Capital One Financial Corp:
Setting and Shaping Strategy
Capital One Financial Corp’s strategy is to develop and market products and services to satisfy the demands of a competitive and ever-changing marketplace by utilizing information technology for mass customization which will deliver the right product to the right customer at the right time and at the right price.
Such a strategy requires the employment of talented people and a flexible culture promoting innovation to help identify, develop and market products and services. Capital One’s information-based strategy, or IBS, serves as the strategy to improve operations in every aspect of the company. IBS technology enables Capital One to provide more valuable products, thereby creating a positional advantage over its competitors. However, by focusing on the IBS capability as its sole competitive advantage, Capital One neglects any positional advantages, such as its brand, that might become more valuable than the potential advantage IBS might yield elsewhere.
Capital One makes it a point to hire the top talent from top schools. Even though this is an important initiative to obtain quality assets, it is just as important to organize such assets in a way that achieves competitive advantage. Capital One has done a good job aligning its organizational structure with its strategy. Its functional structure enables Capital One to facilitate technical excellence within each function and still achieve cross-functional sharing of information or knowledge due to its loose coupling of departments. By aligning the internal organizational structure with the talented resources they become a source of competitive advantage.
Capital One created a culture that rewarded data and fact-based decision making which flattened its hierarchy and promoted innovation. Employees were empowered to test and learn through all aspects of the organization. Performance reviews were conducted by peers and...
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