“Know thyself”: this ancient Greek maxim is one of the pillars of our collective thinking, but it’s one of the easiest to forget. In a civilization driven by the speed of information, self-knowledge falls by the wayside, as it requires us to stop and analyze.
Organizations are not immune to this culture and are often held hostage by the pressure to react quickly. One of the prices to pay is the failure of the reaction, which in turn is rooted in the misalignment between the challenge that motivated it and the organization’s (mis)knowledge of its real capabilities. In other words, in the rush to react, we don’t evaluate the “how” or the “with what resources”.
Knowing your capabilities should therefore not only be a seminal step, but also an ongoing process for any organization that wishes to pursue – and progress – in its mission. In the case of organizations with a social mission – whether public or private – the knowledge and development of capacities serves the purpose of creating social impact.
The subject of organizational capabilities is a broad field of study and definitions abound. One of the simplest is that of Raphael Amit and Paul Schoemaker: an organizational capability is what allows an organization to “make resources available, normally combined, using organizational processes, to effect a desired end”.
As a recent article in the Stanford Social Innovation Review rightly pointed out, that simple definition contains three important elements: (1) results orientation – capacity operationalizes the intention to solve the problem; (2) resource foundation – capacity requires that certain intrinsic assets of the organization – its resources – are mobilized in synergy; and (3) use of processes – capacity is only effective if complex organizational processes are stabilized.
If an organization is based on resources and if its capabilities are strategic resources, then organizational capabilities need to be managed strategically. This means going beyond a neutral diagnosis of capabilities and prioritizing those that are decisive for the organization’s mission – expressed, for example, in its theory of change(C.R. Hibbs).
Considering organizational capacities as strategic resources in the social impact management process has strong implications. Firstly, the recognition that the development of these capacities is at the foundation of the management cycle. Next, the realization that this development is a continuous process linked to the learning of the organization itself: developing capacities also means learning from successes and failures.
A recent theme
Until just over a decade ago, the issue of organizational capacity was practically ignored by funders of organizations with a social mission. From 2005 onwards, this reality began to change and some of the main funders, such as the Rockefeller and Open Society foundations, among others, included organizational capacity building among their funding priorities. This was a recognition that lasting relationships and impacts must be based on organizational capacities and not on project X.
Portugal “woke up” late to the issue but it can be said that, in the context of the European Union, it has been catching up fast. In 2013, CASES and the Montepio Foundation decided to support the Social Impact Programme, entirely dedicated to building the capacity of organizations. In 2015, this programme focused on the topic of diagnosing organizational capacities and, that same year, Portugal Inovação Social included diagnosis as a precondition for funding in the Capacity Building for Impact axis. Since 2018, Cidadãos Ativos (EEA Grants Portugal) has made the same requirement.
In common, these initiatives follow the rationale that in order to impact communities with good projects, organizations must first have the right resources – capacities – and that these capacities go far beyond financial availability. A capable organization makes more efficient and effective use of the resources at its disposal in the process of creating social change and impact.
