Imagine that you are the founder of a startup which helps customers to decide specifications of the computer they are planning to purchase on the basis of usability. Let’s call this service “Best4you”. It’s been 2 years since your company came into existence and you're planning to expand by adding a new service to your portfolio. You’ve named the new service as “GetItNow” which offers customized computers as per Best4you recommendations.
Now to do this, you need to ensure that your company has mastered the “Best4you” service and has a thorough process in place to come up with the right specifications for the customers. You also need to ensure that you have enough manpower and resources to upgrade the system, facilitate transport, handle customer grievances, strategy formulation etc. While doing so, you’ll ask the question -
“Whether or not your company has the capacity to undergo this transformation?”
Capacity refers to an amount or volume - do we have enough, do we need more, how do we grow? Capacity building activities includes evaluating organizational resources and checking for organizational readiness for change.
In terms of capacity, the company might be ready for a new service line in its portfolio as it has the required money, resources, manpower and equipment. The other question which you need to ask is –
“Whether or not your company has the capability to pull off this transformation?”
Capability refers to the skills and knowledge required to do a particular task. Even if one has the required resources, he must have the capability to execute the task in an efficient way so as to meet the desirable outcome. Capability building in an organization defines working towards competencies of the employees and their leadership traits so as to embrace and execute the change/transformation.
The solution to gap in capacity is to find ways to attain resources, money, manpower etc. whereas the gap in capability can be addressed by training and coaching the employees from time to time. The concepts of capacity and capability are interrelated. The knowledge and skills acquired through capability building can actually increase organizational efficiency resulting in capacity building.
Would love to hear your opinion on the same.