6 Business Capability Examples That Drive Organizational Success

This article first appeared on Acorn Labs in February 2023.

Business capabilities are the building blocks of your organization to carry out its most important business processes and functions. They are the skills, knowledge, processes, tools and behaviors that make up what your business does, and how it does it.

A business capability is defined as sustainable, measurable, adaptable, cross-functional, able to drive business value, and strategically aligned with organizational objectives.

The importance of creating business capabilities

In short, your business capabilities work together to generate business value. When you have the right combination of capabilities, you’re better able to meet business objectives. For starters, you can improve organizational performance by equipping your workforce with the capabilities they need to perform their roles and create business impact.

This supports strategic planning by providing a development roadmap towards a desired future state, and increases your company’s competitive advantage and agility in the face of business challenges.

Communication capability

Communication is a behavioral capability (the habits that employees can easily perform). It’s the ability to exchange information and ideas through speaking, writing, or technology.

• Beginners in this capability can use common forms of communication like face-to-face, email and phone, but might have difficulty with more advanced communication forms or adapting their communication style for different audiences or contexts.
• Intermediate individuals can adapt their communication style for different contexts and are comfortable with more complex forms of communication such as presentations or negotiations.
• Advanced individuals are able to understand the strategic use cases of different communication styles.

Learning capability

Learning is a dynamic capability, a capability that allows you to adapt to and address industry change. Learning is gaining or acquiring skills through study or experience and is used to prevent strategic blind spots.

• Beginners can learn the necessary skills to complete tasks and are open to learning more.
• Intermediate individuals can analyze new information for problem-solving and decision-making, and can adapt to new challenges. They’re proactive in their own development.
• Advanced individuals stay up-to-date on the latest developments and trends in the industry, anticipate and prepare for future change.

Operational innovation capability

Operational capabilities are the ability to efficiently carry out the company’s core activities and operations. So, operational innovation is a company’s ability to innovate and improve upon its operations to increase efficiency and effectiveness by utilizing new technology, processes, or management methods.

• Beginners have a basic understanding of the tools and techniques used for analyzing and improving business operations.
• Intermediate individuals can apply their skills and knowledge of business operations in more complex situations and are able to adapt their approach to different contexts.
• Advanced individuals are experts in analyzing, improving, and optimizing business operations.

Reliable designs capability

Reliable designs fall under strategic “critical success factor” (CFG) capabilities. These are the company’s unique ability allowing it to create and sustain a competitive advantage. Specifically, reliable designs are the product designs that perform their function consistently.

• Beginners can create basic designs that meet requirements, and have a basic understanding of design principles that they can apply to their work.
• Intermediate individuals can create more complex designs and implement strategies to ensure designs are robust and able to withstand a range of real-world conditions.
• Advanced individuals can create complex and sophisticated designs that are innovative and effective. Their knowledge of design principles is used to create cutting-edge designs that stand out in the market.

Organizational culture capability

Strategic firm resources are the resources at a company’s disposal, including human capital and both tangible and intangible assets. Organizational culture is the beliefs, values, and behaviors that characterize an organization. Strong organizational culture creates unity and purpose within the company.

• Beginners understand the values, norms and beliefs that shape their organization’s behaviors and practices, and can identify key aspects of the culture.
• Intermediate individuals can contribute and reinforce the culture, and promote the desired culture. They can adapt to different culture norms within the organization.
• Advanced individuals can effectively lead and manage change within the culture. They have a deep understanding of the underlying drivers of organizational culture and make strategic decisions that align with it.

Project management capability

Structural capabilities are the structures and systems in place to support operations and achieve objectives. Project management is the process of planning, organizing, and managing resources to achieve a specific goal.

• Beginners may struggle to understand basic concepts like resource allocation, time management, and risk allocation.
• Intermediate individuals understand the basic concepts of project management can use problem-solving to manage timelines, deliverables and project plans.
• Advanced individuals can proactively anticipate future project management needs and take steps to address them. They are able to adapt to the needs of different individuals and situations.