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Organizational
Capability
Dr. Eric M. Gladney – Presenter
Prepared For:
NCLA Leadership Institute
Leveraging Your Intangible Strengths…
What Are We Trying To Do…..
We are focusing on organizational capabilities and
how leaders can evaluate and build the ones they
need to create intangible value.
Provide the framework for a capabilities
assessment profile that identifies distinctive
capabilities and aids in developing & leveraging
these distinctive capabilities.
Building A Sustaining Fire…
“For a piece of wood to catch fire, it must
first be heated to a temperature at which it
ignites; then it burns by itself. The initial
heating requires energy from outside, but
once the wood is ignited, the flame sustains
itself and gives off light and heat.”
Dave Ulrich - 1990
Organizational Capabilities
Definition: The various routines and
processes that transform those inputs
(resources) into outputs (physical goods and
services).
These organizational routines and processes
are the regular and predictable work
activities done by organizational members.
– Delta Air Lines vs. Southwest Airlines
Organizational Capabilities
The collective skills, abilities, and expertise
of an organization, (these capabilities) are
the outcome of investments in human
resources….
– They represent the ways that PEOPLE and
RESOURCES are brought together to
accomplish work.
– They form the IDENTITY AND
PERSONALITY of the organization by
defining what it is good at doing and, in the
end, what it is.
Organizational Capabilities: The
Key Intangible Asset
Sales Profits Assets Mkt Value
$13 B $593 M $43.2 B $9.4B
$12 B $459 M $15 B $10 B
Organizational Capabilities
Organizational capability focuses on
achieving goals through employee
commitment and competence.
– Remember … Two criteria for competitive
advantage are:
• Adding perceived value to the customer
• Offering uniqueness that cannot be easily imitated
by a competitor.
Organizational capability enhances perceived
customer value thru responsiveness,
relationship, & service quality.
Competence –vs- Capability
Individuals have competencies focused in
certain areas but organizations have
capabilities.
Individual Organizational
Technical 1
An individual’s
functional
Competence
3
An organization’s
core
competencies
Social 2
An individual’s
leadership
ability
4
An organization's
capabilities
Organizational Capabilities
Organizational capabilities emerge when the
organization combines (and delivers on)
individuals’ competencies and abilities.
– An employee or volunteer may be technically
sharp or demonstrate leadership skill, but the
institution as a whole may or may not embody
the same strengths:
• If it does, team members who excel in these areas
will likely be engaged; if not, they may be
frustrated.
– Additionally, an institution’s organizational
capabilities enable it to turn its technical know-
how into results.
A Few Key Capabilities….
Developed From The Inside Out
Talent: We are good at attracting,
motivating, and retaining competent and
committed people.
– Competent employees & volunteers have the
skills for today’s and tomorrow’s business
requirements; committed members of your
organization deploy those skills regularly and
predictably.
A Few Key Capabilities….
Developed From The Inside Out
Speed: We are good at making important
changes happen fast.
– Speed means that the organization can
recognize opportunities and act quickly when it
comes to new market shifts (e.g. digital media),
new systems, new employee & volunteer
policies, and new business processes.
A Few Key Capabilities….
Developed From The Inside Out
Shared mindset /brand identity: We are
good at ensuring that patrons and
employees have positive and consistent
images of and experiences with our
organization.
– Answering the following question will help
your team build its shared mindset … “What
are the top three things we want to be known
for in the future by the people who use our
services?”
Shared Mindset:
Group Exercise
“What are the top three things we want to be
known for in the future by the people who use our
services?”
A Few Key Capabilities….
Developed From The Inside Out
Accountability: We are good at obtaining
high performance from employees.
– Performance accountability becomes an
organization capability when members of the
organization realize that it’s unacceptable not to
meet their goals.
Collaboration: We are good at working
across boundaries within the institution to
ensure both efficiency and leverage.
A Few Key Capabilities….
Developed From The Inside Out
Learning: We are good at generating and
generalizing ideas with impact.
Leadership: We are good at embedding
leaders throughout the organization.
Customer connectivity: We are good at
building enduring relationships of trust with
individuals who use our services.
A Few Key Capabilities….
Developed From The Inside Out
Strategic unity: We are good at articulating
and sharing a strategic point of view.
Innovation: We are good at doing
something new in both content and process.
Efficiency: We are good at managing costs.
30 MINUET BREAK
What is Your Organization’s Organizational
Capability?
In small groups, use the space on the back side of
your handout to design a few specific details
for at least 3 of the 11 elements that leads to
organizational capability for your particular
organization. (I.E. What does a capable
organization specifically look like relative to
these 11 capabilities?)
19
If We Had Better Organizational Capabilities….
Copyright © 2007 The RBL Group - All rights reserved
Stakeholder Measure
Employees 1. Greater Competence 2. More engagement/Commitment 3. More learning and growth 4. Increased career development
opportunities
5. Clarity of direction and priorities 6. Visible support for initiatives 7. Clear and frequent feedback 8. Care about me and my family
Managers/Supervisors/ 9. Connect employee actions to desired customer experiences
10.Build sustainable technical core competencies
11.Build sustainable organization (social) capabilities
12.Provide direction
13.Ensure strategy implementation
14.Clear expectations of leaders 15.Effective cross functional
collaboration
Senior Professionals 16.Greater alignment to critical issues 17.More consistency of action 18.More Collaboration 19.Whole organization is greater than sum
of individual parts
20.More intensity to critical issues and less on peripheral issues
21.Demonstrate support for investments
22.Embody the leadership brand principles
Students & Community (customers / constituents)
23.Higher share of investment (not just $$’s)
24.Greater loyalty 25.More willingness to partner/collaborate
26.Keeping promises and commitment
27.Openness and trust 28.Consistent delivery of the
desired value proposition
Regulators 29.Trust us to do what we say we will do 30.Perceive us as an institution with
integrity
31.Perceive us as able to abide by laws and regulations in an ethical manner
32.Effective risk management and emergency response
If We Had Better Organizational Capabilities….
Stakeholder Measure
Analysts 33.Confidence in future prosperity 34.Belief in growth strategy 35.Trust in Leaders at every level
36.Logical investments in core capabilities that matter
37.Positively differentiated from competitors in our industry
Investors (Alumni, Local /State Government, Philanthropy)
38.Higher investment 39.Greater confidence in our future 40.Increased cash reserves
41.Growth— 42.Efficient cost control
Media 43.More favorable comments about us
44.More acknowledgements of our success
45.Outside groups recognize our achievements
46.Access – open communication
Community at large 47.Employee of choice 48.Environmentally responsible 49.Socially responsible
50.Economic reinvestment in the community
51.Philanthropy 52.Safe
1. Services OC
2. Institution OC
3. Leadership OC
Org. Capability (OC): Trends in and
Levels ….
Make Real to Stakeholders
Make Real to Employees
Org. Capability How org. wants to be known by patrons
Aligned Actions with Desired Experience
OC: Actions Speak Louder Than
Slogans
Strategic clarity about Organizational
Capability
Org. OC: sets a simple, clear point of view about the future
© 2007 The RBL Group. All Rights Reserved Leadership Brand 24
TIME HORIZON
UNIT OF
ANALYSIS
PERSONAL
PROFICIENCY
Long
Term /
Strategic
Short Term /
Operational
Individual Organizational
HUMAN
CAPITAL
DEVELOPER
TALENT
MANAGER
STRATEGIST
EXECUTOR
Capability Code: The DNA of Effective Organizations
© 2007 The RBL Group. All Rights Reserved Leadership Brand 25
Long Term /
Strategic
Individual Organizational
Capability Code: Specific Competencies
Capabilities Assessment Profile
CAP is an in-depth evaluation of an organization’s capabilities.
Assessing capabilities can be complex since they arise from the ways that resources are combined in the organization’s basic work processes and routines.
Capabilities assessment consists of two phases:
– Identify distinctive capabilities
– Developing and leveraging these distinctive capabilities
Capabilities Assessment Profile
The first step in assessing organizational
capabilities is preparing a current product-
market profile.
– Emphasizes organization-patron interactions.
– Identifies what we’re offering, who we’re
offering to, and whether we’re providing
superior customer / community value and
offering the customer desirable benefits.
Capabilities Assessment Profile
In order to prepare a current servive-market profile we need: – Information about specific technology /
services and markets
– Principal competitors in each of these product / service-market segments
– Performance measures for each product / service-market segment.
• Market growth rate…. Is the city/community growing?
• Market impact …. What things are creating change?
• Competitive position … Your position
• Contribution to achievement …. Your service offering
Capabilities Assessment Profile
The next step is identifying sources of competitive advantage and disadvantage in the main service-market segments.
– We need to know why people choose our services instead of our competitors.
– Identify specific costs, service and technology attributes.
– When someone uses your service they are receiving a bundle of attributes that they believe will satisfy their needs.
– We need to know what these attributes are!!!
Capabilities Assessment Profile
The third step involves describing
organizational capabilities and
competencies.
– Examine the resources, skills, and abilities of
your organizations different parts / divisions.
– Uncover what resources and capabilities lead to
your competitive advantage.
– Determine how to cross-functionally leverage
these capabilities by developing
partnerships…especially for public branches.
Capabilities Assessment Profile
The next step involves sorting these capabilities and competencies according to their strategic importance.
– Which capabilities are most important for building the organization’s future.
– We should evaluate each category according to three criteria:
• Does the capability provide tangible customer benefits?
• Is the capability difficult for competitors to imitate?
• Can the capability provide wide access to a number of different markets (school systems, churches, small biz, etc)?
By sorting organizational capabilities according to level of strategic importance, strategic decision makers gain an understanding of their organization’s critical strengths and weaknesses.
Capabilities Assessment Profile
This final step involves not only identifying
but also AGREEING on the key
competencies and capabilities.
– By ranking key competencies and capabilities,
decision makers can easily identify the key
ones.
– The hard part is agreeing which competencies
and areas of the institution deserve future
resource allocation.
Final Thoughts…
“Organizations do not think, make
decisions, or allocate resources; People
do.”
Dave Ulrich - 1990
QUESTIONS / COMMENTS
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