Today I wish to summarise and critique a paper I found quite insightful.

  • Mathiassen, L. and Vainio, A. M. (2007) ‘Dynamic capabilities in small software firms: A sense-and-respond approach’, IEEE Transactions on Engineering Management, vol. 54, no. 3, pp. 522–538 [Online]. DOI: 10.1109/TEM.2007.900782

The paper describes two organisations in different phases of expansion. Both are in the category of small companies in the field of mobile applications.

Summary

The paper starts by defining the object of study, small software firms, depending on integration and reconfiguration capabilities to operate in high-velocity markets. This type of companies’ constraints is limited resources (schedule, fixed costs) and a high dependency on a few big players. The paper takes as a base the Sense-and-Respond approach to managing dynamic capabilities of Haeckel (1995). The study relies on interviews with CEOs, the Department Managers and Team Leaders of two firms with different levels of evolution, named “Starter, Inc” and “Mature, Inc”. Also introduces that successful adaptive organisations can monitor (Sense) environment signals quickly and translate into action (Respond) in three areas:

  • How knowledge is created and shared (input)
  • How to configure and manage the development (process)
  • How to design and structure the resulting software (output).

A detailed comparison between the principles of the corporations is made between “Starter, Inc” and “Mature, Inc” with the following results:

Principle Starter Inc Mature Inc
Processes that learn Centralised learning cycle with the delegation of tasks Autonomous but coordinated learning cycles with partly overlapping responsibilities
Value-based governance Centralised decision making and delegating specific responses Intensive networking, internally (departments) and externally (customers and partners). Conclusions shared across the firm
Dynamic personal accountabilities Employees reassigned ad-hoc to respond to new emerging needs Accountabilities re-negotiated. Dedicated integrators were responsible for the link between the firm employees and customer
Modular processes and products Not reuse of the previous component. Management generates unique responses to emerging needs Ability to adjust individual dynamically and group responsibilities and utilise component-based software. Dedicated integrators to ensure alignment between emerging needs and organisational priorities

The authors found that “Started, Inc” had recently grown to become more complex, which caused the processes and governance structures to become loose compared to the steady growth of “Mature, Inc”. Last, it extrapolates the findings giving the following advice to managers of small software firms inside the Haeckel framework (Haeckel, 1995).

  • Cultivate External Relationships: Customers and users are sources of innovation that can help determine the future direction of a software project.
  • Distribute Sense-and-Respond Cycles: Being able to create responses to new situations.
  • Ensure Firm-Level Coordination: Fostering a culture of communication and integration to collect and learn from past projects and applied the knowledge to new developments.
  • Leverage Component-Based Architectures: Helping small firms to develop flexible software that can quickly adapt to new scenarios.
  • Balance Standardisation and Customisation: Due to the software’s customisation to fit a purpose or demand, it is challenging to develop a market strategy only in the standardised solutions. Still, organisations should reach a balance for long-term sustainability.

The paper concludes by noticing the study’s exploratory nature, with only two software firms and under the Sense-and-Response approach without considering other frameworks. The method used helped to identify and evaluate the core dynamic capabilities, appreciating the enablers and barriers. Also, by decentralising into smaller and quick-responding teams, the companies can detect customer needs and respond quickly even to the tight schedule and budget. Last it warns that the conclusion is limited to the object of study: small software firms, as dynamic capabilities can change between industries.

Critique

The research method is a set of interviews with different members of the two companies, from CEO to Team Leads. The questions were based on the Sense-and-Respond framework, but keeping the questions open allowed the interview to evolve. I consider the approach’s positive effect, as it can gather answers and perspectives that the researcher did not initially plan. On the other hand, it makes it more challenging to replicate the study and apply statistical methods to compare more companies.

Regarding the paper’s provenance, I would like to note that the source for the article (Haeckel, 1995) described an implementation of Sensing Capabilities as described in the course materials (Horrocks and Savory, 2018) oriented to technological enterprises. The Sense-and-Respond approach was published by Haeckel, a management theorist and former director of Strategic Studies of IBM Advanced Business Institute. The strategy has been implemented in corporations worldwide with success and the main topic of books and thousands of papers.

Even though ten years have passed since the publication of the paper, the assumptions and the description of the market matches what is observed nowadays, with mobile devices and wireless equipment as commodities. We can notice the failure to mention the increase in cloud computing. I have found in my activities that cloud computing enters the category of enabling capabilities because it no longer provides any competitive advantage and can be easily subcontracted to external providers with negligible cost. We can appreciate this in Amazon AWS, which provide without cost one year (Amazon Web Services, 2018a) and a few cents for extensions (Amazon Web Services, 2018b). Following the argument, we can assume that the paper results are still valid as 2018.

Regarding the conclusions, we can agree that agile methodologies are the best approach for a small software firm in a highly changing environment. I have learned two approaches to project management; the linear-rational approach and the organic approach (Fortune, 2018). In (Fernandez, 2016) it is argued that when the goal and solutions are not clear, like the paper’s situation, the best approach is the organic approaches to project management, for example, Agile.

I’m afraid I have to disagree with the critique of the lack of reusability of software components discussed in the paper regarding “Starter Inc”. I consider it reasonable that a young enterprise has not many previous projects to approach an internal phase of abstraction of software components reused in future projects. Nonetheless, I agree that the transition to component-based software development is necessary once the conditions and resources are available.

I agree with the authors that the paper’s focus is exploratory because of the few cases studied and the lack of repeatability of the results. The authors can also not extrapolate the conclusions to other industries because the dynamic capabilities can be completely different. Finally, a comparative study using different approaches or frameworks is necessary.

Even with the disadvantages described above, I consider this article informative. The reason relies on that is a compressive study of the several dynamic capabilities required for companies’ success where software plays a predominant part. The study provides ideas and a framework to contribute and give sounded ideas regarding the best approach to consolidate a position in the market and assure its evolution.

References

  • Amazon Web Services (2018a) AWS Free Tier [Online]. Available at https://aws.amazon.com/free/
  • Amazon Web Services (2018b) AWS Cloud Pricing Principles – Amazon Web Services (AWS) [Online]. Available at https://aws.amazon.com/pricing/
  • Fernandez, D. J. (2016) ‘Agile Project Management - Agilism Versus Traditional Approaches’, Journal of Computer Information Systems [Online].
  • Fortune, J. (2018) ‘Block 5 Project Management’, [Online].
  • Haeckel, S. H. (1995) ‘Adaptive enterprise design: The sense‐and‐respond model’, Planning Review, MCB UP Ltd, vol. 23, no. 3, pp. 6–42 [Online]. DOI: 10.1108/eb054506
  • Mathiassen, L. and Vainio, A. M. (2007) ‘Dynamic capabilities in small software firms: A sense-and-respond approach’, IEEE Transactions on Engineering Management, vol. 54, no. 3, pp. 522–538 [Online]. DOI: 10.1109/TEM.2007.900782