An organization deploys capabilities to execute its activities. Some of these capabilities are critical to survive and thrive. In three easy steps, you can determine objectives to steer the development of critical capabilities in your organization.

How to determine objectives for capability development.

Steps to determine objectives

Determine objectives for developing a particular capability in your organization as follows:

Identify the advantage the capability would bring.
Determine the direction for developing the capability.
Set the priority of developing the capability.

Advantage

To identify the advantage that a particular capability would bring to your organization, you can perform a VRIO analysis to determine four relevant properties of the capability:

Valuable: seizing opportunities and fending off threats.
Rare: scarce and difficult to obtain.
Inimitable: hard to mimic.
Organized: set up to capitalize on organizational resources.

You can use the outcomes of the VRIO analysis as follows to identify the advantage a particular capability brings:

VRIO decision table to derive competitive advantage. — VRIO decision table to derive the competitive advantage of a specific capability.

Direction

Determine a course of action for developing a particular capability in your organization as follows:

Disadvantage: disinvest to make room for another capability.
Equal advantage: specialize so it will be rare.
Temporary advantage: merge with other capabilities so it will be inimitable.
Unused advantage: secure in your organization design so it will be organized.
Strategic advantage: maintain in your organization so it will sustain.

Priority

There are several ways to prioritize activities. What is best depends on your way of working. When pursuing Agile, set a priority for developing a particular capability as follows:

Now: do this first.
Next: do this second.
Later: do this after the second.