Skills Versus Capabilities

Do not confuse team capabilities with individual skills. If you wanted to evaluate the total skills of a group and assess its overall average skill at individual tasks, then you would use the idea of attributes from Chapter 6 "You Need Quality Resources as Well as Quantity". Clever organizations manage to take relatively unskilled people and generate outstanding performance. Consulting firms take newly trained professionals and enable them to deliver sophisticated business solutions; fast-food firms take unskilled staff and produce highly consistent products and service; call centers take people with little understanding of an organization’s products and clients and produce excellent customer support; and so on.

Clearly such organizations achieve much of this performance by training people: in other words, by adding to their individual skills. But they do more: They develop, test, and operate proven procedures. Team capability, then, reflects the combination of individual skills and these effective procedures.

Such procedures add up to a library of instructions for completing specific activities quickly and reliably. This library is effectively a resource, something useful that you own, and like any resource it is built up over time. It is also kept up to date by the removal of obsolete or ineffective procedures and the addition of new ones. One of the clearest examples you are likely to find concerns the franchise manuals used by firms like McDonald’s to both train their staff and control their franchisees. Such manuals cover everything from cleaning the fryers, to checking the inventory, to sorting the garbage.

Capabilities Accelerate Resource Development

As I have stressed before, if capabilities are to influence performance then it can only be by improving the organization’s success at developing resources, whether it be winning them in the first place, promoting them from state to state, or retaining them. For example,

• a highly capable human resource (HR) team wins the people that the organization needs quickly, efficiently, and with the greatest likelihood that they will stay;
• a highly capable product development group turns out products quickly and cheaply that satisfy customers’ needs;
• a highly capable customer support team ensures customers are content with the organization’s products and services, thus preventing customer defection.

There is a limit to what capable teams can accomplish though if they do not have the resources to do their job. Even the best customer support group will struggle to keep customers if the products they are supporting are inadequate.

Learning, Capability Building, and Resource Development

The last mystery we need to resolve about capabilities is where they come from. Team capabilities are built up by being used, much as individual skills are. Procedures and methods for getting things done are available to be recorded whenever they take place. So techniques have been developed in many sectors for achieving a sale to a new customer, for example. Indeed, many of these techniques are common to multiple markets and embedded in sales force training systems. The procedures for managing products through a research and development (R&D) process similarly arise from companies’ experience of actually carrying out that activity.

Clearly the more chances the team has to practice its winning, developing, and retention of resources, the more opportunities arise to test, improve, and record the procedures that work best. The bottom line is that the rate of resource flows determines the rate at which capabilities can be improved. If we add the earlier observation that capability levels drive resource flows, we have a simple and direct mutual reinforcement between each capability and the resource to which it relates. There are some cases where capability does not relate directly to a specific resource flow, but they tend to be less influential on long-term strategic performance than are these tightly coupled pairings of resource and capability.