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Do You Have a Capability Strategy?

Everyone working in innovation has more ideas in time.  Every organization has more projects to work than resources.  And all of us truly believe in the purpose and benefits of the ideas and projects we create. 

Yet, we also have limited resources.  There are only 24 hours in a day, seven days in a week.  We have limited budgets and talent to accomplish our innovation project vision.  It is an age-old problem. 

Alongside your business and innovation strategies, it is important to implement a capability strategy.  The capability strategy is an offshoot of product portfolio management, allowing an organization to plan and execute projects with higher productivity and efficiency.  You will learn to schedule and balance resources and talent to ensure effective product innovation. 

Capabilities

In the resource-view of the firm, capabilities and competencies represent the talent and special skills of an organization.  For example, the capability to run ultra-high vacuum electron scanning instruments requires not only specialized equipment but competent and trained users.  Similarly, a successful restaurant requires specialty software to convey orders to the kitchen and well-trained staff that are attentive to diners’ needs. 

Any special equipment or skills of your staff that differentiate your organization are key capabilities.  These are listed as strengths on a SWOT analysis (read about Using SWOT to Reset your Innovation Strategy here).  You also might work diligently to train and acquire staff with unique competencies.  This includes giving employees both formal and informal learning opportunities, on-the-job training, and freedom for idea exploration. 

The Capability Plan

In product portfolio management (PPM), senior management prioritizes a list of innovation projects to maximize value.  Optimizing resources (time, money, equipment, and people) is a key activity of PPM.  In prioritizing active projects (those assigned budgets and resources), the portfolio managers must assess the capability strategy.  Where there are competency gaps, provide training or hire new talent with appropriate skills.  Where there are deep skills without immediate project utility, re-train or release resources for other work. 

“The Toy Box” (an imaginary but representative company) has five innovation projects on the books.  One project is nearing completion and will be launched soon.  The others are at varying stages of completion, from concept development to final prototype testing. 

Because The Toy Box  has only a handful of market researchers assigned to innovation projects, they note a gap in the “motors” and “boats” projects.  Each project needs the attention of three full-time equivalent (FTE) market researchers to conduct prototype testing during the next three months.  The Toy Box employs only four market researchers full-time.  This results in a gap of two FTEs for market research with a crisis level gap in the next three months.

Capability Strategy Choices

In this case, The Toy Box has several choices to balance their project needs with required capacity, as follows.

  • Delay one or both projects
  • Cancel one or both projects
  • Hire more (temporary or permanent) market researchers
  • Re-train other staff to learn market research skills
  • Advance these projects without market research
  • Abandon these projects and work on ones that match availability of market research FTEs

Each of these choices is a strategic decision, since the outcomes impact the ability of the organization to execute projects, generate revenues, and satisfy customers.  Each choice also has both short-term and long-run cost impacts.  Thus, capacity planning is a senior management activity and is a strategic (not operational or tactical) decision. 

Your Capability Strategy

Learning and growth are foundations of successful innovation.  In your strategy, do you account for training, hiring, and development of human resources?  Do you balance talent against project needs in the product portfolio?  Do you have a specific and actionable plan to close capability gaps for innovation?

Learn More

If you answered “no” to any of these questions, you need to join our Reset Your Strategy Workshop.  You can pre-register here and we’ll send you the full details soon.  Contact me at [email protected] or area code (281) phone 787-3979 for more information.

Additional Resources

About Me

I am inspired by writing, teaching, and coaching.  I tackle life with an infusion of rigor, zeal, and faith.   It brings me joy to help you build innovation leaders.  Teresa Jurgens-Kowal is an experienced innovation professional with a passion for lifelong learning with a PhD in Chemical Engineering and an MBA in Computer and Information Decision Making.  My credentials include PE (State of Louisiana), NPDP, PMP®, and CPEM, and I am a DiSC® certified facilitator.  Contact me at [email protected] or area code 281 + phone 787-3979 for more information on coaching for entrepreneurs and innovators.

Using PESTLE in a Recovery Strategy

Watch the short video (<1 minute) and then read on for all the details!

While our country has never before shuttered the economy, we have also never been faced with such challenges in innovation in business.  “Experts” predict V-shaped and U-s0haped recoveries.  Personally, the prediction of a “swoosh”-shaped recovery seems more reasonable; and it gives me hope for fan-based sports in its terminology, too. 

Regardless of size or scope of your business, the so-called “reopening” allows you a chance to reset your strategy.  In an earlier post, we discussed using SWOT (strengths, weaknesses, opportunities, and threats) as a strategic assessment of your internal capabilities.  Opportunities and threats are external drivers in the model, yet how do you ascertain competitor actions when the shape of the business landscape has shifted irreversibly?

This is where another strategy planning tool can be of essence in resetting your business and innovation strategies.  PESTLE is a technique that forces an organization to examine trends outside their control, narrowing the possible scenarios for future conditions.  The acronym PESTLE represents political, economic, social, technological, legal, and environmental situations and trends. 

Political

In the US, the corona-panic has illuminated some strong political trends that are likely to continue unabated into the future.  First, increased socialism and government control is likely.  American citizens have demonstrated they will give up fundamental rights (e.g. the right to assembly and the right to religious freedom) when threatened with an unspecified health fear.  It is unwise to trust that all elected and appointed government officials will treat their power with fairness and justice. 

Second, policy makers have realized that using the word “science” in any conversation is effective to convince the electorate to succumb any personal responsibility or liberty.  Many US citizens have only a limited math or science education (and, unfortunately, we continue to fall behind most other first world nations), so telling someone it is “science” without providing factual data is proof enough for most. 

How do these political trends impact your business and innovation strategies?  Are you positioned to take advantage of growing government bureaucracies?  Will you be nimble enough to navigate a flurry and inconsistent network of illogical rules and regulations again?

Economic

There are not enough words in my vocabulary to describe the economic damage of the corona-panic.  As we plan new business and innovation strategies, one key economic trend stands out.  Debt.  Before the corona-panic, the US economy was already headed toward an unsustainable debt-to-GDP ratio.  With massive stimulus bills and shrinking output, the debt-to-GDP ratio is at astronomical levels, never seen before – even in times of war. 

With a fiat currency (meaning printed money and not based on bullion value), increased debt means inflation and higher taxes.  How can you incorporate these threats into your business and innovation strategies going forward?  What does it mean for product pricing strategies?

Social

Social trends are yet to be determined coming out of the corona-panic.  There are some people who had readily believe the disastrously wrong models from government agencies and consequently believe any social interaction will result in immediate death.  Many of us have looked at the data and will continue to want to live our lives with normal human contact:  going to the movies, concerts, and trade shows. 

As an individual, I dread the trend away from face-to-face events.  It is nearly impossible to meet new people and to connect in a virtual world.  The coffee pot conversations, lunch discussions, and happy hour connections at events allow us to interact as human beings were designed to do.  No one should be expected to sit in front of a computer screen for hours (or days) on end and expect to build an important relationship. 

Yet, as you reset your business and innovation strategies, virtual meetings are, at least, a short-term reality.  How can you involve customers in your product innovation work in a virtual world?  How will you plan for qualitative feedback when you can’t see your potential customers?  What does “moving online” mean for your business?

Technology

With the advent of doing everything virtually and without contact, your business and innovation strategies must incorporate technological changes.  We are sure to see a slew of new technical tools (other than zoom, I hope!) to run our business in a digital, nonhuman world.  There are also going to be more frequent and more numerous cyberattacks.  Are you building IT strength into your business and innovation strategies?  Digital transformation trends will continue to dominate physical product development.  Are you linking “digital” applications with all hardware development?

Legal

There is no doubt that legal implications will continue to grow as the world emerges from the corona-panic.  HR experts will tell you that if your employees are afraid of getting sick at work, you will need to make a legal disability accommodation and let them work from home.  How will you monitor project work and schedules when your staff does not meet together?

Further, if one of your team members coughs or sneezes, how do you treat that?  If another team member catches a cold, will she sue you?  I believe there will be a whole host of new illnesses arising from the overuse of cleaning products.  Government “experts” are encouraging nearly continuous use of hand sanitizer, yet I am reminded that it is the only solution I use to effectively remove bicycle grease.  Once I spilled a few drops of hand sanitizer on my desk and it removed the varnish.  Are you prepared for a trend of chronic diseases from chemical usage in a workplace?  What other legal implications threaten your business or the introduction of a new product?

Environmental

As a result of the corona-panic, I believe there are favorable environmental trends to influence our business and innovation strategies.  The tremendous hit that oil and gas took during the panic creates opportunities for petrochemical manufacturing.  Distribution costs should decline as diesel and jet fuel are less expensive.  Peoples’ fears regarding short-term environmental destruction have been replaced with an immediate health and safety fear.  While both fears are completely irrational (and not based on existing data but so-called “science”), environmental restrictions will be loosened in many areas so business can get going again.  For example, allowing a truck driver to haul two trailers in tandem versus a single trailer might benefit how your products get to market. 

Use PESTLE to Design a Recovery Strategy

Every business, large or small, must deeply probe its innovation strategy today.  Understanding and studying external opportunities and threats can help you formulate an effective recovery strategy.  Use PESTLE to identify trends impacting innovation and business conditions during “reopening”. 

What political trends are happening locally or nationally to threaten your business?  Will the economic conditions (especially increasing debt, inflation, and taxes) cause a change in your business structure?  Which societal trends will allow you to grow and which fears of society might threaten your innovation programs?

Examine technology advances and incorporate enhanced cyber security into your strategies.  Be prepared for a slew of legal actions, especially as elections are anticipated and the way we vote in a democracy is changed away from secure and known trends.  How will employee behaviors influence your strategies to prepare for health and safety lawsuits?  Finally, are there any environmental trends that can open opportunities or provide a benefit to your innovation strategy?

Learn More about Strategy

Strategy lays the groundwork for all innovation work.  If you don’t know what your strategy is, you cannot succeed.  Contact me at area code 281, phone 787-3979 for a complimentary 30-minute innovation coaching session.  We will discuss how you can apply SWOT and PESTLE in your own unique business situation to immediately see results. 

Other Resources

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About Me

I am inspired by writing, teaching, and coaching.  I tackle life with an infusion of rigor, zeal, and faith.   It brings me joy to help you build innovation leaders.  Teresa Jurgens-Kowal is an experienced innovation professional with a passion for lifelong learning with a PhD in Chemical Engineering and an MBA in Computer and Information Decision Making.  My credentials include PE (State of Louisiana), NPDP, PMP®, and CPEM, and I am a DiSC® certified facilitator.  Contact me at [email protected] or area code 281 + phone 787-3979 for more information on coaching for entrepreneurs and innovators.