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Organizational Capabilities

Organizational Capabilities. Resources People, equipment, technologies, cash (tangible) Product designs, information, brands, relationships (intangible) Processes Patterns of interaction, coordination, communication, decision-making

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Organizational Capabilities

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  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 –>processes –>values–>culture. • 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 within the existing organization Use a heavyweight team in a separate spinout organization Fit with Organization’s 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 Organization’s 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 parent’s resources into the unit (Cisco-StrataCom) If its resources, then integrate unit with the parent.

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