An acquaintance of mine once told me that the “secret sauce” of the call center he worked for was that they had sanitizing wipes available at each shared desk so each call center employee could clean off his/her headset, keyboard, and mouse at the start of each shift. He reported that this one thing dramatically reduced absenteeism and he suspected it helped retention. This isn’t a typical example of an organizational capability, but it does fit the definition I use:
A skill developed by an organization that allows them to predictability deliver a particular result.
Organizational capabilities that you see more commonly might include: managing vendors, collaborating remotely, managing change, running Agile development, retaining talent, or managing innovation. Practically speaking, organizations can’t be great at everything, so leaders must be thoughtful about which capabilities to invest time and money in to. But that’s the problem, which capabilities do you choose?
These discussions can go off the rails quickly, often with a single word, such as: Cloud! Agile! Or Big Data! (I recognize that last one is two words. Be cool!) These simple buzzwords obscure the enormous amount of cost, effort, and complexity required to gain those capabilities. These are expensive paths to travel, so you want to makes sure you don’t overlook a less buzz-worthy capability that could potentially do a lot more for your business. You must be able to build a case for your desired capabilities based on facts and sound reasoning.
Like many things in life, it’s useful to step back and look at the big picture (in this case, the big picture is the economy) and then work your way back down to your business:
First, what economic assumptions are you making? In a weak or uncertain economy, you may feel skittish about making bold moves. In a stronger economy, you may be comfortable taking more risks. This assessment should set the stage for, and influence, the rest of your analysis.
Second, what industry circumstances are you in? What threats and opportunities exist that are relevant to your analysis? Knowing how customer demands are changing and what your competitors are up to is vital.
Third, what is the strategic direction of your business? Your business is already in motion, guided by your strategy, but the capabilities you consider should harmonize with that direction and support it.
And last, which existing organizational capabilities do you have and how mature are they? If you know what your organization’s true strengths are, you can make smarter choices between strengthening them even further or moving your focus to something new.
This pragmatic approach will lead you to the shortlist of organizational capabilities that deserve your attention. Once identified, you can begin to think about how you are going to build each capability. Building internally, or through a partnership or vendor, or through an acquisition are all valid approaches. If you make those choices from the foundation of your organizational capabilities analysis, you will be ahead of the game.