Meeting the challenge of disruptive change

"Meeting the challenge of disruptive change" by Clayton M. Christensen, HBR

Where capabilities reside
Resources: Tangibles and Intangibles
Processes: Patterns of interaction, coordination, communication, and decision making about resource allocation
Values: Standards by which employees set priorities and judge their activities (e.g. gross margin, opportunity size)

Migration of capabilities along growth
Resources --> Processes --> Values (--> Cultures)
The capabilities, which evolve from resources, processes, to values (sometimes even to culture), define what an organization can and cannot do.

Sustaining innovation vs. Disruptive innovation
In general, big and companies are better at sustaining innovation because they usually have established forms of capabilities like rigorous process and firm-wide culture. However, when faced with disruptive changes, these firms can be worse than smaller ones because their capabilities fit more with their existing business environment, not with new disruptive changes.

Creating capabilities to cope with change
When an organization needs to new capabilities, it needs new resources, processes, or values. For those in which new processes or values are needed, there are three possible ways to create a new organizational space where new capabilities can be developed.
1. New org. structure within corporate boundaries where new 'processes' can be developed.
2. Spin out an independent organization where new processes and values are required.
3. Acquire a different organization whose processes and values can't be found in existing org.

Questions for managers in changes
Managers whose organizations are confronting change must ask themselves three questions.
1. Does the organization have the resources required to cope with the change?
2. Does the organization have the processes and values needed in the situation?
3. Are the value of the organization cause a initiative to get a priority or not?

Quotation
Ensuring that capable people are ensconced in capable organizations is a major responsibility of management in a transformational age.