Using Capabilities to Build a Response-Led Strategic Decision Model

The dynamics of the business environment are now changing rapidly, and we are witnessing a rate of change that 15/20 years ago could not have been imagined. The digital and connectivity features of Industrié 4.0, the increased integration, coordinated collaboration of Value Chain Network 2.0, and the broader accountability of stakeholder value-led management has brought a requirement for a new approach; individual organizations and networks can no longer rely on existing capabilities; they need to be both agile and future focused, when identifying strategic futures and the capability responses required for success. A response capabilities approach views the firm as a portfolio of capabilities that evolve in response to the (perceived) demands of the business environment. An “enterprise” comprises one organization or collaborative networks of firms. Examples from the large corporations suggest that the traditional structural model based upon functions (silos) is rapidly losing support in favor of holistic structures reflecting response capabilities; these are characteristics that reflect an understanding of the marketplace and of the opportunities it offers and the characteristics of capabilities essential for successful engagement. The evident changes in management approaches of narrowly defined customer centricity, a changing view of the enterprise-stakeholder value management rather than just shareholder value management, a positive approach to network collaboration, network “connectivity,” and the availability of real-time data analysis and management suggest the demise of the silos and replacement by a holistic, interactive approach that enables an organization to identify the capabilities that market opportunities require and the ability to structure a relevant response that meets the market demand precisely rather attempting to mold the market need into an opportunity that fits the silo’s requirements.