by Cesario Ramos.
It seems that at Toyota they say, “Improve for improvement’s sake.” The many books on Toyota TPS tell us they don’t focus on quick fixes or chasing short-term goals. Instead, they build systems and processes that get better every day, no matter what. But in my experience—this does not happen that often in most organizations…
Too many companies set arbitrary targets, chase the numbers, and celebrate short-term wins. But then, the same problems often resurface, and they’re left asking, “Why are we stuck firefighting?”
This is where Creating Agile Organizations (CAO) takes a different path.
Outcomes: The Problem With Chasing Numbers
Outcomes like “increase customer retention by 10%” or “reduce defects by 25%” look great on a quarterly report. But here’s the challenge: these numbers are temporary. They reflect symptoms of the system but don’t help fix the system itself.
You might hit your target by running a loyalty campaign or crunching your team to meet a delivery deadline. But what happens next quarter? The retention rates drop again. The defects return. You’re stuck in a causal-loop of chasing outcomes without solving the underlying issues.
Capabilities: A Better Approach
CAO takes a systemic view of improvement. Instead of asking, “What outcome do we want this quarter?” we ask: “What capabilities do we need to keep getting better over time?”
Capabilities are the skills, tools, and traits that allow teams to adapt, deliver value, and solve problems again and again. Unlike outcomes, capabilities don’t disappear once the quarter is over. They grow stronger and make your organization more resilient, more innovative, and more adaptable.
Outcomes vs. Capabilities: A Practical Example
Let’s say your organization sets an outcome: “Increase customer retention by 10% this year.”
The outcome-focused approach might roll out quick fixes—discounts, loyalty points, or aggressive marketing. Retention might improve for a while, but customers leave again as soon as the campaign ends. The underlying problems—poor product quality, long delivery times, or unclear communication—remain untouched. The CAO approach asks: “What capability will help us improve customer retention over time?”
- Maybe it’s a customer insight capability: A system for gathering and acting on feedback consistently.
- Maybe it’s a delivery capability: Improving how quickly and reliably you meet customer needs.
- Or maybe it’s an experimentation capability: Testing and learning what actually drives retention.
By focusing on capabilities, you address the root causes, not the symptoms. Retention doesn’t just improve for a quarter—it gets better and stays better.
Building Capabilities
Driving change thought capabilities is a framework for change. Here are the high level steps:
Align with your Strategy: Discover the desired capabilities to execute your strategy. What are the underlying bottlenecks in you system that prevent effective execution and improvements? For example: if retention rates are low, ask: “Is a cause a lack of customer feedback? Poor delivery processes? Misalignment in product strategy?”
Conduct a Go-See analysis and identify the systemic issues and link them to specific capabilities. By focusing on capabilities, you uncover leverage points for improvement, rather than patching symptoms.
Identify capability gaps: recognise and address the weaknesses in your organisation. Map your desired outcomes (e.g., “Improve customer retention”) to system capabilities (e.g., “Better customer feedback loops”). Break those capabilities into actionable steps and quantify them to measure progress.
For example: Customer Insight Capability: Train teams to gather actionable feedback through interviews or analytics. Delivery Capability: Changes in workflows or team structures to improve cycle time.
What specific behaviors will signal that the capability is improving?
Experiment, Lean and Evolve: Capabilities grow through experimentation. Encourage teams to test and iterate their approaches. Run experiments to measure improvement in the identified capability.
The Benefits of Capability-Driven Improvement
Building capabilities instead of chasing outcomes delivers three key benefits:
It’s Sustainable: When you improve capabilities, you improve how the work gets done, not just the results. Capabilities don’t disappear—they grow stronger over time, making your organization better equipped to handle future challenges. Also the desired capabilities change over time a strategy, market conditions and organisations challenges change. This makes developing capabilities excellent for continual improvement approach.
It’s Adaptable: Outcomes are static, but capabilities are dynamic. The same capabilities you develop to improve customer retention today might help you solve a supply chain problem tomorrow.
It Drives Real Improvement: Teams become more effective at learning, growing, and solving problems. Instead of relying on temporary fixes, they build the tools to create lasting change.
Outcomes Are Overrated: Build Capabilities That Deliver Every Time
Outcomes aren’t meaningless, but they shouldn’t be the goal. They’re the byproduct of building the right capabilities.
So, let’s stop obsessing over the numbers. The real question is: What capabilities will make us better every day? Build those, and the outcomes will take care of themselves.
If your organization feels stuck chasing the same targets year after year, it’s time to stop chasing and start building. Outcomes are overrated. Capabilities deliver every time!
Learn about this approach and more in our Designing Agile Organizations course.