(Available from McKinsey & Company Jan 2015.)

The capabilities that companies need most have evolved, but methods of building those skills have not. Our survey finds that the most effective companies focus on sustaining skills and linking learning to business performance.

Capability building has remained a high strategic priority since we first surveyed executives on organizational capabilities in 2010. Four years later, many companies are using the same approaches to learning and skill development—namely, on-the-job teaching—that were most common in the earlier survey. Yet the responses to our latest survey on the topic1 suggest that organizations, to perform at their best, now focus on a different set of capabilities2 and different groups of employees to develop.

Amid their evolving needs and infrequent use of more novel skill-building approaches (digital or experiential learning methods, for example), executives report notable challenges in their capability-building programs. Among the most pressing are a lack of learning-related metrics and difficulty ensuring the continuous improvement of skills. In the results from organizations that are most effective at capability building,3 however, are some lessons for improvement. Respondents at these companies are much likelier than others to say sustaining capabilities over time and linking learning to company performance are integral parts of their capability-building programs. They typically use more methods than others to develop employee skills, more often say their human-resources functions and businesses co-own learning, more often use metrics to assess the impact of their programs on the business, and in turn report more success at meeting their programs’ targets.

New focus on functional capabilities and the front line
The strategic importance of capabilities is apparent around the globe: half of all respondents this year say capability building is at least a top-three priority at their companies. It’s even more significant in parts of Asia, particularly in India and China (Exhibit 1). This finding supports our experience with fast-growing organizations in the region, which face notable capability gaps as they expand. Regardless of region, though, most executives agree that they are not building capabilities for purely competitive reasons.

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