Week VI: Looking In the Mirror – Internal Organizational Analysis
A1. Capitalizing on Capabilities
Assets like leadership, talent, and speed are what produce superior market value. A capabilities audit can show us how we measure up – and how to build on our intangible strengths. The authors provide a list of such capabilities appropriate to every organization and especially the ones that well-managed companies tend to have.
With rapid globalization, technological innovation, faster flow of information, the playing grounds for businesses and companies have changed dramatically. Author Thomas Friedman couldn’t have done a better job of explaining this development in his book “The world is Flat: A Brief History of the Twenty-First Century.” Therefore, better methods and mechanisms to improve companies’ performance are more immediate and important now than in the past. The assigned articles for this week shed light on a few of those innovative ideas that companies implement.
As noted by the authors in A1, the list of employee capabilities in itself is not exhaustive, and it is my belief that other capabilities mentioned below should also be considered.
Employee demography: It is desirable for companies to keep experienced workers simply because it can save them money in employee training and experienced workers are perceived to be more productive. However, companies should also proportionately, if not equally, invest on younger employees. It is my belief that younger and relatively inexperienced worker grow faster and become more productive sooner. Off course, this quality is also function of personal goals and capabilities. Therefore, capabilities audit should include employee demography and make an attempt to incorporate the information as a part of internal organizational strategy.
Similarly, time that an employee can contribute to the business is yet another candidate for such list. While such information could seem discriminative, I state this simply because employees have varying constraints and obligation. For example, a part-time MBA student could be distinctively different from full-time undergraduate. An undergraduate student with a mentor could bring different level of contribution to the company vs part-time MBA student with family. Similarly, some employee can afford to travel while other may not. Therefore, have such information can help senior management team make best use of their employees.
A2. Strategic Sourcing: From Periphery to the Core
By identifying the capabilities components of business that represent the core of the core and discovering which capabilities promise high potential, a company can determine what type of control it needs over each of the capabilities.
Outsourcing is often equated to a computer lab in Hyderabad, India, where computer literate folks work – the work that is much more expensive to be done in the US or other major western economies. A2, I think, makes a stark difference in such conventional notion of outsourcing to strategic sourcing. ‘Doing things that we are best at’ seems to be the core message of the article. With an in-depth analysis of Jim Keyes’ approach to 7 –Eleven stores, the authors claim that the three steps (mentioned above) should give us a comprehensive capability sourcing strategy. While the authors state that formulating the strategy is, of course, only the first stage of sourcing effort and moves on to lists other steps such as contracts negotiation, management structure, and the like, the limitations of the approaches have been understated. For example, when 7-Eleven decided to own cows, they did so to get rid of middle man and be self sustainable. Such approach was suitable then but not at the present. However, it is important to state that strategic sourcing exposes a company to greater risk that can arise from multiple trading partners at different nodes of value chain.
A3. Competing Through Organizational Agility
The article emphasizes that strategic agility, portfolio agility, and operational agility are key to a company’s success in modern era wherein market turbulence eminent. A leader with these traits can prepare company for up turns and down turns.
As the saying goes ‘hit an iron when it is hot’, business which mitigates risk and probe for right opportunity will lead the market. Yet it is easy said than done. Perhaps ArcelorMittal, Carnival, and Banco Santander, are few lucky ones. But further investigation reveal otherwise. In fact, strategic agility, portfolio agility, and operational agility can be the defining factors for success. For example, established only in 1984, Bain Capital today manages approximately $65 billion. Acquiring Burlington Coat Factory (2006), Warner Music Group (2003), Domino’s Pizza, etc, at their lows and turning them around, the private investment group has capitalized in the above mentioned traits.