How to Sense and Seize Opportunities—and Transform Your Organization

WHY ARE SOME FIRMS SO ADEPT at anticipating and exploiting the opportunities created by technology and rapid change, while others struggle to keep up — or worse, go out of business?

We believe the answer is linked to the concept of ‘dynamic capabilities’. Developed by Haas School of Business Professor David Teece and his colleagues, this framework shows that three dynamic capabilities — sensing, seizing and transforming — enable firms to sense opportunities sooner than their rivals, seize them more effectively, and support the organizational transformation that this entails.

In this article, we will describe how we have advanced Dynamic Capabilities Theory by adding sub-capabilities to the framework. We will also show how leaders can make smart choices about which capabilities to develop in order to thrive in an era of continuous change.

DYNAMIC CAPABILITY 1: SENSING OPPORTUNITIES

The ability to sense emerging threats and opportunities is fundamental to a firm’s ability to adapt to volatile markets, technological uncertainty and unpredictable competitors.

Our research finds that successful sensing can be understood through two interrelated learning processes that function as dynamic ‘sub-capabilities’ of sensing.

Sub-Capability 1: Peripheral Vision

The intent of this capability is to see signals of potential opportunities and nascent threats sooner than your rivals. As with human vision, the periphery is the fuzzy zone outside the area of primary focus. For organizations, the periphery is difficult to scan because of an adverse signal-to-noise ratio. Information overload, distributed intelligence and confusion are serious impediments to improving peripheral vision. To address this difficulty, a strong peripheral vision capability requires two critical actions.

SCOPING. Managers can use three guides to ensure that their scope is neither too broad nor too narrow:

Learn from the past, by analyzing past blind spots or finding an instructive analogy from other industries.

to focus on signals that are right in front of your leadership team but are not yet noticed or appreciated. Most surprises have some