Absorptive Capacity - Part 1

We all know the value of good professional development: more satisfied employees who are easier to recruit and retain; higher overall productivity, because the collective knowledge of team is increased; and an organizational reputation as a concerned and forward-looking employer. But here’s an ROI from our professional development efforts that is more rarely mentioned: raising our absorptive capacity.

Absorptive capacity—the ability of organizations to recognize the value of new information, assimilate it, and exploit it to their benefit—helps organizations move faster, adapt more quickly, and take more advantage of emerging opportunities. On the down side, organizations with low or little absorptive capacity may get “locked out” of such opportunities. “Once an [organization] ceases investing in its absorptive capacity in a quickly moving field, it may never assimilate and exploit new information in that field, regardless of the value of that information.” Such an organization will always be behind the times.

Absorptive capacity is based on a firm’s related prior knowledge—that is, you can only build on what you already know. The link to professional development is that in rapidly changing environments like IT, our corporate knowledge has to continue to grow if we are going to be able to keep pace. And everyone has to contribute.                                            

Phase One recently helped one of our clients, a federal CIO, develop and implement a professional development program for his staff. While our client is concerned with increasing the well-being of his employees, he is also concerned with increasing the well-being of his organization (OCIO). Rather than being satisfied with minding legacy systems, he wants OCIO to be able to take advantage of opportunities for better customer service and more effective use of resources that are emerging in the rapidly changing IT environment. So while he is investing in higher satisfaction for his staff, but he is also investing in higher absorptive capacity for his organization.

We’ll explore the implications that the absorptive capacity goal has for the design of the professional development program in an upcoming blog.