An Innovation Riddle: Richard Essigs, IBM Corporation

The global economic crisis continues to present challenges for consumer products companies -- and in responding to these challenges, some organizations have been more successful than others. My work with clients provides me the opportunity to examine organizational success and failure as consumer products companies respond to the challenges, and I have seen a common question emerge: Is it possible that an organization can possess the ability to respond to marketplace challenges, yet simultaneously lack the capability?

It is important to understand the distinction between ability and capability, since the terms are often used interchangeably. The ability level within your organization should be thought of as possessing the resources required to accomplish an identified goal. The capability level within your organization should be considered the degree to which the organization can successfully perform the actions required to accomplish an identified goal.

Senior leaders in most consumer products companies have good reason to feel confident regarding their organization's ability level: their people, funding, processes and IT. Their frustration is very real when, no matter what they do, goals aren't achieved. It's clear indication that underlying issues are negatively impacting the organization's capability to respond to the challenges of today's marketplace. Companies may possess the resources -- but they can't always complete the actions that enable them to perform at their ability level. 

Where I've seen inconsistencies between an organization's ability level and its capability level, the typical response is to employ some version of the traditional performance management approach. First, the organization identifies specific goals associated with its broader corporate strategy. Second, it develops a comprehensive list of the abilities that are required to achieve the specific goals. Third, the organization employs the resources, culture and processes required to provide the abilities needed to achieve the goals.

But traditional approaches may not be working, and the distinction between an organization's ability level and its capability level has been exposed by the global economic crisis. I suggest that a closer match between organizational capability level and ability level is needed within many consumer products companies in order to not only address the challenges of today's marketplace, but become the innovative enterprise needed to succeed in the marketplace of tomorrow.

As you look at your own organization, be alert to these seven common barriers to aligning capability with ability.

While your organization might possess the ability to become the innovative enterprise you seek, is the capability level you need still present in your organization? Is your organization still capable of innovating -- or have efforts to respond to the global economic crisis left your organization with work that needs to be done to address the seven barriers to capability?