Written by This is the second post in a series that will explore a fundamental question: how can a leader be more intentional about connecting company strategy to individual work, individuals to teams, and teams to one another? If you missed the first two posts on Roughly 500 Words On… you can read them here: https://kaleidoscopeadvisory.com/roughly500words/
Chapter 2: Organizational Capabilities versus Individual Capabilities – Organizations Don’t Do Things; People Do things and that Matters
We talk about organizations as singular beings capable of developing X or manufacturing Z. But why? Microsoft makes software, except it doesn’t. Merck discovers cutting-edge therapies, except it doesn’t. Dunkin’ makes doughnuts, except, again, it doesn’t. People do those things. People write the code, discover and manufacture the pharmaceuticals, and make the doughnuts. And that is an important distinction.
Now, this probably seems obvious and more about the arcane quirks of the English language than actionable management guidance. But the ability to understand the relationship between the individual and the organization and how to use structure, role scope, and individual skills to execute your company’s strategy is an essential management skill.
Fundamentally, we are talking about the relationship between organizational and individual capabilities. Most sophisticated leaders understand both and spend a significant amount of time thinking about the broad organizational capabilities required to have a successful organization – create, market, and sell products, and enable administratively – and the individual capabilities they must acquire or develop to do those activities. However, few leaders can deftly translate strategy into organizational and individual abilities or use individual and organizational capabilities to shape and influence strategy. The primary goal here is to become more comfortable with these concepts.
How should leaders start to think about this? To oversimplify, but to make it practical in Roughly 500 Words, let’s think about two things: Outputs and Inputs. The Outputs are those core outcomes required to execute your strategy effectively. Outcomes depend on organizational capabilities, understood functionally (e.g., engineering, finance) or across competencies (e.g., customer experience, project management). The Inputs are the individual capabilities – what employees and teams do – and how they use those skills and abilities to create outputs. The leader’s role here is to identify those core organizational capabilities required and build structure and systems to enable individuals to develop the required outputs. The leader must also understand the strengths and gaps in her organization and use that knowledge to make investment decisions into strategy, organizational capabilities, and individual capabilities.
Let’s bring this to life and return to the analogy from the last post: a symphony orchestra. We covered how the strategy and goals of the orchestra are dependent upon the conductor’s ability to organize the instrument section and the individual players in a way that creates balance and harmony. To extend the analogy further, the conductor seeks to maximize the orchestra’s organizational capabilities, which are the abilities of each section and the overall outcomes of the orchestra (i.e., the sound and quality of music). To do so, she makes sure she has the best individual players, and they are organized, balanced, and prepared to play the music at the highest level. The conductor can also use this knowledge to select pieces of music that work best with the orchestra and the audience and make sure the orchestra’s capabilities meet the audience’s expectations. When successful, the organizational capabilities (e.g., all trombonists collectively playing their parts, synchronized with one another, and in harmony with the rest of the orchestra) are enabled by individual capabilities (e.g., each trombonist’s talent, practice, and execution).
In the next post, we will connect capabilities to broader organizational concepts, looking at operating models and organizational design. These two concepts primarily relate to Outputs, but they help us to also think about how we organize our Inputs.
Until then, please let me know your thoughts on this series or topics you would like me to cover in the future.
-Paul