Capabilities in the Playing-to-Win framework refer to the organizational abilities a company must build and maintain to execute its chosen strategy. They represent the fourth question in the Strategic Choice Cascade and follow Where to Play and How to Win: once it is clear where and how to win, the question becomes which capabilities are necessary to make it happen.
The critical point is that capabilities must not be viewed in isolation but as a system that works together. At Procter & Gamble, Lafley and Martin identified five core capabilities: Consumer Understanding, Brand Building, Go-to-Market Capability, Innovation Capability, and Global Scale. These five reinforced each other: deep consumer understanding improved brand management, strong brands facilitated market access, and global scale funded innovation work. A company whose capabilities do not fit together does not have a strategy but a wish list.
The concept comes from the Playing-to-Win framework by Lafley and Martin. The question of capabilities is also an honest inventory: Which capabilities do we already have? Which are missing? How long will it take to build them, and can we realistically accomplish that?
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