CHAPTER 4 RESOURCES AND CAPABILITIES ILLUSTRATION 4.5 Dynamic capabilities (and rigidities) in mobile telephone companies Dynamic capabilities can help firms sense and seize opportunities and reconfigure ordinary capabilities in changing environments. Companies in the mobile telephone industry have built App Store and iTunes Music Store. Apple built on a on their dynamic capabilities in their effort to adapt to recombination of its prior design, interface and con environmental changes and dominate the market. They sumer behaviour capabilities and for them new mobile have identified and evaluated new opportunities (sens phone capabilities. ing), addressed these opportunities with new products While the dynamic capabilities of the mobile phone seizing and renewed and redeployed their capabili companies helped them adapt, they are no guarantee ties accordingly reconfiguring. This is illustrated in for keeping ahead permanently as the ordinary capabil the table ities they developed risk becoming rigidities as markets The pioneers in mobile telephony Ericsson and and technologies change even further. If dynamic capa Motorola, managed to sense and explore an entirely bilities do not manage to detect and alleviate rigidities, new mobile telephony market. They satisfied and cap. competitors may emerge over time with more appropri tured value in that market by recombining and rede- ate dynamic capabilities for the constantly changing ploying telecommunication and radio capabilities. environment. However, they got stuck in these early mobile tele phone capabilities and were followed by Nokia Nokia sensed new opportunities as it realised that mobile phones' awkward design and functionality was not suited to what had become a mass consumer and fash- Questions ion market. The company seized and addressed these 1 What type of dynamic capabilities could new opportunities, offering improved design and func help mobile phone companies like Apple and tionality, building on design and consumer behaviour Samsung avoid becoming stuck in their old canabilities. Finally, Apple, with a long legacy in con resources and capabilities? sumer products, explored even further opportunities 2 Based on your own experience of using mobile Apple realised that most phones, even the new smart and smartphones phones, still maintained a complex and unintuitive a What are the possible future opportunities interface with limited multimedia functionalities. Apple in mobile telephones? addressed this by introducing an upgraded multimedia platform smartphone with an intuitive and simple inter How could they possibly be senised and seized? face combined with complementary services like the Reconfiguring To see an opportunity may require renewal and reconfiguration of organisational capabilities and investments in technologies, manufacturing, market etc. For example, Microsoft's inroad into tablets, smartphones and related software and apps requires major changes in its current resources and capabilities. The company discard some of its old capabilities, acquire and build new ones and recombine them. which may prove quite challenging This view of dynamic capabilities relates directly to the framework for this book strate position, strategic choices and strategy in action (see Figure 1.3). Sensing capabilities is code with understanding an organisation's strategic position sizing opportunities relates to make strategic choices and reconfiguration is to do with enacting strategies, Illustration 45 120