Thursday, July 18, 2019

5 critical capabilities of organization systems

If you view an organization as a (complex) system, there are five key capabilities the system must have to successfully thrive in it's environment.

Capability 1: The ability to deliver and exchange value 
This is of course essential: if you are not able as an organization to produce and actually deliver value to the environment and receive value back, your organization will not have a long continuity. But beware, a nice quote "Profit is like oxygene, it's required for survival, but it's not the purpose for people" (quote varies just like the supposed authors).
Value is defined in the eyes of the environment and is the value for a specific customer job to do but just as well the customer experience throughout the customer journey and life cycle. And you find it through rapid cycles of lean startup, customer development and operating model approaches.

Capability 2: The ability to optimize the delivery and value exchange
This is were we see the likes of Lean and Six Sigma mainly operate: Can we do things faster, better, cheaper. Here starts competitive advantage - are we able to learn quickly enough to improve faster than our competitors doing business as usual.

Capability 3: The ability to adapt to changing needs of the environment 
This is where Darwin would say "Survival of the fittest". Are we able to understand changing needs, changing markets. Do we have the connections to monitor and detect changes and do we have the agility to respond to these changes and adapt our offerings and operating model.

Capability 4: The ability to innovate and deliver value to new needs in the environment
But I find simple 'Survival' a underestimation of human potential. We have so much more: we have creativity, idea-generation and new technology - soft and hard. By using Design Thinking and other techniques we can hunt for new emerging needs or innovative solutions for existing needs. Or we can even influence the development of new needs (did you 15 years ago realize you needed a mobile phone, with even a touchscreen?)

Capability 5: The wisdom to manage the previous four capabilities
This is the tough one - most companies have limited leadership and capability to actually recognize the need for these capabilities. This is the area in which leaders are drowning in projects, programs, KPI's and struggling with sense making, problems of collective visioning and difficulties in the ability to execute. To perhaps there is a 6th capability needed - to develop the previous 5 capabilities

From a process perspective,  you need to understand how to assess, evaluate and organize these capabilities - in terms of people, governance, competencies, maturity. If they are missing - then be careful what you will be doing as internal of external help....

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