Unpredictable Patterns #77: On capabilities
Capabilities and skills, skill trees, the Scrabble theory of economic development, saving sad spreadsheets and organizational innovation in capabilities and thinking like an orchestra
Dear reader,
London is a large city, and I am still getting my bearings, but I find that it is a great experience - not least because it forces me to develop entirely new skills (no not yet driving on left side of road). Skills and capabilities is a recurring theme in what I like exploring, and this week is about how we can work better with capabilities and why they allow us a better crack at thinking about things like roles and responsibilities and stakeholder mapping. I am learning, so all feedback appreciated!
On capabilities
Every person and every person has a set of capabilities or skills.
Examining these is an excellent way of understanding the world around us - and also helps in predicting what people and organizations will do. If we know that a certain actor has a set of skills but lacks a certain capability we can confidently predict that they are unlikely to try to undertake a course of action that would require that capability. And equally, if we see them developing that capability it is clue to the possible course of action that they are developing, just to take one example. We will return to this later.
So what is a capability / skill? The definition I most often end up using is this: it is something we are able to do routinely and well. For a policy team it can be things like organize outreach to key stakeholders in field X or access to key decision makers with Y hours. It can also be the capability to produce succinct and impactful executive briefings or provide actionable intelligence. One way of understanding a team is to list the key capabilities that you want it to have and how this matches the rest of the organization.
This is actually often a much better way to approach the organization of work than the dreaded "roles and responsibilities"-model. The reason is simple: whenever we ask about your role and responsibility we are evoking a discussion about your professional identity, and it is hardly surprising that this should be difficult, since we - rightly - will find such discussions both hard and important.
If we shift instead to discussing capabilities, what we should be able to do as a team, routinely and well, we can start to explore not what we are, but what the team does. Often roles and responsibilities shake out as second order effect of that discussion, and that is much more helpful than starting with them.
Skill trees or maps
There are several different mental models that we can use to understand capabilities. The simplest is the skill tree model, where we map different skills as they build on and unlock each-other. This is a mental model that is widely used in game design, and anyone that has played Civilization will recognize this from the technology trees or maps that you can tinker with. You often have to invent the wheel before you can invent nuclear power. And you often need to find the right tables in a political context before you can have a seat and then a vote at those tables.
Skill trees are excellent for understanding where we need to build and invest. They can also be used for competitive analysis - if you assess an organization against a skill tree and try to find out what they can do routinely and well, you will likely be able to also predict what options they are considering in business or politics.
Devising a skill tree is not that hard, and one way to go about it is to design them backwards. What does excellence look like? Take an excellent organization - what would they be able to do routinely and well? And once you have this clear you decompose those excellences into their component parts. That will allow you to think hard about where you are, and what the requirements are for the different skills.
There are many reasons why this perspective is much better than the "roles and responsibilities" and why skills should be a key part of your strategic planning - and one of the most important is that it is fairly clear to most people that skills cost. If you want a team with certain skills, well, then you have to invest.
Discussing objectives or roles and responsibilities often obscures the salient question about cost and resourcing in a way that is deeply unsatisfying for everyone: once you have finally agreed on them, you still don't quite know how to reach them because you have not discussed the resourcing issue.
So does that mean that objectives are useless? Not at all, we discussed this in an earlier note. The key here is to realize that objectives rest on capabilities. Your skill tree defines the space of achievable objectives, and it is often useful to map out what you can do if you have a certain skill set.
If you cannot navigate you are unlikely to successfully cross the Atlantic on a sailing boat alone.
Skill trees actually also help with that other dreaded planning exercise - the mapping of stakeholders. This is often a particularly sad process, where we often go to great lengths to create very comprehensive spreadsheets of possible stakeholders and then leave that spreadsheet to the cruel and unusual destiny of wilting away in some online drive, never consulted, seldom curated or updated.
One reason stakeholder mapping so often fails is that we map without a set of capabilities in mind. We map in the abstract and say "these folks seem interesting and do stuff" and then end up with a list that we don't really know what to do with.
Now imagine you had a well-defined list of capabilities or skills that you want to achieve. For every capability you can now map out who you will need to interact with. Connecting the stakeholders with the capability that you are looking at will explain to you, and to everyone else, why they are on the list. Instead of listing them in the abstract, you will suddenly see that they are, in a sense, components of a greater skill that you wish to build.
That will also give you a hint about how to interact with them. Gone will be the weird idea that you should reach out and touch base every 3 weeks, just to fill out a spreadsheet saying you had an interacting, and instead you can build working groups and reference teams for the skills that you want to build.
It is not unusual that I get an email from someone just asking how things are, and when I reply and ask the same I get a fine thanks and nothing else. Someone was probably just marking me off in a spreadsheet! That is not a great stakeholder management practice, I suspect.
The Scrabble theory of capabilities
Another mental model that I recently ran across and really liked, is one developed by development economist Ricardo Hausmann. It is worthwhile listening to him explain it, but I will use a simplified version here.
Hausmann suggests that countries develop differently not depending on their institutions - but their capabilities. His argument is a polemic against the likes of Daron Acemoglou who stress the existence of institutions, and there is a long debate in this field that is interesting to think about - but if we really simplify the debate can be cast as a question of if economic development depends on what institutions countries have or what they are able to do routinely and well. Ricardo is arguing that it is the latter.
But the key take away is actually not about the argument as such (even if it is interesting) but the mental model he applies.
Ricardo suggests that we should think about every country as a Scrabble player with a set of letters. Some countries have very few letters and so can only make a very small set of words. Some countries have acquired many letters and can make many words. The letters are capabilities and the words are economic activities.
The way to expand and develop your economy, then, is to acquire more capabilities - knowhow - and ensure that you continue to develop that.
Some letters, he goes on, are provided by government and some are developed privately. They cost differently, but also unlock differently sized sets of words. A X might be worth more, but might unlock less activities in the beginning - and so on.
The difference between this model and the skill tree model is that this model is more focused on the combination of capabilities into possible actions. The skill tree can be deceptive in that it suggests that all skills develop linearly, but, of course, we know that a real capability map is more likely to look like a complex network, with different capabilities unlocking different network components and then allowing the actors to build on them.
In a sense this is a more realistic, second step in modelling capabilities. The skill tree is a great start, but as you add understanding and analysis to it you find branches intersecting and developing into a network of different skills, connected and interdependent.
Hausmann's model can be generalized into another powerful metaphor - and that is where we simply say that skill sets are like languages - and here the mental model becomes almost too complex: letters allow us to express words and sentences and poems and literature and...but there is some value in taking the mental model this far, because we then realize that there is an important distinction left that we have to emphasize.
Language is often understood in linguistics and semiotics as written and spoken. Being able to write is different from, but related to, speaking. A good writer need not be a good speaker, and the reverse is equally true. The insight this suggests to us is that skills are composed of a process part and a practice part. You need both - and that is why the definition of skills or capabilities is focused on what we can do routinely and well.
Capability planning
Strategic planning should involve the three Rumelt steps, as suggested by strategy guru Richard Rumelt: diagnosis, global policy and consistent actions. But when we examine this more closely we should look at third bucket more closely: consistent action.
A key action is to develop the skills / capabilities that you need as an organization. But how many plans have you read lately that have a capabilities section, outlining how the company will take action to build a set of complementary and networked skills? We often forget this, and it is intriguing to think about why.
One reason is, for sure, that we rush to objectives. The canonical question we have learned to ask is "what does success look like?" and we focus on describing desirable outcomes, but then rarely ask the crucial follow up question: "what do I need to do routinely and well to achieve that state of success?". Instead we describe success and the actions we will take to get there, but never sense-check if we have the skills and capabilities to do so.
Capability planning should also involve a diagnosis of the capabilities that other actors are building out. In public policy and government affairs work, it is often useful to think about what capabilities the government is likely to have in 24 months and where it is now. Legislation is interesting in this perspective, since it is a way for government to create entirely new potential capabilities. If they comibine legislation with a good sense of the actual practice - the doing - they will have acquired a new capability that should be taken into account. Simple questions like who are they hiring (what kind of candidate) and where are they investing suggest capability shifts that can be significant for the overall landscape.
Capability planning is fun to do, and provides an interesting metric of progress in policy work. Public policy is often long term, and pure outcome metrics are often difficult to achieve (but should still be attempted , and preferred over activity metrics). Capability metrics provide an alternative - what are we now able to do that we could not do before.
A simple example can be to have a capability tree that you regularly report on over different markets - and you can then track if your overall capability coverage is growing - is focused or changing in ways that are responding to the changing environment.
Finally - capability planning should include retirement of capabilities that are no longer needed or sustainable. You are allocating scarce resources and this should be reflected in your overall capability footprint. It cannot grow beyond the resource invested. So if you want to add a new capability, you should always be able to answer the question of what capability you are retiring.
And, of course, you should include your capability planning as a key element in any hiring!
Capability innovation
One really interesting way to work with capabilities is to explore what kinds of capabilities would be game changing. What would really change the predicted future if you could do it routinely and well? Note that the question is not about a magic intervention or cutting the Gordian knot, it is about a practice - something you can do routinely and well.
Working with teams and experts on this is a good way to make sure you continue to innovate. A simple example of a capability that shifted the landscape significantly is the radar, another the ability to read messages encrypted with the Enigma machine. The work on that was really moonshot work on a capability, and amazingly prescient by the people who commissioned it.
Which capabilities would make the same difference for you in your daily work? It is worth spending at least some time on this, since it will help you develop your catalogue of capabilities in ways that can be strategically important.
It is also possible to think about this in the inverse - is there any negative capability you can think of that would be helpful? What if we did not do X routinely (and well - although it sounds strange in the negative)? If you could get your organization to stop doing one single thing routinely - again, not magic interventions - which one would you pick?
Capability innovation can also be combinatorial: looking at all the capabilities that you have - what is the adjacent possible you could develop from them if you added just one skill?
Capability innovation is hard - but important.
So what?
Shifting into a focus on capability allows you to turn strategy from a noun to a verb. It allows you think about what you would like to be able to do. It can be combined with objectives, but it also helps with the 40-60% of the time where you have to deal with incoming that you know will dominate the day to day of your work, so as a planning method it actually covers both the expected and the unexpected. Anyone wanting to try their hand at it can do really simple things:
Explore what the capability or skill tree for your team looks like.
Map stakeholders against capabilities.
Map the capabilities of your stakeholders (and check the pace, are they changing fast or slow?)
Figure out the resourcing and a timeline from here to where you want to be.
Think like an orchestra director! How are you planning for performances?
This all may feel overwhelming, since there i already so much going on -- but the reality is that if you shift focus to capabilities you will also be able to prioritize better: if a certain ask means that you have to develop entirely new muscles, then you know that it is not going to go well - and you can solve by planning for acquiring those in the next planning cycle if it is a priority.
If nothing else it is a really interesting model to play with!
Thanks for reading,
Nicklas
One of the best articles I've read in June. Thanks for sharing, Nicklas!
As a gamer & game design hobbyist, I loved the game analogies and the skill tree / Scrabble model references.
I've written a post a few months back about how capabilities are interlinked with other elements: https://offbeat.works/article/how-can-we-connect-ld-with-organizational-capabilities/
Hope it resonates & feedback welcome!
Bülent Duagi
Loving this exploration of capabilities, and the way you framed them.