Thoughts & Facts: Capitalizing On Capabilities

Saturday, April 10, 2010

Capitalizing On Capabilities - pointers

Capitalizing On Capabilities by Dave Ulrich & Norm Smallwood from the HBR spotlight.

The article speaks of the most admired companies like GE, Starbucks, Microsoft etc but a layman doesn’t know what transpires behind the screen, the number of leaders, their structure to success etc…

I will try listing some key points

* All specific organizational capabilities are called key intangible assets. They are difficult to measure. [That is why there is a clear difference in evaluation of startups in the same space, some might be generating more revenue but valued lower as the other has some great leaders and potential – Ex – Delta vs. JetBlue]

* In a unit these 4 are the main factors, Individuals Competence, Individuals Leadership, Organizations core competencies and Organizations capabilities (includes DNA, culture and personality).

The main 11 traits that are looked for are

1) Talent – Competent employees have the skills for today's and tomorrows business. The functions here are buy – acquire new talent, build – develop existing talent, borrow – get talent through networks and leaders, bounce – remove poor performers and bind – retain the best talent. The must is that good employees must get the best.

2) Speed – How fast can the company adapt to new opportunities and existing changes in the environment, ROTI – return on time invested index must be maintained and used.

3) Shared mindset and coherent brand identity – Get a consensus from your employees and customers on what they want to remember you as. Example – ask them what are the top three things they want to remember the company as? Good companies are in the range of 80 – 90 %

4) Accountability – Performance accountability needs to be firm and in place. Instead of giving an average of 3 – 4 % across the board ensure you give 0 – 12 % depending on the performance and the work done.

5) Collaboration – A organization needs to collaborate across projects, divisions, units etc.It also promotes huge savings.

6) Learning – Benchmarking, experimentation, competence acquisition, and continuous improvement are key factors. Also letting go of old practices and adopting new ones are important.

7) Leadership – The pride for a organization must come from the number of leaders / CEO’s they create and the number of back up leaders that they have. Example: Ex McKinsey employees take pride from the no of CEO’s they create from their alumni.19 former GE stars added a collective 24.5 $ billion to their organizations after joining.

8) Customer Connectivity – As usually one would like to have 20% of customer account for 80 % of profits, the ability to connect with the customer is valued very much.

9) Strategic unity – The three levels are Intellectual, Behavioral and Procedural.

10) Innovation – It excites employees, delights customers and gives confidence to investors.

11) Efficiency – It is the easiest capability to track.

Capabilities Audit – can be done by running through the 11 pointers in each unit, or the business as a whole. The PDF link provides detailed information on how to complete the audit.

Maximizing your capabilities