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Strategy Dynamics Course - Class 10 – Capabilities

NOTE: The frameworks in this class can be applied on their own, as well as being used as part of a more complete business model.

Organizations with few resources are not necessarily doomed to weak, low growth performance. If they do not possess or have access to important resources, they can develop those they need. For this purpose, they need the capability to build and sustain resources.

Whilst "resources" are useful things that we possess, or to which we have somewhat reliable access - both tangible (customers, cash, equipment …) and intangible (reputation, data, skills …) - "capabilities" are important activities that we are good at doing. There are operational capabilities, ensuring efficient and effective execution of business activities, and strategic capabilities that enable the strong and sustained development of resources. However, strong operational capabilities can enhance the power of the strategic types.

Capabilities are made up of human skills, plus information and procedures that enable them to exercise those skills. Capabilities allow us to do an activity quickly, with high quality, and at low cost. "Learning" means adding to capability, and can be achieved by intentional effort to use findings about how well an activity is done to further enhance the skills, information and procedures. Whilst capability on each operational or resource-building activity is valuable in its own right, the impact on how performance improves over time when multiple capabilities and learning combine is enormous.

Key issues addressed

  • The importance of clear terminology and specification for capabilities
  • Capabilities as activities that groups are good at doing, made up of human skills, information and procedures
  • Operational capabilities ensure that important activities are done efficiently and effectively - very important in their own right, and supportive to …
  • strategic capabilities, concerning the growth, development or retention of resources, so are found at each resource flow in the strategic architecture
  • Capabilities show up in getting things done quickly, with good quality and at low cost
  • Small differences in capability explain large differences in performance
  • Learning as the self-reinforcing connection between an activity (or the growth of a resource) and the associated capability
  • The powerful consequences arising from capabilities working together
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Other resources and links

Books

Daniel V Hunt, 1996, Process Mapping: How to Reengineer your Business Processes, Wiley: New York. Amazon.com   Amazon UK   Amazon Canada

Michael Schrage, 2000, Serious Play, Harvard Business School Press: Boston. Amazon.com   Amazon UK   Amazon Canada

Kees van der Heijden, 2004, Scenarios: the art of strategic conversation, 2nd Edn, Wiley: Chichester UK. Amazon.com   Amazon UK   Amazon Canada

I Nonaka. and H Takeuchi, 1995, The Knowledge Creating Company, Oxford University Press: New York, Amazon.com   Amazon UK   Amazon Canada

Peter Senge, 1996, The Fifth Discipline (Revised edition), Random House, Sydney; Amazon.com   Amazon UK   Amazon Canada

Chris Argyris, 1999, On Organizational Learning (2nd Edn), Blackwell: Oxford; Amazon.com   Amazon UK   Amazon Canada

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