Sustainable Growth:

Competitive Advantage

Organizational Capabilities

The Basic Building Bock of Your Firm and the Basis of Your Competitive Advantage

Organizational Capability Approach vs. Traditional Functional Paradigm

"In the capability model, senior managers are predominantly concerned with issues about the quality of products and services provided to customers (external and internal), the flow of value-added work, and roles and responsibilities.

The dominant view on performance measurement shifts from the traditional focus of actual-vs.-budget to a more balanced model that includes the timeliness, quality, and cost of providing products and services to customers.

Allocation and budgeting of resources moves from the traditional practice of individual units vying for resources based on their own needs toward cross-group teams that jointly assess resource needs based on the flow of work needed to create value for customers. Problem solving would seldom involve situations in which unit managers had to compete with each another; instead, organizations would adapt to departmental interdependence, recognizing that issues are best addressed through cross-group problem-solving sessions focused on providing services to customers and the required flow of work."⁹

Capabilities – the Basis of Your Competitive Advantage

Through continued use, capabilities become stronger and more difficult for competitors to understand and imitate. As a source of competitive advantage, a capability "should be neither so simple that it is highly imitable, nor so complex that it defies internal steering and control."⁴ Capabilities grow through use, and how fast they grow is critical to your success.

According to the new resource-based view of the company, sustainable competitive advantage is achieved by continuously developing existing and creating new resources and capabilities in response to rapidly changing market conditions. Among these resources and capabilities, in the new economy, knowledge represents the most important value-creating asset.

Distinctive and Reproducible Capabilities

The opportunity for your company to sustain your competitive advantage is determined by your capabilities of two kinds – distinctive capabilities and reproducible capabilities - and their unique combination you create to achieve synergy.

Your distinctive capabilities – the characteristics of your company which cannot be replicated by competitors, or can only be replicated with great difficulty - are the basis of your sustainable competitive advantage. Distinctive capabilities can be of many kinds: patents, exclusive licenses, strong brands, effective leadership, teamwork, or tacit knowledge.

Reproducible capabilities are those that can be bought or created by your competitors and thus by themselves cannot be a source of competitive advantage. Many technical, financial and marketing capabilities are of this kind. Your distinctive capabilities need to be supported by an appropriate set of complementary reproducible capabilities to enable your company to sell its distinctive capabilities in the market it operates.

3 Strategies of Market Leaders

Building Capability through Leadership Attributes

Leaders are responsible for building organizational capability. You need the ability to translate organizational direction into roadmaps, vision into action, and purpose into process. To do so, you must demonstrate at least five abilities⁷:

1. To build your organizational infrastructure

2. To leverage diversity

3. To deploy teams

4. To design human resource systems

5. To make change happen.

Creating a Culture for Innovation

The first step is to understand where the greatest deficiencies lie, and which levers will deliver the most impact. For many organizations, the most critical levers to assess initially include structure and metrics, though establishing innovation processes and providing employees with new skill sets are also critical drivers of culture. The act of visibly sponsoring (let alone personally driving) specific initiatives focused on creating new organizational capabilities that promote innovation serves to send a message and establish new symbols and stories that reinforce a culture of innovation.... More

7 Dimensions of Strategic Innovation

The Strategic Innovation framework weaves together seven dimensions to produce a range of outcomes that drive growth.

Core Technologies and Competencies is the set of internal capabilities, organizational competencies and assets that could potentially be leveraged to deliver value to customers, including technologies, intellectual property, brand equity and strategic relationships... More

Inspirational Leadership: 10 Roles

Inspirational leaders create an inspiring culture within their organization. They supply a shared vision and inspire people to achieve more than they may ever have dreamed possible. They are able to articulate a shared vision in a way that inspires others to act.

People do what they have to do for a manager, they do their best for an inspirational leader... More

Bibliography:

1. "Strategic Management - Competitiveness and Globalization", M.A. Hint, R.D. Ireland, and R.E. Hoskisson

2. "The Centerless Corporation", Bruce A.Pasternack and Albert. J. Viscio

3. "Strategy and the Delusion of Grand Designs", John Kay

4. "Investment in Strategic Assets: Industry and Firm-Level Perspectives", P.J.H.Schoemaker and R. Amit

5. "Strategy and the Delusion of Grand Designs", John Kay

6. "MegaChange", William E. Joyce

7. "Results-Based Leadership", Dave Ulrich, Jack Zenger, and Norm Smallwood

8. "Strategic Management: Competitiveness and Globalization", Edition 4, Thomson Learning

9. "Strategic Achievement", Andrew Spanyi