Understanding Organization’s Capabilities To Make Transformational Change

An organization cannot survive without continually transforming themselves to remain relevant & competitive in the face of ever-evolving ecosystem & with advent of disruptive technologies.

The trouble is that often, in a hurry to gain competitive advantage, the leaders tend to get their organization into major transformational change initiatives without comprehensively understanding organizational capabilities to accept & undergo the change.

Just as an individual, an organization too has certain capabilities that decides whether it is capable to undergo transformational journey or not. To evaluate and to be aware of these organizational capabilities is a pre-requisite for the leaders & managers of the organization before they undertake any transformational journey.

Often, we wrongly assume that the ‘resources’ of the organizations such as it people, machines, technology, cash, brand, supplier reach, distribution network, customers etc defines the organizations capabilities. But an organizations resource is only one of the three factors in determining an organizations capability.

Another, more critical and often ignored factor is the organization’s ‘processes’ i.e., how the interaction happens between various resources (entities) of the organizations, formal & informal decision-making processes that various internal stakeholder use to transform the resources into products & services of greater worth. These processes are usually formed over the years and tends to get structured in a way that helps the company to perform the operations in the most efficient way. The same processes that helped the company to perform their operations efficiently becomes a major impediment for transformational change, if the current processes of the company are not aligned with the new process required for transformation.

Last and probably the most critical factor that defines organizations capabilities are the ‘beliefs’ that the organizations hold that define the way it deals with any situation. These beliefs are what defines the standard by which employees judge if the order is attractive or not, the new product idea should be worked upon or not, should the company enter a new market or not, whether a customer is more important or less important etc. These beliefs govern the decisions taken on daily basis at all levels within the organization from on the field salesperson to board room executives. The older the organizations, the deeper and stronger are their beliefs. A company’s value reflects its cost structure or its business model because those define the rules its employees must follow for the company to prosper.

“As long as the organization continues to face the same sorts of problems that its processes and beliefs were designed to address, managing the organization can be straightforward. But because those factors also define what an organization cannot do, the constitute disabilities when the problems facing the company change fundamentally” - By Clayton M. Christensen

The first step in a transformational journey of the organization is to understand organizational capabilities in terms of its resources, process, and beliefs.

We have successfully used TOC's thinking process tools to understand the organizational capabilities in terms of its resources, processes & values and also to identify which is the biggest limiting factor in achieving the required transformation.