What Capabilities Must We Have? Building Core Competencies for Success
The Fourth Strategic Question
In Playing to Win, A.G. Lafley and Roger L. Martin identify "What capabilities must we have?" as the fourth critical question in strategic planning. This question requires organizations to identify the core competencies, skills, and resources needed to execute their winning strategy.
Capabilities as Strategic Enablers
According to Lafley and Martin, capabilities are not just nice-to-have skills—they are the essential competencies that enable organizations to win in their chosen markets. Without the right capabilities, even the best strategy cannot be executed effectively.
Types of Capabilities
1. Core Capabilities
Core capabilities are the fundamental competencies that directly enable your winning strategy. For a technology company, this might include software development, user experience design, or data analytics.
2. Supporting Capabilities
Supporting capabilities enable core capabilities to function effectively. These might include project management, quality assurance, customer support, or marketing.
3. Differentiating Capabilities
Differentiating capabilities are those that create competitive advantages. These are capabilities that competitors cannot easily replicate and that customers value.
Examples from Playing to Win
Olay's Capabilities
Olay developed several key capabilities to support their winning strategy:
- Research and Development: Deep expertise in skincare science and formulation
- Brand Marketing: Ability to communicate scientific benefits to consumers
- Retail Relationships: Strong partnerships with beauty retailers
- Consumer Insights: Deep understanding of women's skincare needs
Gillette's Technical Capabilities
Gillette maintained market leadership through:
- Manufacturing Excellence: Precision manufacturing of razor blades
- Innovation Pipeline: Continuous product development and improvement
- Brand Management: Strong brand positioning and marketing
- Distribution: Global distribution network
Application in Product Development
For Product Teams
Product teams must develop capabilities in:
- User Research: Understanding customer needs and behaviors
- Product Design: Creating intuitive and valuable user experiences
- Data Analysis: Making data-driven product decisions
- Stakeholder Management: Aligning with engineering, design, and business teams
For Engineering Teams
Engineering teams must build capabilities in:
- Technical Architecture: Designing scalable and maintainable systems
- Development Practices: Agile methodologies, testing, and DevOps
- Technology Expertise: Deep knowledge of relevant technologies and frameworks
- Performance Optimization: Building fast and efficient systems
- Security: Protecting systems and user data
Building Capabilities
1. Identify Required Capabilities
Start by identifying the capabilities needed to execute your winning strategy. Consider what you need to do better than competitors to win.
2. Assess Current Capabilities
Honestly assess your current capabilities. Identify gaps between what you need and what you have.
3. Develop Capabilities
Create plans to develop required capabilities through:
- Hiring and talent acquisition
- Training and development programs
- Process improvements
- Technology investments
- Partnerships and acquisitions
4. Measure Capability Development
Establish metrics to track capability development and ensure progress toward strategic goals.
Common Mistakes
- Capability Gaps: Failing to identify or address capability gaps
- Overestimating Capabilities: Assuming you have capabilities you don't actually possess
- Underinvesting: Not investing enough in capability development
- Wrong Capabilities: Developing capabilities that don't support the winning strategy
Best Practices
- Explicitly identify required capabilities
- Honestly assess current capabilities
- Prioritize capability development based on strategic importance
- Invest in building differentiating capabilities
- Measure and track capability development
- Continuously refine capabilities as strategy evolves
Conclusion
The question "What capabilities must we have?" ensures that organizations can actually execute their winning strategies. As Lafley and Martin emphasize in Playing to Win, strategy without the right capabilities is just wishful thinking. By explicitly identifying, developing, and measuring required capabilities, organizations can ensure they have what it takes to win in their chosen markets.
Reference
Lafley, A.G., & Martin, R.L. (2013). Playing to Win: How Strategy Really Works. Harvard Business Review Press.