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Minding the Capability Gap

Once the capability gap is closed, instead of feeling fear and frustration about not knowing how to perform a role or achieve an outcome, staff are empowered to deliver value and be rewarded for their achievement.
This article is part of my FY24 Strategic Outlook series.

In business, I am often put in mind of that immortal scene in Yes Minister:

Sir Humphrey Appleby: Minister, it takes time to do things ‘now’.

James Hacker: The three articles of civil service faith: it takes longer to do things quickly; it’s more expensive to do them cheaply; it’s more democratic to do them in secret.

In last week’s column, I wrote about it being a A Challenging Time for Talent Management. But what I didn’t mention — always leave the audience something for a sequel — is that it isn’t enough to get top performers in the right roles at the right time. Managers also need to address the elephant in the room — the capability gap.

This is because an organisation may employ excellent people, but if they engage technical elements in their strategy, and the organisation does not have access to the necessary capabilities, they are unlikely to achieve the objectives set. To create a competitive advantage, people, processes, and technical capabilities are all necessary as the symbiotic relationship between these elements is what enables an organisation to consistently outperform their competitors.

By technical capabilities, I am not using technical purely in the sense of technology. I am talking about the technical or specific knowledge needed to complete the given work. Be it writing a business case, researching a new industry, giving a presentation on governance to the board, or implementing a marketing plan.

Therefore, success is as much about exploiting latent capability as it is about filling capability gaps. A process that is crucial in helping an organisation to move from being merely people focussed, to being a people and performance winner.

One final word before diving in, is to observe that by a capability gap, I am not talking about the gap for existing employees that should not exist. For example, if they were the one’s specifically hired to do the technical work invoked by the strategic plan.

Determining Capabilities

Missing capabilities broadly fall into two categories. The first are the result of strategic choices, for example an organisation decides to move into a new market without the requisite knowledge of that market. The second are external pressures, for example the emergence of the internet or AI. This latter category is not initiated by an organisation, but the disruptive nature of the change necessitates an organisation keeping pace.

In either scenario, success will largely be determined by how effectively critical employees are deployed — see the strategies offered in A Challenging Time for Talent Management — and how much time is spent playing catch up.

The causes of the capability gap are predominantly accounted for by:

  • Lack of Clarity: managers do not actually know what capabilities are missing, though they are aware goals are not being achieved due to missing capabilities.
  • Lack of Budget: no money for learning and development, hampering attempts at developing in-house capability in critical employees.
  • Lack of Leadership: the result of appointing people to senior roles who do not understand the emerging landscape. Perhaps the hardest of the causes to resolve given the governance around making changes at the top.
  • No Time for Capabilities: this can either be the result of genuinely not enough time, for example if a company sees employee attrition and then reallocates the duties to the remaining staff, exponentially increasing their workload. But it can also be the result of poor task or team management. This occurs when individuals or teams are working on what they feel like, rather than efficiently progressing what will achieve the organisation’s goals. The fix for this latter evil is to Be Bold With Efficiency Aspirations, assess what people are working on and get individuals into their swim lanes so they are not spending time doing work that is not seminal to their responsibilities.

The good news is that conscious raising among senior leaders has dramatically improved in recent years. According to one executive survey (n. 860), over 78% responded that capability building was highly important — this contrasts with the 59% who said it was important pre-COVID.

While the increasing desire in senior leadership teams to address the capability gap is heartening, the new hires and upskilling of existing staff will likely be for nought unless it is combined with organisational and functional capabilities. Organisational capabilities are those which are witnessed across the entire organisation — examples of this are speed and clarity of decision making or willingness to disrupt. Functional capabilities are the BAU or existing processes and ways of working that need to change or improve — examples of this are financial reporting, procurement, or sales effectiveness. Without net new capabilities at the organisational and functional levels — that is the number of gross new capabilities minus the number of capabilities removed from the organisation in a given period — developing net new capabilities at the individual level will be swamped by the prevailing inertia.

Defining Problems Areas

At this point it is tempting to go into solutioning mode and start reeling off a list of things I think will ‘fix’ capability gap challenges. But because problem solving is often as much about process as it is about answers, I will instead offer six areas which all need to harmonise for find sustainable answers to the capability gap problem.

  1. Management: line managers, particularly at the senior leadership level, need to have a clear understanding of capability gaps — be they a result of strategic choices or external pressures. Once grasped, they need to have actionable goals for closing the gaps and must pursue the attainment of these goals resolutely.
  2. Employees: organisations need to develop a support system (Centres of Excellence, training programs, engagement of external educators) to not only supply the technical ‘know how’, but to engender a capability growth culture in employees. This needs to be paired with career paths to retain and empower top performers and critical personnel.
  3. Culture: cultural metrics are all the rage right now, but the diversity percentages will achieve little beyond virtue signalling unless inclusion processes achieve diversity of thinking and knowledge as well as physical ‘group identity’. Culture is not just skin deep.
  4. Routines: habit in our daily life is one of the most powerful tools in unlocking growth. The daily reading of new thoughts or lifting of new weights grows our mind and body. The same is true for team capability building. Assessing team routines and seeing where they have become stagnant can not only expose capability gaps but be part of the process used to fill them.
  5. Technology: a bad labourer blames their tools, but great labourers will struggle to build anything with no tools. COVID particularly underscored this truth as organisations quickly realised that without laptops, webcams, video conference software and the like, business ground to a halt. While this rapid tech transformation was a boon was employees who had long yearned to work from home, it also highlighted the problems that arise when organisations do not get tech right. Particularly in the case of launching initiatives to get ‘quick wins’ or capitalise on opportunities in the market, but which are implemented with such haste they simply do not scale. Poorly implemented or missing technology is as much of a capability gap as is a team member who lacks a vital skill set.
  6. Organisation: pull out an Org Chart and instead of looking at it as a ‘who is who’ in the organisation, map it against the stated strategic goals, and ask, ‘does it overlap?’ In other words, if you have the strategic goal to implement AI into business operations, but there is no technology or data team, or individuals within those teams with the requisite capabilities, then most obviously you have a capability gap. This approach is useful for managers who ‘think’ there is a gap but cannot visualise or articulate it.


Having run several centres of excellence over the years, I know from bitter experience that trying to achieve uplift in employee capabilities can feel like the adage of pearls before swine. To an extent, this is a little unfair, as I am often reminded by people, ‘we appreciate the value, but are too busy to implement these practices’. Yet appreciation is nothing more than lip service unless people follow words with deeds. This is why closing the capability gap is a holistic task that will seldom work unless every level of the organisation is invested, and every lever is pulled to achieve the uplift.

Line managers, once the senior leadership team have voted for the transformation, become the frontline workers in developing teams. This is because people will seldom invest time in a new skill if their boss does not enable them — either by ensuring time is available in their routine to undertake the training or provides carrots and sticks if the outcomes of the training are not implemented.

The good news is that once the hurdle of capability uplift is cleared, even the most resistant staff members will start to experience a better tomorrow — though the most stubborn are unlikely to admit it. The reason this is true is simple, because following the capability uplift, the organisation is better equipped to face the strategic and environmental challenges presented. And because instead of feeling fear and frustration about not knowing how to perform a role or achieve an outcome, staff are empowered to deliver value and be rewarded for their achievement.

Good night, and good luck.

Photo by Suad Kamardeen on Unsplash.

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