Organisational capability refers to the collective skills, resources, processes, and technologies that an organisation possesses. An organisation can respond to business, social, and cultural challenges effectively.
In essence, organisational capability reflects the capacity of an organisation to solve problems, adapt to changes, and innovate in order to stay competitive in the market.
That’s why the creation of organisation capability is one of the most important (but often ignored) responsibilities of a startup founder or an SME business owner. They must engage and work with the HR team to create capability building in their organisation.
It is the foundation upon which they can build a strong and resilient business model. Without a solid organisational capability, SMEs may struggle to respond to market demands or capitalize on opportunities.
Importance Of Organisation Capability.
The importance of organisational capability cannot be overstated. It serves as a catalyst for long-term success and sustainability. By developing robust capabilities across various dimensions of their operations, SMEs can enhance their competitiveness in the marketplace.
Any wise business person knows we win in the marketplace as a company, not as a sales department or a manufacturing firm.
When a lead is generated-
- How efficiently the salespeople do the research on the potential customer
- How soon do they respond?
- What’s the quality of the communication?
- Do we understand the precise problem ( or the hidden problem that the client wasn’t aware of.)
- How do the demo people present the products?
- How do we respond to the client’s objections?
- How well the estimate is created?
- Are the senior people involved in the process?
- If a proof of concept is involved how well our customer success team responds to customer’s challenges?
- How effective is our business model?
- Does our product team good enough to tweak the product and customize it for the customer’s best interests?
The list can go on and on.
The important point is, we compete in the marketplace as an organisation. And our collective skills and capabilities matter.
Building Blocks Of Organisational Capability Building
Here are 4 significant building blocks of organisational capability building
- Collective skills
- Resources
- Processes
- Technologies
Collective Skills:
The first element of organisational capability is the collective skills within an organisation. This includes not only the technical expertise of individual employees but also their ability to work collaboratively as a team.
SMEs should focus on hiring skilled individuals who possess both domain-specific knowledge and soft skills such as communication and problem-solving abilities.
Just hiring talented people isn’t enough. We must see if they would be able to align with our organisational culture. This fit will enhance the performance.
Resources:
Another vital aspect of organisational capability is access to necessary resources. This includes financial capital, physical infrastructure, technology, and information systems. SMEs must carefully manage their resources to ensure they are allocated effectively towards achieving strategic goals.
Here are some important aspects to focus on.
Find ways to achieve work with limited SME resources.
Where needed, a business owner must arrange funds.
But financial resources aren’t the only resources. Access to information, statistics, and knowledge sharing between teams also plays a big role in the success of small business units.
Processes:
Efficient processes are essential for any organisation looking to enhance its capabilities. These processes encompass how work is performed within the company – from production or service delivery to decision-making procedures.
SMEs should continuously review their processes to identify areas for improvement in terms of efficiency, quality control, and customer satisfaction.
Many larger companies suffer due to bureaucratic processes. That slows down their response time to market needs.
SMEs must work on creating processes that help them in quick response to market pain points, and opportunities.
Technologies:
integrating relevant technologies into business operations is vital for building stronger business capability.
SMEs should invest in appropriate technologies that align with their specific industry requirements.
This could include adopting cloud-based solutions for data storage or implementing automation tools to streamline repetitive tasks.
From marketing and sales to HR automation, technology has become a great leveler. Now with SaaS products on cloud, even small organisations can use cutting-edge technology.
2 examples: How Operational efficiency can help an organisation win
Enhancing Operational Efficiency
Let’s take an example of a manufacturing company. The business owner recognized the importance of operational efficiency in achieving their strategic goals. He worked with the HR team for change management. The goal was to adopt lean manufacturing principles to streamline production processes and reduce waste.
By investing in training programs for employees, they improved productivity levels.
It helped the organisation in reducing per unit cost and be more competitive in the marketplace.
Innovation As A Competitive Advantage
To differentiate themselves from competitors, a manufacturing company can focus on design and innovation capabilities.
They would hire skilled designers who can build product designs using emerging technologies. Thus introducing new concepts and products before any of their competitors.
HR would also be involved in helping create faster communication systems and better exchange of ideas between various departments. And getting the talent trained in new technologies.
That also explains different business objectives need different capabilities.
How To Build Organisational Capability?
The development of organisational capability should be aligned with an organisation’s strategic goals. By identifying specific capabilities required to achieve these goals, you can focus the efforts on building those areas most critical for success.
Identify Current Gaps:
To begin the process of building organisational capability, a small business must first identify its current strengths and weaknesses.
Conducting a thorough assessment of the existing skills, resources, processes, and technologies will help pinpoint areas that need improvement.
Invest in Training and Development:
Once the gaps are identified, SMEs should invest in training and development programs to upskill their employees.
Provide not just technical training but also invest in leadership development initiatives.
By investing in the workforce’s growth and capabilities, we SMEs can ensure that our team can deliver when a large order or challenging project comes our way.
That’s the sure-shot way to take a business leap. Those startups and SMEs who are ready to take on bigger challenges survive and thrive.
Collaborate with External Partners:
Building organisational capability does not solely rely on internal efforts. SMEs should explore partnerships with external experts or consultants who can provide specialized knowledge or access to resources beyond the company’s immediate reach. This collaboration can bring fresh perspectives and accelerate capability-building efforts.
Continuous Improvement:
Organisational capability is not a one-time achievement but an ongoing process. SMEs must adopt a culture of continuous improvement by encouraging feedback from employees at all levels and implementing changes based on this feedback. Regularly reviewing and refining processes will ensure that the organisation remains adaptable to evolving market conditions.
Explore why organisational capability and employee self-service matter in SMEs.
Conclusion: Capability Building Is A Prime Responsibility Of HR Team
Organisational capability stands as a vital factor for the success of startups and SMEs, and the Human Resources (HR) department plays a crucial role in its development. By nurturing collective skills, aligning talent with organisational culture, and providing leadership development initiatives, HR ensures that the workforce is equipped to respond to market challenges effectively.
To enhance organisational capability, SME business owners should collaborate closely with HR to identify current strengths and weaknesses, invest in training programs for upskilling employees, and create a culture of continuous improvement.
By recognizing the significance of SME HR software in building capabilities across various dimensions of operations, startups, and SMEs can strengthen their competitive edge and drive long-term growth in the dynamic business environment.
