Organizations that excel at strategy execution know how to create sustainable value for customers and shareholders through defining key organizational capabilities and applying a balanced approach to business systems.

In the capability model (or resource-based model), senior managers are predominantly concerned with issues about quality of products and services provided to customers (external and internal), the flow of value-added work, and roles and responsibilities. The dominant view of performance measurement shifts from the traditional focus of actual-vs.-budget to a more balanced model that includes the timeliness, quality, and cost of providing products and services to customers.

 

 

 
 

Allocation and budgeting of resources moves from the traditional practice of individual units vying for resources based on their own needs towards cross-group teams that jointly assess resource needs based on the flow of work needed to create value for customers. Problem solving would seldom involve situations in which unit managers had to compete with each another; instead, organizations would adapt to departmental interdependence, recognizing that issues are best addressed through cross-group problem-solving sessions focused on providing services to customers and the required flow of work.

 

 

An organizational capability approach nurtures three of the most critical factors essential to achieving superior, sustainable results:

1. Strategic focus

2. Organizational strategic alignment, and

3. Operating discipline.

Conversely, taking action to achieve strategic focus, organizational alignment, and operating discipline develops capability thinking.