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The capabilities entrepreneurs need to develop

This article is written by Dr. Steven Seggie. He is Assistant Professor of Marketing at Özyeğin University.

Listening to the A16z podcast yesterday evening I got thinking about mobile technology and what will be the next “big thing” in the technology space. Prediction is such a hard game to play and although we often forget, there was a day not so long ago when we couldn’t use our smart phones to get a car to take us somewhere or track our health or whatever else we use the devices for. In fact it was not that long ago that we were living in pre-smart phones times and before that in pre-laptop times etc etc etc. So the question of interest to all of us interested in the technology entrepreneurial space and startups has to be ‘today what are we pre-?’ Or if I were to word it in a slightly less convoluted manner, what will exist tomorrow that didn’t exist today? Many people make a reasonable living trying to predict the future, an intellectually interesting parlor game of sorts. However, for entrepreneurs it is ultimately a futile pursuit and as such a waste of valuable time.

Instead, entrepreneurs should be focusing on developing the essential dynamic capabilities required for them to stay ahead of the curve and be able to react quickly to the future as it unravels. We observe a rapidly changing external environment that is almost impossible to predict so firms and entrepreneurs have to find a way to address these environments. This requires entrepreneurs to change mental models and paradigms to be successful in this dynamic environment.

The key features of these dynamic capabilities[1] that entrepreneurs need to be focused upon are the routines and processes that build resource configurations that allow firms to have a long-term competitive advantage. Entrepreneurs should focus on the need to develop processes that allow them to gain knowledge resources and develop new applications from this resource base. Furthermore, there has to be a focus on learning in the startup and this learning (akin to the lean startup methodology) takes place through experiments and repetition and is central to the ability to gain any sort of competitive advantage. The processes and learning combined with the asset position of the company and any path dependencies that may constrain future behavior all tie together to build the resource configuration that will provide the entrepreneur / startup with a competitive advantage in the dynamic market.

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[1] For an overview of dynamic capabilities see Cavusgil, Seggie and Talay (2007), “Dynamic Capabilities View: Foundations and Research Agenda” Journal of Marketing Theory and Practice 15(2), pp 159-166
 
 
─ November 5, 2014