Dynamic Capacity is a robust indicator of Competitive Advantage
The higher the level of the Dynamic Capacity of the firm the greater the ability of the firm to compete and win as the future unfolds. Thus when comparing the relative performance of two firms that are competing in the same industry and markets (i.e. exposed to similar rates of context evolution), the firm with a higher level of Dynamic Capacity will achieve superior performance as the future unfolds. 

• The current period performance of either firm could appear superior as current period results can easily be manipulated by short-term actions, however as the market and industry evolves the firm with the higher level of Dynamic Capacity will out-perform its rival in the mid term. 

As 80% of the value of firm is determined by the expectations of future earnings, the level of Dynamic Capacity is a more robust indicator of firm value than projection from current period performance results.

​A tennis player with superior skills and stamina may loose a particular point, or game to an inferior competitor but over time their level of skills and stamina will be a consistent leading indicator of superior performance.

Dynamic Capacity is more important in faster evolving contexts
The faster the rate of evolution of the contexts in which the firm is competing the more important for the firm to have higher capacity to prepare for and win in the unfolding future. Conversely, the more stable the context of the firm, the less important for the firm to adopt a forward-leaning orientation. Thus important choices of strategy for the firm include: 

• The extent to which it exposes itself to faster evolving or more stable business contexts e.g. to developing or mature markets, to highly regulated concessions or frontier industries where regulation lags business behaviors. 
• The extent to which the firm seeks to lead or follow the evolution of the market-spaces in which it competes. 

​By analogy, in a pick-up game of tennis with the family, the winner may not be particularly skilled nor with the stamina of a professional athlete, but to win a Grand-Slam title requires a level of skill and stamina that few in the world possess. Each player makes their own choice of where they compete based on their level of skills and desire for winning. 

Dynamic Advantage, Competitive Advantage Achieved
​In the global research of corporations, executives rated the relative level of their firm’s performance compared to competitors and also reported on the rate of evolution of the business contexts in which they are operating. Combining these assessments with the calculated level of the Dynamic Capacity for each firm enabled analysis of the relationship between the Dynamic Capacity and Competitive Advantage of a firm. A very strong correlation was revealed, and one that increases with the rate of evolution of the industry. The summary is shown in the graph below. 

The measure of the level of Dynamic Capacity is a strong predictor of the future performance of a firm, and the accuracy of the prediction increases as the instability of the market increases. This is a remarkable result. In exactly the contexts where it should be harder to predict which companies will succeed, where everything is up for grabs and the speed of change is blinding, the ability of Dynamic Capacity to predict winners and losers increases. 

"The conclusion for the leaders of any firm that operates in unstable contexts is that to increase competitive performance they should enhance the Dynamic Capacity of the firm."