Each competence mode arises from a specific level of activity with an organization as an open system. The term mode of competence is used in this discussion to refer to an important way in which the competence of an organization is expressed through specific kinds of activities and processes. Further, as the discussion below explains, each competence mode results from a distinctive kind of organizational flexibility to respond to changing and diverse environmental conditions, such as evolving market demands, technological change and competitive developments in an industry. Each kind of flexibility can in turn be described by the kind of portfolio of strategic options that each flexibility brings to an organization.