Transformation Through Capability Building

capability building
McKinsey defined capabilities as “crucial value-building elements or the hard and soft skills needed to help organizations reach—and sustain—their full potential.” We are aware that most businesses fall short of expectations when it comes to capabilities during enterprise-wide transformation initiatives. Most businesses understand the value of having a talented and dedicated team, yet many still don’t invest enough time and money in its development. For instance, some CEOs think that developing fundamental or “foundational” capabilities is quite simple and that they are already implementing it. According to McKinsey, however, in their experience, what can seem like common sense is rarely standard practice, which means they can’t capitalise on chances to improve performance. Capability building involves radically altering how the work is accomplished and goes much beyond the typical training of the workforce. Successful capability building embeds a performance foundation for ongoing value improvement while also developing the mindsets and behaviours necessary to generate transformational benefits and build on them over time.

So how do we achieve holistic transformation through capability building? McKinsey noted the following crucial elements of a successful capability-building initiative: 

Leadership Role Modelling

Are you aware that people automatically and consciously imitate the behaviours of the people and groups around them? Employees are more likely to adopt the new method of working when they observe highly visible colleagues acting differently. McKinsey’s Organisational Health Index survey shows that transformations are 5.3 times more likely to succeed when senior executives model the behavioural changes, they are asking colleagues to adopt. That being said, ensure that senior executives set an example for the desired change to promote the assumption of new mindsets and behaviours.  

Extensive Employee Engagement

Involvement in the transformation program must be sufficiently extensive for capability building to take place. Employees who aren’t included in a transformation feel disinterested, isolated, and left behind. Capability building needs to be scaled well beyond a few rounds with a chosen few. Anything less than widespread participation serves no useful purpose. According to McKinsey, a capability-building initiative needs to directly involve at least 25% of the workforce in order to provide the groundwork for truly extensive transformation. This is the critical phase at which a minority of workers can establish a new cultural standard. Therefore, involve at least 25% of employees, to allow transformational change to spread throughout the whole business. Begin by focusing on the top “influencers” in your organisation. These “influencers” will act as advocates for the new modes of operation. Using personal tales and persuasive arguments, they can persuade their peers to change. 

Creating a new educational setting virtual delivery

COVID-19 pandemic forced virtual capability building. Recently modified virtual experiences had 87% of participants who agreed that they were at least as successful as in-person events.  One of a virtual capability-building program’s most important features is the potential for worldwide reach. At multinational corporations, it’s critical that as many people as possible, anywhere in the world, have the chance to acquire and practise new skills. Online learning enables easy interaction, more comprehensive feedback, configuration, and customisation.  

Capability building is extremely critical to the long-term growth of their firms, according to nearly 80% of the 1,240 business leaders surveyed by McKinsey in a recent study. This is an increase from the 59% who thought the same thing before the COVID-19 outbreak. However, only one-third of these respondents thought that capability-building initiatives frequently or always succeed in accomplishing their goals and having an influence on businesses. Research supports the effectiveness of capability building. The percentage of people involved in capability building during transitions has an impact on gains in organisational health, according to a new McKinsey analysis. Companies that exposed at least 10% of their workforce to such programmes had a twice as high chance of seeing an increase in OHI scores as companies that didn’t.  

The economic gains are also evident. After 18 months, companies that had more than 30% of their workforce participate in capability-building programmes saw total returns to shareholders that were 43% higher than benchmarks. The benefits are mutual for both employers and employees, who are eager to acquire useful new expertise. Transformations are challenging to carry out and even more challenging to maintain. However, through capability building, organizations may create the mindsets and skills necessary to drive transformation and realise their full potential.  

CPC can help you optimise your Leadership and Team capability and achieve consistent performance. Book your FREE 15-minute consultation here 

Adapted from McKinsey & Company | How capability building can power transformation | Hugh Bachmann, Dominic Skerritt, and Elizabeth Young McNally