OrganizationalCapabilityLeveraging Your Intangible Strengths… Prepared For: NCLA Leadership Institute Dr. Eric M. Gladney – Presenter
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: TheKey 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 3 An individual’s An organization’s functional core Competence competencies Social 2 4 An individual’s An organizations leadership capabilities ability
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.
What is Your Organization’s OrganizationalCapability?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?)
If We Had Better Organizational Capabilities….Stakeholder MeasureAnalysts 33. Confidence in future prosperity 36. Logical investments in core 34. Belief in growth strategy capabilities that matter 35. Trust in Leaders at every level 37. Positively differentiated from competitors in our industryInvestors (Alumni, Local /State 38. Higher investment 41. Growth—Government, Philanthropy) 39. Greater confidence in our future 42. Efficient cost control 40. Increased cash reservesMedia 43. More favorable comments about 45. Outside groups recognize our us achievements 44. More acknowledgements of our 46. Access – open communication successCommunity at large 47. Employee of choice 50. Economic reinvestment in the 48. Environmentally responsible community 49. Socially responsible 51. Philanthropy 52. Safe
Org. Capability (OC): Trends in and Levels ….1. Services OC2. Institution OC3. Leadership OC
OC: Actions Speak Louder Than Slogans Org. Capability How org. wants to be known by patronsMakeReal to Make Real toStakeholders Employees Aligned Actions with Desired Experience
Strategic clarity about OrganizationalCapability Org. OC: sets a simple, clear point of view about the future
Capabilities Assessment ProfileCAP 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 ProfileThe 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 ProfileIn 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 ProfileThe 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 ProfileThe 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 ProfileThe 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 ProfileThis 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