Responsive Innovation: Why Central Management Should Rely on Peripheral Sensing

In dynamic environments, competitive advantage lies in developing useful knowledge from continuous streams of unstructured and ambiguous data. Frontline employees and certain groups of customers are often the first to sense emerging issues of strate-gic importance due to their experiential insights of the firm’s daily operations. Yet, they are rarely asked to provide updated information about critical issues. The present paper seeks to conceptually develop the notion of responsive innovation, by drawing on literary streams concerning collective sensing, strategic issue diagnosis and integra-tive strategy within a micro foundations perspective. It is posited that companies should root their innovation processes in the collective sensing of frontline-employees and customers that operate around the organizational periphery. This frames the con-cept of responsive innovation, where individuals engaged in the firm’s ongoing busi-ness activities collectively identify issues that central managers can resolve.