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Glossary
Dynamic capabilities
Dynamic capabilities are the firm’s capacities to sense opportunities and threats, seize them through investment and commitment choices, and reconfigure assets and ordinary capabilities as environments change — so advantage is not trapped inside yesterday’s operating routines.
Why it matters
Strong operational capabilities can become rigid. Dynamic capabilities explain how some organizations renew their capability set — entering new markets, integrating new technology, retiring obsolete processes — rather than only exploiting what they already do well.
Teece, Pisano, and Shuen (1997) established dynamic capabilities as a strategic management construct linking the firm’s ability to achieve new forms of competitive advantage to path-dependent processes of change. The explicit sensing, seizing, and reconfiguring microfoundations are developed more fully in Teece (2007). In TSS terms, dynamic capabilities complement capability theory: recombination and redesign under change, not merely possession of static strengths. They also sit near decision-making under uncertainty: sensing and seizing are judgment-heavy acts.
“Sense–seize–reconfigure” names those microfoundational mechanisms; it is not an interchangeable alias for the concept of dynamic capabilities.
Example (enterprise): An industrial software vendor senses customers shifting from license seats to usage-based outcomes, seizes by funding a new metering and packaging capability, and reconfigures sales compensation, product architecture, and support routines over four quarters — preserving delivery excellence while changing the capability mix.
Mechanisms
- Sense (Teece 2007 microfoundation) — scan technological, customer, and competitive signals with enough fidelity to update beliefs.
- Seize (Teece 2007 microfoundation) — commit resources and decision rights to opportunities under uncertainty (including staged options).
- Reconfigure (Teece 2007 microfoundation) — realign assets, routines, and ordinary capabilities; sunset what no longer fits.
Boundaries
- Dynamic capabilities ≠ ordinary operational capabilities; operations exploit, dynamic capabilities renew.
- Dynamic capabilities ≠ vague “agility” branding without sensing, seizing, and reconfiguring mechanisms.
- Having changed once successfully does not prove durable dynamic capability.
- Sense–seize–reconfigure ≠ a synonym for dynamic capabilities; it labels microfoundational mechanisms associated especially with Teece (2007).
Related topics
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