Jeffrey Martin on Competing in Fast-Moving Dynamic Environments
Paper Interview: September 2010
It sounds like the paper started out being about this resource-based view and then evolved into something entirely different, on these dynamic capabilities. Is that fair to say?
After spending two years writing this, and rewriting and rewriting, doing a new iteration almost on a weekly basis and finally getting it into the publication process, we actually got feedback from the journal editor who said that the first two-thirds of the paper, which was then about the resource-based view was okay, but the last third, about dynamic capabilities, that was really good. That's what was interesting in the paper. And so what we did was we basically threw out the first two-thirds and worked furiously to further develop the last third of the paper into a full paper.
What was your ultimate conclusion about the importance of these dynamic capabilities?
What we say is that dynamic capabilities have a direct effect on a firm being able to achieve and sustain a competitive advantage, because all market environments are dynamic. It's just that some markets change slowly and others change really fast. Managerial decisions matter on how a firm develops the dynamic capabilities necessary to adapt to these changes.
Managers, through their skill and insight and expertise, take their best shot at making decisions on how best to organize the firm to compete in whatever market environment they're in, whether it is changing slowing or rapidly, and the quality of these decisions and the effectiveness of implementing them is what really matters.
It's not just about a person sensing and seizing an opportunity. It's about how that's done and the learning mechanisms that guide the development and evolution of these dynamic capabilities. Achieving competitive advantage through effective dynamic capabilities is hard to do as it is very difficult for managers to tease out all the decisions they might make on a day-to-day basis those that really differentiated their successful projects to capture value in an uncertain future from their unsuccessful ones, and which ones weren't.
It's hard to believe that the idea that managers make a substantive difference in a firm's performance is a new thing to say or a controversial one. Was it?
Some economists would certainly disagree with this idea. To say managers don't matter isn't a popular thing, but when you actually look at the theoretical underpinning of most economics-based strategy frameworks out there, they really don't focus on managers. They're looking one abstraction level up and so the implication is that what happens at the managerial level isn't all that important to competitive advantage relative to say industry level factors.
"This interest in the intellectual underpinnings of how firms organize themselves and make strategy ultimately led to my desire to change my career focus from consulting to research and teaching."
I'm not saying that an economics view of competitive advantage is not important. Rather, what I am saying is that there's two parts to the story of competitive advantage, and Kathy and I and those of us who are managerial/behavioral strategy scholars are part of this other part of the conversation.
How much of what you learned as a managing consultant in your first life actually fed into the conclusions of this paper?
What was conscious about this—and this is why Kathy thought I would be a good fit and we could collaborate—is that in my consulting work it had become very clear to me that senior managers are very smart and that it's very hard for executives to compete in these really fast-moving dynamic environments.
I was also aware that how we were helping them solve problems when I was a consultant was a little ad hoc. That is, many of the standard managerial frameworks for solving business problems weren't as useful as they should have been in helping clients who were competing in high-dynamic markets, so that's the experience I was taking forward and the context to some extent of this work.
Are you surprised at how well the paper has done, or did you think it was destined, more or less, for greatness, when you wrote it?
We had no idea this was going to be so successful. We worked on it to sharpen our own thinking and in doing so hoped to be able to contribute to the scholarly conversations around competitive advantage. As it turned out, we came up with these ideas at the exact right time that the academic world was ready for them. We got lucky there. We did our job and we were blessed with bit of luck and that's the best you can hope for.
How has your thinking evolved in the 10 years since this paper was published?
Our dynamic capabilities paper emphasized processes that were dynamic capabilities and my new work promises to add another dimension to the dynamic capabilities conversation. What I'm focusing on right now is what I'm calling dynamic managerial capabilities.
The idea is there are things that managers do to obtain, integrate, reconfigure, and release resources that can't be described as a process and yet aren't ad hoc problem-solving either. They're things that an executive might do on a regular and repeated basis, but they're not in a process that's always running, and they are an important element in a firm's dynamic capabilities.
I have a paper coming out in Organization Science that examines this. It's still based on my dissertation research from a decade ago, but the thinking in it also takes advantage of my current research on serial entrepreneurs and what they learn and don't learn from their ventures. This focuses on the individual person's role in dynamic capabilities rather than the group of managers and process.
Think of a start-up, for example. Someone doing multiple start-ups is doing something on a repeated basis. Each time they're obtaining resources, integrating them, reconfiguring them in a way they didn't do before, all to pursue an opportunity. My current research is a way to study more the specifics of managing and the fact that managers matter. Entrepreneurs are better or worse at founding firms and this new stream of research looks more closely at the dynamic managerial capabilities that are an important part of a firm's dynamic capabilities.
What would you do differently or say differently on your 2000 dynamic capabilities article, if you could go back and redo it today?
Change anything on a paper that has had the success that ours has had? I wouldn't change a word. In all seriousness, I learned so much from writing that paper I can't imagine a reason to change a thing.
Jeffrey A. Martin, Ph.D.
Department of Management and Marketing
Culverhouse College of Commerce
University of Alabama
Tuscaloosa, AL, USA
JEFFREY A. MARTIN'S MOST CURRENT MOST-CITED PAPER IN ESSENTIAL SCIENCE INDICATORS:
Eisenhardt KM, Martin JA, "Dynamic capabilities: What are they?," Strateg. Manage. J. 21(10-11): 1105-21, October-November 2000 with 756 cites. Source: Essential Science Indicators from Clarivate .
ADDITIONAL INFORMATION:
- Coauthor Kathleen M. Eisenhardt is featured in ISIHighlyCited.com.
KEYWORDS: DYNAMIC CAPABILITIES, COMPETITIVE ADVANTAGE, RESOURCE-BASED VIEW, DYNAMIC MARKETS, RESOURCES, HIGH-VELOCITY MARKETS, ORGANIZATION THEORY, ORGANIZATIONAL CHANGE, PRODUCT INNOVATION, STRATEGIC MANAGEMENT, FUTURE DIRECTIONS, FIRM, KNOWLEDGE, PERFORMANCE, INDUSTRY, TECHNOLOGY.