6 Strategies to Define & Build Operations Capability in Your Organization

This article first appeared on Acorn Labs in June 2023.

For a more in-depth look at operations capability, have a read of the full article.

Operations capability refers to the combination of skills, knowledge, tools, processes, and behaviors that are used by operations professionals to deliver organizational objectives. They need to be known and effectively performed within operations departments in order to make impactful operations decisions.

Define operations capabilities

Before you can even get started on listing your operations capabilities, you first need to understand what your operations department is doing.

Step 1: Define the need

You need to understand your business strategy in order to align operations capabilities with desired outcomes. Ask:

1. What are the organization’s mission and values?
2. What is the purpose of operations in the organization?
3. What value do operations bring to the business, and where do they have room to develop?

Step 2: Define the purpose

There are five factors to consider when defining the purpose of a capability:

1. How well does the capability feed into achieving business outcomes?
2. Is there a demand for the capability in the market?
3. Are there enough resources to sustain the capability?
4. Does it compete with or complement existing capabilities?
5. What potential risks could arise from building the capability?

Step 3: Define the outcome

Naming capabilities is really about defining your desired outcomes so that the exact function of the capability is clear. For example, capabilities like supply chain management and quality control and assurance are obvious in how they function within the business.

6 strategies for building operations capability

Typically, developing operations capability involves a six-step process.

Engage leadership

You need to get leadership buy-in to make building operations capability a priority. Frame building operations capabilities in terms of the KPIs they care about. How will building operations capability address their pain points and increase business efficiency?

Create co-ownership between HR and business units

Effective capability development programs are difficult when HR and business units are operating in isolation from each other. HR has a good grasp of organizational strategy, while your operations departments know their teams need. If either party is solely in charge, capability development programs will be skewed too far in line with your HR or operations department’s needs, so you need to foster a relationship of co-ownership between the two.

Understand operations capability gaps

Capability gaps are the discrepancies between your current capabilities and the capabilities you need in the future to deliver on business strategy. Gaps are inevitable—to measure them in your individual employees, you can try a combination of a few different assessments to determine what level of competency they’re performed at.

• Self-assessments, carried out by the individual employee to assess themselves
• Manager assessments, which are more objective and have business strategy in mind
• Subject matter expert assessments, for specialist capability sets.

Assess operations capability maturity

Maturity measures the capability of the business overall rather than individuals’ competency. It’s measured on a leveled scale of “maturity”, with the lower end representing immature capability performance (which are ad hoc or reactive) and the higher end indicating capabilities your company is more competent in.

It’s essentially diagnosing which of your organization’s operations capabilities are weakest and should be prioritized in development.

Build operations capability

Effective development of operations capabilities requires creating change that sticks over time. Using a performance learning management system (PLMS), on-the-job training, or institutionalized learning such as learning academies allows the reinforcement of learning over time and increases knowledge retention.

Track progress

Evaluate how well the entire L&D process went, from capability assessments to training design and effectiveness. Re-assess competency and maturity in your operations capability to catch capability gaps or potential business risks and plan development accordingly. To do this, you can use training needs analyses, training evaluations, and surveys, or measure your training ROI to reveal how effective training was at addressing the KPIs your leaders care most about.