Expand Your Organisational Capabilities – Use It or Lose It

An organisation is essentially a set of capabilities that combine to
achieve specific objectives. If you do not use and grow your
capabilities, then they disappear.

The basic idea originates from the study of competitive
advantage.

We start by saying that there are two processes in an organisation –
purchasing and delivery. Let’s look at two organisations (A and B) that
perform the same on the bottom line. In Organisation A we have an
advantage in purchasing, and in Organisation B the advantage is in
delivery. Would it work to take the best of the purchasing in
Organisation A and combine it with the best of delivery in Organisation
B. Logically we would have the best purchasing and the best delivery –
but would this be the best performing organisation? Studies of the
resource based view of the organisation tend to support the fact that
this is not what happens in reality.

The resources from different parts of the organisation tend to
cross-subsidise each other and we may find that resources are
differently allocated and utilised in these processes. Taking the best
from somewhere else, often fails because we do not account for the
fundamental differences in people.

Shareholders and management define the value as perceived to achieve
competitive advantage and allocate resources accordingly. It means that
in organisation A we have decided to be good at purchasing and
subsequently the resources that are there are allocated to be good at
purchasing. If we now shift resources from purchasing to delivery – we
erode the competitive advantage. If we allocate more resources to
delivery – we erode profitability.

When making decisions to become better at a capability – we are
unlikely to want to lose our advantage in areas where we have
competitive advantage and this would require us to relook the resources
and processes involved in other areas, which will change our position of
competitive advantage. The art of strategy is to make these decisions
wisely and understand the impact of these choices in the long term.

If we do not exploit the resources and capabilities inherent in the
resources that we have, we progressively deteriorate in our ability to
use the same resources to generate competitive advantage. If you hire a
top gun, and you employ them as a receptionist – then they will become
good at reception work, but the same resource may have built brilliant
strategies for growth.

To move resources from a position where they are adding normal value
to becoming a significant advantage, a lot must change including

• Strategy

• Culture

• Work processes

• Measures

• People

• Processes

• Technology

This means in effect we are creating new products, addressing new
markets and executing differently for every resource change that we make
in an organisation. Most of these are fundamental changes for
established businesses and managers are expert at crushing the hopes and
ambitions of people, hiding behind resourcing and the need to justify
the return on investment – while often failing to recognise the inherent
potential and extent to which people do want to participate in unlocking
the true potential of an organisation.

In high innovation and high performance organisations there is an
increasing recognition that individuals have a far greater role to play
in delivering unique value and that the use of individual capabilities
are critical in advancing the specific causes that they are capable of
executing. Organisations are doing much more with far fewer staff than
ever before. But these successes are highly dependent on individuals.
This resource based view basically states that businesses are
essentially a collection of people with capabilities and we have to ask
how each resource that is in our domain can contribute the maximum and
find the ideal configuration that utilises the unique skills and
abilities of each person in our space. This view together with some
basic risk management practices that capture and advance knowledge seems
to be part of the future world of work.

For most organisation designers this would be a nightmare as the
basic assumption is not that staff will do the same work, but that staff
will each contribute to a common goal, according to their capability.
But then again research shows that as many as 77% of people are not
engaged at work and do not believe that they are adding value.

So maybe it is time to relook how we employ people, what we expect
from each other and also what we can each contribute in relation to the
common purpose of our organisation. This will unlock value and also
create unique capabilities that our competitors will not be able to
replicate, because they do not have the same people working for
them.