Capabilities-Driven Strategy + Growth

Does your strategy give you a right to win?

Executives are struggling with developing and executing strategy. At PwC’s Strategy&, our pioneering approach, built on distinctive capabilities, enables companies to focus on their greatest strengths and gain a competitive advantage.

Watch the video

Success stories: Winning through distinctive capabilities

 

Examples from Strategy That Works published by Harvard Business Review Press

Capabilities-Driven Strategy: Our pioneering approach

Almost every business faces major strategic challenges. The problem is that years of chasing growth at all costs have left many companies with great ambitions, but no real advantage.

The only proven, sustainable way to generate true competitive advantage is by putting differentiating capabilities at the heart of your strategy and identity. Winning companies do this by being better than anyone else at the few things that matter to the promise they make to their customers and focusing only on products and services where those few capabilities actually give them an advantage.

Companies that do this are coherent and are:

  • 3 times as likely to outgrow the market
  • 2.5 times as likely to be more profitable than the industry average

Learn about our solutions

Our pioneering approach

How we can help you

  • Growth strategy
  • Portfolio and M&A strategy
  • Operating model
  • Functional strategy
  • Capability identification and building
Growth strategy

The most powerful growth engines are made up of a handful of capabilities providing real differentiation in the market.

We can help you achieve sustainable success by growing in a way that fits your capabilities system and value proposition.

Find out more

Portfolio and M&A strategy

True advantage comes from having a steady stream of offerings that only distinctive capabilities can deliver.

We can help you manage your portfolio and M&A strategy in a way that allows you to achieve sustainable advantage.

Find out more

Operating model

A company with a strong alignment between its strategy and its operating model is like an engine firing on all cylinders.

We can help you develop an operating model that brings your strategy to life.

Find out more

Functional strategy

The main purpose of a functional strategy is to enable the company’s strategy — not to achieve functional excellence.

We can help your functional leaders and units take on a more strategic role by enabling the company’s differentiating capabilities while still fulfilling their day-to-day transactional and expertise tasks.

Find out more

Capability identification and building

The engine of value creation is a system of capabilities that together allow a company to compete in a differentiated way.

We can help you identify your unique areas of strengths, and build and manage the capabilities that are required to win with your strategy.

Find out more

Top publications and insights

Strategy That Works
Book
Winning companies don’t follow conventional wisdom. They apply five acts of unconventional leadership that allow them to close the strategy-to-execution gap.
The Essential Advantage
Book
Based on extensive research, The Essential Advantage helps you construct a strategically coherent company in which the pieces reinforce one another instead of working at cross-purposes.
The Coherence Premium
Harvard Business Review
Sustainable, superior returns accrue to companies that focus on what they do best. Companies that align their differentiating capabilities with the right external market position enjoy a coherence premium.
The New Supercompetitors
strategy+business
Companies that realize the power of their capabilities can shape how industries evolve.
Cut Costs and Grow Stronger
Book
For most companies, cost cutting in a down economy means across-the-board slashing that "spreads the pain" of budget reductions across many departments.
Grow from Your Strengths
strategy+business
The only sustainable way to capture new opportunities is to remain true to what your company does best.
The Right to Win
strategy+business
Business strategy is at an evolutionary crossroads. It’s time to resolve the long-standing tension between the inherent identity of your organization and the fleeting nature of your competitive advantage.
The Grass Isn’t Greener
Harvard Business Review
Our analysis of shareholder returns of more than 6,000 companies in 65 industries globally and over a 10-year period, shows that the idea that some industries are superior does not hold true.

FAQs

What is a capability?

A capability is a combination of processes, systems and tools, skills, knowledge and behaviors, and organizational structures that allows a company to deliver a defined outcome. Focusing on a few important capabilities is what enables companies to connect their strategy (how they differentiate themselves) with their execution (what they do every day), creating real and lasting value for customers.

How does Capabilities-Driven Strategy + Growth work?

If you've done traditional strategic planning and wondered why strategies fail, consider this: Conventional business strategy approaches lead companies to spend the majority of their energy and resources on studying the market instead of looking internally.

Capabilities-Driven Strategy + Growth, on the other hand, by combining a market-back and capabilities-forward view, allows companies to identify attractive market opportunities that give them a "right to win" based on who they are and what they are great at doing.

At Strategy&, we believe that long-term success starts with focusing on what your company does best. We help our clients develop their three to six distinctive capabilities until they’re best-in-class and reinforce one another in a powerful system Then we align what our clients do well with the right marketplace opportunities. This creates a powerful growth engine — the kind that yields sustainable growth for years to come.

What are the top-five benefits of a capabilities-driven approach?

A capabilities-driven approach to strategy allows companies to become coherent, which leads to:

  • Effectiveness. Companies become better at the things that truly matter for the business by focusing on what is most important day in and day out.
  • Efficiency. Companies achieve scale by applying their distinctive capabilities throughout the entire company.
  • Focused investment. Companies spend on the areas that matter to their business, concentrating on what drives advantage.
  • Aligned organization. People throughout the organization have a powerful decision framework, which creates alignment.
  • Better talent. Companies can find, motivate, and retain the best talent in the areas they and their people care about most.

Learn more about our approach

Why are coherent companies more successful in executing their strategy?

Coherent companies can more easily close the strategy-to-execution gap because they are clearly focused on the few capabilities that set them apart from their competitors. In developing and enhancing those few differentiated strengths, coherent companies make sure that people’s everyday actions are in line with the strategy. Capabilities really are the link between firm strategy and execution

How do you determine which capabilities to focus on?

We start by identifying a company’s current capabilities. In other words, what are your greatest strengths today? What are you already great at? Next, we assess the market to understand which supercompetitors are likely to emerge:

  • Which value propositions (such as low cost play or experience provider play) are going to win in the future?
  • Which capabilities are required to win with each of those value propositions?

Then we determine how big the gap is between a company’s current capabilities and those supercompetitors. This allows a company to choose the supercompetitor they strive to become – and with it, the set of capabilities that they will need to excel at.

How can you measure the financial benefit of becoming coherent?

We’ve measured the financial benefit resulting from coherence in many different ways.

  • We’ve determined the coherence of major players in a given industry, and mapped that against these players’ profitability. In every industry where we’ve performed this analysis, we’ve found that coherent companies perform better than their less coherent competitors.
  • Our surveys with senior executives have revealed that coherent companies are 3 times as likely to grow faster than the industry average and 2.5 times as likely as incoherent companies to be more profitable than the industry average.
  • We’ve found that mergers and acquisitions with capabilities fit tend to perform better. Our analysis of deals showed that during the two years after closing, those that enhanced or leveraged capabilities generated significantly higher total shareholder returns than those with a limited capabilities fit. Overall, capabilities-driven deals were 14.2 percentage points better than others.

Why should I choose Strategy& to help me develop my company’s business strategy?

Simply said, we provide our clients with business strategies that work. We leverage what your company is great at and have the scope, scale, and expertise to build out the capabilities your company needs globally. Having helped our clients develop and execute capabilities-driven strategies for many years has allowed us to develop a set of powerful tools that enable us to determine the right strategy for you, in an efficient and effective way.

We are clearly recognized as the strategists who invented Capabilities-Driven Strategy + Growth. We have been practicing and researching this methodology for many years and have published our findings in dozens of top-tier publications including Harvard Business Review and the Wall Street Journal.

In terms of scope, scale, and expertise, we are uniquely positioned to develop a winning strategy for your company. We bring more than 100 years of strategy consulting experience, plus the unrivaled industry and functional capabilities of the PwC network. We are a global team of practical strategists committed to helping your company seize essential advantage and build the capabilities required to succeed. We do it by working alongside you to solve your toughest problems and help you capture your greatest opportunities.

Learn more about how we can help or contact us today!