What do we mean when we talk about an organisations capabilities? I've done a fair bit of work in the past helping to assess the digital capabilities of companies (including some working with the smart folk at Econsultancy) and used on a framework that incorporates four main categories: Data & technology, Strategy & KPIs, People and culture, Working processes.
But I also like Clay Christensen's broader definition. He talks about how the factors that determine a company's capabilities (what it can and can't do) fall into one of three buckets:
• Resources - including tangible ones (buildings, people) and intangible ones (brands, insights, IP)
• Priorities (or Values in his RVP model) - the consensus on what's right to do, at an organisational and an individual level, the strategy (in the words of Andy Grove: “To understand a company’s strategy, look at what they actually do rather than what they say they will do.”)
• Processes - the (formal or informal) way in which the work gets done
The reason I like this framework is that, as Christensen says, they are mutually exclusive in that a part of a business cannot fit into more than one of the categories, but are also collectively exhaustive (put together the three categories account for everything inside of the business). He goes on to say that whilst resources can be bought in or hired, innovation will fail if a company attempts to innovate in a way that challenges embedded processes or values. In this case the innovation must be managed in a separate organization that is empowered to create its own values and processes. Useful.