It’s time to put pen to paper and lock in budgets for the year ahead. When you’re considering the finances you’ll need to resource your teams and projects for the next four quarters, it’s important to make sure you’re targeting the best areas.
But what does that mean—the “best”?
Many times, teams are seeking solutions that will help them achieve rapid growth and gains. They pick goals that will help them measure their progress in terms of sales and profits.
However, if you choose that path, then you might be setting yourself up for what’s known as the “capability trap.”
What Is a Capability Trap?
The “Capability Trap” is a theory that explores why some businesses fail in the long term despite successfully resourcing and working hard in the short term.
In order to demonstrate that their work is effective, they choose strategies that are going to deliver the biggest results as fast as possible. When you choose to go after the “low-hanging fruit,” you might see gains right away.
For example, let’s say you own a Pizza Palace. Maybe you want to increase the number of orders sold daily. So you eliminate the delivery fee for the first time in your restaurant’s history. You hang a big sign in the window that says “FREE DELIVERIES.” Suddenly, more people are ordering pizzas for delivery, so you’re selling more orders every week. This feels like success.
When you lock down easy wins, it’s very motivational and great for morale. This can get the team powering ahead on other projects in pursuit of similar wins. You might continue to see the lines on that productivity graph skyrocket steeply over a short period of time.
However, at the same time, your delivery drivers are probably doing more work for the same pay, and they might be unhappy about it. Similarly, your cooks are making more pizzas per hour—and they don’t get paid by the pie. Your ovens and instruments are being used more and will wear down faster. No one has considered the long-term sustainability of this effort, because it seemed like such a successful project at the time. Meanwhile, as months go by, customers will get used to the free deliveries, so the original rush to take advantage of the new deal will die down. The sign will lose its original marketing power once it’s in the window for a long time. Your orders will plateau, not continue to increase proportionally forever. While your staff turnover might escalate, workplace injuries might take place, and you’re replacing equipment faster than ever. That’s because you pursued short-term revenue without accompanying your strategy with a long-term capabilities system to sustain it.
In the long run, it might end up costing you financially, impacting your reputation, and hurting business. You’ll find yourself grasping for other “easy” wins to compensate for the last one.
This is just one broad example of how businesses get caught in the capability trap.
What Can You Do to Avoid This Trap?
Many teams will feel constricted because they feel like executives are demanding fast, visible results—and they have to chase those immediate, impressive rewards.
It’s important to draft a business strategy that explains how capability efforts will actually improve revenue in the long run. Draw a straight line from funding these efforts today to the money that will continue to grow year after year with less and less effort.
In the Pizza Palace example, you might want to run a short-term promotion on free deliveries. But at the same time, you want to set goals that are tied to staff productivity, customer engagement, and quality assessment. You’ll want a complete picture of the support that will be necessary—talent, training, tools, technology, time, and other resources—to sustain wins over a long period.
You’ll want to break the habit of focusing on immediate, profit-linked outcomes. Instead, think about how you can reward a team’s ability to automate, motivate, and execute their work (which might require an initial investment before there’s any payoffs).
When your staff is happy and the money’s coming in, with the capabilities in place to sustain or improve results over time, then you’re free to look at new revenue streams and creative approaches that don’t require additional funding, because you already have the right team and they have the bandwidth.
Maybe your happy, loyal pizza-makers come up with an amazing new pie that sells like crazy!
To learn what steps you can take to add capability buildout into your marketing plans for next year—such as automations, training, and real-time analysis—ask for a consultation with Mad 4 Marketing.