When we want to understand an organization, two words are very important, they are capability and capacity. Let us explore these two words in greater detail.
What is Capability?Capability is an ability to do or to deliver something. All organizations deliver capabilities. When you buy an iPhone, you buy capabilities such as ability to call your friends and family, listen to music system, access to internet etc. When you buy a diamond ring from Tiffany, you buy capabilities such as ability show your love, affection, status etc. So in a way, if an organization is not delivering any capabilities, you can very well say it doesn’t exist or at least no body will buy anything from that organization.
How To Quantify This Capability?We use the term capacity to quantify capability. Let us take an example, I am able to lift 50 kg and here is a body builder he is also able to lift 50 kg. So I can say we both have the same capability that is to lift 50 kg. Listen I am using the word capability. On the other hand, I can lift it 10 times in one-hour, but the body builder can lift it 1000 times in the same one-hour. What does it mean? Though we both have the same capability, but his capacity is much higher than mine.
Let us take another example involving two companies AppsGiant and TinyApps. Both these companies specialize in creating apps for their clients, that means both these companies have same capability. But AppsGiant can develop 1000 apps in a month and TinyApps can develop only 10 apps in a month. So they have different capacities.
In summary, we can define an organization using the two words – capability and capacity. Capability refers to the ability of an organization to do or to deliver or to create or to solve something. On the other hand, capacity refers to the quantification of that capability.
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