Transformation Capacity for High-Octane ERP & CTRM Projects
Capacity vs Capability Building
In the often buzz-word intensive field of digital transformation, the terms “capacity building” and “capability building” are often used interchangeably. That is unfortunate because a more careful treatment of the terms can actually lead to some useful breakthroughs for organisations working through large, complex transformation and change initiatives. Implementary’s 2021 survey of over 100 executive leaders in the commodity and energy sector took a closer look.
In the context of an ERP and/or CTRM transformation, “capacity building” refers to an individual or organisation’s ability to absorb change effectively. A useful way to think about capacity is through the notion of “change assimilation points”. Each individual has a finite number of “assimilation points” say, hypothetically, 500 points. Each change costs a certain number of points – for example, a new boss might cost 100 assimilation points, an office move 200 points, and so on. The fundamental truth is that individuals can only assimilate a certain amount of change before negative symptoms of overload emerge. These may include burnout, depression, or anxiety.
The goal, then, is to manage the pace of change at a speed that matches the individual’s rate of assimilation. By building resilience, individuals can renew and grow their ability to assimilate change.
At an organisational level, understanding capacity building is vital to an organisation’s ability to implement change effectively. Too often, the pace and scope of changes outpace the organisation’s ability to absorb it. In such cases, it is important to identify the capacity issue and forge strategies to address it. This might include:
Time: Provide your people with more time to complete a task in order to allow for assimilation.
Resourcing: bringing in additional resources to liberate your team from their day-to-day tasks so that they can better absorb the change.
Understanding: providing employees with psychological safety by demonstrating an understanding that change is difficult and that tasks may take longer, or may have a higher error rate than usual.
Energy: Periods of intensive change are depleting, people may need encouragement to manage their energy, not just their time.
Capacity, therefore, is a finite resource but can be replenished under certain conditions.
On the other hand, “capability building” refers to the skills and knowledge required for a particular task. An organisation may have the capacity to change but lack certain key capabilities.
A common example of a gap in capability is in managers’ ability to effectively lead change. Managers are often promoted to their roles as a result of technical ability and seniority, but may not have been trained in the craft of management, including change leadership. This can set up a lose-lose-lose situation: the manager feels under-equipped, their staff are under-led, and the organisation is under-served.
The solution to gaps in capability is to provide appropriate training and coaching, particularly in the specialised area of change leadership. This process should begin with foundational training, which can then be augmented through coaching.
There is an interesting interplay between the concepts of change capacity and capability building. In many cases, building capability by increasing a team’s knowledge and skills can actually help expand capacity. This is, in essence, the idea of working smarter, not harder – a wise path as organisations increasingly find that working through change is achieving better results in their erp and ctrm programs.