Caught in the capability trap

Is your company caught in the Capability Trap?

Part 1 of 2. It doesn’t matter what industry you’re in – the ‘Capability Trap’ is poised to take hold of your business and quietly squeeze it to death – if you let it.


A short blog is never going to hold all the answers; but the Capability Trap is both real and avoidable. Having a few “smarts” at the start will give you long term protection for a fraction of what getting trapped will cost you.  So where to start?

First, recognise a Capability Trap for what it is 

MIT Sloan School of Management professors, Repenning and Sternman, first identified the Capability Trap1 (2001, 2002), while trying to understand why so many process improvement projects failed.  It is described in a more recent paper by Landry and Sterman as arising when: 

“…pressure to boost short-run performance leads to greater work effort, including long hours, faster work pace, and cutting corners. Doing so boosts output and performance in the short run, but often at the expense of investments in safety, maintenance, process improvement and learning. The organization’s capabilities then begin to erode.” 

Landry and Sterman
Figure 1 The Capability Trap – Over time as the effort put into process improvement is squeezed, the available capability drops and there is a direct and incremental impact on business performance.

I am sure we can all identify with at least one company caught in the trap.  Staff working day, night and weekends.  Skipping maintenance or putting up with technical debt as you need to get that product or new release out.  Onboarding and training being deferred or cut, because output is needed, now.  These are all traditional ‘Capability Trap’ examples. But no longer is this just a manufacturing and tech sector issue.  It is impacting retailers, banking, hospitals, utility providers, infrastructure development and professional service companies – just think of the hours most employees now work.

It is also holding back the adoption of more sustainable work practices across all businesses.  We remain trapped in suboptimal way of working as the short-term cost of introducing a solution for the long-term betterment of our business is seen as too big a price to pay. Afterall, it is always easier to chase the short-term goals of BAU tasks, or a “high-priority” project with quantifiable dollar benefits. 

Don’t get trapped in oversimplifying the issue 

What we are talking about does sound very simple and obvious – but when you’re stuck in the middle of a Capability Trap you just can’t see it.  Typically, performance starts to fall further and further. Leading to still more pressure to work harder and still lower investment in capability building.  It forms a vicious cycle. 

“Organizations often find it difficult to escape the trap because rebuilding capabilities requires greater investment in maintenance, improvement and learning, leading to higher costs, a reduction in output, or both; things get worse before they get better, exhibiting a classic dynamic in complex systems.” 

(Forrester, 1971)
Figure 2 Escaping the Capability Trap – As more time is spent improving processes, there is an initial dip in production that quickly translates into an overall increase in capability and an exponential improvement in business performance.

The solution to this for most companies is to employ more people in order to gain the capability it needs. New recruits quickly slip into existing work habits and patterns – as that is what they’re taught and required to do. So, while you may have a short-term performance gain as more employees come on board, this is very quickly eroded as they too start adding to the already embedded issues.  Expanding the problem rather than shrinking it.   

Managers continue to attempt to fix the issues but are forced to put ‘sticking plasters’ on them, typically:  

  1. Trying to increase the hours worked through extra overtime and shorter breaks, 
  2. Boosting output by skipping steps in a process,  
  3. Cutting out trials and testing,   
  4. Deferring maintenance and skirting around safety procedures.

And when that fails – to increase performance – they hire more people, incurring more cost for nominal productivity gain.  Rinse and repeat.  You’re caught in the Capability Trap. 

To make matter worse, often the culture of the company has reached a point where the innovators and evangelists – those naturally able to help break the cycle – are getting very frustrated.  It gets harder and harder to retain these change leaders within the organisation.   

Most improvement programs don’t reach their potential 

At some point a line will be drawn and managers held to account for shrinking margins through cost increases.  Opportunities to ‘cost down’ need to be identified.  Unfortunately, the very teams and programs of work that could give the long-term improvements needed to correct the capability trap, are the first to go.  Process improvement teams initiatives are particularly vulnerable due to their lack of “short-term” gain. 

If they do survive, inevitably: workshops are run; reports are produced; and employees are interviewed.  As the expense of using external consultants continues to mount, some ‘low hanging fruit’ initiatives are identified.  Those that take the least amount of effort for the greatest short-term gain are implemented.  Generally, a number of other, longer term, higher impact, business process fixes are also defined but these are ‘parked’ or delayed due to system constraints that requires additional investment, and soon forgotten.   

The managers heave a sigh of relief at the short-term gains made, but all too often they are back at the same drawing board within a couple of years.  Once again trying to identify how they can get the business working smarter – as opposed to harder.   

Effectively, the business is trapped in a downward spiral  Those running it feel they are unable to invest to build capability they need, as they have committed all their resources to just keep the lights on, against diminishing profit margins.  A situation they wouldn’t be in had capability investment was made to deliver continuous improvement in the first place.  But hindsight is a wonderful thing.  

In our next blog we give you six practical steps you can take to escape (or avoid) the Capability Trap.  


References
  1. E. Landry, J. Sterman (2017), The Capability Trap: Prevalence in Human Systems, 35th International Conference of the System Dynamics Society, https://www.systemdynamics.org/assets/conferences/2017/proceed/papers/P1325.pdf 
  2. Forrester, J. W. (1971). Counterintuitive Behavior of Social Systems. Technology Review, 73(3), 52–68
  3. Repenning, N. P., & Sterman, J. D. (2001). Nobody ever gets credit for fixing problems that never happened: Creating and sustaining process improvement. California Management Review, 43(4), 64–88. https://doi.org/10.1109/EMR.2002.1167285
  4. Repenning, N. P., & Sterman, J. D. (2002). Capability Traps and Self-Confirming Attribution Errors in the Dynamics of Process Improvement. Administrative Science Quarterly, 47(2), 265–295.