Capitalizing on Capabilities By Dave Ulrich and Norm Smallwood Assets like leadership, talent, and speed are what produce superior market value. A capabilities audit can show you how you measure up—and how to build on your intangible strengths.
[bio] Dave Ulrich, on leave from the University of Michigan, is currently mission president of the Canada Montreal Mission for the Church of Jesus Christ of Latter-day Saints; he can be reached at firstname.lastname@example.org. Norm Smallwood is a cofounder of Results-Based Leadership; he can be reached at email@example.com. Ulrich and Smallwood are coauthors of Why the Bottom Line Isn’t! How to Build Value Through People and Organization. When asked which companies they admire, people quickly point to
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Differences in intangible assets explain why, for example, upstart airline JetBlue’s market valuation is twice as high as Delta’s, despite JetBlue’s having significantly lower revenues and earnings. In this article, we look at organizational capabilities and how leaders can evaluate and build the ones they need to create intangible value. Through case studies, we explain how to do a capabilities audit, which provides a high-level picture of an organization’s strengths and areas for improvement. We’ve conducted and observed dozens of such audits, and we’ve found them a useful and powerful way to turn intangible assets into something concrete and measurable. Organization Capabilities Explained While people often use the words “competence” and “capability” interchangeably, we make a distinction between the two: We refer to an individual’s competence in an area
but to an organization’s capabilities. With this difference in mind, let’s compare individual and organizational levels of analysis as well as technical and social skill sets: Technical Individual 1 An individual’s functional competence 2 An individual’s leadership ability Organizational 3 An organization’s core competencies 4
An organization's capabilities
In the table above, the individual-technical cell (1) represents a person’s functional competence, such as technical