Adaptability: The New Competitive Advantage

Reprint: R1107M

Traditional approaches to strategy assume that the world is relatively stable and predictable. But globalization, new technologies, and greater transparency have combined to upend the business environment. In this period of risk and uncertainty, more and more managers are finding competitive advantage in organizational capabilities that foster rapid adaptation. Instead of being really good at doing some particular thing, companies must be really good at learning how to do new things.

Those that thrive are quick to read and act on weak signals of change. They have worked out how to experiment rapidly and frequently not only with products and services but also with business models, processes, and strategies. They have acquired the skills to manage complex multistakeholder systems in an increasingly interconnected world. And, perhaps most important, they have learned to unlock their greatest resource: the people who work for them.

The authors, senior partners at the Boston Consulting Group, review these four types of organizational capabilities, showing what companies at the leading edge are doing to create them. They also discuss the particular implications of this fundamental strategic shift for large corporations, many of which have built their operations around scale and efficiency—sources of advantage predicated on an essentially stable environment.