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Four Cs — Capability, Competence, Competency, and Capacity

I recently published an article where competence is a topic, and I’d like to tease out the difference between competence and competency. As a bonus, I’ll toss in capability and perhaps even capacity in the name of alliteration.

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Definitions

Capability noun /ˌkeɪ.pəˈbɪl.ə.ti/

  1. the power or ability to do something

Competence noun  /ˈkɒm.pɪ.təns/

  1. the ability to do something successfully or efficiently

Competency noun /ˈkɒm.pɪ.tən.si/

  1. the ability to do something well

Capacity noun /kəˈpæs.ə.ti/

  1. the amount that something can produce

Allow me to use a pickup football game as an example throughout (despite my lack of competency in this arena).

Capability Models

When assessing a company or a discipline, whether large or small, the first thing you need to consider is the capability model. Effectively, this is about what roles a mature company would expect to have. Even if you are a one-person show with a one-trick pony, you still need the same things as another company in the same space. It might be that you’re doing everything yourself, working with partners, contracting roles, or some combination. Even Apple at its start had Wozniak the techie and Jobs the schmoozer. Wozniak did all the making, and Jobs did all the selling. But they needed a supply chain of sorts even if that was Radio Shack back in the day. They had legal needs, sales and marketing needs; product management; inventory needs; purchasing, accounting, finance; receivables and payables; recruiting and hiring; legal and compliance; back office; front office; and these are macro roles. These deconstruct further, and at scale, a mature company sees more and more specialisation and multiple people performing similar roles.

Person wearing multiple hats

If building software is your thing, you need technical and solutions architects, engineers, and coders; quality assurers and testers; business analysts, and documentation specialists; designers and so on. Perhaps you need integration specialists and technical support and on and on. Again, you might be working out of your proverbial garage or your mum’s basement and you are performing each and every role; the duty still needs to be done. The capability is needed. If you are selling hot dogs from a cart, these needs may differ, but you don’t escape the inventory, selling, and accounting. It is extremely likely that somebody knows what roles are necessary even if you don’t.

Let’s commence the football scenario. As a sport, football has rules—one of which is that it requires 11 players, each of which has a role, some specialised and others generalised. At the highest level, there are four basic positions: the goalkeeper, defence, midfield, and attack. The goalkeeper is the most specialised and has special abilities not afforded to other roles. The other roles are defensive, offensive, or an admixture. Different teams employ these roles differently depending on strategic aims.

Competence

Competence is the next level. Even if you are at a scale that doesn’t afford you specialisation, it’s usually not enough that you can wear 42 hats. Economic diminishing marginal returns act as constraints. If you are programming, then you aren’t selling. And if you are selling then you aren’t programming…or marketing or purchasing or accounting or… I think you get the picture.

Beyond this, you just might not know enough about legal issues. Even though you might be able to tick the capability box because you’ve managed legal affairs to date and assumed the risk of entering contracts, for example, but not being an attorney. So the ability to perform this role efficiently comes into play. You may need to hire for this competence.

Returning to the football scenario, it’s not enough to simply have a person in a position. A goalie may not make a good midfielder or striker and vice versa. With these roles comes role competence. Whilst defenders specialise in breaking up offensive attacks by the opposing team members, a striker’s competence lies in scoring goals.

Competency

Competency may feel about the same as competence. They are weak synonyms derived from the same root, but they are qualitatively different. It’s not just being able to complete a task, it’s the ability to excel at the task. A way to consider it is as being at the top of the competence scale.

Regarding our football example, competency is about being an A-player. Depending on your generation, this is playing at the level of Pele, Beckham, or Ronaldo. Competence is knowing the rules and the moves, but competency is the ability to dial one’s performance to 11.

Footballers, Pele, Beckham, and Ronaldo

Capacity

Capacity is a throughput assessment. Circling back to capability, one may be able to perform each of the roles, but given the 24-hour nature of days, one may not have the capacity to efficiently perform all of these roles—certainly not all at once. This is where opportunity costs and tradeoffs come into play. Even if one could perform all of these tasks at an A-level, throughput or volume will be limited by capacity.

In our football scenario, even top players need to be taken out to rest because their capacity to remain alert and near peak performance diminishes. This also brings us back to capabilities. Do you have the ability to substitute one competent player for another? If not, it’s indicative of a maturity problem. Even if an A-player can carry a team—Michael Jordan or LeBron James of American basketball come to mind—if they are injured or foul out, the team still needs to be able to perform.

Basketball Players, LeBron James and Michael Jordan

Wrapping it all up

In closing, I’ll make a point and share an anecdote.

In my lessons learnt post, I comment on metaphorical toddlers and third-graders — even the tallest third-grader in the class. Any organisation has people who perform certain roles at a higher level than their peers. In this case, a person may be the best accountant, programmer, or juggler relative to the group. This is the third-grade kid who excels at scoring goals against other third-graders. This kid may even be able to hold their own against fourth-graders. Whilst admirable, even third-grader Beckham would get his arse kicked if competing against professionals — or likely even sixth form high-schoolers.

My point is that some talent just isn’t top talent; it’s just top available talent. Not everyone can be a David Beckham or LeBron James. Most people are also-rans. Diminishing marginal returns ensure this.

And when peers migrate from company A to company B, they remember the top person in some role needed for company B. This is not dissimilar to admiring your big brother or sister, thinking they are the best thing since sliced bread. The person is probably competent, but not necessarily world-class.

Before I get off this topic onto the anecdote, I want to be clear that not every employee needs to be world-class. Perhaps, you’ve simply got no access to this level of talent. All one really needs is to be competent enough and hopefully the combination of talent and product offerings is enough to surpass your competition or to maintain whatever market position you decide is right. I’ve worked with several clients who were happy just to play second fiddle or to occupy space in the top 5 (or 6 or 10).

Storytime and sweeping exit

Square Peg: Right Person, Wrong Job

I recall performing a capabilities assessment for a couple of organisations. In one case, an established speciality chemicals company wanted to become Digital, which is to say to gain competencies in expected capabilities. I used a framework for their industry, interviewed a lot of people, and came back with a maturity map. They literally were not able to check even one box. Without going into specifics, on a red-amber-green scale, they were a sea of red. They didn’t even get partial credit. Once they agreed with the assessment, we worked to establish a roadmap that would get them to where they wanted to be within three years—and some roles needed to be filled now.

The problem is that they had a skills mismatch. Their current staff had no experience whatsoever, so retaining them would require a learning curve. They needed to hire already competent talent and augment with current staff. One of the positions they needed to hire was a senior-level digital marketing director. Their current staff from CMO down had no experience, as stated. We offered to help them with role descriptions, but they turned down the offer, informing me that they had it covered. So I offered to review the job description. Their solution was to add [with digital experience] to the job description that was used for the last marketing director role. The problem, which leads to my next anecdote is that neither the hiring managers nor human resource recruiters had any framework to judge a good candidate from another.

A second company took a similar route, but they one-upped the previous story. Whilst I was constructing the capabilities model, they—another company with no digital hires or hiring experience—that I had not already started interviewing, but they already had a position posted for a CDO, Chief Digital Officer, despite having no frame of reference for the position. A quick perusal made that painfully obvious. I explained to them why their definition would not yield them what they needed. They literally were interviewing two top candidates before we had even advised them on their needs. In the end, they asked for one of my senior peers to sit in on the interviews and help to steer it in a more appropriate direction as well as separate the wheat from the chaff. Both candidates were weak, but my colleague suggested B and they went with A anyway. Within six months, the manufacturing company founded in the 18-teens was failing and ultimately filed for bankruptcy chapter 11 protection closing most of its remaining operations. Two hundred-plus years of operations ceased because they refused to listen.

Book open to Chapter 11

Moral of the story: If you haven’t done something, don’t presume you are in the best position to assess how it should be done. If you have done something but only in a second or third-rate capacity, don’t expect to steer, tutor, or otherwise advise someone else to an A-tier position. And don’t let your ego engage in self-deprivation by avoiding the hiring or contracting of some A-tier talent.

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