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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.

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In these rapidly-changing times, and with constant pressure to compete, it’s easy for business leaders to overlook a basic principle: Build from your strengths. When you understand what you’re great at, and design your capabilities and strategy accordingly, you can define how you want to compete, and shape your own future. See how an unconventional speed-skating champion has an important lesson for business leaders.

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6:20

Learn about the approach

Discover the potential of a capabilities-driven strategy

Our pioneering approach, built on distinctive capabilities, enables companies to focus on what they’re great at and create lasting success.

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See how Strategy& can help

Explore capabilities-driven solutions

Find out how viewing your strategic decisions through a capabilities lens will help you with your growth strategy, portfolio and M&A strategy, operating model, functional strategy, and capability identification and building.

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Take the Strategy Profiler & explore other tools

Get started on developing your capabilities-driven strategy

Take the Strategy Profiler to find out in a few minutes how well your company is positioned for success or explore our other tools to find out how we can help improve your strategy planning.

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Explore Strategy&'s ideas

Explore your company’s potential

We have been practicing and researching the methodology behind Capabilities-Driven Strategy + Growth for years. Take a look at our articles and viewpoints.

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See Strategy&'s client examples

See how we have helped clients succeed with a capabilities-driven strategy

We have helped hundreds of organizations across industries and regions develop and execute a capabilities-driven strategy.

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Connect with experts

Get in touch to discuss how we can help you with your strategy

We want to hear from you! Please reach out to an expert in your region, so we can tell you more about how a capabilities-driven strategy will position your company for long-term success.

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Success stories: Winning through distinctive capabilities

CEMEX is a global leader in the building materials industry.

Examples from Strategy That Works published by Harvard Business Review Press

Why Capabilities-Driven Strategy Works

Why Capabilities-Driven Strategy Works
why cds works

How we can help you

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.

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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.

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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.

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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.

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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.

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Top publications and insights

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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.

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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.

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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.

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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

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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.

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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.

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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!

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