Organizational Capability:

Organizational Capability:

The firm’s ability to manage people

to gain competitive advantage.

focuses on internal processes and systems for meeting customer needs

creates organization-specific competencies that provide competitive advantage since they are unique

ensures that employee skills and efforts are directed toward achieving organizational goals and strategies

Traditional Sources of Competitive Advantage:

Economic / financial capability: able to produce good or service at lower cost than competitors

Strategic / marketing capability: products or goods that differentiate a firm from its competitors, typically by “adding-value” or “product-portfolio mix.”

Technological capability: products or services that customers receive are innovative, high-quality, state-of-the art, typically in how they are built or delivered.

Strategic planning typically focuses on resource allocation.

Organizational capability focuses on achieving goals through employee commitment and competence.

Two criteria for competitive advantage:

1) adding perceived value to the customer

2) offering uniqueness that cannot be easily imitated by a competitor

Organizational Capability enhances perceived customer value in three ways:

1) Responsiveness: the ability of the business to understand and meet customer needs more quickly than competitors

2) Relationships: the ability of a business to develop enduring relationship between customer and employee

3) Service quality: the ability of business to design, develop and deliver service that meets or exceeds customer expectations.

Organizational Capability enhances uniqueness because it is difficult to imitate:

Imitation requires changing the way people think, act, and interact.

Social engineering of complex social processes such as culture, teamwork, leadership are neither well-understood nor easily replicated.

Four critical elements of capable organizations:

Shared mindset

Management practices

capacity for change through understanding and managing organizational systems

Leadership at all levels in the organization

SHARED MINDSET

Common understanding and goals of ends (strategies) and means (processes, work systems, activities)

Congruence between customer and employee expectations

MANAGEMENT PRACTICES

Policies, programs, operating procedures, and traditions that guide work

Transform individual behavior to create customer satisfaction and consistency in how customer is treated

Complement and integrate with one another to create common expectations, behaviors, and goals

CAPACITY FOR CHANGE

Ability to reduce cycle time of all activities

Four Principles:

Symbioses: ability to cope with external change; a bridge between internal action and external conditions

Reflexiveness: ability to learn from past experiences; self-assessment and continuous learning

Alignment: ability to integrate tasks, structures, processes, and systems with political, technical, and cultural aspects of the firm.

Self-renewal: ability to change over time successfully when needed.

LEADERSHIP

Owns passionately a vision which is promoted both within and outside the organization

Translates external conditions into vision for organization and how employee must act to attain vision

Empowers individuals at all levels within the organization to act within his or her domain