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Article -> Core Capabilities Align Resources with Growth & Profitability

Date Added: April 2005

In today's world of competition and continually searching for market growth and profitability, it can be a good business decision to take a step back and review organizational core capabilities.

An audit of organizational capabilities can help determine which are truly core to your business, and which can be outsourced to a third party.

Outsourcing to a third party merely equates to freeing up your time to focus on the things you already excel at, while partnering with someone else - who excels in other areas - to generate increased growth and profitability for your company.

A study1 determined several organizational core capabilities including:

  • Talent: Are you able to recruit, train and develop the right employees to achieve your business objectives?
  • Speed: Can you rapidly raise, respond and resolve "things?"
  • Branding: Do employees and customers understand the organizational culture, values and corporate strategy?
  • Accountability: Are employees completely engaged and produce at high levels?
  • Collaboration: Do you excel at partnering across company functions, and with customers and suppliers?
  • Learning: Does your culture offer opportunities for employees to develop skills and share best practices across departments?
  • Leadership: Do you effectively train and develop employees to become leaders?
  • Innovation: Are you innovative and forward-thinking to new ideas?
  • Efficiency: Are you cost-effective in process improvements and project management?

While this list is meant to be high-level to cover "general" capabilities, your organization may have a few other capabilities to add. Once determined, it's recommended to have an independent, third-party facilitator work with the team to assess current performance, as well as rank each capability in terms of improvement priority.

The assessment can be done by department, division or company-wide, and include the "general" capabilities listed above, as well as a customized capabilities list for your organization. Ideally, the audit should include input from those inside and outside the company. This includes leaders, employees across all functional areas, customers and other strategic partners (e.g., suppliers, etc.).

The assessment identifies 3-4 capabilities necessary to achieve the objectives in your strategic plan. These should have the largest impact on business and have the potential to be improved.

From this, an action plan is completed. This should be a SMART plan (Specific, Measurable, Attainable, Realistic, Time-Based), indicating who is responsible for what, and when.

An assessment helps your company re-focus, recognize how each capability is dependent upon others for success, facilitate a culture of continuous learning, and align capabilities with strategy. Ultimately, it also helps customers recognize the value that your organization delivers.

1 Ulrich, Dave and Norm Smallwood. "Capitalizing on Capabilities." Harvard Business Review. June 2004: pages 119 - 127.
2 Watson Wyatt. "Connecting Organizational Communication to Financial Performance - 2003/2004 Communication ROI Study."

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