The Importance of Organizational Capability

by Luanne Kelchner

An organizational capability is a company's ability to manage resources, such as employees, effectively to gain an advantage over competitors. The company's organizational capabilities must focus on the business's ability to meet customer demand. In addition, organizational capabilities must be unique to the organization to prevent replication by competitors. Organizational capabilities are anything a company does well that improves business and differentiates the business in the market. Developing and cultivating organizational capabilities can help small business owners gain an advantage in a competitive environment by focusing on the areas where they excel.

Competitive Advantage

Organizational capabilities provide a company with an advantage in the marketplace. When an organization continues to create new capabilities and develops existing ones, it will maintain the advantage over its competitors. Capabilities that provide a competitive advantage include knowledge, product licenses and innovative designs.

Flexibility and Responsiveness

The responsiveness of an organization is its ability to change in response to customer demand. Knowledge and skilled employees are organizational capabilities that provide a company with the ability to respond to customer demands and remain flexible to changes in the business environment.

Knowledgeable Workforce

The skills and knowledge of a company's workforce allow the organization to direct those skills to achieve the business's goals. Training programs, education assistance and effective recruiting and hiring programs are organizational capabilities that ensure a knowledgeable workforce. To maintain the capability, companies should ensure the workforce has the resources available to improve continuously. Managing a talented workforce is an organizational capability that provides a competitive advantage in the marketplace.

Improved Customer Relationships

Good customer relationships ensure the continued growth and competitiveness in the market. The relationship between the organization and its customers is an organizational capability that affects sales, reputation and loyalty for future business. Maintaining existing relationships with customers as well as developing new ones ensures the company will grow and thrive in the future. A lean manufacturing environment is an organizational capability that focuses on the voice of the customer and meeting demand. This organizational capability improves the relationship with the customer for the business.

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