How to implement capacity building in your organization

What separates organizations that continuously innovate and lead the market from those that don’t?

You can be sure that capacity planning is a key part of their growth strategy—high-performing companies invest in the people, resources, tools, and partnerships to always stay agile and one step ahead.

Let’s introduce capacity building as a concept, discuss how you can prepare to launch a capacity building initiative, and then explore some methods (with real-world examples) for actually implementing it.

What is capacity building?

Capacity building is the strategic process of developing the missing skills and obtaining the necessary physical resources your organization needs to complete its projects in the short, medium, and long term.

It is closely tied to capacity planning, which is the process of assessing, identifying, and determining what these missing skills and physical resources are. While capacity planning is about identifying gaps, capacity building is the steps taken to plug them.

Most fundamentally, capacity building facilitates better performance and productivity by giving you access to the skills, tools, systems, and partnerships you need to meet your objectives.

However, it’s also about cultivating a mindset of continuous improvement. Capacity building shouldn’t be seen as a sporadic or one-time activity, but as an ongoing, systematic process.

In industries characterized by near-constant change, a solid capacity building strategy makes organizations more dynamic, resilient, and adaptable to change. It empowers them to reach their full potential, act with more agility, and seize growth opportunities.

Capacity building examples and approaches

Capacity building can be at an individual level. This may involve providing the necessary training and resources to diversify your team’s skillset.

For example, you may upskill your existing marketing department to run multi-channel paid advertising campaigns, and potentially complement this by hiring externally for a new digital marketing director.

However, it’s a misconception that capacity building is always simply about hiring more people or training existing staff. It can be organizational. Here, the focus may be on introducing new processes or systems, or bringing your existing cross-functional teams together.

For example, you may invest in a new project management platform to create a ‘single source of truth’ for teams across departments and locations.

Capacity building can also take the form of strategic external partnerships, whether that’s outsourcing temporarily or striking up new long-term collaborations.

For example, you may join with a specialist logistics provider to improve your distribution capabilities, reduce delivery lead times, and quickly meet growing customer demand.

Planning and preparing for capacity building: 3 key steps

Capacity building promises great rewards, but its implementation can be challenging. The skills and materials you seek can be highly sought after and in short supply. Not only this, but how can you be sure they’re the exact skills you need?

Laying the right groundwork is essential for success in your capacity building endeavours. Take stock, set realistic targets, and seek sign off from key decision-makers.

1. Take stock of your current situation

Without a clear, comprehensive understanding of your current situation, you fly blind and risk building capacity in the wrong areas.

Before capacity building comes capacity planning—assessing your teams, suppliers, resources, and processes. What are your strengths and weaknesses? Auditing your current situation gives you a solid foundation and helps you to set realistic, focused targets to build up your capacity.

To guide your review, consider asking yourself these questions:

• Skills and capabilities
  • Are the right skills available to meet short-, medium-, and long-term project demands?
  • Are there skill gaps that have caused project delays or missed opportunities in the recent past?
  • How resilient are our teams to sudden changes, absences, or departures?
• Processes and systems
  • Do we have any internal, formal processes for assessing capacity requirements?
  • How do we track resource utilization and bottlenecks?
  • Are our current tools and systems helping us work efficiently, or holding us back?
• Suppliers and partnerships
  • Are current partners reliable and scalable for our needs?
  • Could we call on new suppliers quickly to fill gaps, if required?
  • Are we over-reliant on certain suppliers and do we have alternatives available?

It may be helpful to gather insights from those “on the ground” through a quick survey, workshop, or informal discussion.

2. Establish SMART goals

Determine what you want to achieve when you build capacity. Do you want to phase out your reliance on freelancers? Do you want all your suppliers to offer a direct shipping route?

Remember to stay realistic. Consider SMART goals as your mode—that is, targets that are Specific, Measurable, Achievable, Relevant, and Time-bound.

Instead of thinking about what you want to achieve, what can you achieve?

For example, rather than going straight for the goal of completing all aspects of your project with internal team members, aim to field out only 20% within the next 12 months, ensuring no negative impact on project timelines or quality.

This goal is specific and measurable (it specifies 20% of tasks), achievable (it’s a moderate, realistic target), relevant (it’s about reducing reliance on freelancers and is aligned with capacity building), and time-bound (it must be achieved within 12 months).

The good thing about SMART goals is that their progress can be monitored and reviewed at regular intervals. Are the targets being met? Are there any bottlenecks? Do the goals need some slight tweaking?

Project and portfolio management tools are great for tracking progress of SMART goals. You can set milestones, assign tasks, allocate resources, and create visual dashboards—helpful for demonstrating the success of your capacity building initiatives to stakeholders.

You might want to aim high, but setting SMART metrics that acknowledge complexity will be more convincing for your stakeholders. And if you exceed expectations, it’s all the more impressive.

3. Get sign-off and buy-in

As we’ve already touched on, the business case for capacity building is strong. It makes your organization more innovative, resilient, and dynamic.

But it still has an upfront price tag attached—time, money, and resources need to be justified—and without approval and buy-in, plans can quickly fall apart. You’ve got to bring people with you. After all, capacity building is about instigating a mindset of continuous improvement, from top to bottom.

Whether you’re planning to re-skill, invest in new technology, or bring in strategic partners (or a combination of these), unless you have the decision-making power or the budget to authorize these investments yourself, you’ll need to bring your case to the person who does.

To strengthen your case, ask the following:

• Can I link this capacity building investment to strategic business priorities?
• Who has the authority to approve the capacity building investment? Do they appreciate the risks of inaction?
• What specific time, budget, and resource are required?
• What is the potential return on investment of this capacity building?
• Is there a fair, clear process for deciding which team members to upskill?
• How will capacity building success be measured? Project outcomes? Performance improvements? Employee certifications?
• Are team members engaged in the process of capacity building?

How to build capacity: 5 strategies and methods with real-world examples

Before considering the use of outside resources, upskilling internally should be a first port of call for boosting your team’s capacity. Outsourcing temporary resources and building partnerships with other organizations are other helpful techniques for enhancing capacity. This should all be underpinned by a review of your processes and tools.

1. Upskill your employees

Looking within is the most effective and sustainable way to build your capacity. Seriously: re-skilling existing team members is 1.5–3 times more effective than hiring new employees.

Here, we’re talking about 2 types of upskilling.

1. “Blitz” upskilling requires your employees to go off and take a sustained amount of time out for development. This could mean weeks, months, or even years.
2. Part-time upskilling allows employees to develop these new skills alongside their regular work. They could attend programs or apprenticeships one day a week, for example.

Alongside these types, there are also different learning approaches you can take for upskilling:

• Formal education. This is only relevant to those tackling long-term goals. Specialized certifications, such as those for chartered accountants and specific software fields, can take a long time to complete.
• Hands-on training. Whether it’s a staff mentoring program or consultant-led training, many people find practice more effective than passive learning. It also encourages self-learning, and thus engages and motivates individuals who are truly interested in improving their skill sets. Plus, the organization benefits too, as employees can execute less complex tasks while they learn.
• Job-shadowing. Is knowledge siloed in one or two resources? Job shadowing enables those who don’t have the skills to learn from those who do. That said, training employees isn’t as easy as people think. If the person being shadowed isn’t a natural teacher, they won’t pass on their skills effectively. As such, you need to plan how to implement the job shadowing to ensure they transmit as much knowledge as possible.

Whichever approach (or mixture of approaches) you choose, upskilling should be structured and tailored to your organization’s capacity needs.

2. Use outside resources to upskill

Upskilling isn’t always an option—you might be limited by time, resources, or in-house expertise. External capacity building might be needed to address critical shortages when internal development alone isn’t enough.

Take an example from the environmental sector. Shoal, a global partnership bringing together organizations interested in conserving fish or freshwater environments, lacked the time and institutional support to realize its goals.

So, a more established environmental organization, Synchronicity Earth, stepped in to act as a host and strategic partner, helping Shoal build capacity by providing:

• a place for Shoal’s Executive Director on Synchronicity Earth’s site
• financial resources to support Shoal’s development
• scientific guidance, fundraising support, and access to a global conservation network
• governance support, operational infrastructure, and alignment with Synchronicity’s Freshwater Programme

Synchronicity provided the institutional foundation for Shoal to mobilise resources and build crucial partnerships during its early stages.

Startup incubators follow a similar model. They are one of the most well-known examples of using outside resources to upskill. They provide early-stage companies with expert resources, mentorship, and funding until they have the ability to function independently.

3. Outsource temporary resources

Consider the skills shortage in the IT sector—87% of tech leaders report difficulties finding talent. It’s estimated that 90% of organizations will experience a significant IT skill deficit, costing $5.5 trillion in delays.

It’s near impossible to address skill gaps with sufficient speed through internal upskilling or traditional external hiring. For organizations that need to fill positions and meet demand quickly, outsourcing might be the only option.

This might mean sourcing freelancers on a project-to-project basis, or even just for specific deliverables. Or, you can secure the services of an agency who will embed consultants in your team, often for years at a time. This option is particularly popular in software development, where you can get access to offshore or nearshore resources who will work remotely.

Outsourcing can be the answer to capacity overflow, helping you fill long-term roles while you continue your search for permanent staff.

The key is knowing when outsourcing makes more sense than hiring externally or developing internally. Cost is often the primary concern, but opportunity cost and onboarding time also play a role.

For instance, when you need someone with specialized skills—especially when you won’t need these skills often—it makes more sense to outsource that part of the work, rather than invest in developing these skills internally.

Then there are companies that may have to determine the right direction for their capacity building each time they take on a new project. Some project and portfolio management solutions have dedicated tools to help with the decision-making by surfacing all the relevant information and making the calculations.

Outsourcing isn’t a permanent solution, but if done strategically, it can provide your organization with much-needed temporary capacity, and perhaps the breathing space to address internal shortages.

4. Leverage partnerships

This is where two or more organizations share resources to build capacity. This can be to address skills shortages among workforces, or to gain better access to raw materials, physical infrastructure, and processes they need for their projects.

Some organizations might choose to share factory space, or collaborate over a shared network to innovate products, business models, and supply chains.

Networks

One fascinating example of capacity building through shared networks is Haier, a China-based manufacturer of appliances and electronics. The organization has no traditional bosses and no middle management.

Instead, thousands of independent microenterprises collaborate over Haier’s digital platform, COSMOPlat, to accomplish their goals. What’s most intriguing about Haier’s business model, however, is that they make this platform available to external enterprises, too, helping them to build industry-wide capacity.

In August 2020, the Haizhi Chem Cloud platform partnered with the Tianyuan Group to build China’s first industrial internet platform for the chlorine alkali industry. This collaboration helps chemical industry SMEs share knowledge and data, manage operations, and source chemical resources.

Together, they successfully established an ecosystem linking upstream and downstream chemical resources.

Megaprojects

We also see capacity building through megaprojects. These are large-scale, complex ventures that typically cost more than $1 billion and can require intense collaboration between public and private partners.

Take the Guggenheim Museum Bilbao as an example. The architect Frank Gehry knew which elements were essential and prioritized them as such. To support his vision, all partners, including IDOM and the Guggenheim Foundation, worked together and made sure they delivered the project on time and on budget.

Now, The Guggenheim Museum Bilbao is a stand-out example of a mega project. In fact, its success spurred on transformation in the city of Bilbao that’s called “The Guggenheim Effect.”

On the contrary, consider how the Eurotunnel went over capacity. Because France and the UK decided on the size of the project many years before operations began, the partners involved (among them the French-English consortium Transmarche Link (TML)) built roughly twice the amount of capacity than they needed.

This is a great example of how partnerships on complex megaprojects can build huge amounts of capacity and achieve remarkable results, but without optimal planning or alignment, there can be costly overruns.

5. Review your processes and tools

Building more capacity also means reviewing your internal processes and tech stack.

After all, the keystone is to accurately estimate the skills and physical resources you need both now, but also in the medium and long term. This is a very complicated calculation to do mentally, but one you can greatly simplify with a strategic project and portfolio management tool.

These systems are the foundation supporting all of the capacity building methods outlined above, too. With a clear, real-time picture of resource availability and project demand, they provide a single source of truth for past, present, and future projects.

It will tell you what resources you need, as well as when, so you can make more data-driven decisions. This not only prevents bottlenecks, but ensures that you can avoid growing pains as your capacity requirements increase.

Ready to start your organization’s journey to greater capacity?

With industry-tailored capabilities and smart, AI-powered features, tools like Planisware can also help you increase your organizational capacity by bringing teams together, creating a single source of truth for all operations, and levelling up your project delivery.

Book a demo to see Planisware in action to see how you can start building more capacity across your organization.