Business Success 360


Organizational Capability Approach

vs. Traditional Functional Paradigm


Andrew Spanyi





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 customer value.

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.



Two Fundamental Beliefs

An organizational capability approach requires that leaders subscribe to two fundamental beliefs:

Organizations should be designed, led, and managed so that it is easy for customers to do business with the company and create and environment that helps employees to serve customers.

Organizations are complex business systems in which a change in any one component is likely to have an impact on other components. An understanding of critical relationships is essential.




Strategic Achievement: Organizational Capability Approach

Organizations that excel at strategy execution and strategic achievement know how to create sustainable value for customers and shareholders through defining key organizational capabilities and applying a balanced approach to business systems... More