Customer Reviews

Dynamic Capabilities and Strategic Management: Organizing for Innovation and Growth

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In Dynamic Capabilities author David Teece (with contributions from Mie Augier) successfully brings the study of the firm into the modern era. Drawing extensively on older theories to describe and analyze business economics, Teece explains why these theories are not able to explain fully how businesses succeed or fail in a time of rapid technological innovation, knowledge-based industries, changing customer demands and multinational competition. The author is both descriptive and prescriptive as he outlines how entrepreneurial management is the key to achieving an adequate return - management that is able to sense changes in the economic environment, seize the opportunities those changes present, and, by orchestrating the tangible and especially intangible assets available both inside and outside the firm, exploit market opportunities. Teece ably explains why a business that merely responds to the current market, even if it does so superbly, will ultimately fail unless it is capable of change. Thus the dynamic capabilities of management and business structures responsive to change become the chief determinants of which businesses will succeed and grow and which will not.

Though academic in style, and a useful text for the student of business economics, the book is written to be accessible to practitioners of management as well. The businessman whose MBA certificate is yellowing in its frame will have no trouble understanding it. Indeed, it should be must reading for anyone running, investing in or serving as a director of any business, large or small. Firms which lack such dynamic capabilities will survive only if they develop or acquire them.

Teece further develops his thesis in the later chapters of the book with the implications for businesses highly dependent on exceptional talent, and the public policy implications of dynamic capabilities as a key determinant of market domination. As with the rest of the book, these chapters are thought-provoking and useful guides for both thinking about business and making decisions that will make a difference.

David J. Teece is a Chaired Professor at the University of California Berkeley, where he was the Director of the Institute of Management, Innovation and Organization. He is the author and co-author of numerous articles and books. Teece is supported by Stanford University Fellow Mie Augier. This book was published in 2009, is split into 3 parts, consisting of 1-to-5 chapters, plus a preface.

Teece explains in the preface that "Strategic management is about the major decisions and investments needed to achieve the goals of the enterprises ...". He continues in Chapter 1 that the ambition of the dynamic capabilities framework is nothing less than to explain the sources of enterprise-level competitive advantage over time. "... dynamic capabilities can be disaggregated into the capacity (1) to sense and shape opportunities and threats, (2) to seize opportunities, and (3) to maintain competitiveness through enhancing, combining, protecting, and when, necessary, reconfiguring the business enterprise's intangible and tangible assets." Each of these are discussed in detail together with the microfoundations, such as the distinct skills, processes, procedures, organizational structures, decision rules, and disciplines, undergirding them. The other 4 chapters within Part 1 focus on further exploration of dynamic capabilities, from the (entrepreneurial) role of the manager, via the foundations and resources through to the impact on the multinational enterprise. The other 2 parts takes a high-level view of the business enterprise in the economy with Part II looking at the business enterprise in economic development and Part III focusing on the nature of competition during rapid technological change.

Yes, I do like this book. This book is quite academically written and therefore not that easy to read. I did enjoy the 5 chapters within Part I better than the chapters within Parts II and III as they are more practical, more 'down-to-earth' and provide good guidance for managers and professionals. David Teece does show with this book again his reputable position within the field of strategic management. The book is also recommended to MBA and strategy students.