconfigure operational capabilities), and improvisational capabilities (the learned ability to spontaneously reconfigure operational capabilities). The higher the turbulence of the business environment, the more critical the enterprise's dynamic and improvisational capabilities become.

Historically, IT departments have focused on supporting operational capabilities. Shifting the emphasis to IT-enabled dynamic and improvisational capabilities has significant implications for how the IT function needs to be managed. Our insights into those implications flow from our research into the relationships between an enterprise's IT infrastructure capabilities and the three proposed IT-enabled business capabilities. IT infrastructure capabilities are an awareness of what functionalities the IT infrastructure has to offer, an understanding of when and how to use them, and, when using them, of taking advantage of specific IT functionalities and their combinations.

We describe three types of emerging IT infrastructures -- event-drive, service-oriented, and self-learning -- that enterprises will need to embrace to support IT-enabled dynamic and improvisational capabilities. Finally, we provide guidelines for CIOs as they seek to overcome the hurdles they face in turbulent business environments.