"Dynamic capabilities" versus "satisficing"

How do organizations really create new routines and capabilities? Since its introduction in 1997 (Teece, Pisano, & Shuen, SMJ, 1997), the theoretical lens of “dynamic capabilities” has gained considerable attention in the strategic management literature. Dynamic capabilities are a firm’s ability to integrate, build, and reconfigure internal and external competences to address rapidly changing environments. In other words, organizations use dynamic capabilities to develop new routines and capabilities to adapt to their competitive environment. In practice, however, organizations have been creating new routines and capabilities in response to changing environments well before the introduction of dynamic capabilities. An alternate theoretical view for explaining this comes from the managerial decision-making literature: satisficing - a form of decision making under limited constraints that satisfies some desired goal, however imperfectly or sub-optimally.

If you're reading this post, chances are you have just completed a survey in which I am trying to capture your impressions of these competing(?) approaches to capability building. The dynamic capabilities literature is one of the most popular areas in strategic management now, while satisficing seems to have fallen out of favor. With few exceptions (Winter, 2000, 2003), scholars have ignored satisficing in the management literature. No one offers it as an alternative explanation. There is no special interest group dedicated to satisficing, nor are there any research paper sessions at Academy of Management or Strategic Management Society meetings dedicated to satisficing. I hope to find out more about how these views work (or don't) together!

Managerial decision making

Decision making is one of the most important functions of management. Despite its importance and exhaustive study on the topic, we still struggle to make decisions effectively. In two STVP videos posted here, Janice Fraser of Adaptive Path explains how efficient decision making can be supported by giving the decision maker responsibility, accountability, and authority, and Dominic Orr of Aruba Networks describes how to cultivate a fast decision making process focused on facts and intellectual honesty. Finally, MIT behavioral economist Dan Ariely discusses how we are all victims of the "illusion of control" in decision making (click on the image above). Clearly, there is more researchers can do to help managers become better decision makers.

Dominick Orr on Working with and Making Decisions with Great People

From Stanford's Entrepreneurship Corner:

Dominic Orr, CEO of Aruba Networks, begins by describing two surprises he encountered when working with great people: first, how difficult it is for experienced people to change and second, how challenging it is to be intellectually honest. Orr then describes his efforts to overcome these impediments by cultivating a fast-decision making process focused on the facts and intellectual honesty. However, to achieve this environment each individual has to have a thick-skin and a commitment to self-evaluation, qualities that usually must be cultivated over time. [3 minutes, 42 seconds]