Innovation Pitfalls: Balancing Capability and Capacity

The term “innovation theatre” is widely attributed to Steve Blank, a renowned entrepreneur and academic known for his work on lean startup methodologies.

He first introduced the concept in a HBR article titled “Why Companies Do ‘Innovation Theatre’ Instead of Actual Innovation.”

His criticism is that organisations can engage in superficial activities that mimic innovation but fail to produce tangible results. In his words:

“Companies and government agencies typically adopt innovation activities (hackathons, design thinking classes, innovation workshops) that result in innovation theatre. These activities shape and build culture, but they don’t win wars, and they rarely deliver shippable/deployable product.

Spot on: strategic innovation is a war game against the legacy organisation, not a development of the existing culture and practices.

I understand why people do innovation theatre – it’s fun, colleagues enjoy it, and it is often a genuinely good place to start in low maturity environments. We’ve been there and done that.

Idea generation is easy, selecting ideas that align to (or build) strategy and executing on them us a different matter.

To achieve optimal innovation performance, companies need to balance capability and capacity. These two terms, often used interchangeably, represent distinct yet interconnected elements that fuel your ability to innovate.

Capability: The “Know-How”

Capability refers to the inherent ability to do something. In the context of innovation, it encompasses the knowledge, skills, processes, and resources an organisation possesses to generate new ideas, develop them, and bring them to fruition. Think of it as the “know-how” of innovation.

Key components of capability include:

• Technical expertise: Possessing the necessary skills and knowledge in relevant fields.
• Creative thinking: Fostering a culture that encourages creativity, experimentation, and out-of-the-box thinking.
• Problem-solving: People who have the ability to identify challenges, analyse them, and develop effective solutions.
• Collaboration: Effective communication and collaboration across different departments and teams.
• Project management: Effective management and support for innovation projects, from ideation to implementation.

Capacity: The “Can-Do”

Capacity, on the other hand, refers to the available resources and infrastructure that enable an organisation to carry out its innovation activities. It’s about having the “can-do” power to put capabilities into action.

Key aspects of capacity include:

• Financial resources: Having the necessary funding to invest in research, development, and implementation of new ideas.
• Human resources: Having a sufficient number of skilled employees with the right expertise and time to dedicate to innovation projects.
• Technological resources: Access to the necessary technology, equipment, and infrastructure to support innovation activities.
• Time: Allocating sufficient time for ideation, experimentation, and development.

An organisation with a high level of innovation maturity has both high levels of capability and capacity.

So for instance, I work at Bromford in strategy and innovation. I can say with some confidence that in 2025 we have high maturity when it comes to innovation capability.

• We have a strong strategy which provides absolute clarity on the shifts we need to be make over the next few years and beyond. It’s a near public admittance that we are dissatisfied with the existing paradigm (the sector model is broken) and want to move to a more disruptive operating model.
• We have access to a wide range of technical expertise, from data science to agile ways of working , as well as industry experts and young talent.
• We have unlimited access to our customers, and a relationship where we can genuinely co-create solutions. We have a host of colleagues out in communities talking to and interacting with customers every single day. This provides a platform for endless experimentation.
• We have, over the past year especially, radically improved the project management of our pipeline of explorations. We have a number of workstreams with the right senior sponsorship, that meet regularly to review progress.
• We have broken the silos by having cross-cutting streams that also meet on a regular basis. We talk about innovation on an almost daily basis.

So: I’d give us an innovation capability ranking of 9/10.

Where we are less strong is capacity, although even here we have improved.

• We are financially strong and have huge , often untapped, skills in both our colleague and customer base. However, the flow of financial resources/ decision making to some of our place based teams needs to improve.
• We have a strong technology base and the right internal skill sets to keep improving it.
• Lack of time. We have not found sufficient balance in our teams between serving business as usual, and creating the future. This is our improvement area, although as we continue to deploy our place based working prototypes, capacity will grow.

So, I’d give Bromford a 6 or 7 out of 10 for innovation capacity.

To be fair, in non-profit orgaisations, a lack of bandwidth or time is always likely to be the persistent capacity problem. If you are Elon Musk, you can throw billions at capacity. We cannot and should not.

We are also going through a merger and are due to become Bromford Flagship next month. Although this will likely create even more capability for innovation it could put more pressure on capacity. However that can be mitigated by the workstream controls and governance we have put in place.

Why the Distinction Matters

Understanding the difference between capability and capacity is crucial for effective innovation management.

• Identifying bottlenecks: Recognising whether a lack of progress stems from a capability gap (lack of skills or knowledge) or a capacity constraint (lack of resources or time) allows for targeted interventions.
• Resource allocation: Distinguishing between capability and capacity helps organisations allocate resources effectively, investing in training and development to enhance capabilities or increasing resources to boost capacity.
• Strategic planning: A clear understanding of both elements enables organisations to develop a comprehensive strategy that aligns with their overall goals and resources.

Keeping an eye on your capability and capacity is important. You don’t need to be a 10/10 on both, but you do need to be aware of the balance. If you have low innovation capability you can’t innovate: full stop. But if you have high capability and low capacity you are missing lots of opportunities.

We all like a bit of theatre, but unless you focus on your strategy, and turn those ideas into actions that change colleagues and customers lives, you risk something worse.

The endless idea challenges that go nowhere, the hackathons, the beanbags, the innovation spaces.

It risks becoming innovation pantomime, something that makes people smile and gets a few laughs, but gets shut down three months later .

Related: The Productivity Problem: How Meaningless Metrics Hold Us Back