Why Capability-Based Planning Is the Better Planning Approach Early in a Project

What does it take for an organization to thrive in an unpredictable world? Is it enough to complete projects on time and within budget, or does success hinge on something more fundamental—something deeper? Capability-Based Planning (CBP) suggests the answer lies in building the right capabilities— not just short-term wins. Originally pioneered in the military to ensure readiness for complex future challenges, CBP has now become a key strategic tool for businesses. It shifts the focus from simply delivering projects to ensuring that every initiative builds the capabilities needed to meet an organization’s evolving goals. Curious? Then read on.

From Vision to Reality: How Capability-Based Planning Drives Long-Term Success

IIn projects, we often focus too early on solutions, specifications, requirements, and systems, rather than on capabilities. This approach can lead to significant challenges and missed opportunities for long-term success. By thinking in terms of capabilities through Capability-Based Planning from the start, we can avoid the pitfalls of short-term thinking and premature focus on specific solutions and requirements.

Capability-based planning is an approach that ensures changes in an organization are aligned with its overarching strategic vision. Originally, this approach was developed for defense and military planning as a way to navigate a volatile, uncertain, complex, and ambiguous (VUCA) world. More recently, it has gained popularity in the business domain, particularly for developing ICT solutions and digital strategies. The theory behind capability-based planning is that organizations with a superior ability to execute their strategies will be more successful, whether in military or business contexts. While capability-based planning has been a key tool for enterprise architects, military strategists, and consultants, it is not yet widely understood or adopted in the broader business community.

In the context of projects, CBP ensures that resources, activities, and initiatives are aligned with the organization’s strategic goals, helping to avoid the common pitfall of project misalignment with overarching business objectives. Instead of focusing solely on the outputs of individual projects, CBP helps organizations develop and enhance their capabilities—skills, technologies, processes, and tools—needed to thrive in the future.

Landing a Man on the Moon

John F. Kennedy felt great pressure to have the United States “catch up to and overtake” the Soviet Union in the “space race. On May 25, 1961, he announced[1] before a special joint session of Congress the dramatic and ambitious goal; “First, I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the earth.” 

Define what ‘done’ looks like in units of measure meaningful to the decision makers.” Kennedy made this clear: fly to the moon, land, and return safely to earth. That statement defined success. In the context of Kennedy’s statement, a capability was the “ability” to fly to the moon, land, and return safely. For all projects, a set of “capability” statements is the starting point of describing “done.”

Creating a clearly defined purpose starts with identifying the capabilities needed for business success. These capabilities are not technical and operational requirements, they define the “value” delivered by the project. This value must be measured in units meaningful to the consumer of the outcomes of the project.

What Is a Capability?

A capability is an organizational building block that defines WHAT the organization does or can do. At its core, a capability refers to the capacity to perform a specific function or achieve a desired outcome.

A capabilities describes the activities of the business expressed in general and high-level terms, and it should not be confused with just the skills or competencies of its people. In other words, a business capability encompasses the processes involved, the technology used, and the required skills of the people to achieve specific outcomes.

For example, a company’s software development capability would include:

• People: Developers, product managers, and quality assurance teams.
• Processes: Agile methodology or continuous integration practices.
• Technology: Development tools, code repositories, and cloud infrastructure.

The diagram below shows a couple of example capabilities with associated sub-capabilities.

How Does Capability-Based Planning Work?

Capability-based planning is a structured approach supported by techniques like capability mapping, which helps organizations:

1. Identify their existing capabilities.
2. Assess the level of change needed for each capability.
3. Prioritize those capabilities that need development or enhancement.
4. Create a roadmap to implement those changes.

These capabilities are typically linked to the organization’s strategic objectives, ensuring that business initiatives are in sync with overall goals. This method prevents wasted resources on initiatives that are misaligned with the company’s direction and ensures that every project contributes to the organization’s future readiness.

Benefits of Capability-Based Planning

Capability-based planning offers several benefits:

• It takes a whole-organization approach, breaking through departmental silos by shifting from a functional view to a capability-based view.
• It focuses on what an organization needs to do to execute its strategy.
• It offers a systematic way of identifying change initiatives based on the capabilities needed to meet organizational objectives.
• It provides a clear map of the organization’s overall capabilities to ensure that nothing is overlooked.
• It directly links initiatives and projects back to the required capability changes and, in turn, to the organization’s objectives.
• It helps prioritize the most important capabilities and the initiatives required to develop them.
• It clarifies and optimizes business investment by providing more thorough solutions.
• By looking at capabilities, it opens up planning to alternatives beyond just incremental improvements to existing technology, processes, and people.

Capability Mapping: Visualizing Capabilities

What is a Capability Map?

A capability map is a visual representation of an organization’s core capabilities. Similar to a street map, it allows leaders to see how different capabilities interrelate and which ones require change. By mapping out these capabilities, organizations can better understand their current state and plan for future improvements.

A well-structured capability map includes the following:

• Core building blocks: Key capabilities such as people, processes, and physical assets.
• Relationships: How these capabilities interact and support each other.
• State of change: Capabilities that need to be developed, refined, or retired.

The map can also act as a heat map, where capabilities needing significant change are highlighted in red, while those needing little or no change are marked in blue. This visual approach provides clarity for decision-makers, helping them prioritize resources and efforts effectively.

The capability map is for example a good tool when analyzing the operational excellence strategy. Here, capabilities can be benchmarked by their efficiency against the industry average: Average capabilities are shown in blue, above-average capabilities in green and below-average capabilities in red (figure below). Red capabilities have room for improvement in the context of the operational excellence strategy. We can also add visual tags to the capability map as a means of indicating additional characteristics, such as associated strategic objectives or priorities.

Do I Need a Visual Capability Map?

While a simple list of capabilities in a spreadsheet might suffice for small organizations, larger companies benefit significantly from a visual capability map. Once an organization exceeds 20 capabilities, understanding their relationships and communicating these complexities becomes challenging. A visual map helps clarify which capabilities need improvement and allows better alignment of projects with strategic goals.

Naming and Structuring Business Capabilities

When naming and structuring capabilities, it’s important to follow a few key principles to ensure clarity and accuracy:

1. Be Descriptive: The name of the capability should clearly describe WHAT it does, not how or who is responsible for it. Use suffixes like “-tion”, “-ment”, and “-ance” (e.g., Operations, Management, Assurance).
2. Keep Them Distinct and Independent: Each capability should stand alone without conjunctions like “and” (e.g., Sales and Marketing should be two separate capabilities).
3. Make Them Unique: No two capabilities should have the same name if they serve different functions.
4. Aggregate Sub-Capabilities: High-level capabilities can be broken down into sub-capabilities, represented visually in a nested diagram.

Keeping capabilities simple and distinct helps in maintaining clarity across large organizations and ensures that all essential capabilities are represented.

How Capability-Based Planning Supports Strategy

Augmenting Strategy with Capabilities

Capability-based planning integrates with an organization’s strategy by asking key questions such as:

• What capabilities are needed to support our strategic goals?
• How much of a given capability is required?
• How do capabilities support the overall business strategy?
• What benefits will these capabilities provide, and how will they be measured?

The primary advantage of this approach is its flexibility. In a dynamic business environment, focusing on capabilities helps organizations respond to uncertainty, allowing them to adapt as needs change rather than sticking to predefined features or outputs.

Planning for Change Using Capability Mapping

A capability map not only shows an organization’s current state but also serves as a guide for identifying what needs to change to achieve future objectives. By categorizing, coloring capabilities according to their level of change (low, medium, or high), leaders can prioritize which areas need the most attention.

For instance, an organization looking to improve its IT infrastructure might identify that its software development capability requires a moderate amount of change, while its cybersecurity capability needs a complete overhaul. This prioritization ensures that resources are allocated where they will have the most impact.

Real-World Examples of Capability Planning

Consider President Kennedy’s goal to land a man on the moon. His statement wasn’t just a project deliverable but a capability requirement—the ability to send astronauts to the moon and return them safely. This capability-based approach ensured that every aspect of the mission, from spacecraft design to astronaut training, was aligned with that singular goal.

In a business context, the same principle applies. For example, a retail company may define a capability as “the ability to reduce transaction processing costs by 10%.” Achieving this capability would require improvements in technology, staff training, and process efficiency.

Seven Reasons Why Capability-Based Planning Is Effective

1. A Holistic Approach: CBP breaks down silos and provides a whole-of-organization view by focusing on capabilities instead of individual functions or departments.
2. Alignment with Strategy: It ensures that every initiative and project is directly linked to the organization’s strategic goals.
3. Comprehensive View: A capability map provides an overview of all the capabilities, ensuring no critical elements are overlooked.
4. Direct Project Alignment: CBP helps connect projects back to the necessary capability changes, ensuring all efforts are in line with the organization’s objectives.
5. Prioritization of Efforts: It helps determine which capabilities need the most attention, optimizing business investments.
6. Opens Up Alternative Solutions: By focusing on capabilities, organizations avoid jumping to conclusions about specific solutions too early in the planning process.
7. Systematic Change Management: CBP provides a clear, structured method for identifying and managing change initiatives across the organization.

Conclusion

Capability-Based Planning offers a powerful framework for organizations to plan for the future by focusing on the capabilities they need to succeed. By shifting the focus from deliverables to the development of core capabilities, CBP helps ensure that every project and initiative contributes to long-term strategic objectives. Through tools like capability mapping, organizations can visualize their current and future states, prioritize changes, and allocate resources where they will have the greatest impact. Ultimately, CBP enhances an organization’s ability to remain agile and competitive in a rapidly changing business landscape.

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[1] https://www.nasa.gov/history/the-decision-to-go-to-the-moon/