Why Sustainable Firms Have a Superior Management of Capabilities?

Abstract

Leaders of sustainable firms know how to manage effectively their existing capabilities to achieve their strategic ambition and to serve their customers better than their competitors. Capabilities are made of resources and skills. Resources are what a company owns, while skills are what it can do. Identifying capabilities is a prerequisite to using them well. The inventory is based on an analysis of their contribution to creating solutions that are valued by customers and better than those of competitors. Resources and skills require different management but the key to sustainable success lies in combining them effectively. Resources serve to build a strong dominance over competitors. Sustainable firms manage them in following three principles: threshold, exclusivity, and critical mass. Skills are often more important than resources for enduring companies. They manage skills along six key principles: threshold, alignment, capabilities rationing, valorization, constant flexibility, and singularity. Sustainable companies continually improve the quantity and quality of their capabilities.