Many organizations believe that skills and abilities are the key factors directly affecting business performance and contributing to long-term success. Hence, it's not surprising that many organizations continually conduct seminars, training, and coaching sessions for their employees and executives. They also invest in acquiring individuals with valuable skills from external sources, even if it comes at a high cost. However, the "ability" that truly leads to sustainable business success should not be inflexible. The ability an organization should possess is one that is flexible and dynamic enough to adapt to environmental changes. When strategies change, the ability to perform or operate must also adapt. Therefore, in some cases, developing skills or specific abilities in employees might put the organization at risk, regardless of whether the business operates in an industry with high or low dynamism.

"Dynamic Capability" is the Key

Hence, the concept of "Dynamic Capability" has been introduced, which is a new paradigm for achieving competitive advantage. Dynamic capability refers to an organization's ability to "create, extend, or modify" its resources effectively to respond to the changing environment.

1. Creating Innovation "The ability to create innovation" is often seen in the research and development departments of organizations. Their role is to study, research, and learn from the organization's resources, whether it's knowledge, products, processes, or assets. They then use this knowledge and understanding to create new things that bring benefits, such as new innovations or improvements to existing products. For example, Coca-Cola, or the Coke beverage, is an interesting case study. A few years ago, Coke collaborated with Leo Burnett Colombia to study and develop a non-electric cooling box. After a year of research and development, Coke tested the biological cooling box in Aipir, known to be one of the hottest cities in Colombia. The cooling box operates like a coin-operated refrigerator, capable of storing drinks in three different heights. This innovation not only provides a convenient solution but also extends Coke's reach to a new group of consumers.

2. Expanding Resources "The ability to expand resources" is more broadly visible. It involves expanding into new businesses while building on existing resources. A giant like Google is an excellent example. Google started as a search engine and expanded into various other businesses based on its vast user data. Google now encompasses advertising, email services, and cloud office, to name a few. Another example is Fujifilm, known for photography and cameras. They expanded into producing beauty-enhancing products, such as skincare, makeup, supplements, and beverages. Fujifilm developed nanotechnology and anti-oxidation technology to protect against UV rays and color fading. Under the same concept, they introduced Astalift, a skincare brand that protects against UV rays and boosts collagen production. Recently, Fujifilm partnered with the Kirin beverage brand in Japan to introduce Kirin Astalift Water, a non-alcoholic beverage with collagen and astaxanthin.

3. Modifying Resources "The ability to modify resources" refers to the capability to change or increase the value of existing resources. This process is widespread in competitive industries, where companies differentiate themselves from the competition. For instance, in the highly competitive tea market, where many companies offer similar products, the ability to modify their offerings sets them apart. This may involve changing the aroma, flavor, or appearance of the product to attract consumers and justify higher prices. This value addition allows companies to stand out in the constant pricing war and gain a competitive edge. Therefore, adding value to existing resources is one way to adapt and succeed.

Summary for Organizations with "Dynamic Capabilities"

Dynamic capabilities bring various benefits to organizations. They enable innovation, help organizations revisit and improve existing resources, and identify new business avenues or market opportunities from existing resources. For example, Fujifilm faced a changing competitive environment with increased foreign competitors and digital technology disruptions in the film and photography industry. They responded by reevaluating their strengths and existing resources, starting research and development from their old nanotechnology, and eventually branching out into entirely new industries.

Therefore, organizations with dynamic capabilities need to strike a balance between stability and the ability to adapt continually. This means having the stability to consistently deliver value to customers while being flexible enough to adjust when necessary. Dynamic capabilities must be robust enough to provide continuous value in their unique form to customers, while also being flexible enough to adapt when required.