Explain what is involved in building capabilities internally. What steps are required? How much time does it take? How hard is it? Support your answer.

Question

What will be an ideal response?

Answer 1

Capabilities are the product of bundles of skills and know-how that are integrated into organizational routines and deployed within activity systems through the combined efforts of teams that are often cross-functional in nature, spanning a variety of departments and locations.

Because the process is incremental, the first step is to develop the ability to do something, however imperfectly or inefficiently. This entails selecting people with the requisite skills and experience, upgrading or expanding individual abilities as needed, and then molding the efforts of individuals into a joint effort to create an organizational ability. At this stage, progress can be fitful since it depends on experimenting, actively searching for alternative solutions, and learning through trial and error.

It is generally much easier and less time-consuming to update and remodel a company's existing capabilities as external conditions and company strategy change than it is to create them from scratch. Maintaining capabilities in top form may simply require exercising them continually and fine-tuning them as necessary. Refreshing and updating capabilities require only a limited set of modifications to a set of routines that is otherwise in place. Phasing out an existing capability takes significantly less effort than adding a brand new one. Replicating a company capability, while not an easy process, still begins with an established template. Even the process of augmenting a capability may require less effort if it involves the recombination of well-established company capabilities and draws on existing company resources.