#177 | What Is Capability (Really)? - Capability Unboxed Mini Series (powered by CIAB+) Part 1

Capability Unboxed Mini Series – Powered by CIAB+ | Part 1

We use the word capability constantly, in pitch decks, strategy docs, PMO reviews, but rarely pause to define what it actually means. And when organisations assume it just means skills or headcount, that’s when delivery starts to stall and decisions get stuck.

In the first episode of our Capability Unboxed mini series, we slow things right down to unpack what capability really is...and what it isn’t. Drawing on 20+ years working across strategy, transformation, and portfolio governance, we explore why capability is the foundation for value delivery and why misunderstandings around it create invisible friction across planning, governance, and execution.

You’ll learn why capability is about the what, not the who, and how it operates as a stable system that cuts across functions, tools, and reporting lines. We explain how capability differs from maturity or capacity, why it should never be tied to individuals, and how mapping it clearly can help teams reduce rework, build alignment, and stay resilient as org charts and priorities shift.

If you’ve ever felt like your team has the right people but still can’t deliver at pace, this episode will show you why.

🎧 Tune in, take notes, and join us in May for our live webinar event where we take a deeper dive into all things capability (powered by the AMO Way). If you can’t make it live, register anyway and we’ll send you the recording.

In this episode, I cover: 

2:35 Why Capability is Misunderstood
5:30 Defining Capability As The What
9:20 Mapping Capability to Products
13:30 People, Skills, and the System
17:00 Governance and Reliability
20:30 Not Tied to Org Charts
And more...

Learn more about how AMO can help you with Capability Uplift here: https://quiz.agilemanagementoffice.com/capabilityclarity

Transcript

Welcome And Purpose Of Series

Fatimah Abbouchi 0:00

You're listening to Agile Ideas the Podcast, hosted by Fatimah Abbouchi. For anyone listening out there not having a good day, please know there is help out there. Hi everyone and welcome back to another episode of Agile Ideas. I'm Fatima, CEO at AMO, Mental Health Ambassador, and your host. In this little mini-series of Capability Unboxed, we thought we would talk a bit about capability, what it actually means, particularly because of all the time we're spending in organizations and seeing that firsthand, it doesn't always mean what you think it means. Very few people I think stop to define what capability is, yet the word is thrown around so constantly. And a lot of the time when I reference capability, I find that people tend to think it relates to skills and maturity and headcount, but really it's a lot more than that. So in this series, Capability Unboxed, we're gonna slow things right down and we're gonna unpack what capability actually is, and to do so, help you understand how it works inside organizations and why so many planning, governance, and delivery problems exist because capability is misunderstood. Now, this isn't because people aren't working hard enough or smart enough, it's not about maturity models, it's not about frameworks. This is a simply about breaking down a core idea from what capability really means to how it differs from capacity and a number of different things related to capabilities and why they are so important to understand. And something I've been spending a lot of time on over the last 10 years. Now, if you work in strategy, delivery, governance, leadership, this series, well, mini series series will help give you a clearer view on how organizations actually operate and also what's happening elsewhere. Each episode will start with one capability uh topic, and the first one is what capability really is and what it isn't. It's going to be fun the amount of times you're gonna hear me say capability, but the point is we're trying to demystify it, and so I apologize in advance for the amount of times you'll hear me say the word capability, but it's really important. So let's get into the very first episode. So this first episode about what capability really is important because in my experience I have heard the term capability many, many times over my career, the last 20 plus years. And in my career early on, for me, I felt and the way I understood capability to mean is around the skills and the experience that one acquires and has, and being able to perform their job and do their job really well. So, as an example, in my first corporate job in manufacturing, understanding that the uh capabilities within the business were everything from creating uh new products, um, packaging, uh, we had reception staff, electricians, and each of them had their own capabilities. But it wasn't actually about the people and their capabilities, rather what the organization does overall to produce value to its customers, for its customers, its stakeholders, its shareholders, etc. And I never really understood that to many years later. And I started thinking about it from a different lens as I started evolving a lot more about how we as a business are going to shape ourselves in a way that can differentiate ourselves, but also package up all of the abilities we have as an organization and in a way that really leverages some of the really great insights and concepts and theories and methods and models and structures that already exist today, but applying it in a different way. And so when I think about capability and why it sounds so vague, it's because I don't think it's often clearly defined. In fact, I can almost have it a guess when I ask if I ask five people what capability really means, most of them will probably pertain the example to the individual, the way that I used to think it was. But capabilities show up in strategy decks, in pitch packs, in vendor packs, in um in meetings, in transformation programs, in PMOs, in portfolio planning, in in annual strategy days, in you name it, it's there. It's always there. It's a constant. It's so common, but used so interchangeably. And I think people use it interchangeably with other things like maturity or capacity or delivery performance. Now we'll talk about capability and capacity in a separate time, but thinking about the fuzziness behind capability makes it really, really challenging sometimes to know what we're talking about. Practically, from an organizational perspective, it needs to it needs to start. Um, well, first of all, we need to start making sure that everybody within an organization is speaking the same language. And that is going to be useful to help get everybody on the same page to understand the importance of capabilities overall and what it actually is. So what a capability actually is, at it the at its core, it's describes it describes what a business does to deliver value to its customers and stakeholders. And that is it. Very simply. What, not the who, not the how, not the when, not the where, but what a business does to deliver value to its customers, to its stakeholders. It doesn't matter the size of your business, it doesn't matter if you want to use that concept in your division or your portfolio, whether you want to use it in your PMO or your transformation program. But it's about what a business does or what a portfolio does or what a team does or what a program does to deliver value to its customers and stakeholders. And that's really important because it is about the what, not the how, not the who, not the when, not the where, not the why. All of that comes later. In thinking about capability from that perspective, it means it's not about any one individual. It means it's not about a role or a person. All of those things support the capability being able to exist in itself. Now, when we think about capabilities existing at multiple levels, those capabilities therefore get mapped to products and services that you would offer. For example, an organization may deliver many different products but rely on the same underlying capability to make sure that they can deliver those projects. For example, in AMO, we have transformation capability and change capability and governance capability, and we do all of do have all those things. That's our what, but they enable us to deliver products and services to companies like diagnostics and PMI setups and establishing transformation programs or supporting a D-Merger or a reverse acquisition, whatever it is that we are providing in terms of products and services, but we're still leveraging the same capabilities. It's what our organization does to provide value, and then that feeds into our products and services. Products and services will change almost inevitably and all the time, as frequently as your business needs to. As an example, in the last two or three years, our business has evolved to focus a lot more on regulatory compliance, in particular, the Australian Financial Service legal requirements associated with that, or AFSL for sure. But the capabilities our business is going to be using to deliver that products and services there is the same. It's transformation, it's change, it's governance, it's delivery. And so a capability itself will remain stable even if your strategy, your offerings are changing. And this is why it's really important to think about capability from that perspective and not be so um fixated on the fact that products and services will change and you've got to constantly figure out how these things align. As I said, the capabilities themselves are the things that stay the most constant. Doesn't mean they never change. Um, one company, for example, that we did work with decided to acquire a brand new business. That business provided lots of different products and services, and one of the things that they think they had as a capability was sustainability, a sustainability types of capability. And so their business, although at the moment was only focused on these core capabilities and they brought in sustainability, it adds to the capability stack that they had in their business. And so you can evolve capabilities over time, but I find that they don't change as often as people think. When we think about capability as an organizational ability, regardless of the size of your organization, be it small business or a large business, it's all around what the cape what the organization does as a whole, not any one person or any one team. The capabilities themselves should not be tied directly to individuals. If the if the what best way thinking about it is if your business has certain capabilities, and I'll give you actually a real good example. At the moment, there are a lot of businesses that are starting to learn and introduce um a lot more AI. And one of the things in terms of that is there are businesses out there that specifically are advertising AI capabilities that they offer in their business. Now, let's say that business AI capability is all in Jane Doe or John Doe's um skill set and in their um space, and they've brought that in. If that person leaves the organization and takes that capability with them, then it wasn't really a capability to begin with. And so when you think about the people side of it, people are inputs, and the capability is the collective combined organizational result of people and process and tools. Same people, different organizations will have completely different outcomes. And the bigger the organization, the more capabilities you have. Some organizations might have hundreds, others might have a few. As a small business, we typically start off with a smaller amount of capabilities and continue to evolve as our business grows and scales. And so now I've mentioned people, definitely important, but I want to help you understand where they fit and where they don't. Skills matter 1000%, but skills alone do not create the capability. Skills are important because they support an organization in in being able to deliver the capabilities, but skills alone don't have governance cadences and decision tools and frameworks and models that underpin it. All of those things, without that, you'll have a very, very inconsistent way of delivering value to your customers. And so highly skilled teams can really struggle if the organizational capability model within an organization is weak. And so skills increase the potential of you delivering the value to your customers and stakeholders, but the capability and having a strong capability framework is what determines its reliability, especially as you scale your business, which is another reason why capabilities are such an important foundation to think about. So let's talk about what a capability. I don't mean a tech platform or anything like that. I just mean a system made up of different cogs that actually work together. It has clearly defined outcomes, it has ownership, it has accountability, it has cadence, governance, decision rights, it has agreed ways of working, it has supporting tools and frameworks, it has actual systems, where it be it technology or other. It has feedback loops to continuously evolve and improve, controls, assurance. It has everything. And this is why it's a system. And this is why the easiest way to break it down is to think about whatever the capability may be, you've got people, you've got processes, and you've got tools as inputs to the overarching system. Capabilities will fail at their weakest point, not their strongest. And this is why it's so important to start your foundations well with capability. Anything that fails under immense pressure and not enabling you to deliver that customer value to your stakeholders means that there is probably something or more than one thing broken. When we undertake diagnostics for organizations and we think about what their organization is struggling with, we're looking at the whole system. We're looking at the people, the process, the tools, and the governance and cadences that make it all work. And capabilities are at the heart of that, even if they're not being reflected that way. Capability itself is also independent of how you structure your organization. Something that a lot of people get wrong, and I've seen this quite recently, is people tie capabilities directly to an organization's division or function. Capabilities are not a one-to-one match or a one-to-many match to finance or HR or legal or the risk and compliance team or the strategy offers or your PMO, etc. Capabilities themselves are not and should not be tied to org charts. They need to cut across funds and governance layers because remember, it's the to your stakeholders. And that should be independent of the structure of your business and the way that your people are running within it. When you think about how org charts have a part to play, this is typically around those decision rights and accountabilities and the people inputs that enable you to deliver the products and services that are underpinned by the capabilities. So capabilities will optimize the outcomes and the people that feed into it, which come uh usually come associated with your org charts and your functions, is all about the decision cadences, the reporting lines, the things that feed the system, but not the system itself. And this is why when you use capabilities the right way, it provides the same stable anchor point. It's stable and it helps to provide that anchor point, especially as structural changes, role changes, team changes, and all of those things are happening around it. It even provides an anchor point as you change your products and your services for your customers. If you can modify your business's structure and not break your capabilities, intentionally break your capabilities, then it's very likely that your capability is clear and is going to support you as you continue to grow your business. It's very important that when you think about capability modeling and planning your capabilities, that you do it in a way that holds true for your organization. The minute that starts becoming shaky, it's really important to make sure you go back to assess and understand why that is. So, what changes when you think in capability? This is why I've spent at least the last 10 years thinking about this and doing so in a way that has really resonated not only in our business, but also with our customers. When organizations adopt capability as a primary lens, it changes everything. It doesn't then become just about what projects should we do. It's more about what capabilities are we strengthening. Um, the conversation becomes about reliability. It becomes about would changes over here impact something over there. It becomes about thinking how we make sure that we are investing properly to sustain and improve and evolve our capabilities. It's about sustaining, evolving, and improving the governance, the projects, the delivery, the investment, the strategy, all of those things. Again, tying back to the core aspect of your business. Remember, capabilities themselves are essential foundation building blocks for your business. And everything else works around it. Capability itself and capability mapping helps turn complexity into something a lot more manageable. As a small business and applying this lens in our company has been instrumental in evolving and growing our business in ways that we'd never thought was possible. And it's so powerful that it's once you get your head around it, it makes it so much easier to really understand and resonate and then be able to articulate that. In fact, we use the same capability in a box or KIAP for short in our business that we use for customers as well. And it's been really impactful. Now, how this connects to CIAB, CIAB, or Capability in a Box, is it helps to understand that a capability itself only becomes actionable once it's explicit, once you understand the accountabilities and they're visible, once you understand what the capabilities are, are they core capabilities, strategic capabilities, supporting capabilities? Get everybody in the team using a shared language, understand how to identify the capabilities, address them, and improve them deliberately and proactively. This isn't something that you set once and forget. It's something that you continuously build with you as your organization grows. Remember, you I'm a very visual person, and so it really resonates to me when I think about what you can't see can't be managed well. So it's really important that your teams understand what it is that your organization is doing to deliver value to its customers. And this isn't just about products and services. Often when we think purely about products and services, uh, it can create heroics to prioritize products and services that maybe interconnected interconnectedly don't really drive the capability forward. And so there's lots of reasons why not to think about it like that. But maybe we'll cover that off in a separate conversation. So CAP Capability in a Box is our way of helping make capabilities visible, drive accountability, give teams a shared language, allow capabilities to be identified, assessed, mapped, whether it's a transformation program, the concept is the same. Make sure you join us in May for our live webinar event where we'll deep dive into all things capability powered by the AMO Way, of course. And keep an eye out on our socials and remember to register. If you can't attend on the day, we will send the recording to everyone who has registered. And in the meantime, if you have any questions about capabilities, please reach out. Otherwise, I look forward to talking to you in the next episode. Thank you so much for listening to this podcast. Please share this with someone or rate it if you enjoyed it. Don't forget to follow us on social media and to stay up to date with all things agile ideas. Go to our website www.agilemanagementoffice.com. I hope you've been able to learn, feel, or be inspired today. Until next time, what's your Agile Idea?