<![CDATA[This study explains how formal capacity can lose its operational value when changes in tasks are not accompanied by adequate organizational adjustments. The study examines the case of BUMDes Al-Falah in Tolutu Village, Tomini District, tracing the shift in activities from clean water services to savings and loan operations. Field data, derived from interviews, observations, and documentation, were re-analyzed with a focus on the relationship between changing task demands and organizational configuration. The results indicate that the transition to savings and loan services increased the need for financial expertise, risk analysis, credit procedures, monitoring, debt collection, coordination, and the exercise of authority. However, the organization's structure, competencies, procedures, and oversight mechanisms did not evolve commensurately. This misalignment manifested through four interconnected mechanisms: expertise mismatch, procedural mismatch, coordination mismatch, and authority environment mismatch. The accumulation of these mechanisms diminished the organization's ability to control credit, maintain liquidity, and rectify operational failures, even though the formal structure and mandate remained in place. These findings broaden the understanding of administrative capacity by distinguishing between formally possessed capacity and capacity that is actually usable for specific tasks. The study demonstrates that organizational failure does not always stem from a lack of capacity; rather, it can arise when task demands evolve more rapidly than the organization's ability to adapt.]]>
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