The terminology “Dynamic Capabilities” states “the firm’s ability to integrate, build, and reconfigure internal and external competences to address rapidly changing environment.” Teece et al., 1997). The article “Orchestrating the New Dynamic Capabilities”, written by Amy Shuen and Sandra Sieber introduce dynamic capabilities to the business world as a way for companies to get forward in times of hasty technological change through orchestration. The article raises the question that how organization first develop firm specific capabilities and how the reintroduce competences to respond to shifts in the business environment. Article gives the scenarios that how Google, Amazon, IBM and Cisco etc. are continuing to innovate their business models and grow despite economic crisis in 2008. The technology specially Web has changed the economics of the business and collaboration.
There are four different ways to multiply your “Dynamic Capabilities”.
1. Build on collective user value: Writer says it is really critical step to start thinking exponentially rather than incrementally. The Web makes business 10 times faster for any company with and existing network. When Business use the Web, there is no need to be enlisted in Fortune 500 or in any online stores. There is example of Flicker, how the company built itself on collective user value.
2. Activate Network Effects: Network effects are most important activities in modern business market. “The network effects show how is company doing. For this reason, they can mean the difference between your company having the lion’s share or the leftovers of a competitive market.” (Shuen and Sieber 2009, Orchestrating the New Dynamic Capabilities). To make network effects work, organization should figure out how the company measure their value.
3. Work Through Social Networks: Social Networks can be the effective medium to compete in market for organization. Social Network like Facebook, Flicker, Twitter, Instagram or my space acquire customer very fast. “The communication built by social networks can serve to strengthen the appeal of an endeavor”. (Shuen and Sieber 2009, Orchestrating the New Dynamic Capabilities).
4. Multiply Your partners through syndication: Experts say digital syndication of competence takes it to a whole new level. We can take the example of Amzon, how Amazon decided to sell shelf space or zShops to rival in 2001. Another good example is housing advertisement in craiglist. Where we can craiglist combine the google map with the housing information. Because of digital syndication organization can earn more profit and the customers also get more information.
This article explains that Dynamic Capabilities can usefully be thought of three clusters of activities and adjustment. They are 1) Identification and assessment of an opportunity (sensing); 2) mobilization of resources to address an opportunity and to capture value from doing so (seizing); and 3) Continued renewal (Transforming). To be sustained in competitive market those points are can be very effective for companies.