Strategic and technological fit

Asset owners are nowadays facing a further integration of Internet-based value chains. This development is often referred to as the Internet of Things (IoT) or smart industry (4.0). Beyond the promises of more efficient and adaptive production processes, it eventually will lead to a vertical integration of flexible and reconfigurable assets. This vertical integration suggest that performance, strategy and structure are congruent with the competencies and constraints of the firm’s assets. By linking assets more directly to a firm’s external environment, asset management activities and strategy are placed in a reciprocal relationship. When this relation between existing assets and business environment is set, only then proper targets for maintaining these assets can be formulated.

In management literature, there is a great emphasis on the processes by which strategies are developed. Less attention focus on the planning and control activities to maintain existing technologies. These activities are typically distributed among departments at different organizational levels. The distribution off these activities is more complex than the simple top-down hierarchical approach. These interdisciplinary activities create complexity and challenges throughout all life cycle stages of an asset. In most organizations, maintenance decisions (based on maintenance concepts) at the operational level are a good example of the isolation between an organization’s operational level and the strategic process at the business level.

The technology ‘in use’ is assumed to be confined to strategy-implementation activities (Andrews, 1971; Ansoff, 1965). As Skinner (1985) suggest, (manufacturing) technology is essentially a “good soldier”. As a result, product, market, and strategic choices are often made regardless the technological capabilities. By doing so, there will be a mismatch between strategy and technology and existing assets are seen as neutral to the chosen strategy. In other words, technology cannot induce the creation of new strategy.

A proven technology, solidified in assets must be seen as a variable that undergoes frequent adaptive change due to the change in expectations. Therefore, existing assets are thus directly affected by these dynamics. The dynamics of these relationship must reflect the internal structure. A firm’s advantage is not absolute but relative to the state of technological environment. In other terms, there must be a fit among environment, strategy, technology, and structure.

Changes in the socioeconomic, technological environment necessitate either a change in the firm’s goals or an addition/alteration. Otherwise this will provoke an imbalance in the firm’s internal fit. Fit will be only regained by adjusting technology or/and structure. In the context of technology, fit is regained by adjusting strategy and structure to suit the competencies and constraints of the new technology. This is consistent with Porter’s (1988) reasoning and Abernathy, Clark, and Kantrow (1983). Fit among technology, strategy, and structure is also conceptualized in the contingency theory literature (Schoonhoven, 1981; Venkatraman, 1989).

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