Eric Gladney's presentation on capabilities at the NCLA Leadership Institute

1. Organizational
Capability
Leveraging Your Intangible Strengths…
Prepared For:
NCLA Leadership Institute
Dr. Eric M. Gladney – Presenter

2. What Are We Trying To Do…..
 We are focusing on organizational capabilities and
how leaders can evaluate and build the ones they
need to create intangible value.
 Provide the framework for a capabilities
assessment profile that identifies distinctive
capabilities and aids in developing & leveraging
these distinctive capabilities.

3. Building A Sustaining Fire…
 “For a piece of wood to catch fire, it must
first be heated to a temperature at which it
ignites; then it burns by itself. The initial
heating requires energy from outside, but
once the wood is ignited, the flame sustains
itself and gives off light and heat.”
Dave Ulrich - 1990

4. Organizational Capabilities
 Definition: The various routines and
processes that transform those inputs
(resources) into outputs (physical goods and
services).
 These organizational routines and processes
are the regular and predictable work
activities done by organizational members.
– Delta Air Lines vs. Southwest Airlines

5. Organizational Capabilities
 The collective skills, abilities, and expertise
of an organization, (these capabilities) are
the outcome of investments in human
resources….
– They represent the ways that PEOPLE and
RESOURCES are brought together to
accomplish work.
– They form the IDENTITY AND
PERSONALITY of the organization by
defining what it is good at doing and, in the
end, what it is.

6. Organizational Capabilities: The
Key Intangible Asset
Sales Profits Assets Mkt Value
$13 B $593 M $43.2 B $9.4B
$12 B $459 M $15 B $10 B

7. Organizational Capabilities
 Organizational capability focuses on
achieving goals through employee
commitment and competence.
– Remember … Two criteria for competitive
advantage are:
• Adding perceived value to the customer
• Offering uniqueness that cannot be easily imitated
by a competitor.
 Organizational capability enhances perceived
customer value thru responsiveness,
relationship, & service quality.

8. Competence –vs- Capability
 Individuals have competencies focused in
certain areas but organizations have
capabilities.
Individual Organizational
Technical 1 3
An individual’s An organization’s
functional core
Competence competencies
Social 2 4
An individual’s An organization's
leadership capabilities
ability

9. Organizational Capabilities
 Organizational capabilities emerge when the
organization combines (and delivers on)
individuals’ competencies and abilities.
– An employee or volunteer may be technically
sharp or demonstrate leadership skill, but the
institution as a whole may or may not embody
the same strengths:
• If it does, team members who excel in these areas
will likely be engaged; if not, they may be
frustrated.
– Additionally, an institution’s organizational
capabilities enable it to turn its technical know-
how into results.

10. A Few Key Capabilities….
Developed From The Inside Out
 Talent: We are good at attracting,
motivating, and retaining competent and
committed people.
– Competent employees & volunteers have the
skills for today’s and tomorrow’s business
requirements; committed members of your
organization deploy those skills regularly and
predictably.

11. A Few Key Capabilities….
Developed From The Inside Out
 Speed: We are good at making important
changes happen fast.
– Speed means that the organization can
recognize opportunities and act quickly when it
comes to new market shifts (e.g. digital media),
new systems, new employee & volunteer
policies, and new business processes.

12. A Few Key Capabilities….
Developed From The Inside Out
 Shared mindset /brand identity: We are
good at ensuring that patrons and
employees have positive and consistent
images of and experiences with our
organization.
– Answering the following question will help
your team build its shared mindset … “What
are the top three things we want to be known
for in the future by the people who use our
services?”

13. Shared Mindset:
Group Exercise
 “What are the top three things we want to be
known for in the future by the people who use our
services?”

14. A Few Key Capabilities….
Developed From The Inside Out
 Accountability: We are good at obtaining
high performance from employees.
– Performance accountability becomes an
organization capability when members of the
organization realize that it’s unacceptable not to
meet their goals.
 Collaboration: We are good at working
across boundaries within the institution to
ensure both efficiency and leverage.

15. A Few Key Capabilities….
Developed From The Inside Out
 Learning: We are good at generating and
generalizing ideas with impact.
 Leadership: We are good at embedding
leaders throughout the organization.
 Customer connectivity: We are good at
building enduring relationships of trust with
individuals who use our services.

16. A Few Key Capabilities….
Developed From The Inside Out
 Strategic unity: We are good at articulating
and sharing a strategic point of view.
 Innovation: We are good at doing
something new in both content and process.
 Efficiency: We are good at managing costs.

17. 30 MINUET BREAK

18. What is Your Organization’s Organizational
Capability?
In small groups, use the space on the back side of
your handout to design a few specific details
for at least 3 of the 11 elements that leads to
organizational capability for your particular
organization. (I.E. What does a capable
organization specifically look like relative to
these 11 capabilities?)

19. If We Had Better Organizational Capabilities….
Stakeholder Measure
Employees 1. Greater Competence 5. Clarity of direction and
2. More engagement/Commitment priorities
3. More learning and growth 6. Visible support for initiatives
4. Increased career development 7. Clear and frequent feedback
opportunities 8. Care about me and my family
Managers/Supervisors/ 9. Connect employee actions to desired 13. Ensure strategy
customer experiences implementation
10. Build sustainable technical core 14. Clear expectations of leaders
competencies 15. Effective cross functional
11. Build sustainable organization (social) collaboration
capabilities
12. Provide direction
Senior Professionals 16. Greater alignment to critical issues 20. More intensity to critical issues
17. More consistency of action and less on peripheral issues
18. More Collaboration 21. Demonstrate support for
19. Whole organization is greater than sum investments
of individual parts 22. Embody the leadership brand
principles
Students & Community 23. Higher share of investment (not just 26. Keeping promises and
(customers / $$’s) commitment
24. Greater loyalty 27. Openness and trust
constituents)
25. More willingness to partner/collaborate 28. Consistent delivery of the
desired value proposition
Regulators 29. Trust us to do what we say we will do 31. Perceive us as able to abide by
30. Perceive us as an institution with laws and regulations in an
integrity ethical manner
32. Effective risk management
Copyright © 2007 The RBL Group - All rights reserved
19 and emergency response

20. If We Had Better Organizational Capabilities….
Stakeholder Measure
Analysts 33. Confidence in future prosperity 36. Logical investments in core
34. Belief in growth strategy capabilities that matter
35. Trust in Leaders at every level 37. Positively differentiated from
competitors in our industry
Investors (Alumni, Local /State 38. Higher investment 41. Growth—
Government, Philanthropy) 39. Greater confidence in our future 42. Efficient cost control
40. Increased cash reserves
Media 43. More favorable comments about 45. Outside groups recognize our
us achievements
44. More acknowledgements of our 46. Access – open communication
success
Community at large 47. Employee of choice 50. Economic reinvestment in the
48. Environmentally responsible community
49. Socially responsible 51. Philanthropy
52. Safe

21. Org. Capability (OC): Trends in and
Levels ….
1. Services OC
2. Institution OC
3. Leadership OC

22. OC: Actions Speak Louder Than
Slogans
Org. Capability
How org. wants to be known by patrons
Make
Real to Make Real to
Stakeholders Employees
Aligned Actions with Desired Experience

23. Strategic clarity about Organizational
Capability
Org. OC: sets a simple, clear point of view about the future

24. Capability Code: The DNA of Effective
Organizations
TIME HORIZON
Long
UNIT OF HUMAN
Term /
ANALYSIS CAPITAL Strategic STRATEGIST
DEVELOPER
PERSONAL
Individual PROFICIENCY Organizational
TALENT
EXECUTOR
MANAGER
Short Term /
Operational
© 2007 The RBL Group. All Rights Reserved

25. Capability Code: Specific Competencies
Long Term /
Strategic
Individual Organizational
© 2007 The RBL Group. All Rights Reserved

26. Capabilities Assessment Profile
CAP is an in-depth evaluation of an
organization’s capabilities.
 Assessing capabilities can be complex since
they arise from the ways that resources are
combined in the organization’s basic work
processes and routines.
 Capabilities assessment consists of two phases:
– Identify distinctive capabilities
– Developing and leveraging these distinctive
capabilities

27. Capabilities Assessment Profile
The first step in assessing organizational
capabilities is preparing a current product-
market profile.
– Emphasizes organization-patron interactions.
– Identifies what we’re offering, who we’re
offering to, and whether we’re providing
superior customer / community value and
offering the customer desirable benefits.

28. Capabilities Assessment Profile
In order to prepare a current servive-market
profile we need:
– Information about specific technology /
services and markets
– Principal competitors in each of these product /
service-market segments
– Performance measures for each product /
service-market segment.
• Market growth rate…. Is the city/community growing?
• Market impact …. What things are creating change?
• Competitive position … Your position
• Contribution to achievement …. Your service offering

29. Capabilities Assessment Profile
The next step is identifying sources of
competitive advantage and disadvantage in
the main service-market segments.
– We need to know why people choose our
services instead of our competitors.
– Identify specific costs, service and technology
attributes.
– When someone uses your service they are
receiving a bundle of attributes that they
believe will satisfy their needs.
– We need to know what these attributes are!!!

30. Capabilities Assessment Profile
The third step involves describing
organizational capabilities and
competencies.
– Examine the resources, skills, and abilities of
your organizations different parts / divisions.
– Uncover what resources and capabilities lead to
your competitive advantage.
– Determine how to cross-functionally leverage
these capabilities by developing
partnerships…especially for public branches.

31. Capabilities Assessment Profile
The next step involves sorting these capabilities and
competencies according to their strategic
importance.
– Which capabilities are most important for building the
organization’s future.
– We should evaluate each category according to three
criteria:
• Does the capability provide tangible customer benefits?
• Is the capability difficult for competitors to imitate?
• Can the capability provide wide access to a number of
different markets (school systems, churches, small biz, etc)?
By sorting organizational capabilities according to
level of strategic importance, strategic decision
makers gain an understanding of their
organization’s critical strengths and weaknesses.

32. Capabilities Assessment Profile
This final step involves not only identifying
but also AGREEING on the key
competencies and capabilities.
– By ranking key competencies and capabilities,
decision makers can easily identify the key
ones.
– The hard part is agreeing which competencies
and areas of the institution deserve future
resource allocation.

33. Final Thoughts…
 “Organizations do not think, make
decisions, or allocate resources; People
do.”
Dave Ulrich - 1990

34. QUESTIONS / COMMENTS

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