Know your Core Capabilities

In one of our recent assignments the client had lost its core IT capability, putting at risk a major IT outsource contract and, as a consequence, the viability of the organisation itself.  Following some urgent research into the causes of this situation, we were able to see that this client is not unique, but an extreme example of a worrying trend across a range of market sectors.

The client that triggered our research had entered into a wide-ranging IT outsourcing contract in the mid-2000s.  The purpose of the contract was to work in partnership with a supplier to develop and improve the organisation’s IT, both internal and external.  What resulted was a series of costly failed developments that were poorly managed and a relationship that could never be described as a partnership.  It took the organisation 5 years to understand that something was wrong, and a further 2 years to decide what to do about it.

There were many causes of failure in this example, but the main reason it took so long to rectify was the loss of the organisation’s core IT capability.  Without this, the organisation was unable to carry out its Intelligent Client function and the supplier continued to provide poor service without adequate control.

Our research shows that organisations risk losing control of core capabilities for a range of reasons, including:

• Over-reliance on suppliers;
• Very long supplier relationships, where individuals are treated as internal team members;
• Early retirement schemes driving loss of corporate knowledge;
• Bureaucratic HR processes that limit recruitment of internal resource;
• Recruitment freezes; and,
• Lack of understanding of core capabilities.

We identified that clients need to regularly review three basic questions:

1. Is the vision for the organisation still relevant?
2. Will the corporate strategy still deliver?
3. What core capabilities are needed for successful delivery?

Our experience shows that many organisations can answer the first two questions, but the importance of core capabilities is not well understood.  We can help you identify, capture and manage the core competencies needed to deliver your strategy.  

“Knowing what you need to know” provides you with valuable competitive advantage, and may reveal how much knowledge is held in the heads of your team or in the hands of your suppliers, rather than genuinely owned by the business.

Protect your organisation, contact William Harrod at william@valuta.co.uk for a no-obligation discussion of how to protect your core capabilities.