Capabilities are the often interdependent people, expertise, tools, processes, and systems that are the foundation for a highly successful organizations sustainable advantage in a specific industry … This sustained advantage gives an organization significant market power underlying durable profits, increased market share, growth…
A sustainable advantageous capability typically has the following properties:
- Be the driver for most of your discretionary spending
- Are no more than you can count on one hand
- Should treated "special" during cost cutting initiatives (long term perspective unless short term is too severe)
- A true capability is typically a combination of things which delivers a unique, difficult to copy combination of attributes
- Nearly always multi-functional and increasingly multi-organizational
- In larger organizations, can be the foundation for a high-performing portfolio of businesses — deriving their advantages from similar capability systems.
- Most lend themselves to advantages through economies of scale
- Some lend themselves to advantages through economies of scope
The key thing to understand about these types of capabilities is that unlike a physical asset on which many businesses are based, these do not need to expire. The key is recognizing them as a SAC and maintaining them. A strategy that leads to a SAC can lead to perpetual advantages and success.