Organisational capability is a strategic choice

A change in strategy usually changes what is expected of people

As organisations grow or change direction, the capabilities required from people can change considerably.

A business that has grown successfully through entrepreneurial energy and informal relationships may reach a stage where it needs more consistent management disciplines. A company moving towards larger corporate customers may require a different level of commercial capability from the people responsible for developing and managing those relationships. An organisation introducing AI or automation may need managers to redesign work, exercise different judgement and lead people through uncertainty in ways that were not previously part of their role.

None of this means that the people who helped create the organisation's previous success have suddenly become less capable. The context has changed, and with it the definition of what good performance looks like.

If those changing expectations remain unclear, capability development can easily become generic. People attend courses, receive coaching or complete development plans, but it becomes difficult to demonstrate how that activity relates to what the organisation is trying to achieve strategically.

Greater clarity about what people actually need to be able to do creates a much stronger starting point.

Organisational capability starts with the strategy, not the training plan

Capability discussions often begin by looking at individuals and asking where skills gaps exist, who has potential or what development people would find useful. Those are all legitimate questions, but we would start by understanding what the strategy itself requires from the organisation.

If commercial growth is a strategic priority, for example, describing the requirement as becoming “more commercial” does not provide enough information to make useful decisions about capability. Leaders need to understand what being more commercial means in practice for the people involved.

Depending on the organisation, that might include understanding customer economics, identifying and developing opportunities, negotiating value, managing strategic accounts or making better commercial decisions in operational roles.

The same principle applies to leadership, customer experience, operational excellence, innovation, transformation and technical capability. The clearer an organisation becomes about the behaviours, knowledge and judgement required in particular roles, the easier it becomes to understand whether those capabilities currently exist.

Understanding capability requires more than knowing who attended training

Many organisations already hold substantial amounts of information about their people. There are job descriptions, competency frameworks, appraisal records, learning systems, qualifications and training histories.

All of those can be useful, although they do not necessarily tell leaders whether people can demonstrate the capabilities the organisation needs.

Someone's length of service may indicate experience, but it does not automatically demonstrate capability in every aspect of their role. Completing a course tells us that development activity took place, but not necessarily whether the person can apply what they learned. Equally, a manager's general view that somebody is performing well may be entirely reasonable without providing enough detail to understand capability across a larger workforce.

A useful approach therefore starts by making expectations clear enough for meaningful conversations to take place. People should understand what is expected of them, be able to reflect honestly on where they are confident and where they need support, and discuss that with managers who understand what good performance looks like.

This does not need to become a complicated assessment bureaucracy. In many organisations, greater simplicity and clarity are exactly what is required.

The organisational picture is more strategically useful than isolated individual assessments

Individual development matters, but capability becomes particularly valuable to senior leaders when they can see patterns across the organisation.

Consider a growth strategy that depends heavily on first-line managers being able to coach performance, manage change and develop their teams. If those capabilities are consistently strong, the organisation is starting from a very different position than one where large numbers of managers have limited experience or confidence in those areas.

The same principle applies to commercial capability, operational leadership, customer management or any other area that is important to the strategy.

Without that visibility, leadership teams can unintentionally build plans on assumptions about capability. The gap may only become apparent later, when execution is slower than expected or results begin to fall short of the plan.

At that point, what initially appears to be a strategy problem may actually be a capability problem that existed before implementation began.

A capability gap should lead to development rather than blame

There is an important distinction between identifying a capability gap and concluding that somebody is performing badly.

Roles evolve, organisations change and people are promoted into positions requiring capabilities they have never previously needed. New strategies can place different expectations on experienced employees, while technological or market changes can alter the nature of a role surprisingly quickly.

The purpose of understanding capability should therefore be to identify the distance between what the organisation needs and what currently exists, rather than finding reasons to criticise individuals.

Once that gap is understood, leaders have choices. The response might involve coaching, mentoring, practical experience, formal development, recruitment, changes to organisational design or simply much greater clarity about what is expected.

Those choices become much easier to make when they are based on evidence rather than assumption.

Development investment becomes more useful when it follows strategic need

Organisations spend significant amounts of money and time on learning and development, often with the best of intentions. The challenge is making sure that investment is directed towards the capabilities that will make the greatest difference to organisational performance.

A clear understanding of strategic capability changes the conversation. Instead of beginning with a question about what training should be provided during the year, leaders can consider what the strategy requires people to be able to do, where the most important gaps exist and which form of development is most likely to close them.

Training may be part of the answer, but it may not be the whole answer. Some capabilities develop more effectively through coaching, experience, exposure to different situations or support from a more experienced colleague.

Starting with the capability requirement rather than the intervention also makes evaluation more meaningful, because the organisation has established what needs to improve before deciding how to develop it.

Capability deserves a place in the strategy conversation

Boards and senior leadership teams routinely spend time discussing customers, markets, competitors, technology, investment and financial performance. We believe organisational capability deserves to sit alongside those subjects as a normal part of strategic discussion.

The question is not simply whether the organisation has talented people. It is whether it has enough of the right capability, in the right places, to deliver what the strategy requires.

Where leaders have confidence that the capability exists, they should ideally understand the evidence supporting that view. Where important gaps are known, addressing them can become part of the strategic plan rather than a problem discovered during implementation. Where the organisation simply does not know, establishing a clearer picture is itself a useful starting point.

After many years working with organisations on strategy, leadership, development and performance, we have found that the gap between strategic intent and practical execution is rarely explained by one factor alone. Organisational capability is, however, one of the areas that leaders can understand and influence before that gap becomes a significant problem.

A strategy ultimately depends on people across the organisation making decisions, exercising judgement and doing things well enough to produce the intended result. Being clear about the capabilities required to make that happen is therefore not separate from strategy. It is one of the choices that sits at the heart of it.