Introduction to dynamic capabilities
The study of dynamic capabilities, the organization’s capacity to change its operations and adapt them to the environmental requirements, has taken centre stage in the debate on strategic management as well as organization theory (Teece, Pisano and Shuen 1997, Eisenhardt and Martin 2000, Zollo and Winter 2002, Winter 2003) in recent times. The notion, which has received several, and only partially aligned, definitions, lies at the heart of of the organization’s ability to enact change in a systematic and fruitful way.
Winter (2003) clarifies that organizational change happens in one of two ways: the first with ad-hoc problem driven search, and the second through the action of “stable patterns of activity aimed at creating or changing operating routines in pursuit of enhanced organizational effectiveness”, the definition of dynamic capabilities in Zollo and Winter (2002).
What is Dynamic Capabilities?
The concept of dynamic capabilities defined by David Teece- “These are the skills, processes, routines, organizational structures, and disciplines that enable firms to build, employ, and orchestrate intangible assets relevant to satisfying customer needs, and which cannot be readily replicated by competitors. Enterprises with strong dynamic capabilities are intensely entrepreneurial. They not only adapt to business ecosystems; they also shape them through innovation, collaboration, learning, and involvement”.
Dynamic capabilities , is also another way of addressing change in organizations, and it has the particularity of bringing together the ‘outside’ and ‘inside’ dimensions of organization: in the presence of “rapidly changing environments”, firms integrate, build, and constantly need to reconfigure their resources to meet these new more ‘dynamic’ challenges.
Dynamic Innovation Capabilities need to advance knowledge creation and absorption, extend and integrate, then modify constantly the way we operate, reconfigure and redeploy. This involves dynamic sensing, seizing and transforming (Teece et.all) at the three interdependent levels of the individual, firm and network to coordinate/ integrate, learn and transform constantly to reflect constant change.