What are dynamic capabilities?
Dynamic capabilities are the different skills, processes, procedures, organizational structures, decision rules and disciplines that enable the detection and capture of opportunities that appear in a company. This is the academic definition. I hope you understand it. If not, please continue reading.
Dynamic capabilities enable companies to create, deploy and protect intangible assets that will enable superior business performance in the long term. It is therefore important to identify these capabilities in your company and to foster them. Companies with strong dynamic capabilities are much more entrepreneurial and adapt better to changes in the market.
Why do we call them dynamic capabilities?
Well, in contrast to non-dynamic capabilities. Dynamic capabilities allow the company to change and evolve. The rest of a company's capabilities allow it to operate normally, and are obviously just as important as dynamic capabilities. It's just that having dynamic capabilities in fast-moving environments like the current one has become a competitive advantage. That's why we're now talking about this capability.
Types of dynamic capacity
There are at least 3 dynamic capabilities that you should develop:
- The ability to detect opportunities and threats.
- The ability to take advantage of opportunities.
- The ability to maintain, combine and grow our company's tangible and intangible assets.
In relation to the latter, one of the intangible assets of our company is the business model.
Business model adaptation is the subject of my PhD study: the ability to adapt a business model when this is necessary for the survival of the company. My general research question is “If everyone knows that when the market changes, companies also have to change to adapt. Why do some companies not change and die?”
Obviously the answers are multiple and not all of them are in the field of "management"Some of them are explained from the point of view of people's psychological behavior (risk aversion, fear of change, fear of failure, etc.). In my case, I analyze the reasons from a business point of view, not from a psychological one.
The ability to adapt your business when the market changes
Returning to dynamic capabilities, as I have already mentioned, in my research and in my professional work, I am focusing on the capacity of “Business Model Adaptation”, that is, the capacity to change and adapt a company’s business model to adapt to changes in its environment.
In the times we live in, with Amazon and Alibaba expanding across the globe, COVID-19 disrupting markets, in a world where the Earth is flat and the market is almost infinite, and where all information can be digitalized… it is clear that we must adapt and change.
On the other hand, I think it is essential that someone helps companies to adapt, instead of trying to make companies disruptive and make them the ones who break and transform the markets. I find it unrealistic to think that SMEs in our country will be able to survive by being disruptive… Some of them can, obviously, but I think it is more appropriate to help them develop the capacity to adapt. Note that to adapt successfully you have to be creative and innovative… one thing does not take away from the other.
Well, I won't go on any longer. In this article I only intended to explain a little better what dynamic capabilities are (Dynamic capabilities), and that this reflection will help you to think about what the opportunities are for your company or for you as a person. Are you able to detect opportunities and threats? (or put another way, do you have time to detect opportunities and threats?) and are you able to recombine your company's resources to take advantage of these opportunities? Does the day-to-day drag you down and you can't stop the inertia of your business to adapt it? Do you dare to do it?
I hope I have achieved the reflection.
Related bibliography
You will find more information about dynamic capabilities here. It is a closed article by the best specialist in dynamic capabilities. Just by reading the abstract It will be useful to you. If you can get the whole article, you will love it.
If you want to know more about business models, there are two articles of mine that can help you:
- On the difference between strategy and business model
- On whether or not the types of business models have changed
- How cultural companies have adapted their business models during COVID-19
We keep talking
A hug
