Capabilities Approach

In general, organizational capabilities are categorized in one of three different ways. First, capabilities reflect an ability to more efficiently perform a basic business function (e.g., distribution, marketing activities, operations, logistics, etc.) compared with rivals. For example, Nike has significantly better global brand management than its competitors and has developed extensive competitive capabilities around its brand. Continuously improving the dynamics of interactions is a second type of capability—dynamic capabilities. These types of capabilities focus on the learning associated with repeated and recurring activities. For example, going beyond expectations in customer service responses by anticipating questions or designing next-generation products/services from information gleaned from customer responses is a dynamic capability. Another dynamic capability is the rapid development of bringing ideas to the marketplace. The third category ...