How do you grow a capability?Posted: March 13, 2012
The “dynamic capabilities” literature, I think, is a bit of a mess: lots of jargon, conflicting arguments (and levels of analysis) and little agreement even on a basic definition. I don’t really like to get involved in definitional debates, though I think the idea of a capability, the ability to do/accomplish something (whether individual or collective), is fundamental for strategy scholars.
Last weekend I was involved in a “microfoundations of strategy” panel (with Jay Barney and Kathy Eisenhardt). One of the questions that I raised, and find quite intriguing, is the question of how we might “grow” a capability. The intuition for “growing” something, as a form of explanation, comes from simulation and agent-based modeling. For example, Epstein has argued, “if you didn’t grow it, you didn’t explain it” (here’s the reference). I like that intuition. As I work with colleagues in engineering and computer science, this “growth” mentality seems to implicitly be there. Things are not taken for granted, but explained by “growing” them. Capabilities aren’t just the result of “history” or “experience” (a common explanation in strategy), but rather that history and experience needs to be unpacked and understood more specifically. What were the choices that led to this history? Who are the central actors? What are the incentives and forms of governance? Etc.
So, if we were to “grow” a capability, I think there are some very basic ingredients. First, I think understanding the nature, capability and choices of the individuals involved is important. Second, the nature of the interactions and aggregation matters. The interaction of individuals and actors can lead to emergent, non-linear and collective outcomes. Third, I think the structural and design-related choices (e.g., markets versus hierarchy) and factors are important in the emergence (or not) of capabilities. Those are a few of the “ingredients.”
I’m not sure that the “how do you grow a capability”-intuition is helpful in all situations. However, I do find that there is a tendency to use short-hand code words (routines, history, experience), and the growth notion requires us to open up these black boxes and to more carefully investigate the constituent parts, mechanisms and interactions that lead to the development or “growth” of capability.