A capability analysis is one of the critical tools in any strategic analysis. It is the primary tool for analysing the internal capabilities of an organisation. There are three primary steps to thinking about a capabilities analysis.
- Identify the capabilities & Secondary activates: Start by identifying the value chain, understanding how the organisation takes various raw materials and turns them into products and services.
- What are the steps along the way?
- Which internal secondary activities support the Primary Capabilities that generate value. These could be anything from human resource practices or R&D, anything that supports the creation of the goods and services the capabilities provide.
- Internal & External alignement: Next we need to explore how the secondary activates align with the primary capabilities internally to provide value.
- How well do the secondary activities support the primary capabilities to generate revenue.
- We also need to explore how well the primary capabilities are aligned to the marked demands.
- Sustainability: We must explore whether the capabilities provide a competitive advantage and whether or not that advantage is sustainable.
- Are the capabilities imitable, can a competitor simply copy the organisations capabilities.
- Are the capabilities durable, will they still be valuable in the future.
