The section  below is adapted from Surviving and Thriving in the AI Era, pages 32 and 123-5

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Many of us will face emerging landscapes of threats and opportunities for the remainder of our working lives, knowing that these will be frequently in flux and unpredictable. Careers that could previously have been planned are being transformed, as the only certainty is uncertainty. For many, including top managers, there is a pressing need to develop mutually beneficial partnerships with AI technologies. This can be immensely productive as previously impossible ventures become possible. The cost of innovation is reduced. Time taken to get things done is shortened, sometimes from weeks to minutes, and the clock speed of almost everything increases. Those who have strong Personal Dynamic Capabilities possess the most precious asset of all. They can thrive in volatile, uncertain, and challenging environments and are willing and able to add value through collaboration with new AI Era technologies.

For centuries, kings, generals, philosophers, sages and industrialists have sought to understand the special characteristics of organisations that not only win once but also produce wave after wave of successful outcomes, such as profits, human services, technological innovations or even battles and wars. More recently, social science research has shed new light on the search for the essence of organisational dynamism, with Professor David Teece's insights exceptionally practical.

 

Teece found that an ambition to become a leading company with a clear competitive strategy is necessary but not sufficient. This was because strong Dynamic Capabilities are essential. These enable an organisation to identify new opportunities, reconfigure resources, and adapt quickly to changing environments.

 

Teece found that Organisational Dynamic Capabilities are never a one-time asset, as they need to be re-energised, rebuilt, and redirected, sometimes almost weekly. They need to be sufficiently focused and developed to be a true driving force! Additionally, Dynamic Capabilities must be comprehensive, as many organisational components need to function effectively to build the capability to achieve successive waves of advantage.

 

Teece found that effective top teamwork is mission-critical, as it is the foundation of Dynamic Capability. At a recent conference where Teece gave a keynote speech, he emphasised the importance of insightful top teamwork, saying that the ability of Chief Executives and top teams to detect opportunities and threats in developments, evaluate their relevance, and envision an effective response is critical to dynamic capabilities.

 

Dynamic Capabilities are an organisation’s abilities that enable it to change, adapt, and reinvent itself in ways that deliver superior outcomes for customers, clients, or other beneficiaries. If an organisation is viewed as a machine, ordinary capabilities keep the gears turning; if viewed as a living organism, dynamic capabilities are its life force, enabling it to be venturesome, intelligent, and self-healing. They need to be developed and sustained for four key reasons.

 

First, to increase the probability of survival in a volatile world, without strong Dynamic Capabilities, an organisation risks developing core rigidities, where the very habits and assets that once made it successful become drag anchors that prevent it from adapting to a new reality.

 

Second, to enable strategies to be enacted rapidly and effectively. Dynamic Capabilities act as the bridge between the desire to win and the actual ability to execute new initiatives.

 

Third, to create comprehensive competitive or comparative advantages.  Dynamic Capabilities are the engine of ‘innogility’—a fusion of innovation and agility. They enable a company to offer successive waves of new products and services that customers prefer over rivals

 

Fourth, to infuse the organisation with ‘can-do’ energy.  Dynamic Capabilities liberate Personal Dynamic Capabilities across an organisation by supporting the spotting of opportunities, leading change, and orchestrating human and machine assets to create new value.

 

Personal Dynamic Capabilities

 

Two of the five Core Personal Dynamic Capabilities play a major role in strengthening Organisational Dynamic Capability. These are Requisite Agility and Innovation Competence, which, to put it simply, are alternative ways of getting new things done. They are so closely integrated that we describe them as ‘Innogility’. A simple example explains this point. Imagine you have developed an AI app for identifying where heat is escaping from buildings, and you want to license its use to companies that sell insulation materials. You have no experience in licensing products. You could see this as a task you want your organisation to perform internally (innovation) or outsource to a company that specialises in licensing such products (agility). Making the right decision requires skills in innogility management.

 

Organisational Dynamic Capabilities are built on micro-foundations: assets, components, and processes that combine to create enterprise-specific abilities. These capabilities are not static; they are often made in real time and are continuously ‘becoming’. A key challenge for senior managers is to design their business or organisation as a coherent system of interrelated capabilities aligned with a clear competitive strategy.

 

Becoming and remaining a dynamic organisation is far from easy, as change can be mismanaged, expensive, distracting, resource-intensive, or dysfunctional. Many of our mothers taught us ‘not to throw the baby out with the bathwater’! This principle remains relevant to contemporary organisational development, as innogility must be functional, achievable, affordable, and beneficial to people, the planet, and profit.