Definition
Organizational Capabilities are the collective skills, processes, and resources that enable a company to execute specific tasks and innovate.
Why It Matters
They determine the business’s competitive advantage and execution speed.
Core Concepts
- The RPV Framework:
- Resources: Things or assets (people, equipment, technology, cash, brands, relationships). They are highly flexible and can be bought, sold, or transferred. In a startup, capabilities are primarily found in its resources.
- Processes: The patterns of interaction, coordination, and communication through which resources are transformed into value (e.g., manufacturing, R&D, budgeting, market research). Processes are less flexible than resources and are designed for specific, recurrent tasks.
- Values: The criteria by which prioritization decisions are made (e.g., “Is the margin high enough?”, “Is this customer important?”). Values reflect the firm’s business model and cost structure, defining what the organization cannot do.
- Capability Migration: As an organization matures, its capabilities migrate from its Resources (the people) to its Processes and Values. This institutionalizes success but simultaneously creates “disabilities” when a new task requires different processes or values.
- The Flexibility Paradox: While individuals (resources) are adaptable, organizational processes and values are inherently rigid. A process designed to be efficient for one task (e.g., high-volume manufacturing) is, by definition, “disabled” for a different task (e.g., low-volume prototyping).