Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

Case Study SWOT Analysis Solution

Case Study Description of Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy

"Organizational agility" is often treated as an immutable quality, implying that firms need to be in a constant state of transformation. However, this ignores that such transformations, while often essential, come at a cost. They are not always necessary, and may not even be possible. This article explores agility at a more fundamental level and relates it more specifically to dynamic capabilities. It demonstrates that it is first essential to understand deep uncertainty, which is ubiquitous in the innovation economy. Uncertainty is very different from risk, which can be managed using traditional tools and approaches. Strong dynamic capabilities are necessary for fostering the organizational agility necessary to address deep uncertainty, such as that generated by innovation and the associated dynamic competition. This article explores the mechanisms by which managers may calibrate the required level of organizational agility, deliver it cost effectively, and relate it to strategy.

Authors :: David J. Teece, Margaret Peteraf, Sohvi Leih

Topics :: Strategy & Execution

Tags :: Managing uncertainty, Risk management, SWOT Analysis, SWOT Matrix, TOWS, Weighted SWOT Analysis

Swot Analysis of "Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy" written by David J. Teece, Margaret Peteraf, Sohvi Leih includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Agility Dynamic facing as an external strategic factors. Some of the topics covered in Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy case study are - Strategic Management Strategies, Managing uncertainty, Risk management and Strategy & Execution.

Some of the macro environment factors that can be used to understand the Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy casestudy better are - – talent flight as more people leaving formal jobs, geopolitical disruptions, digital marketing is dominated by two big players Facebook and Google, increasing inequality as vast percentage of new income is going to the top 1%, competitive advantages are harder to sustain because of technology dispersion, technology disruption, there is increasing trade war between United States & China, wage bills are increasing, central banks are concerned over increasing inflation, etc

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Introduction to SWOT Analysis of Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Agility Dynamic, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Agility Dynamic operates in.

According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy can be done for the following purposes –
1. Strategic planning using facts provided in Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy case study
2. Improving business portfolio management of Agility Dynamic
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Agility Dynamic

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Strengths Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Agility Dynamic in Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy Harvard Business Review case study are -

Highly skilled collaborators

– Agility Dynamic has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.

Effective Research and Development (R&D)

– Agility Dynamic has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.

Cross disciplinary teams

– Horizontal connected teams at the Agility Dynamic are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.

Operational resilience

– The operational resilience strategy in the Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.

High switching costs

– The high switching costs that Agility Dynamic has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.

Diverse revenue streams

– Agility Dynamic is present in almost all the verticals within the industry. This has provided firm in Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.

Learning organization

- Agility Dynamic is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Agility Dynamic is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy Harvard Business Review case study emphasize – knowledge, initiative, and innovation.

Digital Transformation in Strategy & Execution segment

- digital transformation varies from industry to industry. For Agility Dynamic digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Agility Dynamic has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.

Superior customer experience

– The customer experience strategy of Agility Dynamic in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Low bargaining power of suppliers

– Suppliers of Agility Dynamic in the sector have low bargaining power. Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Agility Dynamic to manage not only supply disruptions but also source products at highly competitive prices.

Strong track record of project management

– Agility Dynamic is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.

Organizational Resilience of Agility Dynamic

– The covid-19 pandemic has put organizational resilience at the centre of everthing that Agility Dynamic does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.

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Weaknesses Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy are -

Employees’ incomplete understanding of strategy

– From the instances in the HBR case study Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy, it seems that the employees of Agility Dynamic don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.

Aligning sales with marketing

– It come across in the case study Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy can leverage the sales team experience to cultivate customer relationships as Agility Dynamic is planning to shift buying processes online.

Lack of clear differentiation of Agility Dynamic products

– To increase the profitability and margins on the products, Agility Dynamic needs to provide more differentiated products than what it is currently offering in the marketplace.

Workers concerns about automation

– As automation is fast increasing in the segment, Agility Dynamic needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.

High operating costs

– Compare to the competitors, firm in the HBR case study Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Agility Dynamic 's lucrative customers.

Slow decision making process

– As mentioned earlier in the report, Agility Dynamic has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Agility Dynamic even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.

No frontier risks strategy

– After analyzing the HBR case study Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.

Products dominated business model

– Even though Agility Dynamic has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy should strive to include more intangible value offerings along with its core products and services.

Skills based hiring

– The stress on hiring functional specialists at Agility Dynamic has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.

High cash cycle compare to competitors

Agility Dynamic has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.

Need for greater diversity

– Agility Dynamic has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.

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Opportunities Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities highlighted in the Harvard Business Review case study Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy are -

Leveraging digital technologies

– Agility Dynamic can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.

Increase in government spending

– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Agility Dynamic can use these opportunities to build new business models that can help the communities that Agility Dynamic operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.

Reforming the budgeting process

- By establishing new metrics that will be used to evaluate both existing and potential projects Agility Dynamic can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.

Remote work and new talent hiring opportunities

– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Agility Dynamic to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Agility Dynamic to hire the very best people irrespective of their geographical location.

Manufacturing automation

– Agility Dynamic can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.

Reconfiguring business model

– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Agility Dynamic to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.

Buying journey improvements

– Agility Dynamic can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.

Changes in consumer behavior post Covid-19

– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Agility Dynamic can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Agility Dynamic can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.

Identify volunteer opportunities

– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Agility Dynamic can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Developing new processes and practices

– Agility Dynamic can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.

Using analytics as competitive advantage

– Agility Dynamic has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Agility Dynamic to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.

Better consumer reach

– The expansion of the 5G network will help Agility Dynamic to increase its market reach. Agility Dynamic will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.

Creating value in data economy

– The success of analytics program of Agility Dynamic has opened avenues for new revenue streams for the organization in the industry. This can help Agility Dynamic to build a more holistic ecosystem as suggested in the Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy case study. Agility Dynamic can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.

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Threats Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats mentioned in the HBR case study Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy are -

Regulatory challenges

– Agility Dynamic needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.

Easy access to finance

– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Agility Dynamic can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

New competition

– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Agility Dynamic in the Strategy & Execution sector and impact the bottomline of the organization.

Aging population

– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.

Shortening product life cycle

– it is one of the major threat that Agility Dynamic is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

Technology disruption because of hacks, piracy etc

– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.

High level of anxiety and lack of motivation

– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Agility Dynamic needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.

Instability in the European markets

– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Agility Dynamic will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.

Backlash against dominant players

– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Agility Dynamic business can come under increasing regulations regarding data privacy, data security, etc.

Environmental challenges

– Agility Dynamic needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Agility Dynamic can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.

High dependence on third party suppliers

– Agility Dynamic high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy, Agility Dynamic may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .

Technology acceleration in Forth Industrial Revolution

– Agility Dynamic has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Agility Dynamic needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.

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Weighted SWOT Analysis of Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy Template, Example

Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants. We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –

First stage for doing weighted SWOT analysis of the case study Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.

Second stage for conducting weighted SWOT analysis of the Harvard case study Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.

Third stage of constructing weighted SWOT analysis of Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Agility Dynamic needs to make to build a sustainable competitive advantage.

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