Assessment of organizational agility in response to disruptive innovation: a case of an engineering services firm

Abstract

PurposeThe purpose of this paper is to develop a framework to manage the strategy to counter disruptive innovation by identifying stronger attributes and key strategic areas for improvements in an engineering services context with less freedom to orchestrate product innovation. The authors also validate the combined use of multi-grade fuzzy, Importance-Performance Analysis (IPA) and gap analysis in developing the strategy to mitigate turbulence.Design/methodology/approachThe paper presents a framework using a combination of Dynamic Capabilities and Organizational Agility to develop the strategy. The study uses data gathered from a 60-member engineering project team working on an Aircraft Engine Controller design to identify 50 attributes and the related importance and performance ratings. The research study is designed using a three-tier approach. First, multi-grade fuzzy is utilized to measure the overall firm response agility index. In the second step, the IPA is used to analyze the strength and weaknesses of the firm and to identify the attributes where the firm needs to focus. In the past step, gap analysis is used to prioritize the identified attributes. The findings are validated by panel discussions with a different group of experts from the project team and action points were arrived at.FindingsThis research work finds that the firms’ response agility index of 6.97 is comparable to that of the Original Equipment Manufacturers (OEMs) from previous literature, but still needs a better agility score to effectively counter turbulence from disruptive innovations. It also identifies seven key areas for improvement and their relative priority to effectively improve the response agility by utilizing the least number of resources, the reasons for the gap and the mitigation strategy to close the gap. The findings highlight a few key differences between an engineering services firm in comparison to OEMs and Software Services firms.Practical implicationsThe findings help the practitioners with a comparative agility score of an engineering services firm, and an effective way of measuring agility, identify key focus areas and prioritize the actions using a simple set of data that could be collected regularly to keep track of the improvements. The provided strategic framework to improve the agility score can be used for continuous improvement.Originality/valueThis paper contributes to the existing literature by developing a framework for outsourcing services companies to cope with the turbulence by using dynamic capabilities and organizational agility. It also adds to the literature by extending the validity of IPA and gap analysis in making strategic decisions in an industrial set-up.