Sensing Capabilities = Innovation Success

26 May

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There are some emerging marketplace trajectories that are easy to recognize, therefore innovation’s success is higher. In microelectronics this might include miniaturization, greater chip density, and compression and digitization in information and communication technology. However, most emerging trajectories are hard to discern (Teece; 2007).

The group of activities a firm performs to identify oportunities, interpret new developments and take actions from it, it is what Teece (2007) calls sensing capabilities.  Day (1994) reinforces the link between firm’s decisions and the market by mentioning that the failure to anticipate a change in competitive forces or customer requirements results from a deficient market-sensing capability or inadequate links to key customers.

Market sensing activities are made possible by an organization’s internal capabilities to understand, process and use this information (Heusnikvel et al.; Kok et al., 2003). Cravens, Piercy and Prentice (2000) taking a more market oriented approach described market sensing when referring to the importance of identifying potential shifts in customer preferences. Trends such as changing life styles, population shifts, and other demographics often forecast critical transitions in consumer markets. Changes in business-to-business markets may be signaled by actions of industry leaders, changes in business designs, and other initiatives. In order to track these trends, executives should employ market-sensing processes to identify and respond to these market changes. Cravens, Piercy and Prentice (2000)

In order to better understand the market trajectories a firm must traduce the market sensing process into activities so they can develop successful products aligned to these trajectories. In accordance with Teece (2007) sensing (and shaping) new opportunities, is very much a scanning, creation, learning, and interpretive activity. Investment in research and related activities is usually a necessary complement to this activity. This activity not only involves investment in research activity and the probing and reprobing of customer needs and technological possibilities; it also involves understanding latent demand, the structural evolution of industries and markets, and likely supplier and competitor responses.

Jesus Mascareno

jesus.mascareno@innovationbeats.com

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