Adaptability – The New Competitive Advantage

Adaptability: The New Competitive Advantage is an article from Harvard Business review about four organizational capabilities to attain adaptive advantage. The need for these new capabilities comes from the high level of uncertainty that poses a tremendous challenge for strategy making these days.

The article starts with a reference to uncertainty – a force of the external business environment that has dramatically gained influence over the last decades: We live in an era of risk and instability. Globalization, new technologies, and greater transparency have combined to upend the business environment and give many CEOs a deep sense of unease.

The static view of traditional strategy processes is no longer leading to optimum results. Hence, organizations need to ask themselves new questions. The article concludes: Increasingly, managers are finding that it stems from the “second-order” organizational capabilities that foster rapid adaptation. Instead of being really good at doing some particular thing, companies must be really good at learning how to do new things.

The authors derive four organizational capabilities to attain competitive advantage from this idea:

  1. The Ability to Read and Act on Signals
    Companies need to identify the early signs of change from their external environment, to make sense of it, and to react quickly and – if necessary – radically.
  2. The Ability to Experiment
    New approaches and technologies enable companies to experiment on a new level – to generate, test, and replicate a larger number of innovative ideas faster, at lower cost, and with less risk than their rivals can.
  3. The Ability to Manage Complex Multicompany Systems
    This relates to the blurring corporate boundaries and the changing industry structures. Companies need to adapt their strategies to this more networked world
  4. The Ability to Mobilize
    This is about new ways and structures to mobilize the full potential of people working for and with the organization. It is about fluid structures, decision making processes, knowledge sharing, and more.

These four abilities are explained in detail and illustrated with real-world examples.

The article than discusses particular challenges for big businesses. For them, it is even more difficult to become an adaptive competitor.

Link >> Adaptability: The New Competitive Advantage

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