Inbox: Brain Teecer

Many managers may be barking up the wrong tree when it comes to growing their enterprise and its dollars over the long run. An increasingly competitive and globalised world calls for major rethink of management and strategy, and different accompanying framework.
That’s the message from David Teece, Tusher professor of global business at the University of California Berkeley and chairman of the Berkeley Research Group.
Teece, graduate of Canterbury University, was in New Zealand for the World Class New Zealand Awards and sharing his ideas at the University of Auckland’s MBA breakfast series.
Teece’s framework – or what he calls the idea of dynamic capabilities – centres around trying to help solve number of problems that organisations and managers face.
Key among them is the notion that intangible assets – such as relationships, market connections and the very architecture of business – are critical to an organisation’s future success yet most systems and balance sheets are set up to ignore them.
“Dell Computing, for example, was set up without drop of new technology but it had figured out new ways of building and distributing computers.”
In world of outsourcing and offshoring, “advantage flows no longer from what you’ve got but from how you put it together”, said Teece.
“In the old world that [Michael] Porter was describing… it was all around what you had internally.
“Now, that’s still important, but it’s also about what’s there externally. Who are my complementors? And how do I bring together in new combination these assets that often lie outside the boundaries of the business enterprise?
“We keep drawing organisation charts as though the task of management is to manage down through the internal hierarchy. That’s not true. The job of the CEO is as much to manage externally.”
Teece’s “dynamic capabilities” framework for addressing these and other problems, employs the idea of organisations using “sensing, seizing and transforming” activities to both create and capture value.
In essence, they should: “sense” or identify and assess opportunities; “seize” or mobilise resources to address an opportunity and capture value from doing so; and “transform” or continually renew themselves.
Such activities are necessary for firms to sustain themselves as markets and technologies change.
“Wealth will be denied to those (like Nokia in recent years) that miss big trends (failing to sense), move too slow (failing to seize), and are forced to leap off burning platforms (having failed to transform).” M

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