The Reference Frame

This blog is primarily for authors of Functional Competence Models (FCMs). The application hosted as a sub-domain of this site, at app.orgcap.co, houses the FCMs of various organisations – being used by them to revolutionise their people practices. They have been developed by these authors. Hence this blog at this place.

So the blog should also be useful to others interested in thinking about strengthening the knowledge and skill levels of employees. Given how our FCMs are structured, the blog should also be useful to those seeking a framework to link people management practices to the business. We invite you to browse the posts typically with these aims in mind – hope you find the ideas of value!

Since FCMs are not commonly understood, here is a brief and broad overview of how we see them through these seven statements:

It is primarily enterprises that confirm ways to create value for others. They do so, so that they can appropriate some of that value for themselves.

While all enterprises create value, Capabilities are the bases for enterprises to create differentiating value. Without them, their products and services are undifferentiated, and are subject to the tyranny of perfect competition. Also, without them, neither are they able to keep costs lower than competition.

Business Capabilities are large and complex – otherwise, they would be easy to replicate for competitors. They are orchestrations of multiple Functional Capabilities. To put it the other way, Functional Capabilities are the building blocks of Business Capabilities. The journey of sustaining and developing Business Capabilities begins with defining the Functional Capabilities.

Functional Capabilities take time to build or acquire, and are stable in the medium term. Such capabilities, defined, therefore form a viable basis for aligning capability building and sustaining efforts. In particular, these capabilities serve as the the bases to derive people management practices and priorities.

For most employees of enterprises, their world comprises of sustaining and building these Functional Capabilities. Each employee contributes to sustaining and building these capabilities as per their Role.

To play that Role to expectation, they need to display Functional Competences.

Functional Competences displayed by a role holder are based on the person’s Knowledge and Skills.

A Corollary

Like in a multi-storeyed building, the higher floors, regarding Business Capabilities, cannot be built until the foundation and the ground floor are built, comprising Functional Capabilities.

It is these Functional Capabilities that really make one organisation different from another. As mentioned earlier, they are the building blocks of capability …

People management, for the most part then, comprises of acquiring talent and developing them to sustain and build these Functional Capabilities.

Hence the need we see for organisations to define Functional Competence Models. You can read in this blog about the various aspects that go into getting such Models right. If this subject interests you, do get in touch with us, we would love to hear from you! 

A note on the url: in our minds, it stands for Organisational Capabilities. We prefer to see Business Capabilities as organisational. Even external tie-ups of businesses with strong vendors, partners and investors need to be managed by a part of the organisation.

So far, in the blog, we have not elaborated on Business Capabilities. We reckon it will be some time before we do so. There is an enormous ground to be covered by most organisations in defining and managing their Functional Capabilities.

References:

Competing on capabilities: the new rules of corporate strategy. Stalk G, Evans P, Shulman LE. Harvard Business Review, Mar-Apr 1992

The Core Competence of the Corporation. Prahalad C. K., Hamel G. Harvard Business Review, May-Jun 1990

[Book] Competitive Advantage. Porter, M E. The Free Press 1985.