Designing Organizations for Dynamic Capabilities

Abstract

How can organizations put dynamic capabilities into practice? This article focuses on the power of organizational design, showing how managers can harness new organizational forms to build a capacity for sensing, shaping and seizing opportunities. Fast-moving environments favor open organization and self-organizing processes that quickly convert individual capabilities into actionable collective intellect. However, such self-organizing processes require managers to design and execute them. Using Valve Corporation as a case example, this article shows how new design principles—such as polyarchy, social proofs, and new forms of open organization—allow organizations to build dynamic capabilities for sustained innovation in dynamic environments.

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