If you’re not familiar with Capability Based Planning, here’s a quick primer to get you started using a simple analogy of a log cabin you have just inherited.

A Cabin in the Forest

Let’s imagine you have inherited an old cabin in the forest, far away from your current home. You would like to use it for your summer vacations, but it is quite run down and in need of repair. There is only some basic furniture and no comforts to make a holiday a pleasant one.

Money is limited, and the cabin is a long drive away. Making this cabin nice is going to take money, time and effort.

We might just start our project by collecting stuff we think we might need, stuffing our car and taking trips whenever we have a free weekend. This is, as you might imagine, not a very efficient approach.

Can we do better? How are we going to make this process as efficient as possible? Can thinking in terms of capabilities help us? Yes it can!

Let’s think about what capabilities the cabin provides and what will need adding, changing or removing.

Sleeping is a critical capability. You could sleep on the old bed, but it’s not going to be a relaxing or pleasant experience. This capability needs to be upgraded!

Cooking is a capability which also needs to be upgraded. That old stove isn’t in good condition, and is likely to burn down your cabin.

There is a beautiful lake next to your cabin and you’d love the capability to go out boating or go fishing. These are capabilities you’d like to add.

Finally, there is an old woodworking workshop out house on the property. You don’t need this capability anymore and that part of the building is falling down. The woodworking capability isn’t needed and could be removed.

Here’s a summary of the capabilities and what we want to do with them:

With this in mind, you can prioritise these capabilities based on your vacation needs. From these you can identify where to spend money (probably a new bed and cooking equipment) and plan your vehicle logistics and trips intelligently.

Perhaps you decide to create a nice new cosy sleeping area and to establish a functional cooking area to begin with. This will enable you to spend time there with a basic level of comfort. As a second priority you’d like to clear out the workshop area, make it safe and turn it into a area where you can store you boat and fishing equipment.

Here’s an overview of the actions and investments you might make based around the above capabilities:

From this we can start to see concrete actions, and where we need to spend money. We can also start to see which projects need to come first. Sleeping and Cooking is essential, so we would attempt to get a new bed and gas stove up to the cabin as soon as possible. We don’t have to do everything right away, but even within the goal of improving a capability we can prioritise. Perhaps we can get new cutlery and fix the kitchen work top later, but we can’t good at all without a stove.

We can also see some resource constraints. For the boating capability, for example, we need to first release the woodworking shed resource from its current usage, so we can reassign it to a new capability.

Congratulations, you’ve just made a capability based plan. It’s a simple example, but shows how focusing on capabilities first leads us to a higher level of efficiency.

Let’s now look at the process of capability based planning.

Step 0: Identify Your Outcomes

Before starting with planning, it’s helpful to identify what you want to achieve. You don’t start a journey (usually), without having a destination in mind. This is step 0, because it’s not technically part of planning. This is the equivalent to us saying we want to use our log cabin for summer vacations in our above analogy.

Let’s use an online retail business as an example. Let’s say some outcomes may be:

• To expand into new countries
• To support new product lines
• To do so while maintaining excellent customer service.

Step 1: Understanding Your Current Capabilities

As an organisation, a good starting point is to create a capability map (or model). What does your company actually do as part of it’s day to day operations? Understanding the status quo is critical to doing capability based planning. If you don’t know where you are right now, how can you understand where you’ll need to go?

For many non-trivial companies, creating a capability map can be an enlightening experience. By discovering and then breaking down the activities and looking at them at a few levels of abstraction, we can gain real insights into how the business actually works.

For getting started with capability maps, please see my Introduction to Capability Maps.

For example, for an online retail business, capabilities might be:

Step 2: How Will Your Capabilities Need To Change?

Now we know where we currently stand with our capability map. In order to achieve our desired outcome we should consider how these capabilities need to change. The following changes shall be considered:

• Which new capabilities do you need?
• Which capabilities need to change? (to be improved, or reduced)
• Which capabilities can be removed?

Yes, we should also consider capabilities that can be reduced, or completely removed, as doing so will free up resources to invest in adding or improving other, more important, capabilities.

For an online retail company, capabilities may need to be changed as follows:

Step 3: How Will You Realise These Changes?

Now you know which capabilities need to be changed, you need to make those changes happen.

You can identify initiatives or projects, or other vehicles to effect these changes.

For our online retail business, these might include:

Conclusion

While planning around capabilities is not particularly complicated, execution may be much more challenging. But if you do base an execution approach on a capability based plan, you can be more confident that you are investing time and money in a justified manner according to your outcomes. This can provide transparency to management to exactly why certain initiatives are being prioritised over others, which can diffuse disagreements. It can also be a great way to structure the planning process in the face of complex organisations, with many teams, departments and individuals, each with their own ideas about what is important and where they want to go.