Digital Sensing Capabilities
Introduction
Sensing capabilities are vital for organizations to scan their external environment for new opportunities and threats, particularly those emerging from digital trends. In a digitally evolving landscape, these capabilities help firms make sense of vast amounts of data and predict changes.
Definition and Importance of Digital Sensing
Digital sensing capabilities involve “scanning, creation, learning, and interpretative activity” to analyze diverse information about trends in the business ecosystem.
For digital transformation, this means advancing existing research on dynamic capabilities by using disruptive technologies like artificial intelligence, analytics, and IoT platforms to make sense of previously hidden big data. Sensing should occur at all organizational levels, with lower levels contributing insights to middle and top management.
Sub-capabilities of Digital Sensing
Digital sensing capabilities consist of sub-capabilities relating to:
- Digital scouting: Identifying new technological, customer, and competitor-based trends.
- Digital scenario planning: Developing plans for potential future scenarios, especially with new digital technologies.
- Digital mindset crafting: Cultivating a mindset open to digital possibilities and rapid change.
This involves a cultural orientation that recognizes the importance of fast and flexible decision making.
Challenges and Tools for Digital Sensing
Established companies face significant challenges in building sensing capabilities that can predict the latest digitalization trends, especially given the unpredictable nature of new business model innovations arising from connecting user experiences and industries through platforms.
However, advances in computational speed, data storage, and AI are dramatically reducing the cost of predictions, allowing firms to anticipate trends and overcome cognitive limits. Key challenges for executives involve shifting employee training from prediction to judgment skills, timing the adoption of AI technologies, and developing management processes for effective human-AI teams. Firms need to build generative sensing capabilities that use technologies to generate and test hypotheses to explain surprising events and judge the impact of unexpected trends. This also includes digital evolution scanning to gather information through new digital devices, channels, and emerging user behaviors across markets. Sensing capabilities can also be co-created with external parties in the business ecosystem.