Organizational Capabilities

1
Organizational Capabilities

• Resources
• People, equipment, technologies, cash (tangible)
• Product designs, information, brands,
  relationships (intangible)
• Processes
• Patterns of interaction, coordination,
  communication, decision-making
• Transformation resources into higher value
  products and services
• Decision-support market research, financial
  projections, resource allocation
• Values
• Standards by which priorities are set
• Gross margins, size of opportunity (reflect cost
  structure and business model)

2
Migration of Capabilities

• Path resources gtprocesses
  gtvaluesgtculture.
• Some companies never move beyond tacit
  processes and values of the founder
• Processes and values constrain and shape
  employee behavior
• Migration path is fine as long as problems
  remain similar (e.g, develop and introduce
  sustaining technologies)
• New problems may turn this migration path into
  a disability (e.g., disruptive technologies)

3
Fitting the Tool to the Task
Use a heavyweight team in a separate spinout
organization
Use a heavyweight team within the existing
organization
Fit with Organizations Processes
Good Poor
Development may occur in-house through a
heavyweight team, but commercialization almost
always requires a spinout
Use a lightweight team within the existing
organization
Good Poor (sustaining innovation)
(disruptive innovation)
Fit with Organizations Values
4
Acquisitions
Why was the acquisition made? Was it resources,
process or values? Be careful not to destroy what
was unique about process and values of
acquisitions (IBM-Rolm, Daimler-Chrysler) If its
processes or values, keep new unit separate, and
transfer parents resources into the unit
(Cisco-StrataCom) If its resources, then
integrate unit with the parent.