In the new era of data and smart technologies, the consumer is king when companies must decide on new technologies and business transformation. In these new times, the tangible resources (including the tangible products) on which the fundamental competitive capabilities of businesses were based are beginning to lose relevance in favor of the intangible assets and services delivered by the organization. Furthermore, the ability of organizations to open up to the outside world and interact with other players in multiple business ecosystems becomes critical.
The new rules of the game that are constantly emerging are having a strong impact on the way in which value networks are configured, which are becoming more and more extensive and complex. The ultimate consequence is that companies have to operate in a much more turbulent, uncertain and hyper-competitive environment.
New Times Means New Opportunities
To manage all the complexity that surrounds them, companies must devise mechanisms to sense what is happening and quickly adapt to the changes that occur inside and outside their competitive environment, optimizing the organization’s key processes (i.e., with robotization, automating tasks), creating new sources of revenue (i.e., personalized services), or developing new business models (i.e., Uber, Airbnb).
In fact, these new environmental circumstances are not much different from previous times when disruption was also the trend, for example, when the Internet revolution began. What is different this time is the way companies must act to achieve their goals, and the much larger size of the opportunities that lie ahead for those who know how to seize them.
Dynamic Capabilities as a Key Transformational Strategy
A resulting challenge that continues to be important these days is how companies can stay relevant to increasingly digital and savvy customers, and how they can build a deeper and lasting engagement with them that will earn companies more pocket share. And one of the most compelling ways to achieve this is through dynamic capabilities, that is, by strengthening the ability of companies to deliberately modify their resource base, and by acquiring ever-higher levels of digital maturity through successive waves of digital and organizational innovation.
Dynamic capabilities support the way in which companies create, implement, and protect the intangible assets that drive superior business performance over the long term, while helping to develop mechanisms that increase the organization’s adaptability to its environment and ensure their competitiveness.
These dynamic capabilities are difficult for other companies to replicate, and they make all the difference when it comes to adapting to customer changes and harnessing the potential of new smart technologies.
Dynamic Capabilities in Practice
Dynamic capabilities development can be accomplished in the organization through three main mechanisms:
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Sensing and detecting opportunities and threats: companies must constantly explore their environment in search of new technologies and business opportunities, both local and distant. This requires informational resources, analytical and organizational skills, and a culture aimed at acquiring, analyzing, and using data. The speed in acquiring information assets and converting them into useful knowledge becomes the key to maximizing value for the organization.
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Seizing the opportunities: Once the organization detects a new (technological or market) opportunity it should be addressed through new products and services and agile processes. Maintaining and enhancing technological competencies and complementary assets is also key to seizing opportunities. Later on, when the opportunity is more mature, the company may decide to invest heavily in the particular technologies and value offerings that are most likely to gain market acceptance.
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Sustaining competitiveness: It involves enhancing, recombining, and protecting the tangible and intangible assets of the organization (including the organizational structure) as the company grows and the markets and technologies evolve.
However, there are many cases in which companies do not have the capacity to develop dynamic capabilities and innovate on their own. In such cases, companies need to open up and start collaborating across the platforms and ecosystems they operate in, regardless of whether this means collaborating with customers, partners or even competitors. The integration of smart technologies, provided or co-developed with partners, can definitely move the organization steadily forward in the smart transformation process while simultaneously meeting its business objectives.
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