Capabilities Unveiled: The Role of Ordinary Activities in the Evolution of Product Development Processes

Abstract

In contrast to the prevailing interpretation of capabilities as collectives, this inductive study of product development in a leading design firm highlights the centrality of the myriad ordinary activities that may shape the evolution of capabilities. A detailed comparison of 90 diverse product development processes over a 15-year period shows, first, that mindful microactivities carried out by individuals in and around the organization and at all levels of the organizational hierarchy are central in shaping the content of the product development capability and its dynamic adaptation. Understanding organizational renewal and competitive advantage may hence require a partial shift in focus from capabilities as aggregate entities, to the practical realities of core organizational processes. Second, this more fine-grained perspective leads to a set of insights on how organizational renewal may be partially shaped by timely managerial interventions aimed at encoding successful experiments into higher-level organizational capabilities. Third, higher-level capabilities resulting from the conversion of heterogeneous experiences display higher process homogeneity and a permanent increase in performance, because of stabilization of managerial attention. My findings contribute to unveiling the concept of capabilities, extending prior research on dynamic capabilities and organizational renewal and providing a lens for research on the microfoundations of capability evolution and organizational advantage.