October 31, 2014

Innovation Expert David Teece Brings Dynamic Capabilities to Classroom

David Teece
Professor David Teece

Professor David Teece is expanding the influence of "dynamic capabilities" – a concept he developed in a 1997 paper that has since been cited more than 6,000 in academic journals – by teaching a course on the topic and proposing it as a vehicle to better integrate business school curriculum.

The term dynamic capabilities refers to high-level competencies that determine how well business enterprises are able to integrate, build, and reconfigure internal and external resources to address and shape a rapidly changing business environment. Examples include identifying and assessing opportunity, which involves entrepreneurship, and mobilizing resources to address an opportunity and capture value, which can involve everything from business model design to financial capital to employee incentives.

New Course

From April 1 to April 5, Teece will teach a strategic management course in the Berkeley-Columbia Executive MBA Program to help students better understand and appreciate the importance of intangible assets and dynamic capabilities to competitive advantage. Intangible assets can include technological know-how, business models, reputation, and intellectual process.

Teece's new course -- titled Strategic Management and Innovation: Knowledge, Intellectual Capital, and Competitive Advantage -- will provide students with frameworks for managing intellectual capital in the private sector. It will be useful for students interested in working for either large or small firms in technologically progressive industries, such as consumer electronics, as well as students wishing to understand how mature industries can create and respond to innovation.

The course will help students understand how firms sense opportunities, generate technological innovation, utilize the tools of intellectual property, invent new business models, and ultimately win in the marketplace. Students will examine two case studies, with Apple serving as an example of a firm with strong dynamic capabilities and Nokia as a case of weak capabilities.

New Framework for B-School Curricula

Meanwhile, Teece has taken that same idea of dynamic capabilities and applied it to business school curricula in a paper published this year in a special issue on the future challenges of business schools in the Journal of Management Development (Vol. 30 Issue 5).

Teece points to several major deficiencies in business school research and education, arguing that business schools are rarely ahead of practitioners and that their functional silos dominate. He contends focusing on a single discipline benefits researchers and their research, but "it often takes us further away from understanding deep problems, almost all of which require a multidisciplinary focus."

Teece also argues that old ways of looking at different areas of business, from accounting to organizational design, marketing to human resources, are no longer adequate. Previously used frameworks focused on suppliers, customers, and the threat of new entrants. But firms today need to take a more encompassing view of the competitive landscape, looking beyond suppliers and buyers to the local market for skilled workers, financial institutions, and legal and political systems, Teece writes. He explains that a useful unit for analysis is often the ecosystem, not the industry.

"We need a truly interdisciplinary curriculum that everybody now gives lip service to but nobody does much about," Teece said in an interview. "A number of deans I’ve spoken to agree that’s exactly what is needed, but it’s an uphill battle because the system doesn’t reward either faculty or deans for making progress on this final."

Teece argues that dynamic capabilities can serve as this unifying interdisciplinary framework in business school curricula, producing "managers better equipped to handle disruptive challenges, emerging opportunities, and the messy problems of the real world."

Watch a video of Teece talking about his new course.

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