Insight
Capability is not Competence
Four words do most of the damage in conversations about organizational design, because they are used as synonyms and are not synonyms at all.
Capability is something the organization must always be able to do. Settle a claim. Admit a patient. Onboard an employee. It is a bounded area of the business that owns an outcome, and it does not change when the method does. It belongs to the organization.
Competence is what a person knows how to do. Underwriting. Kubernetes. Negotiating with regulators. It walks in through the door in the morning and out again at night, and one day it does not come back. It belongs to people.
Resources are how much of anything you have — headcount, budget, hours, licences. A quantity, not a kind.
Skills are the components competence is assembled from. Below the level anyone should be designing an organization at.
The distinction that matters most is the first two, and it matters because of what follows from it. A capability is only as real as the competence currently staffing it — which means a capability with no competence behind it is an ambition on a slide, and competence with no capability to attach to is a talented person waiting for someone to tell them what they own.
Confusing them is what makes reorganizations dangerous in a specific, repeatable way. An organization that thinks in competences reorganizes by gathering similar people together — all the engineers here, all the analysts there — and discovers a year later that no capability has an owner, because the capability was distributed across four functions and belonged to none of them. An organization that thinks only in capabilities draws a beautiful map, staffs it with whoever was available, and finds that the boundary is correct and nothing behind it works.
The test is a question with a plural answer. Who owns this? should return one name. Who can do this? should return several. If the first question returns several names or none, the capability is unowned. If the second returns one name, the capability is a single person, and it will leave when they do.
Capability endures. Competence arrives, grows, and eventually goes elsewhere. Design the first to outlive the second, and staff the second well enough that the first is more than a diagram.