Dynamic Capabilities That Don't Fail

What is it about?

Most corporate sustainability efforts remain incremental, focusing on reducing harm rather than transforming systems. This article argues that such transitional strategies are insufficient to address escalating environmental challenges and calls for a shift toward transformative circularity—a systemic approach that eliminates waste, optimizes resource use, and regenerates natural systems. To enable this shift, we introduce the concept of dynamic capabilities for circularity—the organizational abilities to sense opportunities, seize them, and reconfigure resources and relationships to deliver long-term sustainability. Drawing on the dynamic capabilities literature and emerging research on the circular economy, we identify ten dynamic capabilities for circularity grouped into three categories: sensing (disruptive learning, pivoting leadership, systems thinking), seizing (dematerializing, radical optimizing, adaptive exchanging, ecosystem regeneration), and reconfiguring (collaborative sharing, business model redesign, ecosystem orchestration). The article contributes a practical framework and a set of actionable steps for managers to develop these capabilities at the individual, organizational, and interorganizational levels. Illustrated with examples from the construction and development sector, the framework provides a roadmap for firms seeking to move beyond incremental improvements toward systemic, regenerative business practices. In doing so, it bridges theory and practice, offering both conceptual clarity and practical guidance for organizations aiming to lead in the transition to a circular economy.

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Why is it important?

This article addresses a critical gap in the sustainability and dynamic capabilities literature by clarifying what capabilities organizations need to achieve transformative circularity. It introduces an integrative, multi-level framework of ten dynamic capabilities that link sensing, seizing, and reconfiguring processes to circular economy principles. By synthesizing fragmented research into a coherent model, it advances theory and provides a foundation for future empirical work on organizational transformation for sustainability. This article provides managers with a practical roadmap for advancing circularity by identifying ten dynamic capabilities that enable organizations to move from incremental sustainability efforts to systemic transformation. It translates complex academic concepts into actionable steps at the individual, organizational, and ecosystem levels, supported by real-world examples from the construction and development sector. By doing so, it equips leaders with concrete strategies to sense opportunities, mobilize resources, and reconfigure business models for long-term resilience and competitive advantage.