#178 | Capability vs Capacity (Why Most Planning Is Broken) - Capability Unboxed Mini Series (powered by CIAB+) Part 2

Capability Unboxed Mini Series (powered by CIAB+) #2

Most organisations plan for capacity and assume capability. And that’s exactly where things start to break.

In this punchy second episode of our Capability Unboxed mini-series, Fatimah Abbouchi unpacks one of the most common – and costly – misconceptions in planning: the belief that headcount equals capability.

She draws a sharp line between the two:

• Capacity tells you how much effort is available
• Capability determines what you can actually deliver

From fuzzy resourcing assumptions to chronic re-planning and key person risk, this episode dives into why more people, more budget, or more tools won’t fix a systemic capability gap.

You’ll learn:

• Why throwing people at problems often accelerates failure
• How capability-led planning flips the planning sequence for good
• The hidden cost of capability confusion on delivery, morale, and stakeholder trust

Whether you're leading strategy, delivery, or transformation, this episode is a must-listen for shifting your planning mindset—and outcomes.

🎧 Tune in, take notes, and join us in May for our live webinar event where we take a deeper dive into all things capability (powered by the AMO Way). If you can’t make it live, register anyway and we’ll send you the recording.

In this episode, I cover: 

0:40 Drawing the Line: Capability vs Capacity
2:27 Defining Capacity and it's Limits
4:12 Timesheets and the Illusion of Control
6:01 Blocked Work and Governance Gaps
7:43 Why Capability Determines Reliability
9:44 Flawed Planning Assumptions
12:19 Diagnostics: The 'We Lack Resources' Myth
15:19 Adding People Amplifies Dysfunction
And more...

Learn more about how AMO can help you with Capability Uplift here: https://quiz.agilemanagementoffice.com/capabilityclarity

Transcript

Welcome And Series Context

Fatimah Abbouchi 0:00

You're listening to Agile Ideas the podcast, hosted by Fatimah Abbouchi. For anyone listening out there not having a good day, please know there is help out there. Hi everyone and welcome back to another episode of Agile Ideas. I'm Fatimah, CEO at AMO, Mental Health Ambassador, and your host. Today is a continuation of our mini capability unbox series. In the last episode, we defined capability as an organization's ability to reliably achieve an outcome and deliver value for customers and stakeholders. In this episode, we're drawing a hard line between capability and capacity because most organizations blur the two, and that's where planning, I think, breaks. Most plans fail not because people weren't working hard enough or smart enough, but organizations plan capacity and assume capability. In fact, one of our most popular blogs on our website is talking about the difference between capability and capacity. And this isn't a coincidence, but it's because it's something that a lot of organizations and people struggle with in general. Really simply, capacity answers the question of how much effort do we have? And this is for your resources. This is not just your people resources, resources overall. And the capability side answers what can we actually do? Now, how much effort and what we can do fundamentally are different questions. And sometimes we factor in just one and forget the other. And this is why part of the problem when we come to planning and planning itself being broken, because organizations and teams often will factor in capacity constraints, usually, and neglect the capability side. And that's understandable to a degree because capacity is where we often can start because we have teams and budgets and resources, and often we think that they're not enough. So let's dive into all of that. But before we get into the specifics, let's just remind everybody, for those that are not on the same page, what capacity is in terms of a simple definition. Capacity is the available effort that you have in your team, your function, your organization. And this usually for many of us is your head count, your full-time equivalent or FTEs, hours, utilization, if you plan and manage that well to that level of detail. It's your organization's budgets, your funding envelopes, it's all of those things combined. Understanding your capacity will tell you how many people you have, how busy they are, and how much work they can theoretically work on. One of the challenges I see with organizations around capacity management is particularly when it comes to projects and programs, is they use models that relate to timesheeting. And I find people spending an inordinate amount of time trying to complete a timesheet. And that is not really a best indicator of the effort used and the capacity available. In fact, I remember seeing at least one example, recent example, where sitting close by to a couple of uh project managers, I remember the planning um coordinator sitting with the project manager at least four or five times, helping them to fill out their timesheet because there was all of these tiny nuances in the way that they were trying to track it against task lines and against different parts of the work breakdown structure. It was complicated, it was complex, it was arduous, and it was just so inefficient. And the problem is it doesn't work very well. And so capacity does not tell you whether the outcome that you plan to achieve is going to be delivered. It may tell you if you've got capacity left, but that's only if you're planning and tracking it well. It also won't tell you what decisions need to be made on at which point in time. It won't tell you what dependencies you have, and it also will not tell you if your organization can absorb the change. It may give you an idea if you have the capacity to deliver an initiative, but that also is not entirely uh, it cannot entirely be told on its own. It is understandably important to understand what you are trying to deliver, not just how. So when we think about um, I think about um some other examples, and again, I'm gonna use project management. This is a space that I spend most of my time in. There are a lot sometimes within the project management office when we are spending time trying to plan out the portfolio and what resources are going to work on, what projects and mapping all of that out. The challenge that we find is sometimes there the resources are fully staffed, they're fully utilized. And the truth is that they are not able to move because often they're very, very uh blocked by governance decisions or um, they're maybe not clear on where decisions need to be made. There is a lot of things that are happening well and truly outside the constraint of capacity, and this is subtly where I'm trying to introduce why capability is the answer instead of just fixating on capacity. Capability helps to, as we said in episode one, understand what are the things that are necessary to enable us to deliver the outcomes and the value for our customers. It asks things like can we do it consistently? Are we able to scale? Um, do we have the right resources? Do we have the right tools? We could have the same capacity in two different teams and produce radically different outcomes because one team is clear on their capabilities and the other isn't. Capability itself helps to determine your longevity and reliability and the feasibility of your business to be able to grow and scale. Whereas when we think about capacity, it's more about speed. Do we have enough people right now to work on X, Y, and Z? But that doesn't determine whether the capabilities your organization needs to withhold long term is going to be sustainable. So this is why the planning assumptions that most organizations are getting wrong is fundamentally because the logic is flawed. So a lot of organizations will do their annual planning or their quarterly planning and they'll define the outcomes they're trying to achieve. They may do that in using OKRs or some other methods and models and tools. Then they estimate the work. We want to do A, B, and C, and we estimate the work, and it's going to be this many hours or this many days, etc., to deliver. Then they'll go and assign people. And then once they've assigned people, they'll get confirmation on any budgets and then they start delivering. Or sometimes they might have a budget and then they assign people based on how much budget they have. But what they don't ask in that process is do we have the capability required? Um, does it already exist, or is there a gap? The capabilities themselves are again going back to decision rights and governance and the adaptiveness of that governance. It's about the dependencies, the teams that we need to align with. It's about the systems and tools we need to deliver. It's all of those things that are assumed and relate to capabilities, but not really assumed around capacity. So when we think about plans themselves, often estimating is one thing, but actually executing is a whole other story. And if we don't have the time put in place to think about whether or not our teams actually have the capabilities and the organization has the capability foundations that are enabled them to be successful, you can throw as many people as you want. How many times, actually, I'll go back a step, the amount of times that we've undertaken diagnostics in organizations. And often we ask what's their biggest challenge. And maybe eight times out of ten, they say they never have enough resources. How is it possible that every organization and every team that we speak to says they don't have resources? When we dig deeper and go through a diagnostic process, we actually find that they either don't have the clear visibility of what the governance model is, they don't have visibility on what other teams are delivering and the dependencies and how their work fits into it. We find that they are using tools that are out of date or not fit for purpose. There's so many other things that are on the peripheral that sit in the system of capability rather than whether they've got enough people. And so there's a real big disconnect there and something I commonly see. Now, this is why when being um advised, sorry, when speaking to organizations and being asked what to advise people who are requesting additional capacity, I usually tell them that it will rarely fix your problem. And the reasons for this is because we're adding more people and more contractors and more parallel work and more consultants and all of this stuff, it doesn't fix the underlying challenges that may be broken or weak. Underlying weak capabilities, um, underlying broken governance cadences and decision structures and tools and systems and processes and all of those things just really means that it doesn't matter how many people you throw at it, it will only accelerate how inefficient or how much a team will possibly fail. It will increase the workload required to coordinate that many people, it will probably burn out some of your high performers, it'll amplify the dysfunction, it doesn't actually um support it. Think about the lines of communication. Every time you add more people, it increases those lines of communication and really just keeps exacerbating the problem. So I understand why a lot of the time management will push back when resource requests are made and why they regularly, especially in your bigger organizations, do uh not only do they do annual freezes on hiring headcounts almost uh every time, half-yearly and and yearly, but they also will have really specific processes where just recruiting one resource goes all the way up to a CFO as an example. Now, the hidden cost behind capability and capacity and the confusion there is it can result in chronic re-planning. It creates key person risks, as I mentioned in episode one, where if you think an organization has X, Y, and Z capabilities, but really it's relying on, you know, Jane Doe and John Doe, and then they leave, your capability goes out the window, then it's not a good capability system to begin with. And ultimately, as you continue to add capacity and you don't deliver what you're expecting to deliver, you lose confidence, not only with your executives, with your board, and with your stakeholders. So it's often then ends up being the same people saving the day. Because there are people out there that do an exceptional job at making sure that things don't fail, but they will get to a point where they'll burn out. So what does capability-led planning look like? This is really timely because one of the clients that we're working with, we've now adopted a capability-led model for a brand new subsidiary that we're establishing. And this capability-led planning concept, which isn't anything new, flips the sequence. So instead of starting just with the people, it starts with the outcomes, which again, going back to episode one, where we talked about capability being what a business does to deliver the outcomes and the value to customers. So think about what outcome must be reliable. What are the capability enablers that support and enable us to achieve that outcome? How strong is our capability today? Does it need to be built? Does it need to be fixed? Does it need to be stabilized? Does it need to be scaled? Does it need to be adapted, adopted? And then you think about what capacity is required. As an example, we recently uh pitched for a piece of work with a client who reached out saying that they had a large piece of work that related to data governance and they needed some support. Initially they were looking for capacity, project management capacity. But when we dug deeper and had further conversation with them, we realized they're actually missing change management capability. And it didn't matter how many project managers we threw at it, if they didn't fix and focus on the capabilities that were missing in their organization, they were not going to be successful. And that's why the plan changed once we introduced the concept of bringing in that capability because it wasn't something an organization that organization had, rather. So, how does this all connect to CIAB or Capability in a Box? Well, capability in a Box exists to make capability assumptions visible for executives before funding and resourcing decisions are locked in. It will help organizations test whether capability exists, understand whether it's fragile, and decide deliberately where to invest. It will not slow things down, but it will actually help you avoid planning, uh funding planning and funding assumptions that are not structurally sound. The last thing I'll say here is the cheapest time to find a capability gap is very early because you don't want to wait till it's too late and you've thrown resources at it to fix a capacity problem. That really is just a capability assumption gone wrong. Make sure you join us in May for our live webinar event where we deep dive into all things capability powered by the AMO way. Keep an eye on our socials and make sure you're registered. And if you aren't able to make it live, we will record the session and we will share that with you. And also make sure you're subscribed to the Agile Ideas Podcast and the Agile Ideas YouTube channel where you'll get copies of all of this content. I hope you've had the opportunity to learn a little bit more about capability. I'll see you in the next episode. Thank you so much for listening to this podcast. Please share this with someone or rate it if you enjoyed it. Don't forget to follow us on social media and to stay up to date with all things agile ideas. Go to our website www.agile managementoffice.com. I hope you've been able to learn, feel, or be inspired today. Until next time, what's your Agile Idea?