The firm’s ability to manage people
to gain competitive advantage.
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
- focuses on internal processes and systems for meeting customer needs
Traditional Sources of Competitive Advantage:
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.
- Economic / financial capability: able to produce good or service at lower cost than competitors
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:
Social engineering of complex social processes such as culture, teamwork, leadership are neither well-understood nor easily replicated.
Four critical elements of capable organizations:
capacity for change through understanding and managing organizational systems
Leadership at all levels in the organization
- Imitation requires changing the way people think, act, and interact.
Congruence between customer and employee expectations
- Common understanding and goals of ends (strategies) and means (processes, work systems, activities)
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
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.
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
- Policies, programs, operating procedures, and traditions that guide work