Universities are organizations. Organizations can sense, seize, and reconfigure — or they can fail to.

Sensing

The condition that made this argument necessary

For most of the twentieth century, knowledge was the scarce input. Access to research, to refined frameworks, to the accumulated thinking of a discipline — these were rationed by geography, by institutional membership, by price. The executive who had read Teece had an edge over the one who had not, because the reading itself was hard to come by.

That scarcity dissolved. The digitization of academic output, the open-access movement, the general-availability of research corpora — these did not make knowledge free in the economic sense, but they made it abundant in the practical one. The cost of knowing a thing fell toward zero. What remained expensive was deciding what to do with it.

Teece and Heaton name this the judgment economy. Their thesis is not a provocation; it is a description of a structural shift already visible in how firms compete. The organizations that win in the next decade will not be the ones with the largest knowledge inventories. They will be the ones with the best-calibrated judgment — the capacity to read a turbulent environment, to distinguish weak signals from noise, and to act before the opportunity window closes.

Sensing, in Teece’s framework, is precisely that capacity. It is the organizational ability to identify and shape opportunities and threats. It requires scanning across technical and market domains, interpreting what is found, and routing interpretation toward decision. It is not an information-management problem. It is a judgment problem. And judgment is developed — or it atrophies — through practice under conditions of genuine uncertainty.

“The opportunity-sensing function requires scanning, creation, learning, and interpretive activities.”David J. Teece — Dynamic Capabilities and Strategic Management, Oxford, 2009

Research institutions were supposed to be the organizations that cultivated judgment. The seminar, the dissertation, the research apprenticeship — these were pedagogical technologies for developing the capacity to think under uncertainty, not merely to retrieve answers. That was the implicit contract.

What the Dynamic Universities thesis argues is that most such institutions have, over the past generation, quietly abandoned this contract in favor of a different one — efficiency at scale, credentialing at volume, content delivery optimized for throughput. The result is graduates who are rich in what they know and poor in their capacity to apply it when the environment refuses to hold still.

The shift was not malicious. It was rational, given the incentive structures those institutions faced. But rationality in the short term and fitness in the long term are not the same thing. This is a distinction the framework insists on.

Evolutionary fitness over static efficiency

The second movement in Teece’s triad is seizing — the commitment of resources to the opportunities that sensing has identified. This is where the framework parts company with classical strategic planning. Classical planning assumes that the environment is stable enough for deliberate analysis to precede action by a comfortable margin. In conditions of what economists call Knightian uncertainty — where the future cannot be described as a probability distribution over known outcomes — that assumption fails.

Frank Knight’s distinction between risk and uncertainty is worth holding precisely here. Risk is measurable: the odds can be known, the expected value can be calculated, the hedge can be priced. The executive facing risk is doing a calculation problem. Uncertainty is different in kind, not in degree: the possible outcomes are not enumerable, their probabilities cannot be estimated, and the relevant category of response is judgment rather than calculation.

Most of the decisions that matter to a senior executive are in this second category. The move into a new market. The timing of a platform investment. The decision to cannibalize a profitable business before a competitor does. These are not calculation problems dressed up as judgment problems. They are judgment problems, and the executive who treats them as the former will systematically choose the wrong option at the wrong time.

“The organization that optimizes for efficiency in a stable environment will be outcompeted by the organization that maintains the adaptive capacity to reconfigure when the environment shifts.”David J. Teece & Sohvi Heaton — Dynamic Universities, 2023

An institution built around seizing, then, is not a decision-support system. It does not produce models or frameworks for calculation. It produces something harder to manufacture and easier to recognize in retrospect: the habit of decisive commitment under conditions that do not yet permit certainty. The executive who has rehearsed this pattern of thought — who has practiced diagnosing the actual obstacle, naming a guiding policy, and choosing coherent actions — carries that pattern into conditions where it is most needed.

What Rumelt calls the strategy kernel — diagnosis, guiding policy, coherent action — is precisely a seizing technology. It is not a planning template. It is a structure for thought that forces the strategist to name what is actually hard about the situation, rather than defaulting to the comfortable fiction that all obstacles are equally important. The diagnosis is where most strategies fail, not the execution.

The Institute’s programs are organized around this insight. Participants do not complete a module by reading a chapter. They complete it by producing a diagnosis of a real situation in their own organization, reviewed against the framework by a faculty member who has spent a career thinking about exactly this problem. That is not content delivery. It is judgment rehearsal.

Why the institute embodies the thesis it teaches

The third capability — reconfiguring — is the most demanding and the most frequently absent. It requires an organization to rebuild its asset base: to retire resources that no longer fit the strategic situation, to co-specialize complementary capabilities around new opportunities, and to do this continuously rather than episodically in response to crisis.

Reconfiguration is expensive. It destroys the sunk-cost investments that efficiency logic protects. It disrupts the routines that make today’s operations predictable. It requires the senior leadership team to carry a model of the organization not as it is, but as it needs to become — and to act on that model before the external pressure to change becomes undeniable.

This is the dynamic in Teece’s framework that connects the theory of the firm to the theory of leadership. Reconfiguration is not an organizational process that happens without human agency. It requires leaders who can perceive the need before the numbers show it, who can build the internal coalition to act, and who can sustain the effort through the period when the old model is visibly degrading and the new one is not yet productive. This is judgment under deep uncertainty in its most demanding form.

“Dynamic capabilities are the antecedent organizational and strategic routines by which managers alter their resource base — acquire and shed resources, integrate them together, and recombine them — to generate new value-creating strategies.”David J. Teece — The Dynamic Capabilities of Firms (Oxford Review of Economic Policy, 1996)

The Dynamic Universities thesis argues that established knowledge institutions face exactly this challenge. Their asset base — tenured faculty, physical campuses, accreditation structures, long-cycle program development — was optimized for a world in which knowledge was scarce and durable. In a world where knowledge is abundant and depreciates rapidly, those assets have become, in some cases, liabilities.

An institution that has genuinely internalized the framework it teaches would recognize itself in this diagnosis. It would ask not only how to deliver more efficiently, but how to sense the changing demand for judgment, seize the opportunity that a new pedagogical model presents, and reconfigure its human and technical assets around the new value-creating logic. Very few institutions are doing this. The pressures of endowment management, accreditation compliance, and rankings optimization push in the opposite direction.

The Dynamic Capabilities Institute was built to be the exception. Not by rejecting scholarship — the scholarship is the product — but by making an institution whose operating model is itself an argument. The faculty are source-faithful twins of named scholars, active and available rather than archived and inert. The programs are structured around judgment rehearsal, not content transmission. The governance is human supervision over AI systems, not the pretense that the AI is the human or that the human is unnecessary.

This is what it means to embody a thesis rather than teach it. Every organizational choice the Institute makes is a test of the same framework its participants are learning to apply. The Institute senses the shift in demand for judgment-based education. It seizes the opportunity that source-faithful AI faculty creates. It reconfigures the asset base of executive education away from recorded lectures and completion badges and toward something that behaves more like a living seminar than a content library.

The argument is not that this is easy. Reconfiguration is never easy. The argument is that it is necessary — and that the scholars whose work defines the framework are the right people to supervise the experiment.