June 1, 2016
One of the reasons why people are becoming a source of competitive advantage for companies in today’s changing environment is because of their capacity to act as sensors of the many changes happening around them.
Nowadays the predominant paradigm to explain competitive advantages is David J. Teece’s Dynamic Capabilities Framework. Teece (1997) defines dynamic capabilities as “the firm’s ability to integrate, build, and reconfigure internal and external competences to address rapidly changing environments”.
According to this approach, competitiveness is no longer a matter of securing the possession or control of valuable, rare, inimitable and non-substitutable resources that allow the company to design and put into practice strategies that are difficult for competitors to copy, but a matter of being able to renew its capabilities in line with the changing business environment, adapting, integrating, and reconfiguring internal and external organizational skills, resources, and functional competences to match the requirements of a volatile, uncertain world.
Those dynamic capabilities can be thought of as belonging to three different categories: (1) identification and assessment of opportunities and threats (sensing); (2) mobilization of resources to address an opportunity and to capture value from doing so (seizing); and (3) continued renewal by enhancing, combining, protecting, and, when necessary, reconfiguring the business enterprise’s intangible and tangible assets (transforming).
Yet neither seizing opportunities nor transforming the organization is possible without previously having sensed what is going on in the outside world, and detected those opportunities.
The sensing capacity of the leaders is no longer sufficient.
And here come the people: The sensing capacity of the leaders is no longer sufficient. Today’s world is so complex that companies cannot effectively detect, assess, and keep track of all the changes, threats, and opportunities that emerge around them unless they figure out ways to mobilize and leverage the “sensing power” of a larger proportion of their people.
However, although every day people in organizations sense dissonances between what the reality is and how things could be, way too often companies have no channels to capture those dissonances, process them, and translate them into change.
As Brian Robertson argues in Holacracy:
“We humans have an incredible capacity to sense tensions, but we usually don’t have a forum to go to where we can reliably process those tensions into something useful. So the organization loses one of its most powerful forces for evolution, and we humans are forced to hold the tensions — in our minds and our bodies — where they fester into frustrations and eventually apathy or burnout.”
Thus today companies need two things: First, they need to have “good sensors”. They need people with the capacity of sensing changes around them from as many different perspectives as possible (hence the importance of a diverse and curious workforce). And second, they need to articulate mechanisms to listen, interpret and assess all those tensions people detect.
Of course, Robertson argues that holacracy can be the solution to all that since it provides organizations that decide to replace their classic structures with this kind of “organizational operational system” with explicit channels to “harnesses the conscious capacity of those within to sense dissonance between what is and what could be”.
Yet, there are many other things a company can do to capture the threats and opportunities people sense without need of such a radical solution we already know is not made for all organizations, as it is not made for all individuals.
For instance, companies can revisit their communication systems, their hierarchical structures, the level of centralization of their decisions, and their people management practices to foster interest for what is going on in the outside world, lateral collaboration, responsiveness, and individual initiative. They can also increase the sensing capacity of their people by ensuring their workforces are diverse enough, so they can see reality through as many perspectives as possible.
And, above all, their leaders can contribute with their behavior to build a culture where people feel listened to and respected, as well as a climate of trust where messengers are not shot every time the information they bring is not nice to listen to…
Photo by Darren Flinders under a creative commons license.