‘Most of life’s actions are within our reach, but decisions take willpower.’[1]

The most common reason for organisations failing to succeed, even with good strategies, is the lack of adequate supporting capabilities needed for execution. Conversely, capability-aligned organisations perform at the top of their markets.[2] Discrete capabilities can be more easily mixed and matched compared to traditional departmental functions, resulting in a more responsive organisation (BCG study)[3] – a critical characteristic for digital success. Simply stated, ‘capability’ is the power or ability to do something. Many definitions of ‘what is digital capability’ exist in published literature[4] and these range from very narrow, i.e. use of a specific set of digital features, to being quite broad, encompassing an enterprise’s adoption of digital. Our working definition here for digital capabilities is:

‘The distinguishing capabilities of an organisation to identify and assimilate appropriate technologies, adapt its work both internally and externally, to innovate and deliver digitally enabled products and services that meet and exceed the expectations of customers in the emerging digital era.’

In this section we discuss the general aspects of digital capability acquisition – the supporting organisational and technical skills are discussed in subsequent sections. Pertinent questions with regard to digital capability acquisition are: What is an organisational capability composed of? What capabilities are needed to support digital transformation? What are sourcing choices for the acquisition of digital capabilities? How do you prioritise, in terms of time and investment, the acquisition of such capabilities? How do you assess digital capability maturity?

High-performance organisations (see the above-mentioned BCG study) display a good balance of two complementary elements of organisational capability, i.e. a ‘behavioural’ element that includes culture and roles and responsibilities (agility, innovation and risk-taking, learning, collaboration, commit-and-coordinate governance, etc.) and a ‘structural’ element that encompasses a flatter and more flexible organisational layout, with associated operating model, competencies in digital technologies (including mobile, social, data-driven, bimodal IT), physical assets (such as cloud-based on-demand infrastructure and tools) and mobilised supplier and partner ecosystems.

Three main capability clusters that have to be focused on are: research and development (R&D) capability (identification of customer needs, rapid innovation experiments, rapid scaling up of winning innovations, etc.), go-to-market (GTM) capability (product/service features and pricing, marketing, sales, post-sales service, etc.) and back-office capability (integrated information systems, shared services, high-level of automation, etc.). Capabilities must be business-relevant (i.e., not simply IT skills) and are usually recognised at a macro level, e.g., ‘rapid delivery of mobile apps’ or ‘automation of business processes’, and these macro-capabilities typically have many dimensions of supporting sub-capabilities. Using the capability decomposition style of the enterprise architecture standard TOGAF 9.1, we can depict a given capability using its component dimensions (e.g., people, process, material) and associated skills (a combination of knowledge and experience) as the figure below shows.

Often, capabilities are built up in increments. This evolution of capabilities should be tracked, for example by radar charts or dashboards, so as to guide capability acquisition.