CAPABILITY – THE ENGINE OF ORGANISATIONAL SUCCESS. Organisations are rightly focused on performance – organisational and employee – and rightly spend a lot of time and resources managing and improving it. It is measured with KPIs, reported as financial results, rewarded (or not) by customers in the marketplace and shareholders at the stock exchange.
WHAT ABOUT CAPABILITY?
In a previous blog (see ‘Capability or performance – What’s the difference) we looked at different definitions of capability and arrived at the conclusion that capability is “what organisations must have, must be and must be able to do to achieve their objectives”. That is, capability is the enabler of performance.
In automotive terms (see picture), performance relates to the progress on the road towards the destination – this is of course of fundamental interest to managers and shareholders – whereas capability relates to the car, the engine in the car, the transmission, the way it handles the road and the skills of the driver.
Let’s expand on this a little.
If capability truly is the enabler or engine of success, as it is, then its prominence should be as least as high as that of performance, and management should spend at least as much time working on it as on performance. After all, where we are on a journey – and even more importantly whether we are going to reach our destination – depends a lot on the car, the health of the engine in the car and its transmission, and the skills of the driver. In fact, pursuing the racing car analogy, it would be unthinkable for a racing team not to focus on the enablers of success. And they do, the enablers are front and centre of their strategy. Shouldn’t it be the same in organisations?
But is the prominence of capability as high as that of performance? A google search for ‘organisational performance’ returns ~4.3 million results whereas a search for ‘organisational capability’ returns ‘only’ ~1.2 million. It would be difficult to define a cruder measure of their relative prominence in management thinking; nevertheless, we can still take this as a ‘data point’ and conclude very provisionally that capability is ‘less prominent’ than performance.
A slightly better way might be to check what McKinsey has to say about capability and performance. Their website returns 4,448 and 2713 articles for performance and capability respectively; a significant difference but not as large as for google.
Overall, and this is a personal view, there is more focus on performance because it directly relates to the financial results, market related results and shareholder value, whereas capability, as the enabler, will get attention mainly when performance is falling short of expectations. But is it the best way to go about it?
That brings me back to the title of this blog:
FIRE UP CAPABILITY
If one had a reliable way to fire up capability, that is to improve the car, the engine, the transmission and the skills of the driver, then one would be sure to travel better (faster and further) on the road and bring greater rewards to managers and shareholders.
To do this, we’ll need to revisit the concept of capability, how to measure it and how to improve it.
This is a journey in itself and I hope you’ll stay with me as we travel along, not in a straight line, but nevertheless without losing sight of our overall objective: firing up the engine of organisational success.