Purpose – The purpose of this paper is to report on research that identifies the relationships that senior managers believe exist between capabilities and business success. In doing so, it addresses the need for more empirical research about the role of strategic and dynamic capabilities in organisational performance. It also highlights the critical strategic and dynamic capabilities that are most valuable for practising managers. Design/methodology/approach – A multi-method study was conducted. Eight types of strategic capability and ten types of dynamic capability commonly found in organisations were identified through consecutive literature review, web site content analysis and interviews with senior executives. A questionnaire survey was then used to ask senior officers of publicly listed Australian firms about the importance of each capability and financial and non-financial performance indicators. The relationship between capabilities and performance was measured by regression modelling. Findings – Good leadership with an innovative vision and selection and retention of good staff and developing their skills and capabilities were the stand out strategic capabilities. Strategic thinking about the big picture and the long-term and flexible leaders who can lead and manage adaptation to change were considered to be the most important dynamic capabilities. Strategic capabilities were more often associated with indicators of financial success, and dynamic capabilities were more often associated with non-financial measures of organisational performance. Originality/value – This is the first study to make a distinction between strategic and dynamic capabilities in examining the relationship between capabilities and business success. The results demonstrate that the distinction has both theoretical and practical value.

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This article considers strategic transformation and how organisations can learn to become better at strategically transforming themselves over time. Two case studies are considered, Marks & Spencer and Intel, and these provide two contrasting examples of how organisations can either be reactive or proactive in managing strategic transformation. The article argues that in order for strategic transformation to become an art it must become part of the unconscious competence mindset of the organisation. A number of questions/statements are developed which help managers to fine-tune their strategic transformation skills and these are interlinked and combine to form a strategic transformation framework. Thus, the article intends to be of practical use to managers.As always, the author is grateful to Elsie Plumb for reproducing the figures.

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